Registration No. 333-106296 As filed with the Securities and Exchange Commission on June 27, 2003 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-14A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X / PRE-EFFECTIVE AMENDMENT NO. 1 / X / POST-EFFECTIVE AMENDMENT NO.___ / / OPPENHEIMER MIDCAP FUND (Exact Name of Registrant as Specified in Charter) 6803 South Tucson Way, Centennial, Colorado 80112 (Address of Principal Executive Offices) 303-768-3200 (Registrant's Telephone Number) Robert G. Zack, Esq. Senior Vice President & General Counsel OppenheimerFunds, Inc. 498 Seventh Avenue, New York, New York 10018 (212) 323-0250 (Name and Address of Agent for Service) As soon as practicable after the Registration Statement becomes effective. (Approximate Date of Proposed Public Offering) Title of Securities Being Registered: Class A, Class B, Class C, Class N and Class Y shares of Oppenheimer MidCap Fund. No filing fee is due because of reliance on Section 24(f) of the Investment Company Act of 1940. - ------------------------------------------------------------------------------ The Registrant hereby amends the Registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), shall determine.
CONTENTS OF REGISTRATION STATEMENT This Registration Statement contains the following pages and documents: Front Cover Contents Page Cross-Reference Sheet Part A Proxy Statement for Oppenheimer Select Managers Gartmore Millennium Growth Fund II and Prospectus for Oppenheimer MidCap Fund Exhibit A - Agreement and Plan of Reorganization between Oppenheimer Select Managers Gartmore Millennium Growth Fund II and Oppenheimer MidCap Fund Part B Statement of Additional Information Financials Financial statements for the six-month period ended April 30, 2003 of Oppenheimer MidCap Fund Part C Other Information Signatures Exhibits
OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II 6803 South Tucson Way, Centennial, Colorado 80112 1.800.708.7780 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST 29, 2003 To the Shareholders of Oppenheimer Select Managers Gartmore Millennium Growth Fund II: Notice is hereby given that a Special Meeting of the Shareholders of Oppenheimer Select Managers Gartmore Millennium Growth Fund II ("GMG Fund"), a registered investment management company, will be held at 6803 South Tucson Way, Centennial, CO 80112 at 1:00 p.m., Mountain time, on August 29, 2003, or any adjournments thereof (the "Meeting"), for the following purposes: 1. To approve an Agreement and Plan of Reorganization between Oppenheimer Select Managers Gartmore Millennium Growth Fund II ("GMG Fund") and Oppenheimer MidCap Fund ("MidCap Fund"), and the transactions contemplated thereby, including (a) the transfer of substantially all the assets of GMG Fund to MidCap Fund in exchange for Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund, (b) the distribution of these shares of MidCap Fund to the corresponding Class A, Class B, Class C, Class N and Class Y shareholders of GMG Fund in complete liquidation of GMG Fund and (c) the cancellation of the outstanding shares of GMG Fund (all of the foregoing being referred to as the "Proposal"). 2. To act upon such other matters as may properly come before the Meeting. Shareholders of record at the close of business on June 18, 2003 are entitled to notice of, and to vote at, the Meeting. The Proposal is more fully discussed in the Proxy Statement and Prospectus. Please read it carefully before telling us, through your proxy or in person, how you wish your shares to be voted. The Board of Trustees of GMG Fund recommends a vote in favor of the Proposal. WE URGE YOU TO SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY. By Order of the Board of Trustees, Robert G. Zack, Secretary July 7, 2003 - -------------------------------------------------------------------------------- Shareholders who do not expect to attend the Meeting are requested to indicate voting instructions on the enclosed proxy and to date, sign and return it in the accompanying postage-paid envelope. To avoid unnecessary duplicate mailings, we ask your cooperation in promptly mailing your proxy no matter how large or small your holdings may be.
OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II 6803 South Tucson Way, Centennial, Colorado 80112 1.800.708.7780 COMBINED PROSPECTUS AND PROXY STATEMENT DATED JULY 7, 2003 Acquisition of the Assets of OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II By and in exchange for Class A, Class B, Class C, Class N and Class Y shares of OPPENHEIMER MIDCAP FUND This combined Prospectus and Proxy Statement solicits proxies from the shareholders of Oppenheimer Select Managers Gartmore Millennium Growth Fund II ("GMG Fund") to be voted at a Special Meeting of Shareholders (the "Meeting") to approve the Agreement and Plan of Reorganization (the "Reorganization Agreement") and the transactions contemplated thereby (the "Reorganization") between GMG Fund and Oppenheimer MidCap Fund ("MidCap Fund"). This combined Prospectus and Proxy Statement constitutes the Prospectus of MidCap Fund and the Proxy Statement of GMG Fund filed on Form N-14 with the Securities and Exchange Commission (the "SEC"). If shareholders vote to approve the Reorganization Agreement and the Reorganization, the net assets of GMG Fund will be acquired by and in exchange for shares of MidCap Fund. The Meeting will be held at the offices of OppenheimerFunds, Inc. at 6803 South Tucson Way, Centennial, CO 80112 at 1:00 p.m., Mountain time, on August 29, 2003 or any adjournment thereof. The Board of Trustees of GMG Fund is soliciting these proxies on behalf of GMG Fund. This Prospectus and Proxy Statement will first be sent to shareholders on or about July 14, 2003. If the shareholders vote to approve the Reorganization Agreement, you will receive Class A shares of MidCap Fund equal in value to the value as of the Valuation Date (as defined in the Agreement and Plan of Reorganization: the business day preceding the Closing Date of the Reorganization) of your Class A shares of GMG Fund; Class B shares of MidCap Fund equal in value to the value as of the Valuation Date of your Class B shares of GMG Fund; Class C shares of MidCap Fund equal in value to the value as of the Valuation Date of your Class C shares of GMG Fund; Class N shares of MidCap Fund equal in value to the value as of the Valuation Date of your Class N shares of GMG Fund; and Class Y shares of MidCap Fund equal in value to the value as of the Valuation Date of your Class Y shares of GMG Fund. GMG Fund will then be liquidated and de-registered under the Investment Company Act of 1940 (the "Investment Company Act"). MidCap Fund's investment objective is to seek capital appreciation. MidCap Fund invests mainly in equity securities, such as common and preferred stocks, and securities convertible into common stock. It invests primarily in equity securities of U.S. companies, but can also buy foreign stocks. Under normal market conditions, the Fund invests at least 80% of its net assets (plus borrowings for investment purposes) in equity securities of growth companies that have a market capitalization of between $2 billion and $11.5 billion (referred to as "mid-cap" stocks). This Prospectus and Proxy Statement gives information about Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund that you should know before investing. You should retain it for future reference. A Statement of Additional Information relating to the Reorganization described in this Prospectus and Proxy Statement, dated July 7, 2003 (the "Proxy Statement of Additional Information") has been filed with the SEC as part of the Registration Statement on Form N-14 (the "Registration Statement") and is incorporated herein by reference. You may receive a copy by written request to the OppenheimerFunds Services free of charge (the "Transfer Agent") or by calling the toll-free number 1.800.708.7780. The Proxy Statement of Additional Information includes the following documents: (i) audited financial statements for the 12-month period ended November 30, 2002, and financial statements for the six-month period ended May 31, 2003 (to be 2003,filed upon availability), respectively of GMG Fund; (ii) audited financial statements for the 12-month period ended October 31, 2002, and financial statements for the six-month period ended April 30, 2003, respectively of MidCap Fund; (iii) the Prospectus of GMG Fund dated March 28, 2003, as supplemented May 7, 2003 (iv) the Statement of Additional Information of GMG Fund dated March 28, 2003; and (v) the Prospectus dated December 23, 2002 and the Statement of Additional Information of MidCap Fund dated December 23, 2002, as supplemented February 11, 2003. The Prospectus of MidCap Fund dated December 23, 2002 is attached to and considered a part of this Prospectus and Proxy Statement and is intended to provide you with information about MidCap Fund. Mutual fund shares are not deposits or obligations of any bank, and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other U.S. government agency. Mutual fund shares involve investment risks including the possible loss of principal. This Prospectus and Proxy Statement is dated July 7, 2003. As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this Prospectus and Proxy Statement. Any representation to the contrary is a criminal offense.
TABLE OF CONTENTS COMBINED PROSPECTUS AND PROXY STATEMENT Page ---- Synopsis What am I being asked to vote on?............................................6 What are the general tax consequences of the Reorganization?................ 7 Comparisons of Some Important Features.......................................7 How do the investment objectives and policies of the Funds compare?..........7 Who manages the Funds?.......................................................8 What are the fees and expenses of each Fund and those expected after the Reorganization?...........................................................8 Where can I find more financial information about the Funds?.................12 What are the capitalizations of the Funds and what would the capitalizations be after the Reorganization?..............................................................13 How have the Funds performed?................................................14 What are other Key Features of the Funds?....................................20 Investment Management and Fees.........................................20 Transfer Agency and Custody Services...................................21 Distribution Services..................................................21 Purchases, Redemptions, Exchanges and other Shareholder Services.......21 Dividends and Distributions............................................21 What are the Principal Risks of an Investment in GMG Fund and MidCap Fund?..22 Reasons for the Reorganization..................................................26 Information about the Reorganization How will the Reorganization be carried out?..................................23 Who will pay the Expenses of the Reorganization?.............................24 What are the Tax Consequences of the Reorganization?.........................25 What should I know about Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund?..............................................................25 Comparison of Investment Objectives and Policies Are there any significant differences between the investment objectives and strategies of the Funds?................................................................26 What are the main risks associated with an investment in the Funds?..........26 How do the investment policies of the Funds compare?.........................26 What are the fundamental investment restrictions of the Funds?...............32 How do the Account Features and Shareholder Services for the Funds Compare?.... 33 Investment Management..................................................33 Distribution...........................................................34 Purchases and Redemptions..............................................35 Shareholder Services...................................................35 Dividends and Distributions............................................35 Voting Information How many votes are necessary to approve the Reorganization Agreement?........36 How do I ensure my vote is accurately recorded?..............................36 Can I revoke my proxy?.......................................................37 What other matters will be voted upon at the Meeting?........................37 Who is entitled to vote?..................................................37 What other solicitations will be made?.......................................37 Are there any appraisal rights?..............................................38 Information about MidCap Fund...................................................38 Information about GMG Fund......................................................38 Principal Shareholders..........................................................39 Exhibit A - Agreement and Plan of Reorganization by and between Oppenheimer Select Managers Gartmore Millennium Growth Fund II and Oppenheimer MidCap Fund Enclosures: Prospectus of Oppenheimer MidCap Fund dated December 23, 2002. Semi-Annual Report of Oppenheimer MidCap Fund dated April 30, 2003 (available without charge upon request, by calling 1.800.708.7780).
SYNOPSIS This is only a summary and is qualified in its entirety by the more detailed information contained in or incorporated by reference in this Prospectus and Proxy Statement and by the Reorganization Agreement which is attached as Exhibit A. Shareholders should carefully review this Prospectus and Proxy Statement and the Reorganization Agreement in their entirety and, in particular, the current Prospectus of MidCap Fund which accompanies this Prospectus and Proxy Statement and is incorporated herein by reference. If shareholders of GMG Fund approve the Reorganization, the net assets of GMG Fund will be transferred to MidCap Fund, in exchange for an equal value of shares of MidCap Fund. The shares of MidCap Fund will then be distributed to GMG Fund shareholders and GMG Fund will be liquidated. As a result of the Reorganization, you will cease to be a shareholder of GMG Fund and will become a shareholder of MidCap Fund. For federal income tax purposes, the holding period of your GMG Fund shares will be carried over to the holding period for shares you receive in connection with the Reorganization. This exchange will occur on the Closing Date (as such term is defined in the Agreement and Plan of Reorganization attached hereto as Exhibit A) of the Reorganization." What am I being asked to vote on? Your Fund's investment manager, OppenheimerFunds, Inc. (the "Manager"), proposed to the Board of Trustees a reorganization of your Fund, GMG Fund, with and into Oppenheimer MidCap Fund so that shareholders of GMG Fund may become shareholders of a substantially larger fund advised by the same investment advisor with generally more favorable long-term performance, and investment objectives and policies similar to those of their current Fund. The Board considered the differences in investment focus, discussed below. The Board also considered the fact that the surviving fund has the potential for lower overall operating expenses. In addition, the Board considered that both Funds have Class A, Class B, Class C, Class N and Class Y shares offered under identical sales charge arrangements. The Board also considered that the Reorganization is expected to be a tax-free reorganization, and there would be no sales charge imposed in effecting the Reorganization. In addition, due to the relatively moderate costs of the reorganization, the Boards of both Funds concluded that neither Fund would experience dilution as a result of the Reorganization. A reorganization of GMG Fund with and into MidCap Fund is recommended by the Manager based on the fact that both funds have similar investment practices and industry sector weighting. At a meeting held on April 28, 2003, the Board of Trustees of GMG Fund approved a reorganization transaction that will, if approved by shareholders, result in the transfer of the net assets of GMG Fund to MidCap Fund, in exchange for an equal value of shares of MidCap Fund. The shares of MidCap Fund will then be distributed to GMG Fund shareholders and GMG Fund will subsequently be liquidated. As a result of the Reorganization, you will cease to be a shareholder of GMG Fund and will become a shareholder of MidCap Fund. This exchange will occur on the Closing Date (as such term is defined in the Agreement and Plan of Reorganization attached hereto as Exhibit A) of the Reorganization. Approval of the Reorganization means you will receive Class A shares of MidCap Fund equal in value to the value as of the Valuation Date of your Class A shares of GMG Fund; Class B shares of MidCap Fund equal in value to the value as of the Valuation Date of your Class B shares of GMG Fund; Class C shares of MidCap Fund equal in value to the value as of the Valuation Date of your Class C shares of GMG Fund; Class N shares of MidCap Fund equal in value to the value as of the Valuation Date of your Class N shares of GMG Fund; and Class Y shares of MidCap Fund equal in value as of the Valuation Date of your Class Y shares of GMG Fund. The shares you receive will be issued at net asset value without a sales charge or the payment of a contingent deferred sales charge ("CDSC") although if your shares of GMG Fund are subject to a CDSC, your MidCap Fund shares will continue to be subject to the same CDSC applicable to your shares, and the period during which you held your GMG shares will carryover to your MidCap Fund shares for purposes of determining the CDSC holding period. For the reasons set forth in the "Reasons for the Reorganization" section, the Board of GMG Fund has determined that the Reorganization is in the best interests of the shareholders of GMG Fund. THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION What are the general tax consequences of the Reorganization? It is expected that shareholders of GMG Fund who are U.S. citizens will not recognize any gain or loss for federal income tax purposes, as a result of the exchange of their shares for shares of MidCap Fund. You should, however, consult your tax advisor regarding the effect, if any, of the Reorganization in light of your individual circumstances. You should also consult your tax advisor about state and local tax consequences. For further information about the tax consequences of the Reorganization, please see the "Information About the Reorganization--What are the Tax Consequences of the Reorganization?" Comparisons of Some Important Features How do the investment objectives and policies of the Funds compare? GMG Fund and MidCap Fund have similar investment objectives. GMG Fund seeks long-term capital appreciation and MidCap Fund seeks capital appreciation. In seeking their investment objectives, GMG Fund and MidCap Fund utilize a similar investing strategy. GMG Fund invests primarily in securities of growth companies that are creating fundamental changes in the economy and MidCap Fund looks for, among other characteristics, established growth companies that are well-positioned to take advantage of product or technology advances in their industry or related growth sector. Please refer to the Annual Reports of both Funds for a complete listing of the investments for each Fund.
Who Manages the Funds? The day-to-day management of the business and affairs of each Fund is the responsibility of the Manager, however, GMG Fund also utilizes sub-advisers to manage the investment and reinvestment of the assets. MidCap Fund is an open-end, diversified management investment company with an unlimited number of authorized shares of beneficial interest, organized as a Massachusetts business trust on June 18, 1997. It commenced operations on December 1, 1997. GMG Fund is an open-end, management investment company with an unlimited number of authorized shares of beneficial interest, organized as a Massachusetts business trust on November 10, 2000. It commenced operations on February 16, 2001. Both Funds are governed by a Board of Trustees, which is responsible for protecting the interests of shareholders under Massachusetts law. Both Funds are located at 6803 South Tucson Way, Centennial, Colorado 80112. The Manager, located at 498 Seventh Avenue, New York, New York 10018, acts as investment advisor to both Funds. GMG Fund's assets are managed by a subadviser. The portfolio manager for MidCap Fund is Bruce Bartlett. He is a Vice President of the Fund and a Senior Vice President of the Manager. Mr. Bartlett has been the Fund's portfolio manager since April 1, 1998. The portfolio managers for GMG Fund are Aaron Harris and Nicholas Ford. Both Mr. Harris and Mr. Ford are employed by Gartmore Mutual Fund Capital Trust, the Fund's Sub-Adviser. Mr. Harris has been the Fund's portfolio manager since February 16, 2001 and Mr. Ford since October 1, 2001. Prior to joining the Fund's Sub-Adviser, Mr. Harris was a portfolio manager, managing portions of several portfolios for Nicholas Applegate Capital Management. Mr. Harris manages funds similar to GMG Fund and other global technology funds. Mr. Ford joined the Fund's Sub-Adviser in 1998, serving as an investment manager on the U.S. equity team. Prior to joining the Fund's Sub-Adviser, Mr. Ford served as the director of U.S. equities at Clerical Medical Investment Group in London. From 1995 to 1996, Mr. Ford was a U.S. equities fund manager for Sun Alliance Investment Management. Additional information about the Funds and the Manager is set forth below in "Comparison of Investment Objectives and Policies." What are the Fees and Expenses of each Fund and those expected after the Reorganization? GMG Fund and MidCap Fund each pay a variety of expenses directly for management of their assets, administration, distribution of their shares and other services. Those expenses are subtracted from each Fund's assets to calculate the Fund's net asset value per share. Shareholders pay these expenses indirectly. Shareholders for both Funds pay other expenses directly, such as sales charges. The following tables are provided to help you understand and compare the fees and expenses of investing in shares of GMG Fund with the fees and expenses of investing in shares of MidCap Fund. The pro forma expenses of the surviving MidCap Fund show what the fees and expenses are expected to be after giving effect to the Reorganization. All amounts shown are a percentage of net assets of each class of shares of the Funds. PRO FORMA FEE TABLE For the 12 month period ended 3/31/03 - ------------------------------------------------------------------------------------ Pro Forma GMG Fund MidCap Fund Surviving MidCap Class A shares Class A Shares Fund Class A shares - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Shareholder Transaction Expenses (charges paid directly from a shareholder's investment) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Maximum Sales Charge (Load) on purchases 5.75% 5.75% 5.75% (as a % of offering price) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Maximum Deferred Sales Charge (Load) None 1 None 1 None1 (as a % of the lower of the original offering price or redemption proceeds) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Annual Fund Operating Expenses (deducted from Fund assets) (as a percentage of average daily net assets) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Management Fees 1.20% 0.70% 0.70% - ------------------------------------------------------------------------------------ Distribution and/or Service (12b-1) Fees 0.02% 0.22% 0.22% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Other Expenses5 0.58% 0.69% 0.69% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Total Fund Operating Expenses 1.80% 1.61% 1.61% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Pro Forma GMG Fund MidCap Fund Surviving MidCap Class B shares Class B Shares Fund Class B shares - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Shareholder Transaction Expenses (charges paid directly from a shareholder's investment) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Maximum Sales Charge (Load) on purchases None None None (as a % of offering price) - ------------------------------------------------------------------------------------ Maximum Deferred Sales Charge (Load) 5%2 5%2 5%2 (as a % of the lower of the original offering price or redemption proceeds) - ------------------------------------------------------------------------------------ Annual Fund Operating Expenses (deducted from Fund assets) (as a percentage of average daily net assets) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Management Fees 1.20% 0.70% 0.70% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Distribution and/or Service (12b-1) Fees 1.00% 1.00% 1.00% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Other Expenses5 1.44% 0.78% 0.78% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Total Fund Operating Expenses 3.64% 2.48% 2.48% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Pro Forma Surviving GMG Fund MidCap Fund MidCap Fund Class C Shares Class C Shares Class C Shares - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Shareholder Transaction Expenses (charges paid directly from a shareholder's investment) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Maximum Sales Charge (Load) on purchases None None None (as a % of offering price) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Maximum Deferred Sales Charge (Load) 1%3 1%3 1%3 (as a % of the lower of the original offering price or redemption proceeds) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Annual Fund Operating Expenses (deducted from Fund assets) (as a percentage of average daily net assets) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Management Fees 1.20% 0.70% 0.70% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Distribution and/or Service (12b-1) Fees 1.00% 1.00% 1.00% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Other Expenses5 0.97% 0.76% 0.76% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Total Fund Operating Expenses 3.17% 2.46% 2.46% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Pro Forma GMG Fund MidCap Fund Surviving MidCap Class N shares Class N Shares Fund Class N shares - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Shareholder Transaction Expenses (charges paid directly from a shareholder's investment) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Maximum Sales Charge (Load) on purchases None None None (as a % of offering price) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Maximum Deferred Sales Charge (Load) 1%4 1%4 1%4 (as a % of the lower of the original offering price or redemption proceeds) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Annual Fund Operating Expenses (deducted from Fund assets) (as a percentage of average daily net assets) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Management Fees 1.20% 0.70% 0.70% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Distribution and/or Service (12b-1) Fees 0.50% 0.50% 0.50% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Other Expenses5 1.26% 0.49% 0.49% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Total Fund Operating Expenses 2.96% 1.69% 1.69% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Pro Forma GMG Fund MidCap Fund Surviving MidCap Class Y Shares Class Y Shares Fund Class Y Shares - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Shareholder Transaction Expenses (charges paid directly from a shareholder's investment) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Maximum Sales Charge (Load) on purchases None None None (as a % of offering price) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Maximum Deferred Sales Charge (Load) None None None (as a % of the lower of the original offering price or redemption proceeds) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Annual Fund Operating Expenses (deducted from Fund assets) (as a percentage of average daily net assets) - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Management Fees 1.20% 0.70% 0.70% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Distribution and/or Service (12b-1) Fees N/A N/A N/A - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Other Expenses5 3.13% 0.19% 0.19% - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Total Fund Operating Expenses 4.33% 0.89% 0.89% - ------------------------------------------------------------------------------------ Note: Expenses may vary in future years. 1. A contingent deferred sales charge may apply to redemptions of investments of $1 million or more ($500,000 for retirement plan accounts) of Class A shares. See "How to Buy Shares" in each Fund's Prospectus. 2. Applies to redemptions within the first year after purchase. The contingent deferred sales charge declines to 1% in the sixth year and is eliminated after that. 3. Applies to shares redeemed within 12 months of purchase. 4. Applies to shares redeemed within 18 months of retirement plan's first purchase of Class N shares. 5. "Other Expenses" include transfer agent fees and custodial, accounting and legal expenses, and are based on, among other things, the fees the Funds would have paid if the transfer agent had not waived a portion of its fee under a voluntary undertaking to the Fund to limit these fees to 0.25% of average daily net assets per fiscal year for Class Y shares and 0.35% of average daily net assets per fiscal year for all other classes. With that expense assumption and the transfer agent waiver, "Total Annual Operating Expenses" for GMG Fund were 1.78% for Class A, 2.50% for Class B, 2.50% for Class C, 2.00% for Class N and 1.19% for Class Y. After the waiver, the actual "Other Expenses" and "Total Annual Operating Expenses" for MidCap Fund as percentages of average daily net assets were 0.48% and 1.40% for Class A, 0.49% and 2.19% for Class C and 0.47% and 1.67% for Class N. Class Y was the same as shown above. After the waiver, the actual "Other Expenses" and "Total Annual Operating Expenses" for the combined funds as percentages of average daily net assets were 0.48% and 1.40% for Class A, 0.49% and 2.19% for Class B, 0.49% and 2.19% for Class C and 0.47% and 1.67% for Class N. Class Y was the same as shown above. Examples The examples below are intended to help you compare the cost of investing in each Fund and the proposed surviving MidCap Fund. These examples assume that you invest $10,000 for the time periods indicated, an annual return for each class of 5%, the operating expenses described above and reinvestment of your dividends and distributions. Your actual costs may be higher or lower because expenses will vary over time. For each $10,000 investment, you would pay the following projected expenses if you sold your shares after the number of years shown or held your shares for the number of years shown without redeeming, according to the following examples. 12 Months Ended 3/31/03 ----------------------- GMG Fund - -------------------------------------------------------------------------------- If shares are 1 year 3 years 5 years 10 years1 redeemed: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class A $747 $1,109 $1,494 $2,569 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class B $866 $1,414 $2,083 $3,1071 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class C $420 $977 $1,659 $3,476 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class N $399 $915 $1,557 $3,280 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class Y $434 $1,312 $2,202 $4,478 - -------------------------------------------------------------------------------- GMG Fund - -------------------------------------------------------------------------------- If shares are not 1 year 3 years 5 years 10 years1 redeemed: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class A $747 $1,109 $1,494 $2,569 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class B $366 $1,114 $1,883 $3,1071 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class C $320 $977 $1,659 $3,476 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class N $299 $915 $1,557 $3,280 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class Y $434 $1,312 $2,202 $4,478 - --------------------------------------------------------------------------------
MidCap Fund - -------------------------------------------------------------------------------- If shares are 1 year 3 years 5 years 10 years1 redeemed: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class A $729 $1,054 $1,401 $2,376 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class B $751 $1,073 $1,521 $2,4051 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class C $349 $767 $1,311 $2,796 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class N $272 $533 $918 $1,998 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class Y $91 $284 $493 $1,096 - --------------------------------------------------------------------------------
MidCap Fund - -------------------------------------------------------------------------------- If shares are not 1 year 3 years 5 years 10 years1 redeemed: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class A $729 $1,054 $1,401 $2,376 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class B $251 $773 $1,321 $2,4051 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class C $249 $767 $1,311 $2,796 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class N $172 $533 $918 $1,998 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class Y $91 $284 $493 $1,096 - -------------------------------------------------------------------------------- Pro Forma Surviving MidCap Fund - -------------------------------------------------------------------------------- If shares are redeemed: 1 year 3 years 5 years 10 years1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class A $729 $1,054 $1,401 $2,376 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class B $751 $1,073 $1,521 $2,4051 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class C $349 $767 $1,311 $2,796 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class N $272 $533 $918 $1,998 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class Y $91 $284 $493 $1,096 - -------------------------------------------------------------------------------- Pro Forma Surviving MidCap Fund - -------------------------------------------------------------------------------- If shares are not 1 year 3 years 5 years 10 years1 redeemed: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class A $729 $1,054 $1,401 $2,376 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class B $251 $773 $1,321 $2,4051 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class C $249 $767 $1,311 $2,796 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class N $172 $533 $918 $1,998 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Class Y $91 $284 $493 $1,096 - -------------------------------------------------------------------------------- In the "If shares are redeemed" example, expenses include the initial sales charge for Class A and the applicable Class B, Class C or Class N contingent deferred sales charge. In the "If shares are not redeemed" example, the Class A expenses include the initial sales charge, but Class B, Class C and Class N expenses do not include the contingent deferred sales charges. There is no sales charge on Class Y shares. 1 Class B expenses for years 7 through 10 are based on Class A expenses, since Class B shares automatically convert to Class A after 6 years. Where can I find more financial information about the Funds? Performance information for both MidCap Fund and GMG Fund is set forth in each Fund's Prospectus under the section "The Fund's Past Performance." MidCap Fund's Prospectus accompanies this Prospectus and Proxy Statement and is incorporated by reference. The financial statements of MidCap Fund and additional information with respect to its performance during its fiscal year ended October 31, 2002, including a discussion of factors that materially affected its performance and relevant market conditions during that fiscal year, is set forth in MidCap Fund's Annual Report dated as of October 31, 2002, that is included in the Proxy Statement of Additional Information and incorporated herein by reference. These documents are available upon request. See section entitled "Information About MidCap Fund." The financial statements of GMG Fund and additional information with respect to the Fund's performance during its fiscal year ended November 30, 2002, including a discussion of factors that materially affected its performance and relevant market conditions during that fiscal year, is set forth in GMG Fund's Annual Report dated as of November 30, 2002, that is included in the Proxy Statement of Additional Information and incorporated herein by reference. These documents are available upon request. See section entitled "Information About GMG Fund." What are the capitalizations of the Funds and what would the capitalization be after the Reorganization? The following table sets forth the capitalizations (unaudited) of GMG Fund and MidCap Fund and indicates the pro forma combined capitalization as of March 31, 2003 as if the Reorganization had occurred on that date. As of April 30, 2003, the value of the assets of GMG Fund was less than 10% of the value of the assets of MidCap Fund. Net Asset Shares Value Net Assets Outstanding Per Share GMG Fund Class A $2,860,439 542,160 $5.28 Class B $183,682 35,371 $5.19 Class C $140,008 26,972 $5.19 Class N $75,320 14,374 $5.24 Class Y $532 100 $5.32 TOTAL $3,259,981 618,977 MidCap Fund Class A $323,181,442 29,591,155 $10.92 Class B $262,414,202 24,979,865 $10.51 Class C $77,577,506 7,387,508 $10.50 Class N $10,100,112 929,643 $10.86 Class Y $11,125,353 992,433 $11.21 TOTAL $684,398,615 63,880,604 MidCap Fund (Pro Forma Surviving Fund) Class A $326,041,881 29,853,063 $10.92 Class B $262,597,884 24,997,350 $10.51 Class C $77,717,514 7,400,841 $10.50 Class N $10,175,432 936,576 $10.86 Class Y $11,125,885 992,480 $11.21 TOTAL $687,658,596 64,180,312 *Reflects the issuance of 261,908 Class A shares, 17,485 Class B shares, 13,333 Class C shares, 6,933 Class N shares and 47 Class Y shares of MidCap Fund in a tax-free exchange for the net assets of GMG Fund, aggregating $3,259,981.
How have the Funds performed? The following past performance information for each Fund is set forth below, and for earlier periods, in its respective Prospectus: (i) a bar chart detailing annual total returns of Class A shares of each Fund as of MarchDecember 31st for each of the five most recent full calendar years (for GMG Fund, since that Fund's inception); and (ii) tables detailing how the average annual total returns of MidCap Fund's Class A, Class B, Class C, Class N and Class Y shares compare to those of the S&P MidCap 400(R)Index; and how GMG Fund's Class A, Class B, Class C, Class N and Class Y average annual total returns compare to those of the Russell MidCap Growth Index. The after-tax returns are shown for Class A shares only and are calculated using the historical highest individual federal marginal income tax rates in effect during the periods shown. The after-tax returns for the other classes of shares will vary. In certain cases, the figure representing "Return After Taxes on Distributions and Sale of Fund Shares" may be higher than the other return figures for the same period. A higher after-tax return results when a capital loss occurs upon redemption and translates into an assumed tax deduction that benefits the shareholder. The after-tax returns are calculated based on certain assumptions mandated by regulation and your actual after-tax returns may differ from those shown, depending on your individual tax situation. The after-tax returns set forth below are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or IRAs or to institutional investors not subject to tax. The Fund's past investment performance both before and after taxes, is not necessarily an indication of how the Fund will perform in the future. Past performance is no guarantee of how a fund will perform in the future. Calendar year average annual total returns for the Funds for the periods ended December 31, 2002, are as follows: [See appendix to prospectus and proxy statement for data in bar chart showing annual total returns for Oppenheimer Select Managers Gartmore Millennium Growth Fund II.] Sales charges and taxes are not included in the calculations of return in this bar chart, and if those charges and taxes were included, the returns may be less than those shown. For the period from 1/1/03 through 3/31/03, the cumulative return for GMG Fund (not annualized) before taxes for Class A shares was -2.04%. During the period shown in the bar chart, the highest return for GMG Fund (not annualized) before taxes for a calendar quarter was 1.51% (4thQtr'02) and the lowest return (not annualized) before taxes for a calendar quarter was - -16.71% (2ndQtr'02). [See appendix to prospectus and proxy statement for data in bar chart showing annual total returns for Oppenheimer MidCap Fund.] Sales charges and taxes are not included in the calculations of return in this bar chart, and if those charges and taxes were included, the returns may be less than those shown. For the period from 1/1/03 through 3/31/03, the cumulative return for MidCap Fund (not annualized) before taxes for Class A shares was -1.89%. During the period shown in the bar chart, the highest return for Oppenheimer MidCap Fund (not annualized) before taxes for a calendar quarter was 43.43% (4thQtr'99) and the lowest return (not annualized) before taxes for a calendar quarter was -32.06% (4thQtr'00). Average annual total returns for the Funds for the periods ended December 31, 2002 are as follows: - ---------------------------------------------------------------------- GMG Fund 1 Year 5 Years (or life of class, if less) - ---------------------------------------------------------------------- - ------------------------------------------------------------ GMG Fund 1 Year 5 Years (or life of class, if less) - ------------------------------------------------------------------------ - ---------------------------------------------------------------------- Class A Shares (inception 2/16/01) Return Before Taxes -21.67% Return After Taxes on Distributions -34.00% -21.31% -27.99% Return After Taxes on -34.00% -27.99% Distributions and Sale of Fund -16.61% Shares -20.88% -21.48% - ---------------------------------------------------------------------- - ------------------------------------------------------------ Class A Shares (inception 2/16/01) Return Before Taxes Return After Taxes on Distributions -33.51% -30.32% Return After Taxes on -33.51% -30.32% Distributions and Sale of Fund Shares -20.41% -23.42% - ------------------------------------------------------------ Russell MidCap Growth Index (from -27.41% -20.08% 2/28/01) - ------------------------------------------------------------ - ------------------------------------------------------------ Class B Shares (inception 2/16/01) -33.63% -30.19% - ------------------------------------------------------------ - ------------------------------------------------------------ Class C Shares (inception 2/16/01) -30.74% -28.65% - ------------------------------------------------------------ - ------------------------------------------------------------ Class N Shares (inception 3/1/01) -30.36% -24.90% - ------------------------------------------------------------ - ------------------------------------------------------------ Class Y Shares (inception 2/16/01) -29.37% -27.94% - ------------------------------------------------------------ - -------------------------------------------------------------------------------------- MidCap Fund 1 Year 5 Years 10 Years (or life of class, if less) - -------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------- Class A Shares (inception 12/1/97) Return Before Taxes Return After Taxes on Distributions -31.79% 0.26% 0.97% Return After Taxes on -31.79% 0.25% 0.96% Distributions and Sale of Fund Shares -19.36% 0.20% 0.77% - -------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------- S&P MidCap 400(R)Index (from -14.51% 6.41% 11/30/97) 7.10% - -------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------- Class B Shares (inception 12/1/97) -31.84% 0.30% 1.22% - -------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------- -28.92% 0.69% Class C Shares (inception 12/1/97) 1.40% - -------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------- -28.59% -26.61% Class N Shares (inception 3/1/01) N/A - -------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------- Class Y Shares (inception 12/1/97) -27.10% 1.99% 2.69% - -------------------------------------------------------------------------------------- Average annual total returns for the Funds for the periods ended March 31, 2003 are as follows: - -------------------------------------------------------- GMG Fund 1 5 Years Year (or life of class, if less)1 - -------------------------------------------------------- - -------------------------------------------------------- Class A Shares (inception 2/16/01) Return Before Taxes Return After Taxes on Distributions -34.00% -27.99% Return After Taxes on -34.00% -27.99% Distributions and Sale of Fund Shares -20.88% -21.48% - -------------------------------------------------------- - -------------------------------------------------------- Russell MidCap Growth Index (from 2/28/01) -26.11%-12.04% -17.91% - -------------------------------------------------------- - -------------------------------------------------------- Russell MidCap Growth Index (from 2/28/01) -26.11% -17.91% - -------------------------------------------------------- - -------------------------------------------------------- Class B Shares (inception 2/16/01) -34.08%-21.57% -27.60% - -------------------------------------------------------- - -------------------------------------------------------- Class B Shares (inception 2/16/01) -34.08% -27.60% - -------------------------------------------------------- - -------------------------------------------------------- Class C Shares (inception 2/16/01) -31.22%-19.95% -26.56% - -------------------------------------------------------- - -------------------------------------------------------- Class C Shares (inception 2/16/01) -31.22% -26.56% - -------------------------------------------------------- - -------------------------------------------------------- Class N Shares (inception 3/1/01) -30.92%-19.62% -23.11% - -------------------------------------------------------- - -------------------------------------------------------- Class N Shares (inception 3/1/01) -30.92% -23.11% - -------------------------------------------------------- - -------------------------------------------------------- Class Y Shares (inception 2/16/01) -29.63%-19.06% -25.70% - -------------------------------------------------------- - -------------------------------------------------------- Class Y Shares (inception 2/16/01) -29.63% -25.70% - -------------------------------------------------------- - ---------------------------------------------------------------------------- MidCap Fund 1 2 5 10 Years (or life of class, Year Years Years if less) - ---------------------------------------------------------------------------- 1 The Average annual total returns for GMG Fund for a 2 Year period ended March 31, 2003 were as follows: Class A Shares (inception 2/16/01) Return Before Taxes was -21.67%, Class A Shares Return After Taxes on Distributions was -21.31%, Class A Shares Return After Taxes on Distribution and Sale of Fund Shares was - -16.61%, Russell MidCap Growth Index (from 2/28/01) was -12.04%, Class B Shares (inception 2/16/01) was -21.57%, Class C Shares (inception 2/16/01) was -19.95%, Class N Shares (inception 3/1/01) was -19.62%, and Class Y Shares (inception 2/16/01) was -19.06%. 2 The Average annual total returns for MidCap Fund for a 2 Year period ended March 31, 2003 were as follows: Class A Shares (inception 12/1/97) Return Before Taxes was -21.31%, Class A Shares Return After Taxes on Distributions was - -21.67%, Class A Shares Return After Taxes on Distributions and Sale of Fund Shares was -16.88%, S&P MidCap 400(R)Index (from 11/30/97) was -4.60%, Class B Shares (inception 12/1/97) was -21.15%, Class C Shares (inception 12/1/97) was - -19.57%, Class N Shares (inception 3/1/01) was -19.17%, and Class Y Shares (inception 12/1/97) was -18.56%. - ---------------------------------------------------------------- MidCap Fund 1 5 Years 2 10 Years (or life of class, if Year less) - ---------------------------------------------------------------- - ---------------------------------------------------------------------------- Class A Shares (inception 12/1/97) Return Before Taxes -21.31 Return After Taxes on Distributions -30.41-21.67-3.77% 0.56% Return After Taxes on -30.41 -3.78% 0.56% Distributions and Sale of Fund -16.88 Shares -18.67 -2.98% 0.45% - ---------------------------------------------------------------------------- - ---------------------------------------------------------------- Class A Shares (inception 12/1/97) Return Before Taxes Return After Taxes on Distributions -30.41% -3.77% 0.56% Return After Taxes on -30.41% -3.78% 0.56% Distributions and Sale of Fund Shares -18.67% -2.98% 0.45% - ---------------------------------------------------------------- - ---------------------------------------------------------------------------- S&P MidCap 400(R)Index (from 11/30/97) -23.45%-4.60% 3.27% 5.85% - ---------------------------------------------------------------------------- - ---------------------------------------------------------------- S&P MidCap 400(R)Index (from 11/30/97) -23.45% 3.27% 5.85% - ---------------------------------------------------------------- - ---------------------------------------------------------------------------- Class B Shares (inception 12/1/97) -30.37%-21.15% -3.71% 0.78% - ---------------------------------------------------------------------------- - ---------------------------------------------------------------- Class B Shares (inception 12/1/97) -30.37% -3.71% 0.78% - ---------------------------------------------------------------- - ---------------------------------------------------------------------------- Class C Shares (inception 12/1/97) -27.46%-19.57% -3.36% 0.94% - ---------------------------------------------------------------------------- - ---------------------------------------------------------------- Class C Shares (inception 12/1/97) -27.46% -3.36% 0.94% - ---------------------------------------------------------------- - ---------------------------------------------------------------------------- Class N Shares (inception 3/1/01) -27.16%-19.17% -24.57% N/A - ---------------------------------------------------------------------------- - ---------------------------------------------------------------- Class N Shares (inception 3/1/01) -27.16% -24.57% N/A - ---------------------------------------------------------------- - ---------------------------------------------------------------------------- Class Y Shares (inception 12/1/97) -25.76%-18.56% -2.15% 2.19% - ---------------------------------------------------------------------------- - ---------------------------------------------------------------- Class Y Shares (inception 12/1/97) -25.76% -2.15% 2.19% - ---------------------------------------------------------------- GMG Fund's average annual total returns include applicable sales charges: for Class A, the current maximum initial sales charge of 5.75%; for Class B, the contingent deferred sales charge of 5% (1-year) and 4% (life of class); and for Class C and Class N, the 1% contingent deferred sales charge for the 1-year period. There is no sales charge for Class Y. The returns measure the performance of a hypothetical account and assume that all dividends and capital gains distributions have been reinvested in additional shares. The performance of the Fund's Class A shares is compared to the Russell MidCap Growth Index, an unmanaged index which measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The index performance includes reinvestment of income but does not reflect transaction costs, expenses or taxes. The Fund will have investments that vary from those in the index. MidCap Fund's average annual total returns include applicable sales charges: for Class A, the current maximum initial sales charge of 5.75%; for Class B, the contingent deferred sales charge of 5% (1-year) and 3% (life of class); and for Class C and Class N, the 1% contingent deferred sales charge for the 1-year period. There is no sales charge for Class Y shares. The returns measure the performance of a hypothetical account and assume that all dividends and capital gains distributions have been reinvested in additional shares. The performance of the Fund's Class A shares is compared to the S&P Midcap 400(R)Index, an unmanaged index of midcap equity securities. The index performance includes reinvestment of income but does not reflect transaction costs, expenses, or taxes. The Fund's investments vary from those in the index. How has MidCap Fund Performed? - Below is a discussion by OppenheimerFunds, Inc., of MidCap Fund's performance during its fiscal year ended October 31, 2002, followed by a graphical comparison of MidCap Fund's performance to an appropriate broad-based market index. Management's Discussion of Performance - During the one-year period that ended October 31, 2002, Oppenheimer MidCap Fund suffered losses amid widespread declines in stock prices. We continue to focus on our disciplined investment strategy that concentrates on the quality and sustainability of a company's growth, rather than on the sheer magnitude of its growth. MidCap Fund's best-performing stocks were concentrated in the health care area, particularly among health care services and medical products companies. Another attractive area of investment proved to be market-sensitive financials. MidCap Fund's relative performance was hurt by declines in cable industry holdings, and individual stocks in a variety of other sectors. MidCap Fund's portfolio and our management strategies are subject to change. Comparing MidCap Fund's Performance to the Market - The graphs that follow show the performance of a hypothetical $10,000 investment in each Class of shares of MidCap Fund held until October 31, 2002. Performance is measured from the inception of Class A, B, C, and Y shares on December 1, 1997. In the case of Class N shares, performance is measured from inception of the class on March 1, 2001. MidCap Fund's performance reflects the deduction of the maximum initial sales charge on Class A shares, the applicable contingent deferred sales charge on Class B, Class C and Class N shares, and reinvestments of all dividends and capital gains distributions. MidCap Fund's performance is compared to that of the S&P Mid-Cap 400 Index. The S&P Mid-Cap 400 is an unmanaged index of 400 domestic stocks chosen for market size liquidity, and industry group representation. Index performance reflects the reinvestment of dividends but does not consider the effect of capital gains or transaction costs, and none of the data in the graphs shows the effect of taxes. MidCap Fund's performance reflects the effects of Fund business and operating expenses. While index comparisons may be useful to provide a benchmark for MidCap Fund's performance, it must be noted that MidCap Fund's investments are not limited to the securities in the index.
Class A Shares Comparison of Change in Value of $10,000 Hypothetical Investments in: MidCap Fund (Class A) and S&P MidCap 400 Index. [Line Graph] - --------------------------------------------------------------------------------- Date Value of Investment in Fund S&P Midcap 400 Index - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/01/1997 $9,425 $10,000 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/1997 $9,774 $10,388 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/1998 $11,772 $11,532 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/1998 $12,450 $11,285 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/1998 $9,906 $9,652 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/1998 $12,683 $12,374 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/1999 $14,230 $11,584 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/1999 $16,155 $13,224 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/1999 $17,231 $12,113 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/1999 $24,714 $14,195 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2000 $31,065 $15,996 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/2000 $30,301 $15,469 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/2000 $32,433 $17,348 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/2000 $22,034 $16,680 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2001 $15,684 $14,883 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/2001 $16,476 $16,842 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/2001 $13,570 $14,052 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/2001 $14,513 $16,580 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2002 $13,957 $17,694 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/2002 $12,164 $16,047 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/2002 $10,258 $13,392 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/2002 $10,503 $14,173 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2003 $10,305 $13,545 - --------------------------------------------------------------------------------- Class B Shares Comparison of Change in Value of $10,000 Hypothetical Investments in: MidCap Fund (Class B) and S&P MidCap 400 Index. [Line Graph] - --------------------------------------------------------------------------------- Date Value of Investment in Fund S&P Midcap 400 Index - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/01/1997 $10,000 $10,000 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/1997 $10,370 $10,388 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/1998 $12,460 $11,532 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/1998 $13,150 $11,285 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/1998 $10,440 $9,652 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/1998 $13,356 $12,374 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/1999 $14,968 $11,584 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/1999 $16,971 $13,224 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/1999 $18,052 $12,113 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/1999 $25,842 $14,195 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2000 $32,430 $15,996 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/2000 $31,569 $15,469 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/2000 $33,732 $17,348 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/2000 $22,868 $16,680 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2001 $16,250 $14,883 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/2001 $17,041 $16,842 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/2001 $14,007 $14,052 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/2001 $14,958 $16,580 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2002 $14,358 $17,694 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/2002 $12,485 $16,047 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/2002 $10,503 $13,392 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/2002 $10,733 $14,173 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2003 $10,423 $13,545 - --------------------------------------------------------------------------------- Class C Shares Comparison of Change in Value of $10,000 Hypothetical Investments in: MidCap Fund (Class C) and S&P MidCap 400 Index. [Line Graph] - --------------------------------------------------------------------------------- Date Value of Investment in S&P Midcap 400 Index Fund - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/01/1997 $10,000 $10,000 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/1997 $10,370 $10,388 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/1998 $12,470 $11,532 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/1998 $13,160 $11,285 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/1998 $10,450 $9,652 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/1998 $13,346 $12,374 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/1999 $14,958 $11,584 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/1999 $16,951 $13,224 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/1999 $18,032 $12,113 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/1999 $25,822 $14,195 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2000 $32,420 $15,996 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/2000 $31,559 $15,469 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/2000 $33,722 $17,348 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/2000 $22,868 $16,680 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2001 $16,250 $14,883 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/2001 $17,041 $16,842 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/2001 $13,997 $14,052 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/2001 $14,948 $16,580 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2002 $14,348 $17,694 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/2002 $12,485 $16,047 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/2002 $10,503 $13,392 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/2002 $10,733 $14,173 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2003 $10,513 $13,545 - ---------------------------------------------------------------------------------
Class N Shares Comparison of Change in Value of $10,000 Hypothetical Investments in: MidCap Fund (Class N) and S&P MidCap 400 Index. [Line Graph] - --------------------------------------------------------------------------------- Date Value of Investment in Fund S&P Midcap 400 Index - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/01/2001 $10,000 $10,000 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2001 $8,506 $9,257 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/2001 $8,930 $10,475 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/2001 $7,349 $8,740 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/2001 $7,861 $10,312 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2002 $7,554 $11,005 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/2002 $6,576 $9,980 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/2002 $5,542 $8,329 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/2002 $5,670 $8,815 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2003 $5,558 $8,424 - --------------------------------------------------------------------------------- Class Y Shares Comparison of Change in Value of $10,000 Hypothetical Investments in: MidCap Fund (Class Y) and S&P MidCap 400 Index. [Line Graph] - --------------------------------------------------------------------------------- Date Value of Investment in Fund S&P Midcap 400 Index - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/01/1997 $10,000 $10,000 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/1997 $10,370 $10,388 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/1998 $12,510 $11,532 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/1998 $13,250 $11,285 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/1998 $10,550 $9,652 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/1998 $13,526 $12,374 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/1999 $15,199 $11,584 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/1999 $17,281 $13,224 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/1999 $18,442 $12,113 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/1999 $26,482 $14,195 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2000 $33,341 $15,996 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/2000 $32,560 $15,469 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/2000 $34,893 $17,348 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/2000 $23,739 $16,680 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2001 $16,921 $14,883 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/2001 $17,782 $16,842 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/2001 $14,658 $14,052 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/2001 $15,699 $16,580 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2002 $15,118 $17,694 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 06/30/2002 $13,196 $16,047 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 09/30/2002 $11,144 $13,392 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 12/31/2002 $11,444 $14,173 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- 03/31/2003 $11,224 $13,545 - --------------------------------------------------------------------------------- What are other Key Features of the Funds? The description of certain key features of the Funds below is supplemented by each Fund's Prospectus and Statement of Additional Information, which are incorporated by reference. Investment Management and Fees - Under each Fund's investment advisory agreement, the Fund pays the Manager an advisory fee at an annual rate that declines on additional assets as the Fund grows. - ------------------------------------------------------------------------------------- GMG Fund MidCap Fund - ------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------- 1.20% of the first $400 million of 0.75% of the first $200 million of average annual net assets, average annual net assets, - ------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------- 1.10% of the next $400 million, and 0.72% of the next $200 million, - ------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------- 1.00% of average annual net assets in 0.69% of the next $200 million, excess of $800 million. - ------------------------------------------------------------------------------------- ------------------------------------------- 0.66% of the next $200 million, ------------------------------------------- ------------------------------------------- 0.60% of the next $700 million, ------------------------------------------- ------------------------------------------- 0.58% of the next $1 billion, and ------------------------------------------- ------------------------------------------- 0.56% of average annual net assets in excess of $2.5 billion. ------------------------------------------- Based on average annual net assets of the respective Fund. The management fee for GMG Fund for the twelve months ended March 31, 2003 was 1.20% of the average annual net assets for each class of shares. The management fee for MidCap Fund for the twelve months ended March 31, 2003 was 0.70% of the average annual net assets for each class of shares. The 12b-1 distribution plans for both Funds were substantially similar. - --------------------------------------------------------------------------- Opp MidCap Opp GMG Combined Pro Forma 03/31/03 Class A Class A Class A - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- Management Fee 0.70% 1.20% 0.70% - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- 12b-1 Fees 0.22% 0.02%1 0.22% - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- Other Expenses 0.69% 0.58% 0.69% - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- Total Expenses 1.61% 1.80% 1.61% - --------------------------------------------------------------------------- "Other Expenses" include transfer agent fees and custodial, accounting and legal expenses the Funds pay. This chart is for illustrative purposes only. 1. Class A shares 12b-1 fee is not the full 25 basis points due to monies invested by OppenheimerFunds, Inc. The net assets under management for MidCap Fund on March 31, 2003 were $684,398,615, as compared to $3,259,981 for GMG Fund. Effective upon the Closing of the Reorganization, the management fee rate for MidCap Fund is expected to be 0.70% of average annual net assets based on combined assets of the Funds as of March 31, 2003. Additionally, the "Other Expenses" of the surviving Fund are expected to be the same as the "Other Expenses" of MidCap Fund. For a detailed description of each Fund's investment management agreement, see the section below entitled "Comparison of Investment Objectives and Policies - How do the Account Features and Shareholder Services for the Funds Compare?" Transfer Agency and Custody Services - Both Funds receive shareholder accounting and other clerical services from OppenheimerFunds Services in its capacity as transfer agent and dividend paying agent. It acts on an annual per-account fee basis for both Funds. The terms of the transfer agency agreement for both Funds are substantially similar. Citibank, N.A., located at 111 Wall Street, New York, NY 10005, acts as custodian of the securities and other assets of both GMG Fund and MidCap Fund. Distribution Services - OppenheimerFunds Distributor, Inc. (the "Distributor") acts as the principal underwriter in a continuous public offering of shares of both Funds, but is not obligated to sell a specific number of shares. Both Funds have adopted distribution and service plans under Rule 12b-1 of the Investment Company Act for their Class A shares. The 12b-1 fees for Class A shares of both GMG Fund and MidCap Fund are service plan fees which are a maximum of 0.25% of average annual net assets of Class A shares. The 12b-1 fees for Class B, Class C and Class N shares of both Funds are Distribution and Service plan fees which include a service fee of 0.25% of average annual net assets and an asset-based sales charge for Class B and Class C shares of 0.75% and an asset-based sales charge of 0.25% for Class N shares of the average annual net assets. For a detailed description of each Fund's distribution-related services, see the section below titled "Comparison of Investment Objectives and Policies - How do the Account Features and Shareholder Services for the Funds Compare?" Purchases, Redemptions, Exchanges and other Shareholder Services - Both Funds have nearly the same requirements and restrictions in connection with purchases, redemptions and exchanges. In addition, each Fund also offers the same types of shareholder services. More detailed information regarding purchases, redemptions, exchanges and shareholder services can be found below in the section below titled "Comparison of Investment Objectives and Policies - - How do the Account Features and Shareholder Services for the Funds Compare?" Dividends and Distributions - Both Funds declare dividends separately for each class of shares from net investment income annually and pay those dividends to shareholders in December on a date selected by the Board of each Fund. For a detailed description of each Fund's policy on dividends and distributions, see the section entitled "Comparison of Investment Objectives and Policies - How do the Account Features and Shareholder Services for the Funds Compare?"
What are the Principal Risks of an Investment in GMG Fund and MidCap Fund? As with most investments, investments in MidCap Fund and GMG Fund involve risks. There can be no guarantee against loss resulting from an investment in either Fund, nor can there be any assurance that either Fund will achieve its investment objective. The risks associated with an investment in each Fund are similar. Because both Funds invest substantially in stocks of U.S. companies, the value of each Fund's portfolio will be affected by changes in the U.S. stock markets. The prices of individual stocks do not all move in the same direction uniformly at the same time and the volatility of their prices at times may be great. A particular company's stock price can be affected by among other things a poor earnings report, loss of major customers, major litigation against the company, or changes in government regulations affecting the company or its industry. For more information about the risks of the Funds, see "What are the main risks associated with investment in the Funds?" under the heading "Comparison of Investment Objectives and Policies." REASONS FOR THE REORGANIZATION At a meeting of the Board of Trustees of GMG Fund held April 28, 2003, the Board considered whether to approve the proposed Reorganization and reviewed and discussed with the Manager and independent legal counsel the materials provided by the Manager relevant to the proposed Reorganization. Included in the materials was information with respect to the Funds' respective investment objectives and policies, management fees, distribution fees and other operating expenses, historical performance and asset size. The Board reviewed information demonstrating that GMG Fund is a relatively smaller fund with approximately $3.6 million in net assets as of April 23, 2003. The Board anticipates that GMG Fund's assets will not increase substantially in size in the near future. In comparison, MidCap Fund had approximately $723.1 million in net assets as of April 23, 2003. After the Reorganization, the shareholders of GMG Fund would become shareholders of a larger fund that is anticipated to have lower overall operating expenses than GMG Fund. There can be no assurances that lower operating expenses will continue into the future. Economies of scale may benefit shareholders of GMG Fund. The Board considered the fact that both Funds have similar investment objectives of seeking capital appreciation. Additionally, the Board considered that both Funds invest in growth companies. However, their respective focuses are different. Under normal market conditions, MidCap Fund invests at least 80% of its net assets (plus borrowings for investment purposes) in equity securities of growth companies that have a market capitalization of between $2 billion and $11.5 billion (referred to as "mid-cap" stocks). It currently invests mainly in equity securities of U.S. companies. GMG Fund invests primarily in securities of growth companies that are creating fundamental changes in the economy. The Board noted that MidCap Fund's management fee is currently lower than that of GMG Fund. The Board also considered that MidCap Fund's performance has been better than that of GMG Fund. The Board also considered that the procedures for purchases, exchanges and redemptions of shares of both Funds are very similar and that both Funds offer the same investor services and options. The Board also considered the terms and conditions of the Reorganization, including that there would be no sales charge imposed in effecting the Reorganization and that the Reorganization is expected to be a tax-free reorganization. The Board concluded that GMG Fund's participation in the transaction is in the best interests of the Fund and its shareholders, notwithstanding that the lower pro forma expenses of the combined funds (relative to GMG Fund) and the historically better performance of MidCap Fund is subject to change, and that the Reorganization would not result in a dilution of the interests of existing shareholders of GMG Fund. After consideration of the above factors, and such other factors and information as the Board of GMG Fund deemed relevant, the Board, including the Trustees who are not "interested persons" (as defined in the Investment Company Act) of either GMG Fund or the Manager (the "Independent Trustees"), unanimously approved the Reorganization and the Reorganization Agreement and voted to recommend its approval to the shareholders of GMG Fund. The Board of MidCap Fund also determined that the Reorganization was in the best interests of MidCap Fund and its shareholders and that no dilution would result to those shareholders. MidCap Fund shareholders do not vote on the Reorganization. The Board of MidCap Fund, including the Independent Trustees, unanimously approved the Reorganization and the Reorganization Agreement. For the reasons discussed above, the Board, on behalf of GMG Fund, recommends that you vote FOR the Reorganization Agreement. If shareholders of GMG Fund do not approve the Reorganization Agreement, the Reorganization will not take place. INFORMATION ABOUT THE REORGANIZATION This is only a summary of the material terms of the Reorganization Agreement. You should read the actual form of Reorganization Agreement. It is attached as Exhibit A.
How Will the Reorganization be Carried Out? If the shareholders of GMG Fund approve the Reorganization Agreement, the Reorganization will take place after various conditions are satisfied by GMG Fund and MidCap Fund, including delivery of certain documents. The Closing Date is presently scheduled for September 5, 2003 and the Valuation Date is presently scheduled for September 4, 2003. If shareholders of GMG Fund approve the Reorganization Agreement, GMG Fund will deliver to MidCap Fund substantially all of its net assets on the closing date. In exchange, shareholders of GMG Fund will receive Class A, Class B, Class C, Class N and Class Y MidCap Fund shares that have a value equal to the dollar value of the assets delivered by GMG Fund to MidCap Fund. GMG Fund will then be liquidated and its outstanding shares will be cancelled. The stock transfer books of GMG Fund will be permanently closed at the close of business on the Valuation Date. Only redemption requests received by the Transfer Agent in proper form on or before the close of business on the Valuation Date will be fulfilled by GMG Fund. Redemption requests received after that time will be considered requests to redeem shares of MidCap Fund. Shareholders of GMG Fund who vote their Class A, Class B, Class C, Class N and Class Y shares in favor of the Reorganization will be electing in effect to redeem their shares of GMG Fund at net asset value on the Valuation Date, after GMG Fund subtracts a cash reserve, and reinvests the proceeds in Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund at net asset value. The cash reserve is that amount retained by GMG Fund, which is deemed sufficient in the discretion of the Board for the payment of the Fund's outstanding debts, taxes, and expenses of liquidation. The cash reserve will consist of approximately $18,200 cash. This amount of cash reserve is reflected in the pro forma presentation of NAV. MidCap Fund is not assuming any debts of GMG Fund except debts for unsettled securities transactions and outstanding dividend and redemption checks. Any debts paid out of the cash reserve will be those debts, taxes or expenses of liquidation incurred by GMG Fund on or before the Closing Date. GMG Fund will recognize capital gains or losses on any sales of portfolio securities made prior to the Reorganization. The sales contemplated in the Reorganization are anticipated to be in the ordinary course of business of GMG Fund's activities. Under the Reorganization Agreement, within one year after the Closing Date, GMG Fund shall: (a) either pay or make provision for all of its debts and taxes; and (b) either (i) transfer any remaining amount of the cash reserve to MidCap Fund, if such remaining amount is not material (as defined below) or (ii) distribute such remaining amount to the shareholders of GMG Fund who were shareholders on the Valuation Date. The remaining amount shall be deemed to be material if the amount to be distributed, after deducting the estimated expenses of the distribution, equals or exceeds one cent per share of the number of GMG Fund shares outstanding on the Valuation Date. In order to qualify for this rebate, it is not necessary for a shareholder of GMG Fund to continue to hold shares of the combined entity after the Closing Date. If the cash reserve is insufficient to satisfy any of GMG Fund's liabilities, the Manager will assume responsibility for any such unsatisfied liability. Within one year after the Closing Date, GMG Fund will complete its liquidation. Under the Reorganization Agreement, either GMG Fund or MidCap Fund may abandon and terminate the Reorganization Agreement for any reason and there shall be no liability for damages or other recourse available to the other Fund, provided, however, that in the event that one of the Funds terminates this Agreement without reasonable cause, it shall, upon demand, reimburse the other Fund for all expenses, including reasonable out-of-pocket expenses and fees incurred in connection with this Agreement. To the extent permitted by law, the Funds may agree to amend the Reorganization Agreement without shareholder approval. They may also agree to terminate and abandon the Reorganization at any time before or, to the extent permitted by law, after the approval of shareholders of GMG Fund. Who Will Pay the Expenses of the Reorganization? The cost of printing and mailing the proxies and this Prospectus and Proxy Statement will be borne by GMG Fund. Those printing costs and mailing costs are estimated to be $7,748 and $10,966, respectively. The Funds will bear the cost of their respective tax opinions. Any documents such as existing prospectuses or annual reports that are included in the proxy mailing or at a shareholder's request will be a cost of the Fund issuing the document. Any other out-of-pocket expenses associated with the Reorganization will be paid by the Funds in the amounts incurred by each. The approximate cost of the Reorganization is $38,433 for GMG Fund, and $18,000 for MidCap Fund. What are the Tax Consequences of the Reorganization? The Reorganization is intended to qualify as a tax-free reorganization for federal income tax purposes under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended. Based on certain assumptions and representations received from GMG Fund and MidCap Fund, it is expected to be the opinion of Deloitte & Touche LLP, tax advisor to GMG Fund, that shareholders of GMG Fund will not recognize any gain or loss for federal income tax purposes as a result of the exchange of their shares for shares of MidCap Fund, and that shareholders of MidCap Fund will not recognize any gain or loss upon receipt of GMG Fund's assets. If this type of tax opinion is not forthcoming by the Closing Date, the Fund may still choose to go forward with the reorganization, pending re-solicitation of shareholders and shareholder approval. In addition, neither Fund is expected to recognize a gain or loss as a result of the Reorganization. Immediately prior to the Valuation Date, GMG Fund will pay a dividend which will have the effect of distributing to GMG Fund's shareholders all of GMG Fund's net investment company taxable income for taxable years ending on or prior to the Closing Date (computed without regard to any deduction for dividends paid) and all of its net capital gains, if any, realized in taxable years ending on or prior to the Closing Date (after reduction for any available capital loss carry-forward). Such dividends will be included in the taxable income of GMG Fund's shareholders as ordinary income and capital gain, respectively. You will continue to be responsible for tracking the purchase cost and holding period of your shares and should consult your tax advisor regarding the effect, if any, of the Reorganization in light of your individual circumstances. You should also consult your tax advisor as to state and local and other tax consequences, if any, of the Reorganization because this discussion only relates to federal income tax consequences. What should I know about Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund? The rights of shareholders of both Funds are substantially the same. The Declarations of Trust and By-Laws of both Funds are substantially similar with respect to rights voting for the election of Trustees, and rights for mergers, liquidations and distributions, and redemptions. Class A, Class B, Class C, Class N and/or Class Y shares of MidCap Fund will be distributed to shareholders of Class A, Class B, Class C, Class N and/or Class Y shares of GMG Fund, respectively, in connection with the Reorganization. Each share will be fully paid and nonassessable when issued, will have no preemptive or conversion rights and will be transferable on the books of MidCap Fund. Each Fund's Declaration of Trust contains an express disclaimer of shareholder or Trustee liability for the Fund's obligations, and provides for indemnification and reimbursement of expenses out of its property for any shareholder held personally liable for its obligations. Neither Fund permits cumulative voting. The shares of MidCap Fund will be recorded electronically in each shareholder's account. MidCap Fund will then send a confirmation to each shareholder. Class A shareholders of GMG Fund whose shares are represented by outstanding share certificates will not be allowed to redeem, transfer or pledge shares of MidCap Fund they receive in the Reorganization until the exchanged GMG Fund certificates have been returned to the Transfer Agent. Shareholders of Class B, Class C, Class N and Class Y shares of GMG Fund do not have certificates representing shares. Their shares will be cancelled. Like GMG Fund, MidCap Fund does not routinely hold annual shareholder meetings. COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES This section describes key investment policies of GMG Fund and MidCap Fund, and certain noteworthy differences between the investment objectives and policies of the two Funds. For a complete description of MidCap Fund's investment policies and risks, please review its prospectus and Statement of Additional Information dated December 23, 2002. That Prospectus is attached to this Prospectus and Proxy Statement as an enclosure. Are there any significant differences between the investment objectives and strategies of the Funds? In considering whether to approve the Reorganization, shareholders of GMG Fund should consider the differences in investment objectives, policies and risks of the Funds. Further information about MidCap Fund is set forth in its Prospectus, which accompanies this Prospectus and Proxy Statement and is incorporated herein by reference. Additional information about both Funds is set forth in their respective Statements of Additional Information and Annual Reports, which may be obtained upon request to the Transfer Agent. See "Information about GMG Fund" and "Information about MidCap Fund." GMG Fund and MidCap Fund have similar investment objectives. Both Funds' investment objective is to seek capital appreciation, though GMG Fund seeks long-term capital appreciation. GMG Fund invests in companies of any size but primarily focuses on securities of small to mid sized companies. MidCap Fund invests primarily in mid cap stocks. MidCap Fund may invest its assets in a variety of industry categories, although it may from time to time emphasize investments in one or more industries. For example, MidCap Fund has at certain times, invested a significant amount of its assets in technology companies. MidCap Fund does not concentrate 25% or more of its investments in companies in any one industry. What are the Main Risks Associated with an investment in the Funds? Like all investments, an investment in both of the Funds involves risk. There is no assurance that either Fund will meet its investment objective. The achievement of the Funds' goals depends upon market conditions, generally, and on the portfolio manager's analytical and portfolio management skills. The risks described below collectively form the risk profiles of the Funds, and can affect the value of the Funds' investments, investment performance and prices per share. There is also the risk that poor securities selection by the Manager will cause the Fund to underperform other funds having a similar objective. These risks mean that you can lose money by investing in either Fund. When you redeem your shares, they may be worth more or less than what you paid for them. How Do the Investment Policies of the Funds Compare? Both funds invest primarily in mid-cap stocks. GMG Fund can invest without limit in foreign securities. GMG Fund currently does not intend to invest more than 25% of its net assets in foreign securities. Although MidCap Fund invests primarily in equity securities of U.S. companies, it can also buy foreign stocks. Risks of Investing in Stocks. Stocks fluctuate in price, and their short-term volatility at times may be great. Because the Funds invest primarily in common stocks, the value of each Fund's portfolio will be affected by changes in the stock markets. Market risk will affect each Fund's net asset value per share, which will fluctuate as the values of the respective Fund's portfolio securities change. A variety of factors can affect the price of a particular stock and the prices of individual stocks do not all move in the same direction uniformly or at the same time. Different stock markets may behave differently from each other. Other factors can affect a particular stock's price, such as poor earnings reports by the issuer, loss of major customers, major litigation against the issuer, or changes in government regulations affecting the issuer or its industry. Industry and Sector Focus. At times the Funds may increase the relative emphasis of its investments in a particular industry or sector. The prices of stocks of issuers in a particular industry of sector may go up and down in response to changes in economic conditions, government regulations, availability of basic resources or supplies, or other events that affect that industry or sector more than others. To the extent that a Fund increases the relative emphasis of its investments in a particular industry or sector, its share values may fluctuate in response to events affecting that industry or sector. Risks of Growth Stocks. Stocks of growth companies, particularly newer companies, may offer opportunities for greater long-term capital appreciation but may be more volatile than stocks of larger, more established companies. They have greater risks if the company's earnings growth or stock price fails to increase as expected. Risks of Technology Stocks. The MidCap Fund may also be subject to the risks associated with technology stocks. To the extent the MidCap Fund is invested in stocks of technology companies, the value of the Fund's shares is particularly vulnerable to risks affecting technology companies and/or companies that affect those technology companies. The technology sector has historically exhibited great fluctuations in valuations. The Fund's Manager takes this into account when evaluating the long-term merits of its investments. The stock prices of technology companies during the past few years have been highly volatile, largely due to the rapid pace of product change and development within this sector. This phenomenon may also result in future stock price volatility. In addition, technologies that are dependent on consumer demand may be more sensitive to changes in consumer spending patterns. Technology companies focusing on the information and telecommunications sectors may also be subject to international, federal and state regulations and may be adversely affected by changes in those regulations. Special Risks of Mid-Cap Stocks. In addition, the MidCap Fund may be subject to the risks associated with the Fund's investments in mid-cap companies. While stocks of mid-cap companies may offer greater capital appreciation potential than investments in larger capitalization companies, they may also present greater risks. Mid-Cap stocks tend to be more sensitive to changes in an issuer's earnings expectations. They tend to have lower trading volumes than large capitalization securities. As a result, they may experience more abrupt and erratic price movements. Since mid-cap companies typically reinvest a high proportion of earnings in their own businesses, they may lack the dividend yield that can help cushion their total return in a declining market. Many mid-cap stocks are traded in over-the-counter markets and therefore may be less liquid than stocks of larger exchange-traded issuers. That means that the MidCap Fund could have greater difficulty selling a security at an acceptable price, especially in periods of market volatility. That factor increases the potential for losses to the Fund. How Do the Investment Policies of the Funds Compare? Other Equity Securities. While MidCap Fund emphasizes investments in common stocks, it can buy preferred stocks, warrants and securities convertible into common stock, which may be subject to credit risks and interest rate risks. Midcap Fund will not invest more than 5% of its net assets in convertible securities that are rated below investment grade by a nationally recognized rating organization such as Moody's Investor Service or that are assigned a comparable rating by the Midcap Fund's Manager. Similarly, while GMG Fund also emphasizes investments in common stocks, it can also buy preferred stocks, warrants, and securities convertible into common stock. GMG Fund may invest in the stocks of companies of every size, small, medium and large capitalization. Cyclical Opportunities. Each Fund may also seek to take advantage of changes in the business cycle by investing in companies that are sensitive to those changes, if the Manager or the Adviser/Sub-Adviser believes they have growth potential. For example, when the economy is expanding, companies in the consumer durables and technology sectors may benefit and offer long-term growth opportunities. The MidCap Fund focuses on seeking growth over the ling term, but may seek to take tactical advantage of short-term market movements or events affecting particular issuers or industries. Illiquid and Restricted Securities. Investments may be illiquid because they do not have an active trading market, making it difficult to value them or dispose of them promptly at an acceptable price. A restricted security is one that has a contractual restriction on its resale or which cannot be sold publicly until it is registered under the Securities Act of 1933. Neither MidCap nor GMG Fund will invest more than 15% of its net assets in illiquid or restricted securities. Certain restricted securities that are eligible for resale to qualified institutional purchasers may not be subject to that limit. The Manager monitors holdings of illiquid securities on an ongoing basis to determine whether to sell any holdings to maintain adequate liquidity. Foreign Investing. GMG Fund can invest without limit in foreign securities. The Fund currently does not intend to invest more than 25% of its net assets in foreign securities. It can buy securities of both foreign governments and companies. MidCap Fund can buy securities in any country, including developed countries and emerging markets. The Fund has no limits on the amount of its assets that can be invested in foreign securities, but has adopted an operating policy limiting its investments in foreign securities to 10% of its total assets. It does not expect to invest substantial amounts of its assets in foreign stocks. While foreign securities may offer special investment opportunities, they are subject to special risks that can reduce the Fund's share prices and returns. Special Risks of Emerging Markets. Both GMG Fund and MidCap Fund can invest in emerging markets. Emerging and developing markets abroad may also offer special opportunities for growth investing but have greater risks than more developed foreign markets, such as those in Europe, Canada, Australia, New Zealand and Japan. There may be less liquidity in their securities markets, and settlements of purchases and sales of securities may be subject to additional delays. They are subject to greater risks of limitations on the repatriation of income and profits because of currency restrictions imposed by local governments. Those countries may also be subject to the risk of greater political and economic instability, which can greatly affect the volatility of prices of securities in those countries. Derivative Investments. Both Funds can invest in a number of different kinds of "derivative" investments. In general terms, a derivative investment is an investment contract whose value depends on (or is derived from) the value of an underlying asset, interest rate or index. Options, futures contracts, structured notes such as indexed securities or inverse securities, collateralized mortgage obligations ("CMOs") and hedging instruments are "derivative instruments" GMG Fund can use. Options, futures contracts, and other hedging instruments may be considered derivative investments for MidCap Fund. In addition to using derivatives for hedging, both Funds might use other derivative investments because they offer the potential for increased income and principal value. GMG Fund and MidCap Fund are not required to use derivative investments in seeking their objectives. Derivatives have risks. If the issuer of the derivative does not pay the amount due, the Funds can lose money on the investment. The underlying security or investment on which the derivative is based, and the derivative itself, might not perform the way the Manager of MidCap Fund and the Adviser or Sub-Adviser of GMG Fund expected it to perform. Interest rate and stock market changes in the U.S. and abroad may also influence the performance of derivatives. As a result of these risks, both Funds could realize less principal or income from the investment than expected or their hedge might be unsuccessful. If that happens, the Funds' share prices could fall. Certain derivative investments held by the Funds may be illiquid. Borrowing and Leveraging. For GMG Fund, certain types of investments or trading strategies (such as borrowing money to increase the amount of investment) may be subject to leverage risk. This means a relatively small market movement may result in large changes in the value of an investment. Certain investments or trading strategies that involve leverage can result in losses that greatly exceed the amount originally invested. Derivatives may be difficult or impossible to sell at the time that the seller would like or at the price that the seller believes the security is currently worth. MidCap Fund has the ability to borrow for leverage up to 10% of the value of its net assets from banks on an unsecured basis to invest the borrowed funds in portfolio securities. This speculative technique is known as "leverage." MidCap Fund may borrow only from banks. Currently, under the Investment Company Act, a mutual fund may borrow only from banks and the maximum amount it may borrow is up to one-third of its total assets (including the amount borrowed) less all liabilities and indebtedness other than borrowing. If the value of MidCap Fund's assets fails to meet this 300% asset coverage requirement, the Fund will reduce its bank debt within three days to meet the requirement. To do so, the Fund might have to sell a portion of its investments at a disadvantageous time. MidCap Fund will pay interest on these loans, and that interest expense will raise the overall expenses of the Fund and reduce its returns. If it does borrow, its expenses will be greater than comparable funds that do not borrow for leverage. Additionally, MidCap Fund's net asset value per share might fluctuate more than that of funds that do not borrow. Currently, MidCap Fund does not contemplate using this technique, but if it does so, it will not likely do so to a substantial degree. Neither Fund expects to borrow funds for investing purposes. Hedging. Both Funds can buy and sell certain kinds of futures contracts, put and call options and forward contracts. These are all referred to as "hedging instruments." The Funds are not required to hedge to seek their objectives. The Funds have limits on their use of hedging and types of hedging instruments that can be used, and do not use them for speculative purposes. Some of these strategies could be used to hedge the Funds' portfolio against price fluctuations. Other hedging strategies, such as buying futures and call options, could increase the Funds' exposure to the securities market. Forward contracts can be used to try to manage foreign currency risks on both Funds' foreign investments. Foreign currency options can be used to try to protect against declines in the dollar value of foreign securities the Funds own, or to protect against an increase in the dollar cost of buying foreign securities. There are also special risks in particular hedging strategies. Options trading involves the payment of premiums and has special tax effects on the Funds. If the Adviser or Sub-Adviser for GMG Fund, and the Manager for MidCap Fund use a hedging instrument at the wrong time or judged market conditions incorrectly, the hedge might fail and the strategy could reduce the respective Fund's return. Both Funds could also experience losses if the prices of their futures and options positions are not correlated with their other investments or if they could not close out a position because of an illiquid market. Portfolio Turnover. Both Funds can engage in short-term trading to achieve their respective objectives. Portfolio turnover affects brokerage costs the Funds pay. If GMG Fund realizes capital gains when it sells its portfolio investments, generally it must pay out those gains to shareholders, increasing non-retirement plan or non-IRA or non-education savings account shareholders' taxable distributions. If MidCap Fund realizes capital gains when it sells its portfolio investments, generally it must pay out those gains to shareholders, increasing their taxable distributions. Investing in Small, Unseasoned Companies. Both Funds can invest in securities of small, unseasoned companies. These companies that have been in operation for less than three (3) years, including the operations of any predecessors. Securities of these companies may be subject to volatility in their prices. They may have a limited trading market, which may adversely affect the Funds' ability to dispose of them and can reduce the price the Funds might be able to obtain for them. Other investors that own a security issued by a small, unseasoned issuer for which there is limited liquidity might trade the security when the Funds are attempting to dispose of their holdings of that security. In that case the Funds might receive a lower price for their holdings than might otherwise be obtained. These are more speculative securities and can increase the Funds' overall portfolio risks. Repurchase Agreements. Both Funds can acquire securities subject to repurchase agreements. In a repurchase transaction, the Funds buy a security from, and simultaneously resell it to, an approved vendor for delivery on an agreed-upon future date. The resale price exceeds the purchase price by an amount that reflects an agreed-upon interest rate effective for the period during which the repurchase agreement is in effect. Approved vendors include U.S. commercial banks, U.S. branches of foreign banks, or broker-dealers that have been designated as primary dealers in government securities. They must meet credit requirements set by the Funds' Adviser from time to time. The majority of these transactions run from day to day, and delivery pursuant to the resale typically occurs within one to five days of the purchase. Repurchase agreements having a maturity beyond seven days are subject to the Funds' limits on holding illiquid investments. The Funds will not enter into a repurchase agreement that causes more than 15% of each of their net assets to be subject to repurchase agreements having a maturity beyond seven (7) days. There is no limit on the amount of the Funds' net assets that may be subject to repurchase agreements having maturities of seven days or less. Purchase and Sale Contracts. GMG Fund may enter into purchase and sale contracts. A purchase and sale contract is similar to a repurchase agreement, but purchase and sale contracts provide that the purchaser receives any interest on the security paid during the period. If the seller fails to repurchase the security and the market value declines, GMG Fund may lose money. Short Sales. GMG Fund has the ability to have up to 20% of its total assets in short positions. GMG Fund may make short sales of securities, either as a hedge against potential declines in value of a portfolio security or to realize appreciation when a security that the Fund does not own declines in value. When GMG Fund makes a short sale, it borrows the security sold short and delivers it to the broker-dealer through which it made the short sale as collateral for its obligation to deliver the security upon conclusion of the sale. The Fund may have to pay a fee to borrow particular securities and is often obligated to turn over any payments received on such borrowed securities to the lender of the securities. GMG Fund's obligations to replace the borrowed security will be secured by collateral deposited with the broker-dealer, usually cash, U.S. Government securities or other liquid securities similar to those borrowed. With respect to uncovered short positions, GMG Fund will also be required to deposit similar collateral with its custodian to the extent, if any, necessary so that the value of both collateral deposits in the aggregate is at all times equal to at least 100% of the current market value of the security sold short. Depending on arrangements made with the broker - dealer from which it borrowed the security, regarding payment over of any payments received by the Fund on such security, the Fund may not receive any payments (including interest) on its collateral deposited with such broker-dealer. GMG Fund will not make a short sale if, after giving effect to such sale, the market value of all securities sold short exceeds 5% of the value of its total assets. Temporary Defensive and Interim Investments. In times of adverse or unstable market, economic or political conditions, both Funds can invest up to 100% of their assets in temporary defensive investments that are inconsistent with the Fund's principal investment strategies. Generally they would be cash equivalents (such as commercial paper), money market instruments, short-term debt securities, U.S. government securities, repurchase agreements and in the case of GMG Fund, purchase and sales contracts. They could include other investment grade debt securities. GMG Fund can also invest in such short-term securities for cash management purposes. MidCap Fund might also hold these types of securities pending the investment of proceeds from the sale of Fund's shares or portfolio securities or to meet anticipated redemptions of Fund shares. To the extent the Funds invest in these securities, either defensively, or in the case of GMG Fund, for cash management purposes, they might not achieve their investment objectives of capital appreciation. What are the fundamental investment restrictions of the Funds? Both GMG Fund and MidCap Fund have certain additional investment restrictions that are fundamental policies, changeable only by shareholder approval. MidCap Fund's investment objective is a fundamental policy, GMG Fund's investment objective is not. Generally, these investment restrictions are similar between the Funds and are discussed below: |_| Neither Fund can buy securities issued or guaranteed by any one issuer if more than 5% of their total assets would be invested in securities of that issuer or if they would then own more than 10% of that issuer's voting securities. That restriction applies to 75% of each Fund's total assets. The limit does not apply to securities issued by the U.S. government or any of its agencies or instrumentalities, and in the case of GMG Fund, securities of other investment companies. |_| Neither Fund can invest in physical commodities or physical commodity contracts. However, the Funds can buy and sell hedging instruments to the extent specified in their Prospectuses and Statement of Additional Information from time to time. The Funds can also buy and sell options, futures, securities or other instruments backed by, or the investment return from which, is linked to changes in the price of, physical commodities. |_| MidCap Fund cannot lend money. However, it can invest in all or a portion of an issue of bonds, debentures, commercial paper or other similar corporate obligations. The Fund may also lend its portfolio securities subject to the restrictions stated in its Prospectus and Statement of Additional Information and can enter into repurchase transactions. |_| GMG Fund cannot make loans except (a) through lending of securities, (b) through the purchase of debt instruments, loan participations or similar evidences of indebtedness, (c) through an inter-fund lending program with other affiliated funds, and (d) through repurchase agreements. |_| Neither Fund can concentrate investments. That means they cannot invest 25% or more of their total assets in companies in any one industry. |_| Neither Fund can underwrite securities of other companies. A permitted exception is in case they are deemed to be underwriters under the Securities Act of 1933 when reselling any securities held in their own portfolio. |_| Neither Fund can invest in real estate or in interests in real estate. However, the Funds can purchase readily-marketable securities of companies holding real estate or interests in real estate. |_| Neither Fund can issue "senior securities." However, that restriction does not prohibit the Funds from borrowing money subject to the provisions set forth in their Statements of Additional Information, or from entering into margin, collateral or escrow arrangements permitted by their other investment policies. |_| GMG Fund cannot borrow money in excess of 33 1/3% of the value of its total assets. The Fund may borrow only from banks and/or affiliated investment companies. With respect to this fundamental policy, the Fund can borrow only if it maintains a 300% ratio of assets to borrowings at all times in the manner set forth in the Investment Company Act. MidCap Fund does not have such a fundamental investment restriction.
How do the Account Features and Shareholder Services for the Funds Compare? Investment Management - Pursuant to each investment advisory agreement, the Manager acts as the investment advisor for both Funds. For GMG Fund, the Manager has retained Gartmore Mutual Fund Capital Trust, the Sub-Advisor, to provide day-to-day portfolio management for GMG Fund. The sub-advisory fee is paid by the Manager out of its management fee. Under the Investment Advisory Agreement for MidCap Fund and under the Subadvisory Agreement for GMG Fund, the Manager, Adviser, or Sub-Adviser is authorized and directed to (i) regularly provide investment advice and recommendations to each Fund with respect to the Funds' investments, investment policies and the purchase and sale of securities and other investments; (ii) supervise and monitor the investment program of each Fund and the composition of its portfolio to determine what securities and other investments shall be purchased or sold by the Funds; and (iii) arrange for the purchase of securities and other investments for each Fund and the sale of securities and other investments held in the portfolio of each Fund. The investment advisory agreements state that the Manager will provide administrative services for the Funds, including compilation and maintenance of records, preparation and filing of reports required by the SEC, reports to shareholders, and composition of proxy statements and registration statements required by Federal and state securities laws. The administrative services to be provided by the Manager under the investment advisory agreement will be at its own expense. Expenses not expressly assumed by the Manager under each Fund's advisory agreement or by the Distributor under the General Distributor's Agreement are paid by the Funds. The investment advisory agreements list examples of expenses paid by the Funds, the major categories of which relate to interest, taxes, brokerage commissions, fees to certain Trustees, legal and audit expenses, custodian and transfer agent expenses, share issuance costs, certain printing and registration costs and non-recurring expenses, including litigation costs. Both investment advisory agreements generally provide that in the absence of willful misfeasance, bad faith, gross negligence in the performance of its duties or reckless disregard of its obligations and duties under the investment advisory agreement, the Manager is not liable for any loss sustained by reason of good faith errors or omissions in connection with any matters to which the agreement(s) relate. The agreements permit the Manager to act as investment advisor for any other person, firm or corporation. Pursuant to each agreement, the Manager is permitted to use the name "Oppenheimer" in connection with other investment companies for which it may act as investment advisor or general distributor. If the Manager shall no longer act as investment advisor to the Funds, the Manager may withdraw the right of the Funds to use the name "Oppenheimer" as part of their names. The Manager is controlled by Oppenheimer Acquisition Corp., a holding company owned in part by senior officers of the Manager and ultimately controlled by Massachusetts Mutual Life Insurance Company, a mutual life insurance company that also advises pension plans and investment companies. The Manager has been an investment advisor since January 1960. The Manager (including subsidiaries and an affiliate) managed more than $120 billion in assets as of March 31, 2003, including other Oppenheimer funds with more than 7 million shareholder accounts. The Manager is located at 498 Seventh Avenue, 10th Floor, New York, New York 10018. OppenheimerFunds Services, a division of the Manager, acts as transfer and shareholder servicing agent and is paid an annual per-account fee by each of GMG Fund and MidCap Fund and for certain other open-end funds managed by the Manager and its affiliates. Distribution - Pursuant to General Distributor's Agreements, the Distributor acts as principal underwriter in a continuous public offering of shares of GMG Fund and MidCap Fund, but is not obligated to sell a specific number of shares. Expenses normally attributable to sales, including advertising and the cost of printing and mailing prospectuses other than those furnished to existing shareholders, are borne by the Distributor, except for those for which the Distributor is paid under each Fund's Rule 12b-1 Distribution and Service Plan described below. The Service Plan provides for the reimbursement to OppenheimerFunds Distributor, Inc. (the "Distributor"), for a portion of its costs incurred in connection with the personal service and maintenance of accounts that hold Class A shares of the respective Funds. Under the Class A Service Plans, 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 respective Funds. The Distributor currently uses all of those fees to compensate dealers, brokers, banks and other financial institutions quarterly for providing personal service and maintenance of accounts of their customers that hold Class A shares of the respective Funds. Both Funds have adopted Distribution and Service Plans and Agreements under Rule 12b-1 of the Investment Company Act for Class B, Class C and Class N shares. These plans compensate the Distributor for its services and costs in connection with the distribution of Class B, Class C and Class N shares and the personal service and maintenance of shareholder accounts. Under each Class B, Class C and Class N Plan, the Funds pay the Distributor a service fee at an annual rate of 0.25% of average annual net assets and an asset-based sales charge for Class B and Class C at an annual rate of 0.75% of average annual net assets. Under the Class N Plan, the Funds pay an asset-based sales charge at an annual rate of 0.25% of average annual net assets. All fee amounts are computed on the average annual net assets of the class determined as of the close of each regular business day of each Fund. The Distributor uses all of the service fees to compensate dealers for providing personal services and maintenance of accounts of their customers that hold shares of the Funds. The Class B and Class N asset-based sales charge is retained by the Distributor. After the first year, the Class C asset-based sales charge is paid to the broker-dealer as an ongoing concession for shares that have been outstanding for a year or more. The terms of the Funds' respective Distribution and Service Plans are substantially similar. Purchases and Redemptions - Both Funds are part of the OppenheimerFunds family of mutual funds. The procedures for purchases, exchanges and redemptions of shares of the Funds are nearly identical; however, for GMG Fund, not only can shares be redeemed by mail and telephone, but by wire as well. Shares of either Fund may be exchanged for shares of the same class of other Oppenheimer funds offering such shares. Exchange privileges are subject to amendment or termination at any time. Both Funds have the same initial and subsequent minimum investment amounts for the purchase of shares. These amounts are $1,000 and $50, respectively. Both Funds have a maximum initial sales charge of 5.75% on Class A shares for purchases of less than $25,000. The sales charge of 5.75% is reduced for purchases of Class A shares of $25,000 or more. Investors who purchase $1 million or more of Class A shares pay no initial sales charge. Class B shares of the Funds are sold without a front-end sales charge but investors will pay an annual asset-based sales charge. If investors sell their shares within six years of buying them, they will normally pay a CDSC. The CDSC begins at 5% for shares redeemed in the first year and declines to 1% in the sixth year and is eliminated after that. Class C shares may be purchased without an initial sales charge, but investors will pay an annual asset-based sales charge, and if redeemed within 12 months of buying them, a CDSC of 1% may be deducted. Class N shares (available only through certain retirement plans) are purchased without an initial sales charge, but investors will pay an annual asset-based sales charge, and if redeemed within 18 months of the retirement plan's first purchase of Class N shares, a CDSC of 1% may be deducted. Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund received in the Reorganization will be issued at net asset value, without a sales charge and no CDSC will be imposed on any GMG Fund shares exchanged for MidCap Fund shares as a result of the Reorganization. However, any CDSC that applies to GMG Fund shares as of the date of the exchange will carry over to MidCap Fund shares received in the Reorganization. Shareholder Services - Both Funds also offer the following privileges: (i) Right of Accumulation, (ii) Letter of Intent, (iii) reinvestment of dividends and distributions at net asset value, (iv) net asset value purchases by certain individuals and entities, (v) Asset Builder (automatic investment) Plans, (vi) Automatic Withdrawal and Exchange Plans for shareholders who own shares of the Funds valued at $5,000 or more, (vii) AccountLink and PhoneLink arrangements, (viii) exchanges of shares for shares of the same class of certain other funds at net asset value, and (ix) telephone and Internet redemption and exchange privileges. GMG Fund also offers wire redemptions of fund shares (for a fee); MidCap Fund does not offer this feature. All of such services and privileges are subject to amendment or termination at any time and are subject to the terms of the Funds' respective prospectuses. Dividends and Distributions - Both Funds intend to declare dividends separately for each class of shares from net investment income on an annual basis and to pay those dividends to shareholders in December on a date selected by the Board of Trustees of each Fund. Dividends and the distributions paid on Class A, Class B, Class C, Class N or Class Y shares may vary over time, depending on market conditions, the composition of the Funds' portfolios, and expenses borne by the particular class of shares. Dividends paid on Class A and Class Y shares will generally be higher than those paid on Class B, Class C and Class N shares. That is because of the effect of the asset-based sales charge on Class B, Class C and Class N shares. The Funds have no fixed dividend rates and there can be no guarantee that either Fund will pay any dividends or distributions. Either Fund may realize capital gains on the sale of portfolio securities. If either does, it may make distributions out of any net short-term or long-term capital gains in December of each year. The Funds may make supplemental distributions of dividends and capital gains following the end of their fiscal years.
VOTING INFORMATION How many votes are necessary to approve the Reorganization Agreement? The affirmative vote of the holders of a majority of the outstanding voting securities (as defined in the Investment Company Act) of GMG Fund voting in the aggregate and not by class is necessary to approve the Reorganization Agreement and the transactions contemplated thereby. As defined in the Investment Company Act, the vote of a majority of the outstanding shares means the vote of (1) 67% or more of GMG Fund's outstanding shares present at a meeting if the holders of more than 50% of the outstanding shares of the Fund are present or represented by proxy; or (2) more than 50% of the Fund's outstanding shares, whichever is less. Each shareholder will be entitled to one vote for each full share, and a fractional vote for each fractional share of GMG Fund held on the Record Date. If sufficient votes to approve the proposal are not received by the date of the Meeting, the Meeting may be adjourned to permit further solicitation of proxies. The holders of a majority of shares entitled to vote at the Meeting and present in person or by proxy (whether or not sufficient to constitute a quorum) may adjourn the Meeting to permit further solicitation of proxies. How do I ensure my vote is accurately recorded? You can vote in either of three ways: o By mail, with the enclosed proxy card. o In person at the Meeting. o By telephone (please see the insert for instructions). A proxy card is, in essence, a ballot. If you simply sign and date the proxy but give no voting instructions, your shares will be voted in favor of the Reorganization Agreement. Votes may also be recorded by telephone. Shareholders must enter a unique control number found on their respective proxy ballots before providing voting instructions by telephone. After a shareholder provides his or her voting instructions, those instructions are read back to the shareholder and the shareholder must confirm his or her voting instructions before disconnecting the telephone call. The voting procedures used in connection with telephone voting are designed to reasonably authenticate the identity of shareholders, to permit shareholders to authorize the voting of their shares in accordance with their instructions and to confirm that their instructions have been properly recorded Can I revoke my proxy? Yes. You may revoke your proxy at any time before it is voted by (i) writing to the Secretary of GMG Fund at 6803 South Tucson Way, Centennial, Colorado 80112 (if received in time to be acted upon); (ii) attending the Meeting and voting in person; or (iii) signing and returning a later-dated proxy (if returned and received in time to be voted). What other matters will be voted upon at the Meeting? The Board of Trustees of GMG Fund does not intend to bring any matters before the Meeting other than those described in this proxy. It is not aware of any other matters to be brought before the Meeting by others. If any other matters legally come before the Meeting, the proxy ballots confer discretionary authority with respect to such matters, and it is the intention of the persons named as attorneys-in-fact to vote proxies to vote in accordance with their judgment in such matters. Who is entitled to vote? Shareholders of record of GMG Fund at the close of business on June 18, 2003 (the "record date") will be entitled to vote at the Meeting. On June 18, 2003, there were ___670,240.261 outstanding shares of GMG Fund, consisting of __________ Class AB shares, __________551,526.066 Class A shares, 35,839.079 Class B shares, 63,770.736 Class C shares, __________ _19,004.380 Class N shares and 100.00 Class Y shares. On June 18, 2003, there were 64,206,743.878 outstanding shares of MidCap Fund, consisting of 30,012,086.968 Class A shares, 24,695,233.844 Class B shares, 7,471,664.312 Class C shares, 1,012,052.754 Class N shares and 1,015,706.000 Class Y shares. Under relevant state law, proxies representing abstentions and broker non-votes will be included for purposes of determining whether a quorum is present at the Meeting. Shares owned of record by broker-dealers for the benefit of their customers ("street account shares") will be voted by the broker-dealer based on instructions received from its customers. If no instructions are received, and the broker-dealer does not have discretionary power to vote such street account shares under applicable stock exchange rules, the shares represented thereby will be considered to be present at the Meeting for purposes of only determining the quorum ("broker non-votes"). Because of the need to obtain the above-described vote for the Reorganization proposal to pass, broker non-votes will have the same effect as a vote "against" the Proposal. For purposes of the Meeting, a majority of shares outstanding and entitled to vote, present in person or represented by proxy, constitutes a quorum. MidCap Fund shareholders do not vote on the Reorganization. What other solicitations will be made? GMG Fund will request broker-dealer firms, custodians, nominees and fiduciaries to forward proxy material to the beneficial owners of the shares of record, and may reimburse them for their reasonable expenses incurred in connection with such proxy solicitation. In addition to solicitations by mail, officers of GMG Fund or officers and employees of OppenheimerFunds Services, without extra pay, may conduct additional solicitations personally or by telephone or telegraph. Any expenses so incurred will be borne by OppenheimerFunds Services. Proxies may also be solicited by a proxy solicitation firm hired at GMG Fund's expense. If a proxy solicitation firm is hired, it is anticipated that the cost of engaging a proxy solicitation firm would not exceed $17,000, plus the additional costs which would be incurred in connection with contacting those shareholders who have not voted, in the event of a need for resolicitation of votes. Are there any appraisal rights? No. Under the 1940 Act, shareholders do not have rights of appraisal as a result of the Reorganization. Although appraisal rights are unavailable, you have the right to redeem your shares at net asset value until the Valuation Date for the Reorganization. After the closing date, you may redeem your new MidCap Fund shares or exchange them into shares of certain other funds in the OppenheimerFunds family of mutual funds, subject to the terms of the prospectuses of both funds. Shares owned of record by broker-dealers for the benefit of their customers ("street account shares") will be voted by the broker-dealer based on instructions received from its customers. If no instructions are received, and the broker-dealer does not have discretionary power to vote such street account shares under applicable stock exchange rules, the shares represented thereby will be considered to be present at the Meeting for purposes of only determining the quorum ("broker non-votes"). Because of the need to obtain a vote of the majority of the outstanding voting securities for the Reorganization proposal to pass, abstentions and broker non-votes will have the same effect as a vote "against" the Proposal. INFORMATION ABOUT MIDCAP FUND Information about MidCap Fund (File no. 811-08297) is included in MidCap Fund's Prospectus dated December 23, 2002, which is attached to and considered a part of this Proxy Statement and Prospectus. Additional information about MidCap Fund is included in the Fund's Statement of Additional Information dated December 23, 2002, and the Annual Report dated October 31, 2002 and the succeeding Semi-Annual Report dated April 30, 2003, which have been filed with the SEC and are incorporated herein by reference. You may request a free copy of these materials and other information by calling 1.800.708.7780 or by writing to MidCap Fund at OppenheimerFunds Services, P.O. Box 5270, Denver, CO 80217-5270. MidCap Fund also files proxy materials, reports and other information with the SEC in accordance with the informational requirements of the Securities and Exchange Act of 1934 and the 1940 Act. These materials can be inspected and copied at: the SEC's Public Reference Room in Washington, D.C. (Phone: 1.202.942.8090) or the EDGAR database on the SEC's Internet website at www.sec.gov. Copies may be obtained upon payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public ------------------ Reference Section, Washington, D.C. 20549-0102. INFORMATION ABOUT GMG FUND Information about GMG Fund (File no. 811-10153) is included in the current GMG Fund Prospectus dated March 28, 2003, as supplemented May 7, 2003. This document has been filed with the SEC and is incorporated herein by reference. Additional information about GMG Fund is also included in the Fund's Statement of Additional Information dated March 28, 2003, and the Annual Report dated November 30, 2002and the succeeding Semi-Annual Report dated May 31, 2003, which have been filed with the SEC and are incorporated herein by reference. You may request free copies of these or other documents relating to GMG Fund by calling 1.800.708.7780 or by writing to OppenheimerFunds Services, P.O. Box 5270, Denver, CO 80217-5270. Reports and other information filed by GMG Fund can be inspected and copied at: the SEC's Public Reference Room in www.sec.gov. Copies may be obtained upon payment of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference Section, - ------------------ Washington, D.C. 20549-0102.
PRINCIPAL SHAREHOLDERS As of June 18, 2003, the officers and Trustees of GMG Fund, as a group, owned less than 1% of the outstanding voting shares of GMG Fund. As of June 18, 2003, the only persons who owned of record or was known by GMG Fund to own beneficially or of record 5% or more of any class of the Fund's outstanding shares were as follows: 5% Shareholder information will be updated ------------------------------------------ OppenheimerFunds Distributor, Inc., c/o Tim Abbuhl, Bldg. 2, 6803 S. Tucson Way Centennial, CO 80112-3924, which owned 500,000.000 Class A shares, representing 90.65% of the Class A shares then outstanding. BNY Clearing Services LLC, AC 3731-7840, BNY Clearing Services LLC, CUST, 111 E. Kilbourn Ave., Milwaukee, WI 53202, which owned 6,173.718 Class B shares, representing 17.22% of the Class B shares then outstanding. RPSS TR Claims Conference 401(k) Plan, Attn: Celeste Levy, 15 E 26th St., Ste. 906, New York, NY 10010-1533, which owned 2,545.244 Class B shares, representing 7.10% of the Class B shares then outstanding. Pershing LLC, P.O. Box 2052, Jersey City, NJ 07303-9998, which owned 2,252.747 Class B shares, representing 6.28% of the Class B shares then outstanding. RPSS TR Rollover Ira, FBO E. Lynn Dial, 1746 W. 600 N, Salt Lake City, UT 84116-2412, which owned 6,835.153 Class C shares, representing 10.71% of the Class C shares then outstanding. RPSS TR Rollover Ira, FBO Clifton N. Blue Jr., 9 Tempsford Ln, Williamsburg, VA 23188-1550, which owned 4,632.506 Class C shares, representing 7.26% of the Class C shares then outstanding. RPSS TR Ira, FBO Steven L. Sharp, 47 E. 4050 S., Bountiful, UT 84010-8059, which owned 4,564.018 Class C shares, representing 7.15% of the Class C shares then outstanding. RPSS TR, Fidelity Deposit & Discount Ban 401(k) Plan, Blakely & Drinker Sts., Dunmore, PA 18512, which owned 7,672.296 Class N shares, representing 40.37% of the Class N shares then outstanding. NGOC Mihn Pham TR, NGOC Minh Pham M.D. & Soung My Tuong, M.D. APC DB Pension Trust, 2363 Ulric St., Ste. B, San Diego, CA 92111-6447, which owned 4,055.946 Class N shares, representing 21.34% of the Class N shares then outstanding. John Van De Wiele TR, Van De Wiele Engineering, Inc., 401(k) PSP, 2925 Briarpark Dr., Ste. 275, Houston, TX 77042-3725, which owned 2,641.431 Class N shares, representing 13.89% of the Class N shares then outstanding. RPSS TR, Roossien Masonry, Inc., 401(k) Plan, Attn: James Vandyken, 3388 Busch Dr. SW, Grandville, MI 49418-1095, which owned 1,730.809 Class N shares, representing 9.10% of the Class Y shares then outstanding. RPSS TR, Maverick Engineering, Inc., 401(k) Plan, Attn: Teri Mueller, 1 O'Connor Plz., Fl. 8, Victoria, TX 77901-6502, which owned 1,066.070 Class N shares, representing 5.60% of the Class N shares then outstanding. OppenheimerFunds, Inc., c/o Tim Abbuhl, Bldg. 2, 6802 S. Tucson Way, Centennial, CO 80112-3924, which owned 100.00 Class Y shares, representing 100% of the Class Y shares then outstanding. As of June 18, 2003, the officers and Trustees of MidCap Fund, as a group, owned less than 1% of the outstanding voting shares of MidCap Fund. As of June 18, 2003, the only persons who owned of record or was known by MidCap Fund to own beneficially or of record 5% or more of any class of the Fund's outstanding shares were as follows: Charles Schwab & Co., Inc. Special Custody Acct. for the Exclusive Benefit of Customers, Attn: Mutual Funds, 101 Montgomery St., San Francisco, CA 94104-4122, which owned 1,736,762.034 Class A shares, representing 5.78% of the Class A shares then outstanding. Anthony DiMaria TR, Attn: Joseph Lomangino, TJH Medical Services PC 401(k), 8906 135th St. Ste. 7E, Jamaica, NY 11418-2834, which owned 83,734.901 Class N shares, representing 8.27% of the Class N shares then outstanding. MLPF & S for the sole benefit of its customers, Attn: Fund Admn., 4800 Deer Lake Dr. E. Fl. 3, Jacksonville, FL 32246-6484, which owned 78,653.652 Class N shares, representing 7.77% of the Class N shares then outstanding. Mass Mutual Life Insurance Co., Attn: N225, Separate Investment Acct., 1295 State St., Springfield, MA 01111-0001, which owned 377,755.721 Class Y shares, representing 37.19% of the Class Y shares then outstanding. OFI Trust Company TR, OppenheimerFunds, Inc., Deferred Compensation Plan, Attn: Susan Cisneros, 498 7th Ave., Fl. 14, New York, NY 10018-6798, which owned 306,096.958 Class Y shares, representing 30.13% of the Class Y shares then outstanding. Massachusetts Mutual Life Insurance Company, 1295 State St., Springfield, MA 01111-0001, which owned 187,930.188 Class Y shares, representing 18.50% of the Class Y shares then outstanding. IBT & Co. Cust., OppenheimerFunds Cap. Accum. Plan, Attn: MML037, 200 Clarendon St. Fl. 16, Boston, MA 02116-5021, which owned 141,096.102 Class Y shares, representing 13.89% of the Class Y shares then outstanding. By Order of the Board of Trustees Robert G. Zack, Secretary July 7, 2003
Appendix to Prospectus and Proxy Statement of Oppenheimer Select Managers Gartmore Millennium Growth Fund II Graphic material included in the Prospectus of Oppenheimer Select Managers Gartmore Millennium Growth Fund II under the heading "Annual Total Returns (Class A) (as of 12/31 each year)": A bar chart will be included in the Prospectus of the Fund depicting the annual total returns of a hypothetical investment in Class A shares of the Fund for the calendar year ended 12/31/02, without deducting sales charges. Set forth below is the relevant data point that will appear on the bar chart. Calendar Oppenheimer Select Managers Gartmore Year Millennium Growth Fund II Ended Class A Shares - ----- -------------- 12/31/02 -29.45%
Appendix to Prospectus and Proxy Statement of Oppenheimer MidCap Fund Graphic material included in the Prospectus of Oppenheimer MidCap Fund under the heading "Annual Total Returns (Class A) (as of 12/31 each year)": A bar chart will be included in the Prospectus of the Fund depicting the annual total returns of a hypothetical investment in Class A shares of the Fund for its five most recent calendar years, without deducting sales charges. Set forth below are the relevant data points that will appear on the bar chart. Calendar Year Oppenheimer MidCap Fund Ended Class A Shares - ----- -------------- 12/31/98 29.76% 12/31/99 94.87% 12/31/00 -10.84% 12/31/01 -34.13% 12/31/02 -27.63%
EXHIBITS TO THE COMBINED PROXY STATEMENT AND PROSPECTUS Exhibit - ------- A Agreement and Plan of Reorganization between Oppenheimer Select Managers Gartmore Millennium Growth Fund II and Oppenheimer MidCap Fund EXHIBIT A AGREEMENT AND PLAN OF REORGANIZATION AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") dated as of April 28, 2003 by and between Oppenheimer Select Managers Gartmore Millennium Growth Fund II ("GMG Fund"), a Massachusetts business trust and Oppenheimer MidCap Fund ("MidCap Fund"), a Massachusetts business trust. W I T N E S S E T H: WHEREAS, the parties are each open-end investment companies of the management type; and WHEREAS, the parties hereto desire to provide for the reorganization pursuant to Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), of GMG Fund through the acquisition by MidCap Fund of substantially all of the assets of GMG Fund in exchange for the voting shares of beneficial interest ("shares") of Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund and the assumption by MidCap Fund of certain liabilities of GMG Fund, for which Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund are to be distributed by GMG Fund pro rata to its shareholders in complete liquidation of GMG Fund and complete cancellation of its shares; NOW, THEREFORE, in consideration of the mutual promises herein contained, the parties hereto agree as follows: 1. The parties hereto hereby adopt this Agreement and Plan of Reorganization (the "Agreement") pursuant to Section 368(a)(1) of the Code as follows: The reorganization will be comprised of the acquisition by MidCap Fund of substantially all of the assets of GMG Fund in exchange for Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund and the assumption by MidCap Fund of certain liabilities of GMG Fund, followed by the distribution of such Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund to the Class A, Class B, Class C, Class N and Class Y shareholders of GMG Fund in exchange for their Class A, Class B, Class C, Class N and Class Y shares of GMG Fund, all upon and subject to the terms of the Agreement hereinafter set forth. The share transfer books of GMG Fund will be permanently closed at the close of business on the Valuation Date (as hereinafter defined) and only redemption requests received in proper form on or prior to the close of business on the Valuation Date shall be fulfilled by GMG Fund; redemption requests received by GMG Fund after that date shall be treated as requests for the redemption of the shares of MidCap Fund to be distributed to the shareholder in question as provided in Section 5 hereof. 2. On the Closing Date (as hereinafter defined), all of the assets of GMG Fund on that date, excluding a cash reserve (the "cash reserve") to be retained by GMG Fund sufficient in its discretion for the payment of the expenses of GMG Fund's dissolution and its liabilities, but not in excess of the amount contemplated by Section 10E, shall be delivered as provided in Section 8 to MidCap Fund, in exchange for and against delivery to GMG Fund on the Closing Date of a number of Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund, having an aggregate net asset value equal to the value of the assets of GMG Fund so transferred and delivered. 3. The net asset value of Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund and the value of the assets of GMG Fund to be transferred shall in each case be determined as of the close of business of The New York Stock Exchange on the Valuation Date. The computation of the net asset value of the Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund and the Class A, Class B, Class C, Class N and Class Y shares of GMG Fund shall be done in the manner used by MidCap Fund and GMG Fund, respectively, in the computation of such net asset value per share as set forth in their respective prospectuses. The methods used by MidCap Fund in such computation shall be applied to the valuation of the assets of GMG Fund to be transferred to MidCap Fund. GMG Fund shall declare and pay, immediately prior to the Valuation Date, a dividend or dividends which, together with all previous such dividends, shall have the effect of distributing to GMG Fund's shareholders all of GMG Fund's investment company taxable income for taxable years ending on or prior to the Closing Date (computed without regard to any dividends paid) and all of its net capital gain, if any, realized in taxable years ending on or prior to the Closing Date (after reduction for any capital loss carry-forward). 4. The closing (the "Closing") shall be at the offices of OppenheimerFunds, Inc. (the "Agent"), 6803 S Tucson Way, Centennial, CO 80112, on such time or such other place as the parties may designate or as provided below (the "Closing Date"). The business day preceding the Closing Date is herein referred to as the "Valuation Date." In the event that on the Valuation Date either party has, pursuant to the Investment Company Act of 1940, as amended (the "Act"), or any rule, regulation or order thereunder, suspended the redemption of its shares or postponed payment therefore, the Closing Date shall be postponed until the first business day after the date when both parties have ceased such suspension or postponement; provided, however, that if such suspension shall continue for a period of 60 days beyond the Valuation Date, then the other party to the Agreement shall be permitted to terminate the Agreement without liability to either party for such termination. 5. In conjunction with the Closing, GMG Fund shall distribute on a pro rata basis to the shareholders of GMG Fund as of the Valuation Date Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund received by GMG Fund on the Closing Date in exchange for the assets of GMG Fund in complete liquidation of GMG Fund; for the purpose of the distribution by GMG Fund of Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund to GMG Fund's shareholders, MidCap Fund will promptly cause its transfer agent to: (a) credit an appropriate number of Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund on the books of MidCap Fund to each Class A, Class B, Class C, Class N and Class shareholder of GMG Fund in accordance with a list (the "Shareholder List") of GMG Fund shareholders received from GMG Fund; and (b) confirm an appropriate number of Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund to each Class A, Class B, Class C, Class N and Class Y shareholder of GMG Fund; certificates for Class A shares of MidCap Fund will be issued upon written request of a former shareholder of GMG Fund but only for whole shares, with fractional shares credited to the name of the shareholder on the books of MidCap Fund and only after any share certificates for GMG Fund are returned to the transfer agent. The Shareholder List shall indicate, as of the close of business on the Valuation Date, the name and address of each shareholder of GMG Fund, indicating his or her share balance. GMG Fund agrees to supply the Shareholder List to MidCap Fund not later than the Closing Date. Shareholders of GMG Fund holding certificates representing their shares shall not be required to surrender their certificates to anyone in connection with the reorganization. After the Closing Date, however, it will be necessary for such shareholders to surrender their certificates in order to redeem, transfer or pledge the shares of MidCap Fund which they received. 6. Within one year after the Closing Date, GMG Fund shall (a) either pay or make provision for payment of all of its liabilities and taxes, and (b) either (i) transfer any remaining amount of the cash reserve to MidCap Fund, if such remaining amount (as reduced by the estimated cost of distributing it to shareholders) is not material (as defined below) or (ii) distribute such remaining amount to the shareholders of GMG Fund on the Valuation Date. Such remaining amount shall be deemed to be material if the amount to be distributed, after deduction of the estimated expenses of the distribution, equals or exceeds one cent per share of GMG Fund outstanding on the Valuation Date. 7. Prior to the Closing Date, there shall be coordination between the parties as to their respective portfolios so that, after the Closing, MidCap Fund will be in compliance with all of its investment policies and restrictions. At the Closing, GMG Fund shall deliver to MidCap Fund two copies of a list setting forth the securities then owned by GMG Fund. Promptly after the Closing, GMG Fund shall provide to MidCap Fund a list setting forth the respective federal income tax bases thereof. 8. Portfolio securities or written evidence acceptable to MidCap Fund of record ownership thereof by The Depository Trust Company or through the Federal Reserve Book Entry System or any other depository approved by GMG Fund pursuant to Rule 17f-4 and Rule 17f-5 under the Act shall be endorsed and delivered, or transferred by appropriate transfer or assignment documents, by GMG Fund on the Closing Date to MidCap Fund, or at its direction, to its custodian bank, in proper form for transfer in such condition as to constitute good delivery thereof in accordance with the custom of brokers and shall be accompanied by all necessary state transfer stamps, if any. The cash delivered shall be in the form of certified or bank cashiers' checks or by bank wire or intra-bank transfer payable to the order of MidCap Fund for the account of MidCap Fund. Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund representing the number of Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund being delivered against the assets of GMG Fund, registered in the name of GMG Fund, shall be transferred to GMG Fund on the Closing Date. Such shares shall thereupon be assigned by GMG Fund to its shareholders so that the shares of MidCap Fund may be distributed as provided in Section 5. If, at the Closing Date, GMG Fund is unable to make delivery under this Section 8 to MidCap Fund of any of its portfolio securities or cash for the reason that any of such securities purchased by GMG Fund, or the cash proceeds of a sale of portfolio securities, prior to the Closing Date have not yet been delivered to it or GMG Fund's custodian, then the delivery requirements of this Section 8 with respect to said undelivered securities or cash will be waived and GMG Fund will deliver to MidCap Fund by or on the Closing Date with respect to said undelivered securities or cash executed copies of an agreement or agreements of assignment in a form reasonably satisfactory to MidCap Fund, together with such other documents, including a due bill or due bills and brokers' confirmation slips as may reasonably be required by MidCap Fund. 9. MidCap Fund shall not assume the liabilities (except for portfolio securities purchased which have not settled and for shareholder redemption and dividend checks outstanding) of GMG Fund, but GMG Fund will, nevertheless, use its best efforts to discharge all known liabilities, so far as may be possible, prior to the Closing Date. The cost of printing and mailing the proxies and proxy statements will be borne by GMG Fund. GMG Fund and MidCap Fund will bear the cost of their respective tax opinions. Any documents such as existing prospectuses or annual reports that are included in that mailing will be a cost of the Fund issuing the document. Any other out-of-pocket expenses of MidCap Fund and GMG Fund associated with this reorganization, including legal, accounting and transfer agent expenses, will be borne by GMG Fund and MidCap Fund, respectively, in the amounts so incurred by each. 10. The obligations of MidCap Fund hereunder shall be subject to the following conditions: A. The Board of Trustees of GMG Fund shall have authorized the execution of the Agreement, and the shareholders of GMG Fund shall have approved the Agreement and the transactions contemplated hereby, and GMG Fund shall have furnished to MidCap Fund copies of resolutions to that effect certified by the Secretary or the Assistant Secretary of GMG Fund; such shareholder approval shall have been by the affirmative vote required by the Massachusetts Law and its charter documents at a meeting for which proxies have been solicited by the Proxy Statement and Prospectus (as hereinafter defined). B. MidCap Fund shall have received an opinion dated as of the Closing Date from counsel to GMG Fund, to the effect that (i) GMG Fund is a business trust duly organized, validly existing and in good standing under the laws of the State of Massachusetts with full corporate powers to carry on its business as then being conducted and to enter into and perform the Agreement; and (ii) that all action necessary to make the Agreement, according to its terms, valid, binding and enforceable on GMG Fund and to authorize effectively the transactions contemplated by the Agreement have been taken by GMG Fund. Massachusetts counsel may be relied upon for this opinion. C. The representations and warranties of GMG Fund contained herein shall be true and correct at and as of the Closing Date, and MidCap Fund shall have been furnished with a certificate of the President, or a Vice President, or the Secretary or the Assistant Secretary or the Treasurer or the Assistant Treasurer of GMG Fund, dated as of the Closing Date, to that effect. D. On the Closing Date, GMG Fund shall have furnished to MidCap Fund a certificate of the Treasurer or Assistant Treasurer of GMG Fund as to the amount of the capital loss carry-over and net unrealized appreciation or depreciation, if any, with respect to GMG Fund as of the Closing Date. E. The cash reserve shall not exceed 10% of the value of the net assets, nor 30% in value of the gross assets, of GMG Fund at the close of business on the Valuation Date. F. A Registration Statement on Form N-14 filed by MidCap Fund under the Securities Act of 1933, as amended (the "1933 Act"), containing a preliminary form of the Proxy Statement and Prospectus, shall have become effective under the 1933 Act. G. On the Closing Date, MidCap Fund shall have received a letter from Robert G. Zack or other senior executive officer of OppenheimerFunds, Inc. acceptable to MidCap Fund, stating that nothing has come to his or her attention which in his or her judgment would indicate that as of the Closing Date there were any material, actual or contingent liabilities of GMG Fund arising out of litigation brought against GMG Fund or claims asserted against it, or pending or to the best of his or her knowledge threatened claims or litigation not reflected in or apparent from the most recent audited financial statements and footnotes thereto of GMG Fund delivered to MidCap Fund. Such letter may also include such additional statements relating to the scope of the review conducted by such person and his or her responsibilities and liabilities as are not unreasonable under the circumstances. H. MidCap Fund shall have received an opinion, dated as of the Closing Date, of Deloitte & Touche LLP (or an appropriate substitute tax expert), to the same effect as the opinion contemplated by Section 11.E. of the Agreement. I. MidCap Fund shall have received at the Closing all of the assets of GMG Fund to be conveyed hereunder, which assets shall be free and clear of all liens, encumbrances, security interests, restrictions and limitations whatsoever. 11. The obligations of GMG Fund hereunder shall be subject to the following conditions: A. The Board of Trustees of MidCap Fund shall have authorized the execution of the Agreement, and the transactions contemplated thereby, and MidCap Fund shall have furnished to GMG Fund copies of resolutions to that effect certified by the Secretary or the Assistant Secretary of MidCap Fund. B. GMG Fund's shareholders shall have approved the Agreement and the transactions contemplated hereby, by an affirmative vote required by the Massachusetts Law and its charter documents and GMG Fund shall have furnished MidCap Fund copies of resolutions to that effect certified by the Secretary or an Assistant Secretary of GMG Fund. C. GMG Fund shall have received an opinion dated as of the Closing Date from counsel to MidCap Fund, to the effect that (i) MidCap Fund is a business trust duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts with full powers to carry on its business as then being conducted and to enter into and perform the Agreement; (ii) all actions necessary to make the Agreement, according to its terms, valid, binding and enforceable upon MidCap Fund and to authorize effectively the transactions contemplated by the Agreement have been taken by MidCap Fund; and (iii) the shares of MidCap Fund to be issued hereunder are duly authorized and when issued will be validly issued, fully-paid and non-assessable, except as set forth under "Shareholder and Trustee Liability" in MidCap Fund's Statement of Additional Information. Massachusetts counsel may be relied upon for this opinion. D. The representations and warranties of MidCap Fund contained herein shall be true and correct at and as of the Closing Date, and GMG Fund shall have been furnished with a certificate of the President, a Vice President or the Secretary or the Assistant Secretary or the Treasurer or the Assistant Treasurer of the Trust to that effect dated as of the Closing Date. E. GMG Fund shall have received an opinion of Deloitte & Touche LLP to the effect that the federal tax consequences of the transaction, if carried out in the manner outlined in the Agreement and in accordance with (i) GMG Fund's representation that there is no plan or intention by any GMG Fund shareholder who owns 5% or more of GMG Fund's outstanding shares, and, to GMG Fund's best knowledge, there is no plan or intention on the part of the remaining GMG Fund shareholders, to redeem, sell, exchange or otherwise dispose of a number of MidCap Fund shares received in the transaction that would reduce GMG Fund shareholders' ownership of MidCap Fund shares to a number of shares having a value, as of the Closing Date, of less than 50% of the value of all of the formerly outstanding GMG Fund shares as of the same date, and (ii) the representation by each of GMG Fund and MidCap Fund that, as of the Closing Date, GMG Fund and MidCap Fund will qualify as regulated investment companies or will meet the diversification test of Section 368(a)(2)(F)(ii) of the Code, will be as follows: 1. The transactions contemplated by the Agreement will qualify as a tax-free "reorganization" within the meaning of Section 368(a)(1) of the Code, and under the regulations promulgated thereunder. 2. GMG Fund and MidCap Fund will each qualify as a "party to a reorganization" within the meaning of Section 368(b)(2) of the Code. 3. No gain or loss will be recognized by the shareholders of GMG Fund upon the distribution of Class A, Class B, Class N and Class Y shares of beneficial interest in MidCap Fund to the shareholders of GMG Fund pursuant to Section 354 of the Code. 4. Under Section 361(a) of the Code no gain or loss will be recognized by GMG Fund by reason of the transfer of substantially all its assets in exchange for Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund. 5. Under Section 1032 of the Code no gain or loss will be recognized by MidCap Fund by reason of the transfer of substantially all of GMG Fund's assets in exchange for Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund and MidCap Fund's assumption of certain liabilities of GMG Fund. 6. The shareholders of GMG Fund will have the same tax basis and holding period for the Class A, Class B, Class C, Class N and Class Y shares of beneficial interest in MidCap Fund that they receive as they had for GMG Fund shares that they previously held, pursuant to Section 358(a) and 1223(1), respectively, of the Code. 7. The securities transferred by GMG Fund to MidCap Fund will have the same tax basis and holding period in the hands of MidCap Fund as they had for GMG Fund, pursuant to Section 362(b) and 1223(1), respectively, of the Code. F. The cash reserve shall not exceed 10% of the value of the net assets, nor 30% in value of the gross assets, of GMG Fund at the close of business on the Valuation Date. G. A Registration Statement on Form N-14 filed by MidCap Fund under the 1933 Act, containing a preliminary form of the Proxy Statement and Prospectus, shall have become effective under the 1933 Act. H. On the Closing Date, GMG Fund shall have received a letter from Robert G. Zack or other senior executive officer of OppenheimerFunds, Inc. acceptable to GMG Fund, stating that nothing has come to his or her attention which in his or her judgment would indicate that as of the Closing Date there were any material, actual or contingent liabilities of MidCap Fund arising out of litigation brought against MidCap Fund or claims asserted against it, or pending or, to the best of his or her knowledge, threatened claims or litigation not reflected in or apparent by the most recent audited financial statements and footnotes thereto of MidCap Fund delivered to GMG Fund. Such letter may also include such additional statements relating to the scope of the review conducted by such person and his or her responsibilities and liabilities as are not unreasonable under the circumstances. I. GMG Fund shall acknowledge receipt of the Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund. 12. GMG Fund hereby represents and warrants that: A. The audited financial statements of GMG Fund as of November 30, 2002 and unaudited financial statements as of May 31, 2003 heretofore furnished to MidCap Fund, present fairly the financial position, results of operations, and changes in net assets of GMG Fund as of that date, in conformity with generally accepted accounting principles applied on a basis consistent with the preceding year; and that from May 31, 2003 through the date hereof there have not been, and through the Closing Date there will not be, any material adverse change in the business or financial condition of GMG Fund, it being agreed that a decrease in the size of GMG Fund due to a diminution in the value of its portfolio and/or redemption of its shares shall not be considered a material adverse change; B. Contingent upon approval of the Agreement and the transactions contemplated thereby by GMG Fund's shareholders, GMG Fund has authority to transfer all of the assets of GMG Fund to be conveyed hereunder free and clear of all liens, encumbrances, security interests, restrictions and limitations whatsoever; C. The Prospectus, as amended and supplemented, contained in GMG Fund's Registration Statement under the 1933 Act, as amended, is true, correct and complete, conforms to the requirements of the 1933 Act and does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Registration Statement, as amended, was, as of the date of the filing of the last Post-Effective Amendment, true, correct and complete, conformed to the requirements of the 1933 Act and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; D. There is no material contingent liability of GMG Fund and no material claim and no material legal, administrative or other proceedings pending or, to the knowledge of GMG Fund, threatened against GMG Fund, not reflected in such Prospectus; E. Except for the Agreement, there are no material contracts outstanding to which GMG Fund is a party other than those ordinary in the conduct of its business; F. GMG Fund is a Massachusetts business trust duly organized, validly existing and in good standing under the laws of the State of Massachusetts; and has all necessary and material Federal and state authorizations to own all of its assets and to carry on its business as now being conducted; and GMG Fund is duly registered under the Act and such registration has not been rescinded or revoked and is in full force and effect; G. All federal and other tax returns and reports of GMG Fund required by law to be filed have been filed, and all federal and other taxes shown due on said returns and reports have been paid or provision shall have been made for the payment thereof and to the best of the knowledge of GMG Fund no such return is currently under audit and no assessment has been asserted with respect to such returns; and H. GMG Fund has elected that GMG Fund be treated as a regulated investment company and, for each fiscal year of its operations, GMG Fund has met the requirements of Subchapter M of the Code for qualification and treatment as a regulated investment company and GMG Fund intends to meet such requirements with respect to its current taxable year. 13. MidCap Fund hereby represents and warrants that: A. The audited financial statements of MidCap Fund as of October 31, 2002 and unaudited financial statements as of April 30, 2003 heretofore furnished to GMG Fund, present fairly the financial position, results of operations, and changes in net assets of MidCap Fund, as of that date, in conformity with generally accepted accounting principles applied on a basis consistent with the preceding year; and that from April 30, 2003 through the date hereof there have not been, and through the Closing Date there will not be, any material adverse changes in the business or financial condition of MidCap Fund, it being understood that a decrease in the size of MidCap Fund due to a diminution in the value of its portfolio and/or redemption of its shares shall not be considered a material or adverse change; B. The Prospectus, as amended and supplemented, contained in MidCap Fund's Registration Statement under the 1933 Act, is true, correct and complete, conforms to the requirements of the 1933 Act and does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Registration Statement, as amended, was, as of the date of the filing of the last Post-Effective Amendment, true, correct and complete, conformed to the requirements of the 1933 Act and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; C. Except for this Agreement, there is no material contingent liability of MidCap Fund and no material claim and no material legal, administrative or other proceedings pending or, to the knowledge of MidCap Fund, threatened against MidCap Fund, not reflected in such Prospectus; D. There are no material contracts outstanding to which MidCap Fund is a party other than those ordinary in the conduct of its business; E. MidCap Fund is a business trust duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts; MidCap Fund has all necessary and material federal and state authorizations to own all its properties and assets and to carry on its business as now being conducted; the Class A, Class B, Class C, Class N and Class Y shares of MidCap Fund which it issues to GMG Fund pursuant to the Agreement will be duly authorized, validly issued, fully-paid and non-assessable, except as set forth under "Shareholder & Trustee Liability" in MidCap Fund's Statement of Additional Information, will conform to the description thereof contained in MidCap Fund's Registration Statement and will be duly registered under the 1933 Act and in the states where registration is required; and MidCap Fund is duly registered under the Act and such registration has not been revoked or rescinded and is in full force and effect; F. All federal and other tax returns and reports of MidCap Fund required by law to be filed have been filed, and all federal and other taxes shown due on said returns and reports have been paid or provision shall have been made for the payment thereof and to the best of the knowledge of MidCap Fund, no such return is currently under audit and no assessment has been asserted with respect to such returns and to the extent such tax returns with respect to the taxable year of MidCap Fund ended October 31, 2002 have not been filed, such returns will be filed when required and the amount of tax shown as due thereon shall be paid when due; G. MidCap Fund has elected to be treated as a regulated investment company and, for each fiscal year of its operations, MidCap Fund has met the requirements of Subchapter M of the Code for qualification and treatment as a regulated investment company and MidCap Fund intends to meet such requirements with respect to its current taxable year; H. MidCap Fund has no plan or intention (i) to dispose of any of the assets transferred by GMG Fund, other than in the ordinary course of business, or (ii) to redeem or reacquire any of the Class A, Class B, Class C, Class N and Class Y shares issued by it in the reorganization other than pursuant to valid requests of shareholders; and I. After consummation of the transactions contemplated by the Agreement, MidCap Fund intends to operate its business in a substantially unchanged manner. 14. Each party hereby represents to the other that no broker or finder has been employed by it with respect to the Agreement or the transactions contemplated hereby. Each party also represents and warrants to the other that the information concerning it in the Proxy Statement and Prospectus will not as of its date contain any untrue statement of a material fact or omit to state a fact necessary to make the statements concerning it therein not misleading and that the financial statements concerning it will present the information shown fairly in accordance with generally accepted accounting principles applied on a basis consistent with the preceding year. Each party also represents and warrants to the other that the Agreement is valid, binding and enforceable in accordance with its terms and that the execution, delivery and performance of the Agreement will not result in any violation of, or be in conflict with, any provision of any charter, by-laws, contract, agreement, judgment, decree or order to which it is subject or to which it is a party. MidCap Fund hereby represents to and covenants with GMG Fund that, if the reorganization becomes effective, MidCap Fund will treat each shareholder of GMG Fund who received any of MidCap Fund's shares as a result of the reorganization as having made the minimum initial purchase of shares of MidCap Fund received by such shareholder for the purpose of making additional investments in shares of MidCap Fund, regardless of the value of the shares of MidCap Fund received. 15. MidCap Fund agrees that it will prepare and file a Registration Statement on Form N-14 under the 1933 Act which shall contain a preliminary form of proxy statement and prospectus contemplated by Rule 145 under the 1933 Act. The final form of such proxy statement and prospectus is referred to in the Agreement as the "Proxy Statement and Prospectus." Each party agrees that it will use its best efforts to have such Registration Statement declared effective and to supply such information concerning itself for inclusion in the Proxy Statement and Prospectus as may be necessary or desirable in this connection. GMG Fund covenants and agrees to liquidate and dissolve under the laws of the State of Massachusetts, following the Closing, and, upon Closing, to cause the cancellation of its outstanding shares. 16. The obligations of the parties shall be subject to the right of either party to abandon and terminate the Agreement for any reason and there shall be no liability for damages or other recourse available to a party not so terminating this Agreement, provided, however, that in the event that a party shall terminate this Agreement without reasonable cause, the party so terminating shall, upon demand, reimburse the party not so terminating for all expenses, including reasonable out-of-pocket expenses and fees incurred in connection with this Agreement. 17. The Agreement may be executed in several counterparts, each of which shall be deemed an original, but all taken together shall constitute one Agreement. The rights and obligations of each party pursuant to the Agreement shall not be assignable. 18. All prior or contemporaneous agreements and representations are merged into the Agreement, which constitutes the entire contract between the parties hereto. No amendment or modification hereof shall be of any force and effect unless in writing and signed by the parties and no party shall be deemed to have waived any provision herein for its benefit unless it executes a written acknowledgment of such waiver. 19. MidCap Fund understands that the obligations of GMG Fund under the Agreement are not binding upon any Trustee or shareholder of GMG Fund personally, but bind only GMG Fund and GMG Fund's property. MidCap Fund represents that it has notice of the provisions of the Declaration of Trust of GMG Fund disclaiming shareholder and trustee liability for acts or obligations of GMG Fund. 20. GMG Fund understands that the obligations of MidCap Fund under the Agreement are not binding upon any trustee or shareholder of MidCap Fund personally, but bind only MidCap Fund and MidCap Fund's property. GMG Fund represents that it has notice of the provisions of the Declaration of Trust of MidCap Fund disclaiming shareholder and trustee liability for acts or obligations of MidCap Fund. IN WITNESS WHEREOF, each of the parties has caused the Agreement to be executed and attested by its officers thereunto duly authorized on the date first set forth above. OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II By: ______________________ Robert G. Zack Vice President and Secretary OPPENHEIMER MIDCAP FUND By: ______________________ Robert G. Zack Secretary
STATEMENT OF ADDITIONAL INFORMATION TO PROSPECTUS AND PROXY STATEMENT PART B Acquisition of the Assets of the OPPENHEIMER SELECT MANAGERS GARTMORE MILLENNIUM GROWTH FUND II By and in exchange for Shares of the OPPENHEIMER MIDCAP FUND This Statement of Additional Information to this Prospectus and Proxy Statement (the "SAI") relates specifically to the proposed delivery of substantially all of the assets of Oppenheimer Select Managers Gartmore Millennium Growth Fund II ("GMG Fund") for shares of Oppenheimer MidCap Fund ("MidCap Fund"). This SAI consists of this Cover Page and the following documents: (i) audited financial statements for the 12-month period ended November 30, 2002, and financial statements for the six-month period ended May 31, 2003 (to be filed upon availability), respectively of GMG Fund; (ii) audited financial statements for the 12-month period ended October 31, 2002, and financial statements for the six-month period ended April 30, 2003, respectively of MidCap Fund; (iii) the Prospectus of GMG Fund dated March 28, 2003, as supplemented May 7, 2003 (iv) the Statement of Additional Information of GMG Fund dated March 28, 2003; and (v) the Prospectus dated December 23, 2002 and the Statement of Additional Information of MidCap Fund dated December 23, 2002, as supplemented February 11, 2003. This SAI is not a Prospectus; you should read this SAI in conjunction with the Prospectus and Proxy Statement dated July 7, 2003, relating to the above-referenced transaction. You can request a copy of the Prospectus and Proxy Statement by calling 1.800.708.7780 or by writing OppenheimerFunds Services at P.O. Box 5270, Denver, Colorado 80217. The date of this SAI is July 7, 2003.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-08297 Oppenheimer MidCap Fund (Exact name of registrant as specified in charter) 6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924 (Address of principal executive offices) (Zip code) Robert G. Zack, Esq. OppenheimerFunds, Inc. 498 Seventh Avenue, New York, New York 10018 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (303) 768-3200 -------------- Date of fiscal year end: October 31 Date of reporting period: October 31, 2002 - April 30, 2003 ITEM 1. REPORTS TO STOCKHOLDERS. April 30, 2003 Oppenheimer MidCap Fund Management Commentaries and Semiannual Report MANAGEMENT COMMENTARIES Performance Update Investment Strategy Discussion Listing of Top Holdings SEMIANNUAL REPORT AND FINANCIAL STATEMENTS Listing of Investments Financials "We believe the Fund's long-term record of performance demonstrates the enduring value of our disciplined approach to growth investing, which focuses on a company's ability to sustain true internal revenue growth." [LOGO] OppenheimerFunds[R] The Right Way to Invest HIGHLIGHTS Fund Objective Oppenheimer MidCap Fund seeks capital appreciation. MANAGEMENT COMMENTARIES AND ADDITIONAL DISCLOSURES 1 Letter to Shareholders 2 An Interview with Your Fund's Manager 26 Trustees and Officers Listing 28 Privacy Policy Notice SEMIANNUAL REPORT AND FINANCIAL STATEMENTS 7 Statement of Investments 9 Statement of Assets and Liabilities 11 Statement of Operations 12 Statements of Changes in Net Assets 13 Financial Highlights 18 Notes to Financial Statements Cumulative Total Returns* For the 6-Month Period Ended 4/30/03 Without With Sales Chg. Sales Chg. - --------------------------------- Class A 0.79% -5.01% - --------------------------------- Class B 0.45 -4.55 - --------------------------------- Class C 0.45 -0.55 - --------------------------------- Class N 0.70 -0.30 - --------------------------------- Class Y 1.03 - --------------------------------- Average Annual Total Returns* For the 1-Year Period Ended 4/30/03 Without With Sales Chg. Sales Chg. - --------------------------------- Class A -18.99% -23.65% - --------------------------------- Class B -19.61 -23.63 - --------------------------------- Class C -19.61 -20.41 - --------------------------------- Class N -19.18 -19.99 - --------------------------------- Class Y -18.53 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 the possible loss of the principal amount invested. *See Notes on page 6 for further details. - -------------------------------------------------------- Not part of the semiannual report to Fund shareholders - -------------------------------------------------------- LETTER TO SHAREHOLDERS Dear Shareholder, It is nearly impossible to reflect on the past six months without thinking about the war with Iraq. We experienced a range of emotions in the days leading up to the war and especially as the media brought the war into our homes, as never before. At OppenheimerFunds, we face the difficult task of looking beyond the war to see its long-term impact, together with other factors, on the global economy, the financial markets and, in the end, your investment with us. It's a responsibility that we take very seriously and becomes our primary focus during uncertain times like these. It is our strong belief that investors can be well served by this professional insight and by the guidance provided by a financial advisor. In partnership with OppenheimerFunds, your financial advisor can help you navigate through this volatile and sometimes unpredictable environment. We encourage you to continue to work closely with your advisor to develop and implement an investment plan that fits your goals and risk tolerance. On our end, we continue to be the home to some of the most experienced and talented investment professionals in the industry. They remain focused on proven methods that drive informed, intelligent investment decisions. It is an approach we are proud of and one that has served investors well in a variety of market conditions. We've found that in good times and bad, the fundamental principles of investing remain key for financial success. These principles-- investing according to your goals, diversifying your portfolio and benefiting from the value of professional investment advice--are simple ideas that have proven themselves over time, and, we believe, will prove themselves again. We thank you for your continued confidence in OppenheimerFunds and encourage you to visit our website, www.oppenheimerfunds.com, or speak with your advisor for up to date information on your investments and the markets. Sincerely, /S/ SIGNATURE John V. Murphy May 21, 2003 These general market views represent opinions of OppenheimerFunds, Inc. and are not intended to predict performance of the securities markets or any particular fund. Specific information that applies to your Fund is contained in the pages that follow. PHOTO OF JOHN V. MURPHY President Oppenheimer MidCap Fund - -------------------------------------------------------- Not part of the semiannual report to Fund shareholders - -------------------------------------------------------- 1 | OPPENHEIMER MIDCAP FUND AN INTERVIEW WITH YOUR FUND'S MANAGER Q How would you characterize the Fund's performance during the six-month period that ended April 30, 2003? A. The Fund delivered slightly below average performance during a difficult period. 1 Returns were undermined by high levels of market volatility generated by unpredictable geopolitical events and a shaky transition from recession to gradual growth. We believe these results generally reflect short-term market fluctuations rather than the broader trends responsible for the Fund's longer-term performance. We believe our long-term record of performance demonstrates the enduring value of our disciplined approach to growth investing, which focuses on a company's ability to sustain true internal revenue growth. What made this such a challenging period for stocks? Conflicting economic and political forces battered markets during the past six months. On the positive side, the U.S. economy showed signs of modest growth, while interest rates remained low and inflation remained in check. On the negative side, corporate capital spending remained weak, consumer sentiment declined and geopolitical uncertainties sapped investor confidence. These conditions created high levels of volatility, with stock prices rising and falling in response to international political developments as well as company-specific business results. The market's volatility was also reflected in abrupt shifts in sentiment with regard to various industries and sectors. For example, technology and health care stocks tended to move in opposite directions at any one moment, depending on whether the news of the day encouraged growth investors to hold a more strongly positive or negative economic outlook. As optimism rose, investors shifted assets into technology stocks they believed were more likely to benefit from economic gains. As prospects for growth dimmed, growth investors sought shelter Portfolio Manager Bruce Bartlett 1. The Fund's performance is compared to the S&P MidCap 400 Index, an unmanaged index of midcap equity securities, which had a six-month return of 3.98% for the period ended 4/30/03. - -------------------------------------------------------- Not part of the semiannual report to Fund shareholders - -------------------------------------------------------- 2 | OPPENHEIMER MIDCAP FUND in the traditionally defensive health care area. These shifts drove individual stock prices sharply higher and lower, often without any reference to a company's underlying fundamentals. How did you manage the Fund under these conditions? We focused on stocks of companies with strong earnings growth generated by increasing sales. We believe that sales-driven earnings growth is intrinsically more sustainable than growth that is driven primarily by acquisitions or accounting gimmicks. Among stocks that met our investment criteria, we emphasized those we believed could maintain revenue growth during this difficult economic period. By focusing on the quality rather than the magnitude of a company's growth, we cushioned the impact of market volatility on the Fund, while avoiding many of the market's sharpest losses. We also maintained the Fund's concentration on mid-cap stocks. Mid-cap companies generally provide greater growth potential than larger companies and lower risks of failure than smaller companies, thereby offering the best of both worlds. Our company-by-company stock selection approach led us to concentrate a relatively high percentage of assets in the areas of health care, consumer and technology, each of which resulted in positive contributions to the Fund's relative performance in the last six months. Health care proved to be the Fund's largest single area of investment, because that's where we found the largest number of companies generating the kind of sustainable, internal revenue growth we target. Key holdings included equipment suppliers, such as Varian Medical Systems, Inc., and biotechnology companies, such as Gilead Sciences, Inc. While we sold some positions in drug distribution companies that experienced a slowdown in revenue growth, we added to other positions, such as Biomet, Inc., that were generating above-average, sales-driven earnings growth. In the consumer area, we succeeded in identifying several strong-performers despite weakness in consumer sentiment and seasonally - -------------------------------------------------------- Not part of the semiannual report to Fund shareholders - -------------------------------------------------------- 3 | OPPENHEIMER MIDCAP FUND AN INTERVIEW WITH YOUR FUND'S MANAGER disappointing sales experienced by many leading companies. Above-average holdings ranged from natural foods retailers, such as Whole Foods Market, Inc., to upscale apparel and accessories companies, such as Coach, Inc. Among technology stocks, we emphasized companies that stand at a favorable point in their product cycle, such as wireless equipment manufacturers (e.g., UTStarcom, Inc.), semiconductor makers (Marvell Technology Group Ltd.), and software security developers (Symantec Corp.). On the other hand, the Fund sustained steeper-than-average losses in the areas of industrials and financials. Both of these areas were adversely affected by the market volatility and sector rotation trends mentioned earlier, as well as weakening fundamentals among some of the Fund's individual holdings. We responded by reducing the Fund's exposure to companies that showed disappointing levels of growth. What is your outlook for the future? While short-term growth prospects are likely to face continuing geopolitical and economic pressures, longer-term prospects appear favorable. Many of the inventory excesses that inhibited technology growth in the past two years have run their course, while low interest rates are likely to encourage companies to reinvest in their business infrastructure. On the health care front, positive regulatory developments have opened the door to new drug approvals. As always, we remain sharply focused on the underlying fundamentals that we believe are the most reliable indicators of a company's long-term growth prospects. Our disciplined strategy of building the portfolio one company and one investment at a time has earned Oppenheimer MidCap Fund its exceptional record of performance, and makes the Fund a continuing part of The Right Way to Invest. Average Annual Total Returns with Sales Charge For the Periods Ended 3/31/03 2 Class A Since 1-Year 5-Year Inception - --------------------------- - -30.41% -3.77% 0.56% Class B Since 1-Year 5-Year Inception - --------------------------- - -30.37% -3.71% -0.78% Class C Since 1-Year 5-Year Inception - --------------------------- - -27.46% -3.36% 0.94% Class N Since 1-Year 5-Year Inception - --------------------------- - -27.16% N/A - 24.57% Class Y Since 1-Year 5-Year Inception - --------------------------- - -25.76% -2.15% 2.19% 2. See Notes on page 6 for further details. - -------------------------------------------------------- Not part of the semiannual report to Fund shareholders - -------------------------------------------------------- 4 | OPPENHEIMER MIDCAP FUND Top Ten Common Stock Holdings 4 - ------------------------------------------------------------- Bed Bath & Beyond, Inc. 7.2% - ------------------------------------------------------------- Varian Medical Systems, Inc. 6.7 - ------------------------------------------------------------- Gilead Sciences, Inc. 5.8 - ------------------------------------------------------------- Lincare Holdings, Inc. 5.3 - ------------------------------------------------------------- Stryker Corp. 4.9 - ------------------------------------------------------------- Coach, Inc. 4.4 - ------------------------------------------------------------- Radian Group, Inc. 4.4 - ------------------------------------------------------------- UTStarcom, Inc. 4.1 - ------------------------------------------------------------- Apollo Group, Inc., Cl. A 3.6 - ------------------------------------------------------------- Biomet, Inc. 3.5 For up-to-date Top 10 Fund holdings, please visit www.oppenheimerfunds.com. Top Five Stock Industries 4 - ------------------------------------------------------------- Health Care Equipment & Supplies 15.0% - ------------------------------------------------------------- Specialty Retail 9.8 - ------------------------------------------------------------- Biotechnology 8.7 - ------------------------------------------------------------- Insurance 7.7 - ------------------------------------------------------------- Software 6.6 - ------------------------------------- Sector Allocation 3 [PIE CHART] o Health Care 32.5% Health Care Equipment & Supplies 16.8 Bio- technology 9.7 Health Care Providers & Services 6.0 o Consumer Discretionary 23.6 o Information Technology 20.3 o Financials 13.4 o Industrials 6.9 o Consumer Staples 3.3 - ------------------------------------- 3. Portfolio's holdings and allocations are subject to change. Percentages are as of April 30, 2003, and are based on total market value of common stock investments. 4. Portfolio's holdings and allocations are subject to change. Percentages are as of April 30, 2003, and are based on net assets. - -------------------------------------------------------- Not part of the semiannual report to Fund shareholders - -------------------------------------------------------- 5 | OPPENHEIMER MIDCAP FUND NOTES In reviewing performance, please remember that past performance cannot 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. Because of ongoing market volatility, the Fund's performance may be subject to substantial fluctuations, and current performance may be more or less than the results shown. For updates on the Fund's performance, visit our website at www.oppenheimerfunds.com. Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Cumulative total returns are not annualized. The Fund's total returns shown do not reflect the deduction of income taxes on an individual's investment. Taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares. For more complete information about the Fund, including charges, expenses and risks, please refer to the prospectus. To obtain a copy, call your financial advisor, call OppenheimerFunds Distributor, Inc. at 1.800.CALL OPP (1.800.225.5677) or visit the OppenheimerFunds website at www.oppenheimerfunds.com. Read the prospectus carefully before you invest or send money. Class A shares of the Fund were first publicly offered on 12/1/97. Unless otherwise noted, Class A returns include the current maximum initial sales charge of 5.75%. Class B shares of the Fund were first publicly offered on 12/1/97. Unless otherwise noted, Class B returns include the applicable contingent deferred sales charge of 5% (1-year), 2% (5-year) and 1% (since inception). Class B shares are subject to an annual 0.75% asset-based sales charge. Class C shares of the Fund were first publicly offered on 12/1/97. Unless otherwise noted, Class C returns include the contingent deferred sales charge of 1% for the one-year period. Class C shares are subject to an annual 0.75% asset-based sales charge. Class N shares of the Fund were first publicly offered on 3/1/01. Class N shares are offered only through retirement plans. Unless otherwise noted, Class N returns include the contingent deferred sales charge of 1% for the one-year period. Class N shares are subject to an annual 0.25% asset-based sales charge. Class Y shares of the Fund were first publicly offered on 12/1/97. Class Y shares are offered only to certain institutional investors under special agreement with the Distributor. An explanation of the calculation of performance is in the Fund's Statement of Additional Information. - -------------------------------------------------------- Not part of the semiannual report to Fund shareholders - -------------------------------------------------------- 6 | OPPENHEIMER MIDCAP FUND STATEMENT OF INVESTMENTS April 30, 2003 / Unaudited Market Value Shares See Note 1 - ------------------------------------------------------ Common Stocks--89.5% - ------------------------------------------------------ Consumer Discretionary--21.1% - ------------------------------------------------------ Hotels, Restaurants & Leisure--1.7% Outback Steakhouse, Inc. 166,500 $ 5,950,710 - ------------------------------------------------------ Wendy's International, Inc. 222,500 6,461,400 ------------ 12,412,110 - ------------------------------------------------------ Media--2.6% Univision Communications, Inc., Cl. A 1 620,000 18,773,600 - ------------------------------------------------------ Multiline Retail--2.6% Family Dollar Stores, Inc. 550,000 18,804,500 - ------------------------------------------------------ Specialty Retail--9.8% Abercrombie & Fitch Co., Cl. A 1 224,000 7,365,120 - ------------------------------------------------------ Bed Bath & Beyond, Inc. 1 1,320,000 52,153,200 - ------------------------------------------------------ CarMax, Inc. 1 360,000 7,614,000 - ------------------------------------------------------ Weight Watchers International, Inc. 1 77,100 3,622,158 ------------- 70,754,478 - ------------------------------------------------------ Textiles & Apparel--4.4% Coach, Inc. 1 739,000 32,153,890 - ------------------------------------------------------ Consumer Staples--3.0% - ------------------------------------------------------ Food & Drug Retailing--3.0% Whole Foods Market, Inc. 1 360,000 21,369,600 - ------------------------------------------------------ Financials--12.0% - ------------------------------------------------------ Banks--2.1% Commerce Bancorp, Inc. 368,000 14,966,560 - ------------------------------------------------------ Diversified Financials--2.2% Doral Financial Corp. 404,200 16,172,042 - ------------------------------------------------------ Insurance--7.7% AMBAC Financial Group, Inc. 131,600 7,678,860 - ------------------------------------------------------ MBIA, Inc. 358,700 16,033,890 - ------------------------------------------------------ Radian Group, Inc. 801,100 31,803,670 ------------ 55,516,420 Market Value Shares See Note 1 - ------------------------------------------------------ Health Care--29.0% - ------------------------------------------------------ Biotechnology--8.7% Gilead Sciences, Inc. 1 914,300 $ 42,185,802 - ------------------------------------------------------ IDEC Pharmaceuticals Corp. 1 301,000 9,857,750 - ------------------------------------------------------ Medimmune, Inc. 1 300,000 10,581,000 ------------ 62,624,552 - ------------------------------------------------------ Health Care Equipment & Supplies--15.0% Biomet, Inc. 832,500 25,357,950 - ---------------------------------------- ------------- Stryker Corp. 525,000 35,180,250 - ------------------------------------------------------ Varian Medical Systems, Inc. 1 898,000 48,366,280 ------------ 108,904,480 - ------------------------------------------------------ Health Care Providers & Services--5.3% Lincare Holdings, Inc. 1 1,268,400 38,521,308 - ------------------------------------------------------ Industrials--6.2% - ------------------------------------------------------ Commercial Services & Supplies--4.1% Apollo Group, Inc., Cl. A 1 475,000 25,744,525 - ------------------------------------------------------ Career Education Corp. 1 60,000 3,607,800 ------------ 29,352,325 - ------------------------------------------------------ Machinery--2.1% SPX Corp. 1 450,000 15,210,000 - ------------------------------------------------------ Information Technology--18.2% - ------------------------------------------------------ Communications Equipment--4.1% UTStarcom, Inc. 1 1,362,900 29,671,696 - ------------------------------------------------------ Computers & Peripherals--0.4% Network Appliance, Inc. 1 250,000 3,320,000 - ------------------------------------------------------ Electronic Equipment & Instruments--1.1% Garmin Ltd. 1 186,200 7,891,156 - ------------------------------------------------------ Internet Software & Services--1.0% Expedia, Inc., Cl. A 1 125,000 7,223,750 - ------------------------------------------------------ Semiconductor Equipment & Products--5.0% Marvell Technology Group Ltd. 1 800,000 18,463,200 - ------------------------------------------------------ QLogic Corp. 1 400,000 17,596,000 ------------ 36,059,200 - ------------------------------------------------------ Software--6.6% Mercury Interactive Corp. 1 700,000 23,758,000 7 | OPPENHEIMER MIDCAP FUND STATEMENT OF INVESTMENTS Unaudited / Continued Market Value Shares See Note 1 - ------------------------------------------------------ Software Continued Symantec Corp. 1 539,300 $ 23,702,235 ------------ 47,460,235 ------------ Total Common Stocks (Cost $594,974,075) 647,161,902 - ------------------------------------------------------ Preferred Stocks--0.1% Axsun Technologies, Inc., Cv., Series C 1,2,3 771,208 363,933 - ------------------------------------------------------ Centerpoint Broadband Technologies, Inc., Cv., Series D 1,2 556,586 -- - ------------------------------------------------------ fusionOne, Inc., 8% Non-Cum. Cv., Series D 1,2,3 1,675,894 63,181 - ------------------------------------------------------ ITF Optical Technologies, Inc., Cv., Series A 1,2,3 200,000 116,760 ------------ Total Preferred Stocks (Cost $29,100,099) 543,874 Principal Market Value Amount See Note 1 - ------------------------------------------------------ Joint Repurchase Agreements--13.3% 4 Undivided interest of 11.64% in joint repurchase agreement (Market Value $827,630,000) with PaineWebber, Inc., 1.31%, dated 4/30/03, to be repurchased at $96,366,507 on 5/1/03, collateralized by Federal Home Loan Mortgage Corp., 5.50%, 4/1/33--5/1/33, with a value of $844,859,664 (Cost $96,363,000) $96,363,000 $ 96,363,000 - ------------------------------------------------------ Total Investments, at Value (Cost $720,437,174) 102.9% 744,068,776 - ------------------------------------------------------ Liabilities in Excess of Other Assets (2.9) (20,677,626) ---------------------- Net Assets 100.0% $723,391,150 ====================== Footnotes to Statement of Investments 1. Non-income producing security. 2. Identifies issues considered to be illiquid or restricted--See Note 6 of Notes to Financial Statements. 3. Affiliated company. Represents ownership of at least 5% of the voting securities of the issuer, and is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended April 30, 2003. The aggregate fair value of securities of affiliated companies held by the Fund as of April 30, 2003 amounts to $543,874. Transactions during the period in which the issuer was an affiliate are as follows: Shares Gross Gross Shares Unrealized October 31, 2002 Additions Reductions April 30, 2003 Depreciation - -------------------------------------------------------------------------------- Stocks and/or Warrants Axsun Technologies, Inc., Cv., Series C 771,208 - -- -- 771,208 $8,636,064 fusionOne, Inc., 8% Non-Cum. Cv., Series D 1,675,894 - -- -- 1,675,894 9,036,923 ITF Optical Technologies, Inc., Cv., Series A 200,000 - -- -- 200,000 4,883,240 4. The Fund may have elements of risk due to concentrated investments. Such concentrations may subject the Fund to additional risks. See accompanying Notes to Financial Statements. 8 | OPPENHEIMER MIDCAP FUND STATEMENT OF ASSETS AND LIABILITIES Unaudited April 30, 2003 - ------------------------------------------------------------------------------- Assets Investments, at value (including $96,363,000 in repurchase agreements)-- see accompanying statement: Unaffiliated companies (cost $697,337,073) $ 743,524,902 Affiliated companies (cost $23,100,101) 543,874 - --------------- 744,068,776 - -------------------------------------------------------------------------------- Cash 497,785 - -------------------------------------------------------------------------------- Receivables and other assets: Shares of beneficial interest sold 599,019 Interest and dividends 5,695 Other 7,829 - --------------- Total assets 745,179,104 - -------------------------------------------------------------------------------- Liabilities Payables and other liabilities: Investments purchased 19,829,193 Shares of beneficial interest redeemed 949,289 Shareholder reports 484,859 Transfer and shareholder servicing agent fees 200,173 Distribution and service plan fees 139,397 Trustees' compensation 137,988 Other 47,055 - --------------- Total liabilities 21,787,954 - -------------------------------------------------------------------------------- Net Assets $ 723,391,150 =============== - -------------------------------------------------------------------------------- Composition of Net Assets Paid-in capital $1,941,983,592 - -------------------------------------------------------------------------------- Accumulated net investment loss (4,709,776) - -------------------------------------------------------------------------------- Accumulated net realized loss on investment transactions (1,237,514,268) - -------------------------------------------------------------------------------- Net unrealized appreciation on investments 23,631,602 - --------------- Net Assets $ 723,391,150 =============== 9 | OPPENHEIMER MIDCAP FUND STATEMENT OF ASSETS AND LIABILITIES Unaudited / Continued - -------------------------------------------------------------------------------- Net Asset Value Per Share - -------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net assets of $342,327,016 and 29,715,999 shares of beneficial interest outstanding) $11.52 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $12.22 - -------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $275,545,400 and 24,883,938 shares of beneficial interest outstanding) $11.07 - -------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $82,405,478 and 7,444,604 shares of beneficial interest outstanding) $11.07 - -------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $11,161,814 and 974,260 shares of beneficial interest outstanding) $11.46 - -------------------------------------------------------------------------------- Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $11,951,442 and 1,010,626 shares of beneficial interest outstanding) $11.83 See accompanying Notes to Financial Statements. 10 | OPPENHEIMER MIDCAP FUND STATEMENT OF OPERATIONS Unaudited For the Six Months Ended April 30, 2003 - ------------------------------------------------------------------------------ Investment Income Dividends $ 820,214 - ------------------------------------------------------------------------------ Interest 554,560 ------------ Total investment income 1,374,774 - ------------------------------------------------------------------------------ Expenses Management fees 2,488,059 - ------------------------------------------------------------------------------ Distribution and service plan fees: Class A 348,167 Class B 1,353,875 Class C 395,076 Class N 23,922 - ------------------------------------------------------------------------------ Transfer and shareholder servicing agent fees: Class A 1,119,328 Class B 1,066,497 Class C 304,224 Class N 24,662 Class Y 13,996 - ------------------------------------------------------------------------------ Shareholder reports 353,845 - ------------------------------------------------------------------------------ Trustees' compensation 7,266 - ------------------------------------------------------------------------------ Custodian fees and expenses 5,051 - ------------------------------------------------------------------------------ Other 73,624 ------------ Total expenses 7,577,592 Less reduction to custodian expenses (120) Less voluntary waiver of transfer and shareholder servicing agent fees--Class A (665,872) Less voluntary waiver of transfer and shareholder servicing agent fees--Class B (758,160) Less voluntary waiver of transfer and shareholder servicing agent fees--Class C (210,195) Less voluntary waiver of transfer and shareholder servicing agent fees--Class N (6,768) ------------ Net expenses 5,936,477 - ------------------------------------------------------------------------------ Net Investment Loss (4,561,703) - ------------------------------------------------------------------------------ Realized and Unrealized Gain (Loss) Net realized gain (loss) on: Investments (85,769,503) Closing and expiration of option contracts written 191,097 ------------ Net realized loss (85,578,406) - ------------------------------------------------------------------------------ Net change in unrealized appreciation on investments 93,448,645 ------------ Net realized and unrealized gain 7,870,239 - ------------------------------------------------------------------------------ Net Increase in Net Assets Resulting from Operations $ 3,308,536 ============ See accompanying Notes to Financial Statements. 11 | OPPENHEIMER MIDCAP FUND STATEMENTS OF CHANGES IN NET ASSETS Six Months Year Ended Ended April 30, 2003 October 31, (Unaudited) 2002 - -------------------------------------------------------------------------------- Operations Net investment loss $(4,561,703) $ (14,191,329) - -------------------------------------------------------------------------------- Net realized loss (85,578,406) (235,256,189) - -------------------------------------------------------------------------------- Net change in unrealized appreciation 93,448,645 31,615,304 - ---------------------------- Net increase (decrease) in net assets resulting from operations 3,308,536 (217,832,214) - -------------------------------------------------------------------------------- Beneficial Interest Transactions Net increase (decrease) in net assets resulting from beneficial interest transactions: Class A (11,714,381) (79,503,847) Class B (16,352,042) (59,860,957) Class C (1,203,299) (19,236,764) Class N 2,178,678 8,462,388 Class Y 4,178,724 4,409,028 - -------------------------------------------------------------------------------- Net Assets Total decrease (19,603,784) (363,562,366) - -------------------------------------------------------------------------------- Beginning of period 742,994,934 1,106,557,300 - ---------------------------- End of period [including accumulated net investment loss of $4,709,776 and $148,073, respectively] $723,391,150 $742,994,934 ============================ See accompanying Notes to Financial Statements. 12 | OPPENHEIMER MIDCAP FUND FINANCIAL HIGHLIGHTS Six Months Year Ended Ended April 30, 2003 Oct. 31, Class A (Unaudited) 2002 2001 2000 1999 1998 1 - -------------------------------------------------------------------------------- Per Share Operating Data Net asset value, beginning of period $ 11.43 $ 14.42 $ 30.41 $ 19.88 $ 10.83 $ 10.00 - -------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) (.04) (.13) (.02) .04 (.04) (.02) Net realized and unrealized gain (loss) .13 (2.86) (15.97) 10.49 9.11 .85 - --------------------------------------------------------------------------- Total from investment operations .09 (2.99) (15.99) 10.53 9.07 .83 - ---------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Distributions in excess of net realized gain -- -- - -- -- (.02) -- - ------------------------------------------------------------------------------------ Net asset value, end of period $11.52 $11.43 $14.42 $30.41 $19.88 $10.83 =========================================================================== - ---------------------------------------------------------------------------------- Total Return, at Net Asset Value 2 0.79% (20.74)% (52.58)% 52.97% 83.79% 8.30% - --------------------------------------------------------------------------------- Ratios/Supplemental Data Net assets, end of period (in thousands) $342,327 $351,983 $532,338 $1,055,967 $167,879 $14,607 - -------------------------------------------------------------------------------- Average net assets (in thousands) $334,180 $460,797 $718,814 $ 728,168 $ 60,644 $ 7,185 - -------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income (loss) (0.93)% (1.06)% (0.09)% 0.28% (0.49)% (0.33)% Expenses, gross 1.73% 1.68% 1.33% 1.16% 1.40% 1.59% 4 Expenses, net 1.33% 5,6 1.47% 5,6 1.32% 5,6 1.16% 5 1.40% 5 1.59% - -------------------------------------------------------------------------------- Portfolio turnover rate 36% 51% 84% 23% 61% 117% 1. For the period from December 1, 1997 (inception of offering) to October 31, 1998. 2. Assumes an 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. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. 5. Reduction to custodian expenses less than 0.01%. 6. Net of voluntary waiver of transfer agent fees. See accompanying Notes to Financial Statements. 13 | OPPENHEIMER MIDCAP FUND FINANCIAL HIGHLIGHTS Continued Six Months Year Ended Ended April 30, 2003 Oct. 31, Class B (Unaudited) 2002 2001 2000 1999 1998 1 - --------------------------------------------------------------------------------- Per Share Operating Data Net asset value, beginning of period $ 11.02 $ 14.02 $ 29.79 $ 19.62 $ 10.77 $ 10.00 - -------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment loss (.11) (.30) (.15) (.07) (.07) (.05) Net realized and unrealized gain (loss) .16 (2.70) (15.62) 10.24 8.94 .82 - --------------------------------------------------------------------------- Total from investment operations .05 (3.00) (15.77) 10.17 8.87 .77 - -------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Distributions in excess of net realized gain -- -- - -- -- (.02) -- - -------------------------------------------------------------------------------- Net asset value, end of period $11.07 $11.02 $14.02 $29.79 $19.62 $10.77 =========================================================================== - ------------------------------------------------------------------------------------------------------------------------- Total Return, at Net Asset Value 2 0.45% (21.40)% (52.94)% 51.83% 82.40% 7.70% - ------------------------------------------------------------------------------------------------------------------------- Ratios/Supplemental Data Net assets, end of period (in thousands) $275,545 $291,397 $438,962 $874,830 $118,611 $7,654 - ------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $272,931 $385,917 $592,096 $594,390 $ 40,455 $3,521 - ------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment loss (1.67)% (1.85)% (0.84)% (0.48)% (1.25)% (1.06)% Expenses, gross 2.63% 2.48% 2.08% 1.91% 2.16% 2.35% 4 Expenses, net 2.07% 5,6 2.27% 5,6 2.07% 5,6 1.91% 5 2.16% 5 2.35% - ------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 36% 51% 84% 23% 61% 117% 1. For the period from December 1, 1997 (inception of offering) to October 31, 1998. 2. Assumes an 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. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. 5. Reduction to custodian expenses less than 0.01%. 6. Net of voluntary waiver of transfer agent fees. See accompanying Notes to Financial Statements. 14 | OPPENHEIMER MIDCAP FUND Six Months Year Ended Ended April 30, 2003 Oct. 31, Class C (Unaudited) 2002 2001 2000 1999 1998 1 - -------------------------------------------------------------------------------------- Per Share Operating Data Net asset value, beginning of period $ 11.02 $ 14.02 $ 29.78 $ 19.60 $ 10.76 $ 10.00 - -------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment loss (.09) (.30) (.15) (.07) (.06) (.05) Net realized and unrealized gain (loss) .14 (2.70) (15.61) 10.25 8.92 .81 - ------------------------------------------------------------------------------- Total from investment operations .05 (3.00) (15.76) 10.18 8.86 .76 - ------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Distributions in excess of net realized gain -- -- - -- -- (.02) -- - ------------------------------------------------------------------------------------- Net asset value, end of period $11.07 $11.02 $14.02 $29.78 $19.60 $10.76 =============================================================================== - ------------------------------------------------------------------------------------- Total Return, at Net Asset Value 2 0.45% (21.40)% (52.92)% 51.94% 82.38% 7.60% - ------------------------------------------------------------------------------------ Ratios/Supplemental Data Net assets, end of period (in thousands) $82,405 $ 83,351 $128,230 $247,566 $26,482 $2,587 - ----------------------------------------------------------------------------------- Average net assets (in thousands) $79,665 $112,436 $170,129 $161,221 $ 9,066 $1,271 - ----------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment loss (1.68)% (1.84)% (0.85)% (0.48)% (1.26)% (1.07)% Expenses, gross 2.61% 2.47% 2.08% 1.91% 2.16% 2.35% 4 Expenses, net 2.08% 5,6 2.26% 5,6 2.07% 5,6 1.91% 5 2.16% 5 2.35% - ---------------------------------------------------------------------------------- Portfolio turnover rate 36% 51% 84% 23% 61% 117% 1. For the period from December 1, 1997 (inception of offering) to October 31, 1998. 2. Assumes an 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. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. 5. Reduction to custodian expenses less than 0.01%. 6. Net of voluntary waiver of transfer agent fees. See accompanying Notes to Financial Statements. 15 | OPPENHEIMER MIDCAP FUND FINANCIAL HIGHLIGHTS Continued Six Months Year Ended Ended April 30, 2003 Oct. 31, Class N (Unaudited) 2002 2001 1 - -------------------------------------------------------------------------------------------------- Per Share Operating Data Net asset value, beginning of period $ 11.38 $ 14.40 $ 19.54 - -------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment loss (.09) (.14) (.05) Net realized and unrealized gain (loss) .17 (2.88) (5.09) - ---------------------------------------- Total from investment operations .08 (3.02) (5.14) - -------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Distributions in excess of net realized gain -- - -- -- - -------------------------------------------------------------------------------------------------- Net asset value, end of period $11.46 $11.38 $14.40 ======================================== - -------------------------------------------------------------------------------------------------- Total Return, at Net Asset Value 2 0.70% (20.97)% (26.31)% - -------------------------------------------------------------------------------------------------- Ratios/Supplemental Data Net assets, end of period (in thousands) $11,162 $8,846 $2,268 - -------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 9,661 $6,576 $1,250 - -------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment loss (1.32)% (1.28)% (0.94)% Expenses, gross 1.85% 1.87% 1.73% Expenses, net 1.71% 4,5 1.66% 4,5 1.72% 4,5 - -------------------------------------------------------------------------------------------------- Portfolio turnover rate 36% 51% 84% 1. For the period from March 1, 2001 (inception of offering) to October 31, 2001. 2. Assumes an 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. Reduction to custodian expenses less than 0.01%. 5. Net of voluntary waiver of transfer agent fees. See accompanying Notes to Financial Statements. 16 | OPPENHEIMER MIDCAP FUND Six Months Year Ended Ended April 30, 2003 Oct. 31, Class Y (Unaudited) 2002 2001 2000 1999 1998 1 - --------------------------------------------------------------------------------- Per Share Operating Data Net asset value, beginning of period $ 11.71 $ 14.69 $ 30.86 $ 20.07 $ 10.88 $ 10.00 - ------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) (.12) (.08) (.08) (.02) (.01) .01 Net realized and unrealized gain (loss) .24 (2.90) (16.09) 10.81 9.22 .87 - ---------------------------------------------------------------------------- Total from investment operations .12 (2.98) (16.17) 10.79 9.21 .88 - -------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Distributions in excess of net realized gain -- -- - -- -- (.02) -- - ----------------------------------------------------------------------------------- Net asset value, end of period $11.83 $11.71 $14.69 $30.86 $20.07 $10.88 =========================================================================== - ----------------------------------------------------------------------------------- Total Return, at Net Asset Value 2 1.03% (20.29)% (52.40)% 53.76% 84.69% 8.80% - ------------------------------------------------------------------------------------------------------------------------- Ratios/Supplemental Data Net assets, end of period (in thousands) $11,951 $7,419 $4,759 $115 $2 $1 - ------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 9,115 $6,449 $2,720 $ 33 $2 $1 - ------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income (loss) (0.75)% (0.39)% (0.12)% 0.60% (0.06)% 0.05% Expenses, gross 1.15% 0.83% 1.07% 0.74% 1.03% 1.09% 4 Expenses, net 1.15% 5 0.83% 5 1.02% 5,6 0.74% 5 1.03% 5 1.09% - ------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 36% 51% 84% 23% 61% 117% 1. For the period from December 1, 1997 (inception of offering) to October 31, 1998. 2. Assumes an 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. Expense ratio has been calculated without adjustment for the reduction to custodian expenses. 5. Reduction to custodian expenses less than 0.01%. 6. Net of voluntary waiver of transfer agent fees. See accompanying Notes to Financial Statements. 17 | OPPENHEIMER MIDCAP FUND NOTES TO FINANCIAL STATEMENTS Unaudited - -------------------------------------------------------------------------------- 1. Significant Accounting Policies Oppenheimer MidCap Fund (the Fund) is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment objective is to seek capital appreciation. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B, Class C, Class N and Class Y shares. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B, Class C and Class N shares are sold without a front-end sales charge but may be subject to a contingent deferred sales charge (CDSC). Class N shares are sold only through retirement plans. Retirement plans that offer Class N shares may impose charges on those accounts. Class Y shares are sold to certain institutional investors without either a front-end sales charge or a CDSC. All classes of shares have identical rights and voting privileges. Earnings, net assets and net asset value per share may differ by minor amounts due to each class having its own expenses directly attributable to that class. Classes A, B, C and N have separate distribution and/or service plans. No such plan has been adopted for Class Y shares. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. - -------------------------------------------------------------------------------- Securities Valuation. Securities listed or traded on National Stock Exchanges or other domestic or foreign exchanges are valued based on the last sale price of the security traded on that exchange prior to the time when the Fund's assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the closing bid and asked prices, and if not, at the closing bid price. Securities (including restricted securities) for which quotations are not readily available are valued primarily using dealer-supplied valuations, a portfolio pricing service authorized by the Board of Trustees, or at their fair value. Fair value is determined in good faith under consistently applied procedures under the supervision of the Board of Trustees. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). - -------------------------------------------------------------------------------- Joint Repurchase Agreements. The Fund, along with other affiliated funds of the Manager, may transfer uninvested cash balances into one or more joint repurchase agreement accounts. These balances are invested in one or more repurchase agreements, secured by U.S. government securities. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. 18 | OPPENHEIMER MIDCAP FUND - -------------------------------------------------------------------------------- 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 capital loss carryforwards, if any, to shareholders. Therefore, no federal income or excise tax provision is required. As of April 30, 2003, the Fund had available for federal income tax purposes an estimated unused capital loss carryforward of $1,236,791,274. This estimated capital loss carryforward represents the carryforward as of the end of the last fiscal year, increased for losses deferred under tax accounting rules for the current fiscal year and is increased or decreased by capital losses or gains realized in the first six months of the current fiscal year. During the six months ended April 30, 2003, the Fund did not use carryforward to offset capital gains realized. During the year ended October 31, 2002, the Fund did not use carryforward to offset capital gains realized. As of October 31, 2002, the Fund had available for federal income tax purposes unused capital loss carryforwards as follows: Expiring ---------------------- 2006 $ 2,792,572 2007 3,516,822 2008 142,020,390 2009 764,990,986 2010 237,892,098 -------------- Total $1,151,212,868 ============== - -------------------------------------------------------------------------------- Trustees' Compensation. The Fund has adopted an unfunded retirement plan for the Fund's independent trustees. Benefits are based on years of service and fees paid to each trustee during the years of service. During the six months ended April 30, 2003, the Fund's projected benefit obligations were decreased by $4,304 and payments of $3,871 were made to retired trustees, resulting in an accumulated liability of $139,896 as of April 30, 2003. The Board of Trustees has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. Under the plan, the compensation deferred is invested by the Fund in the fund(s) selected by the trustee. Deferral of trustees' fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund's assets, liabilities or net investment income per share. 19 | OPPENHEIMER MIDCAP FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- 1. Significant Accounting Policies Continued Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. - -------------------------------------------------------------------------------- Classification of Dividends and Distributions to Shareholders. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund. No distributions were paid during the six months ended April 30, 2003 and the year ended October 31, 2002. - -------------------------------------------------------------------------------- Investment Income. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. - -------------------------------------------------------------------------------- Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. - -------------------------------------------------------------------------------- Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. - -------------------------------------------------------------------------------- 2. Shares of Beneficial Interest The Fund has authorized an unlimited number of no par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows: Six Months Ended April 30, 2003 Year Ended October 31, 2002 Shares Amount Shares Amount - -------------------------------------------------------------------------------- Class A Sold 4,114,279 $ 45,766,376 10,246,014 $ 140,041,291 Redeemed (5,206,092) (57,480,757) (16,353,774) (219,545,138) - --------------------------------------------------------------- Net decrease (1,091,813) $(11,714,381) (6,107,760) $ (79,503,847) =============================================================== - -------------------------------------------------------------------------------- Class B Sold 1,990,184 $ 21,198,964 5,434,402 $ 72,796,103 Redeemed (3,542,899) (37,551,006) (10,300,242) (132,657,060) - --------------------------------------------------------------- Net decrease (1,552,715) $(16,352,042) (4,865,840) $ (59,860,957) =============================================================== 20 | OPPENHEIMER MIDCAP FUND Six Months Ended April 30, 2003 Year Ended October 31, 2002 Shares Amount Shares Amount - -------------------------------------------------------------------------------- Class C Sold 1,044,223 $ 11,096,891 2,545,426 $ 33,944,222 Redeemed (1,163,927) (12,300,190) (4,128,477) (53,180,986) - --------------------------------------------------------------- Net decrease (119,704) $ (1,203,299) (1,583,051) $(19,236,764) =============================================================== - -------------------------------------------------------------------------------- Class N Sold 315,808 $ 3,475,070 900,502 $ 11,916,305 Redeemed (118,536) (1,296,392) (281,019) (3,453,917) - --------------------------------------------------------------- Net increase 197,272 $ 2,178,678 619,483 $ 8,462,388 =============================================================== - -------------------------------------------------------------------------------- Class Y Sold 479,549 $ 5,330,470 505,761 $ 7,112,046 Redeemed (102,216) (1,151,746) (196,412) (2,703,018) - --------------------------------------------------------------- Net increase 377,333 $ 4,178,724 309,349 $ 4,409,028 =============================================================== - -------------------------------------------------------------------------------- 3. Purchases and Sales of Securities The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the six months ended April 30, 2003, were $223,348,398 and $235,990,244, respectively. - -------------------------------------------------------------------------------- 4. Fees and Other Transactions with Affiliates Management Fees. Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund provides for an annual fee of 0.75% of the first $200 million of average annual net assets of the Fund; 0.72% of the next $200 million; 0.69% of the next $200 million; 0.66% of the next $200 million; 0.60% of the next $700 million; 0.58% of the next $1 billion and 0.56% of average annual net assets in excess of $2.5 billion. - -------------------------------------------------------------------------------- Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a $19.75 per account fee. Additionally, Class Y shares are subject to minimum fees of $5,000 for assets of less than $10 million and $10,000 for assets of $10 million or more. The Class Y shares are subject to the minimum fees in the event that the per account fee does not equal or exceed the applicable minimum fees. OFS may voluntarily waive the minimum fees. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees up to an annual rate of 0.35% of average annual net assets for all classes. This undertaking may be amended or withdrawn at any time. 21 | OPPENHEIMER MIDCAP FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- 4. Fees and Other Transactions with Affiliates Continued Distribution and Service Plan (12b-1) Fees. Under its General Distributor's Agreement with the Manager, OppenheimerFunds Distributor, Inc. (the Distributor) 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. Aggregate Class A Concessions Concessions Concessions Concessions Front-End Front-End on Class A on Class B on Class C on Class N Sales Charges Sales Charges Shares Shares Shares Shares on Class A Retained by Advanced by Advanced by Advanced by Advanced by Six Months Ended Shares Distributor Distributor 1 Distributor 1 Distributor 1 Distributor 1 - -------------------------------------------------------------------------------------------------------- April 30, 2003 $542,027 $164,525 $53,999 $703,547 $85,401 $22,453 1. The Distributor advances concession payments to dealers for certain sales of Class A shares and for sales of Class B, Class C and Class N shares from its own resources at the time of sale. Class A Class B Class C Class N Contingent Contingent Contingent Contingent Deferred Deferred Deferred Deferred Sales Charges Sales Charges Sales Charges Sales Charges Retained by Retained by Retained by Retained by Six Months Ended Distributor Distributor Distributor Distributor - -------------------------------------------------------------------------------- April 30, 2003 $4,962 $509,161 $10,477 $6,903 - -------------------------------------------------------------------------------- Service Plan for Class A Shares. The Fund has adopted a Service Plan for Class A Shares. It reimburses the Distributor for a portion of its costs incurred for services provided to accounts that hold Class A shares. Reimbursement is made quarterly at an annual rate of up to 0.25% of the average annual net assets of Class A shares of the Fund. For the six months ended April 30, 2003, payments under the Class A Plan totaled $348,167, all of which were paid by the Distributor to recipients, and included $32,564 paid to an affiliate of the Manager. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent years. - -------------------------------------------------------------------------------- Distribution and Service Plans for Class B, Class C and Class N Shares. The Fund has adopted Distribution and Service Plans for Class B, Class C and Class N shares. Under the plans, the Fund pays the Distributor an annual asset-based sales charge of 0.75% per year on Class B shares and on Class C shares and the Fund pays the Distributor an annual asset-based sales charge of 0.25% per year on Class N shares. The Distributor also receives a service fee of 0.25% per year under each plan. 22 | OPPENHEIMER MIDCAP FUND Distribution fees paid to the Distributor for the six months ended April 30, 2003, were as follows: Distributor's Distributor's Aggregate Aggregate Unreimbursed Unreimbursed Expenses as % Total Payments Amount Retained Expenses of Net Assets Under Plan by Distributor Under Plan of Class - -------------------------------------------------------------------------------- Class B Plan $1,353,875 $1,061,684 $18,995,716 6.89% Class C Plan 395,076 93,886 3,186,207 3.87 Class N Plan 23,922 20,255 233,329 2.09 - -------------------------------------------------------------------------------- 5. Option Activity The Fund may buy and sell put and call options, or write put and covered call options on portfolio securities in order to produce incremental earnings or protect against changes in the value of portfolio securities. The Fund generally purchases put options or writes covered call options to hedge against adverse movements in the value of portfolio holdings. When an option is written, the Fund receives a premium and becomes obligated to sell or purchase the underlying security at a fixed price, upon exercise of the option. Options are valued daily based upon the last sale price on the principal exchange on which the option is traded and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss upon the expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. Securities designated to cover outstanding call options are noted in the Statement of Investments where applicable. Shares subject to call, expiration date, exercise price, premium received and market value are detailed in a note to the Statement of Investments. Options written are reported as a liability in the Statement of Assets and Liabilities. Realized gains and losses are reported in the Statement of Operations. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Written option activity for the six months ended April 30, 2003 was as follows: Call Options ------------------------- Number of Amount of Contracts Premiums ---------------------------------------------------------------- Options outstanding as of October 31, 2002 -- $ -- Options written 1,300 191,097 Options closed or expired (1,300) (191,097) ---------------------- Options outstanding as of April 30, 2003 -- $ -- ====================== 23 | OPPENHEIMER MIDCAP FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- 6. Illiquid or Restricted Securities As of April 30, 2003, 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. 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. The aggregate value of illiquid or restricted securities subject to this limitation as of April 30, 2003 was $543,874, which represents 0.08% of the Fund's net assets, all of which is considered restricted. Information concerning restricted securities is as follows: Acquisition Valuation as of Unrealized Security Dates Cost April 30, 2003 Depreciation - ------------------------------------------------------------------------------------------------------- Stocks and/or Warrants Axsun Technologies, Inc., Cv., Series C 12/13/00 $8,999,997 $363,933 $8,636,064 - ------------------------------------------------------------------------------------------------------- Centerpoint Broadband Technologies, Inc., Cv., Series D 10/23/00 5,999,997 -- 5,999,997 - ------------------------------------------------------------------------------------------------------- fusionOne, Inc., 8% Non-Cum. Cv., Series D 9/6/00 9,100,104 63,181 9,036,923 - ------------------------------------------------------------------------------------------------------- ITF Optical Technologies, Inc., Cv., Series A 4/7/00 5,000,000 116,760 4,883,240 - -------------------------------------------------------------------------------- 7. Borrowing and Lending Arrangements Bank Borrowings. The Fund had the ability to borrow from banks for temporary or emergency purposes. Asset coverage for borrowings must be at least 300%. The Fund and other Oppenheimer funds participated in a $400 million unsecured line of credit from a bank, for liquidity purposes. Under that line of credit, each fund was charged interest on its borrowings at a rate equal to the Federal Funds rate plus 0.45%. The Fund paid a commitment fee on its pro rata share of the average unutilized amount of the credit facility at a rate of 0.08% per annum. The credit facility was terminated on November 12, 2002, when the Fund entered into the interfund borrowing and lending arrangements described below. The Fund had no outstanding borrowings under the credit facility through November 12, 2002. 24 | OPPENHEIMER MIDCAP FUND - -------------------------------------------------------------------------------- Interfund Borrowing and Lending Arrangements. Commencing November 12, 2002, the Fund entered into an "interfund borrowing and lending arrangement" with other funds in the Oppenheimer funds complex, to allow funds to borrow for liquidity purposes. The arrangement was initiated pursuant to exemptive relief granted by the Securities and Exchange Commission to allow these affiliated funds to lend money to, and borrow money from, each other, in an attempt to reduce borrowing costs below those of bank loan facilities. Under the arrangement the Fund may lend money to other Oppenheimer funds and may borrow from other Oppenheimer funds at a rate set by the Fund's Board of Trustees, based upon a recommendation by the investment manager. The Fund's borrowings, if any, are subject to asset coverage requirements under the Investment Company Act and the provisions of the SEC order and other applicable regulations. If the Fund borrows money, there is a risk that the loan could be called on one day's notice, in which case the Fund might have to borrow from a bank at higher rates if a loan were not available from another Oppenheimer fund. If the Fund lends money to another fund, it will be subject to the risk that the other fund might not repay the loan in a timely manner, or at all. The Fund had no interfund borrowings or loans outstanding during the six months ended or at April 30, 2003. 25 | OPPENHEIMER MIDCAP FUND OPPENHEIMER MIDCAP FUND - -------------------------------------------------------------------------------- Trustees and Officers Thomas W. Courtney, Chairman John V. Murphy, President Paul Y. Clinton, Trustee Robert G. Galli, Trustee Lacy B. Herrmann, Trustee Brian Wruble, Trustee Bruce Bartlett, Vice President Robert G. Zack, Secretary Brian W. Wixted, Treasurer - -------------------------------------------------------------------------------- Investment Advisor OppenheimerFunds, Inc. - ------------------------------------------------------------------------------- Distributor OppenheimerFunds Distributor, Inc. - -------------------------------------------------------------------------------- Transfer and Shareholder OppenheimerFunds Services Servicing Agent - -------------------------------------------------------------------------------- Independent Auditors KPMG LLP - -------------------------------------------------------------------------------- Legal Counsel Mayer Brown Rowe & Maw The financial statements included herein have been taken from the records of the Fund without examination of those records by the independent auditors. (C)Copyright 2003 OppenheimerFunds, Inc. All rights reserved. - -------------------------------------------------------- Not part of the semiannual report to Fund shareholders - -------------------------------------------------------- 26 | OPPENHEIMER MIDCAP FUND OPPENHEIMERFUNDS FAMILY - ------------------------------------------------------------------------------------------------------- Global Equity Developing Markets Fund Global Fund International Small Company Fund Quest Global Value Fund, Inc. International Growth Fund Global Opportunities Fund 1 - ------------------------------------------------------------------------------------------------------- Equity Stock Stock & Bond Emerging Technologies Fund Quest Opportunity Value Fund Emerging Growth Fund Total Return Fund, Inc. Enterprise Fund Quest Balanced Value Fund Discovery Fund Capital Income Fund Main Street Small Cap Fund(R) Multiple Strategies Fund Small Cap Value Fund Disciplined Allocation Fund MidCap Fund Convertible Securities Fund Main Street Opportunity Fund(R) Specialty Growth Fund Real Asset Fund(R) Capital Appreciation Fund Gold & Special Minerals Fund Main Street Fund(R)2 Tremont Market Neutral Fund, LLC 3 Value Fund Tremont Opportunity Fund, LLC 3 Quest Capital Value Fund, Inc. Quest Value Fund, Inc. Trinity Large Cap Growth Fund Trinity Core Fund Trinity Value Fund - ------------------------------------------------------------------------------------------------------- Income Taxable Rochester Division International Bond Fund California Municipal Fund 5 High Yield Fund New Jersey Municipal Fund 5 Champion Income Fund AMT-Free New York Municipals 5,6 Strategic Income Fund Municipal Bond Fund Bond Fund Limited Term Municipal Fund Total Return Bond Fund Rochester National Municipals Senior Floating Rate Fund Rochester Fund Municipals U.S. Government Trust Limited Term New York Municipal Fund Limited-Term Government Fund Pennsylvania Municipal Fund 5 Capital Preservation Fund 4 - ------------------------------------------------------------------------------------------------------- Select Managers Stock Stock & Bond Mercury Advisors Focus Growth Fund QM Active Balanced Fund 4 Gartmore Millennium Growth Fund II Jennison Growth Fund Salomon Brothers All Cap Fund Mercury Advisors S&P 500(R) Index Fund 4 - ------------------------------------------------------------------------------------------------------- Money Market 7 Money Market Fund, Inc. Cash Reserves 1. The Fund's name changed from Oppenheimer Global Growth & Income Fund on 6/1/03. 2. The Fund's name changed from Oppenheimer Main Street Growth & Income Fund(R) on 4/30/03. 3. Special investor qualification and minimum investment requirements apply. See the prospectus for details. 4. Available only through qualified retirement plans. 5. Available to investors only in certain states. 6. The Fund's name changed from Oppenheimer New York Municipal Fund on 1/22/03. 7. An investment in money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although these funds may seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds. - -------------------------------------------------------- Not part of the semiannual report to Fund shareholders - -------------------------------------------------------- 27 | OPPENHEIMER MIDCAP FUND PRIVACY POLICY NOTICE As an Oppenheimer fund shareholder, you are entitled to know how we protect your personal information and how we limit its disclosure. Information Sources We obtain nonpublic personal information about our shareholders from the following sources: o Applications or other forms o When you create a user ID and password for online account access o When you enroll in eDocs Direct, our electronic document delivery service o Your transactions with us, our affiliates or others o A software program on our website, often referred to as a "cookie," which indicates which parts of our site you've visited If you visit www.oppenheimerfunds.com and do not log on to the secure account information areas, we do not obtain any personal information about you. When you do log on to a secure area, we do obtain your user ID and password to identify you. We also use this information to provide you with products and services you have requested, to inform you about products and services that you may be interested in and to assist you in other ways. Protection of Information We do not disclose any nonpublic personal information (such as names on a customer list) about current or former customers to anyone, except as permitted by law. Disclosure of Information We send your financial advisor (as designated by you) copies of confirmations, account statements and other documents reporting activity in your fund accounts. We may also use details about you and your investments to help us, our financial service affiliates or firms that jointly market their financial products and services with ours, to better serve your investment needs or suggest financial services or educational material that may be of interest to you. Right of Refusal We will not disclose your personal information to unaffiliated third parties (except as permitted by law), unless we first offer you a reasonable opportunity to refuse or "opt out" of such disclosure. Security In the coming months, an Internet browser that supports 128-bit encryption will be required to view the secure pages of www.oppenheimerfunds.com. These areas include: o Account access o Create a user ID and profile o User profile o eDocs Direct, our electronic document delivery service - -------------------------------------------------------- Not part of the semiannual report to Fund shareholders - -------------------------------------------------------- 28 | OPPENHEIMER MIDCAP FUND To find out if your Internet browser supports 128-bit encryption, or for instructions on how to upgrade your browser, visit the Help section of www.oppenheimerfunds.com. Emails and Encryption As a security measure, we do not include personal or account information in nonsecure emails, and we advise you not to send such information to us in nonsecure emails. Instead, you may take advantage of the secure features of our website to encrypt your email correspondence. To do this, you will need to use an Internet browser that supports 128-bit encryption. If you are not sure if your Internet browser supports 128-bit encryption, or need instructions on how to upgrade your browser, visit the Help section of www.oppenheimerfunds.com for assistance. o All transactions, including redemptions, exchanges and purchases are secured by Secure Socket Layers (SSL) and encryption. SSL is used to establish a secure connection between your PC and OppenheimerFunds' server. It transmits information in an encrypted and scrambled format. o Encryption is achieved through an electronic scrambling technology that uses a "key" to code and then decode the data. Encryption acts like the cable converter box you may have on your television set. It scrambles data with secret code so that no one can make sense of it while it is being transmitted. When the data reaches its destination, the same software unscrambles the data. o You can exit the secure area by either closing your browser, or for added security, you can use the Log Out of Account Area button before you close your browser. Other Security Measures We maintain physical, electronic and procedural safeguards to protect your personal account information. Our employees and agents have access to that information only so that they may offer you products or provide services to you, for example, when responding to your account questions. How You Can Help You can also do your part to keep your account information private, and to prevent unauthorized transactions. If you obtain a user ID and password for your account, do not allow it to be used by anyone else. Also, take special precautions when accessing your account on a computer used by others. - -------------------------------------------------------------------------------- This joint notice describes the privacy policies of Oppenheimer funds, OppenheimerFunds Distributor, Inc., the trustee of OppenheimerFunds Individual Retirement Accounts (IRAs) and the custodian of the OppenheimerFunds 403(b)(7) tax-sheltered custodial accounts. It applies to all Oppenheimer fund accounts you presently have, or may open in the future, using your Social Security number--whether or not you remain a shareholder of our funds. If you have any questions about these privacy policies, write to us at P.O. Box 5270, Denver, CO 80217-5270, email us by clicking on the Contact Us section of our website at www.oppenheimerfunds.com or call us at 1.800.CALL OPP (1.800.225.5677). - -------------------------------------------------------- Not part of the semiannual report to Fund shareholders - -------------------------------------------------------- 29 | OPPENHEIMER MIDCAP FUND INFORMATION AND SERVICES Get This Report Online! You can quickly view, download and print this report at your convenience. It's EASY, FAST, CONVENIENT, and FREE! With OppenheimerFunds eDocs Direct, you'll receive email notification when shareholder reports, prospectuses or prospectus supplements for your fund(s) become available online, instead of receiving them through the mail. You'll cut down on paper mail and help reduce fund expenses! Sign up for eDocs Direct today at www.oppenheimerfunds.com GRAPHIC OMITTED eDocs Direct Internet 24-hr access to account information and transactions 1 www.oppenheimerfunds.com - ------------------------------------------------------------------------------- PhoneLink 1 and General Information 24-hr automated information and automated transactions Representatives also available Mon-Fri 8am-9pm ET Sat (January-April) 10am-4pm ET 1.800.CALL OPP (1.800.225.5677) - -------------------------------------------------------------------------------- Written Correspondence and Transaction Requests OppenheimerFunds Services P.O. Box 5270, Denver, CO 80217-5270 For Overnight Delivery OppenheimerFunds Services 10200 East Girard Avenue, Building D Denver, CO 80231 - ------------------------------------------------------------------------------- Ticker Symbols Class A: OMDAX Class B: OMDBX Class C: OMDCX Class N: OMDNX Class Y: OMDYX 1. At times the website or PhoneLink may be inaccessible or their transaction features may be unavailable. - -------------------------------------------------------- Not part of the semiannual report to Fund shareholders - -------------------------------------------------------- [GRAPHIC] OppenheimerFunds[R] Distributor, Inc. RS0745.001.0403 June 27, 2003 ITEM 2. CODE OF ETHICS - NOT REQUIRED ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT - NOT REQUIRED ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES - NOT REQUIRED ITEM 5. RESERVED ITEM 6. RESERVED ITEM 7. NOT APPLICABLE ITEM 8. RESERVED ITEM 9. CONTROLS AND PROCEDURES (a) Based on their evaluation of registrant's disclosure controls and procedures (as defined in rule 30a-2(c) under the Investment Company Act of 1940 (17 CFR 270.30a-2(c)) as of April 30, 2003, registrant's principal executive officer and principal financial officer found registrant's disclosure controls and procedures to be appropriately designed to ensure that information required to be disclosed by registrant in the reports that it files under the Securities Exchange Act of 1934 (a) is accumulated and communicated to registrant's management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure, and (b) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the U.S. Securities and Exchange Commission. (b) There have been no significant changes in registrant's internal controls or in other factors that could significantly affect registrant's internal controls subsequent to the date of the most recent evaluation as indicated, including no significant deficiencies or material weaknesses that required corrective action. ITEM 10. EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)
OPPENHEIMER MIDCAP FUND FORM N-14A PART C OTHER INFORMATION Item 15. Indemnification - ------------------------- Reference is made to the provisions of Article Seventh of Registrant's Amended and Restated Declaration of Trust, filed by cross-reference to Exhibit 16(1) to this Registration Statement, and incorporated herein by reference. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of Registrant pursuant to the foregoing provisions or otherwise, Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a trustee, officer or controlling person of Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person, Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. Item 16. Exhibits (1) Amended and Restated Declaration of Trust dated December 5, 2002: Previously filed with Post-Effective Amendment No. 8 to Registrant's registration statement, (Reg. No. 333-31533), 12/19/02, and incorporated herein by reference. (2) By-Laws dated 6/18/97: Previously filed with Registrant's Initial registration statement (Reg. No. 333-31533), 7/18/97, and incorporated herein by reference. (3) N/A (4) Agreement and Plan of Reorganization: See Exhibit A to Part A of the Registration Statement: Previously filed with Registrant's N-14 filing, (File. No. 333-106296), 06/20/03, and incorporated herein by reference. (5) (i) Specimen Class A Share Certificate: Previously filed with Registrant's Initial Registration Statement, (Reg. No. 333-31533), 7/18/97, and incorporated herein by reference. (ii) Specimen Class B Share Certificate: Previously filed with Registrant's Initial Registration Statement, (Reg. No. 333-31533), 7/18/97, and incorporated herein by reference. (iii) Specimen Class C Share Certificate: Previously filed with Registrant's Initial Registration Statement, (Reg. No. 333-31533), 7/18/97, and incorporated herein by reference. (iv) Specimen Class N Share Certificate: Previously filed with Registrant's Post-Effective Amendment No. 5, (Reg. No. 333-31533), 12/6/00, and incorporated herein by reference. (v) Specimen Class Y Share Certificate: Previously filed with Registrant's Initial Registration Statement, (Reg. No. 333-31533), 7/18/97, and incorporated herein by reference. (6) Investment Advisory Agreement dated 11/17/97: Previously filed with Registrant's Pre-Effective Amendment No. 2 (Reg. No. 333-31533), 11/3/97, and incorporated herein by reference. (7) (i) General Distributor's Agreement dated 11/17/97, Previously filed with Registrant's Pre-Effective Amendment No. 2 (Reg. No. 333-31533), 11/3/97, and incorporated herein by reference. (ii) Form of Dealer Agreement of OppenheimerFunds Distributor, Inc.: Previously filed with Post-Effective Amendment No. 45 to the Registration Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076), 10/26/01, and incorporated herein by reference. (iii) Form of Broker Agreement of OppenheimerFunds Distributor, Inc.: Previously filed with Post-Effective Amendment No. 45 to the Registration Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076), 10/26/01, and incorporated herein by reference. (iv) Form of Agency Agreement of OppenheimerFunds Distributor, Inc.: Previously filed with Post-Effective Amendment No. 45 to the Registration Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076), 10/26/01, and incorporated herein by reference. (v) Form of Trust Company Fund/SERV Purchase Agreement of OppenheimerFunds Distributor, Inc.: Previously filed with Post-Effective Amendment No. 45 to the Registration Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076), 10/26/01, and incorporated herein by reference. (vi) Form of Trust Company Agency Agreement of OppenheimerFunds Distributor, Inc.: Previously filed with Post-Effective Amendment No. 45 to the Registration Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076), 10/26/01, and incorporated herein by reference. (8) Form of Deferred Compensation Plans for Disinterested Trustees/Directors: Form of Deferred Compensation Plan for Disinterested Trustees/Directors: Previously filed with Post-Effective Amendment No. 43 to the Registration Statement of Oppenheimer Quest For Value Funds (Reg. No. 333-31533), 12/21/98, and incorporated herein by reference. (9) (i) Amendment dated August 28, 2002 to the Global Custodial Services Agreement dated May 3, 2001 between Registrant and Citibank, N.A.: Previously filed with Post-Effective Amendment No. 29 to the Registration Statement of Oppenheimer Discovery Fund (Reg. No. 33-371), 11/22/02, and incorporated herein by reference. (ii) Global Custodial Services Agreement dated May 3, 2001 between Registrant and Citibank, N.A.: Previously filed with Post-Effective Amendment No. 33 to the Registration Statement of Centennial Money Market Trust (Reg. No. 2-65245), 10/25/01, and incorporated herein by reference (10) (i) Service Plan and Agreement for Class A shares dated 11/17/97: Previously filed with Registrant's Pre-Effective Amendment No. 2 (Reg. No. 333-31533), 11/3/97, and incorporated herein by reference. (ii) Amended and Restated Distribution and Service Plan and Agreement for Class B shares dated 2/3/98: Previously filed with Registrant's Post-Effective Amendment No. 1 (Reg. No. 333-31533), 5/11/98, and incorporated herein by reference. (iii) Amended and Restated Distribution and Service Plan and Agreement for Class C shares dated 2/3/98: Previously filed with Registrant's Post-Effective Amendment No. 1 (Reg. No. 333-31533), 5/11/98, and incorporated herein by reference. (iv) Form of Distribution and Service Plan and Agreement for Class N shares: Previously filed with Registrant's Post-Effective Amendment No. 5, 12/6/00 and incorporated herein by reference. (11) Opinion and Consent of Counsel: Opinion of Mayer, Brown, Rowe & Maw: Previously filed with Registrant's N-14 filing, (File No. 333-106296), 6/20/03, and incorporated herein by reference. (12) Tax Opinion Relating to the Reorganization: Tax Opinion of Deloitte and Touche LLP: Filed herewith. (13) N/A. (14) (i) Consent of Deloitte and Touche LLP: Filed herewith. (ii) Consent of KPMG LLP: Filed herewith. (15) N/A. (16) (i) Power of Attorney (including Certified Board resolution) for Robert G. Galli: Previously filed with Post-Effective Amendment No. 43 to the Registration Statement of Oppenheimer Quest For Value Funds (Reg. No. 33-15489), 12/21/98, and incorporated herein by reference. (ii) Power of Attorney for Brian W. Wixted: Previously filed with Post-Effective Amendment No. 5 to the Registration Statement of Oppenheimer Quest Capital Value Fund, Inc., (Reg. No. 333-16881), 2/22/00, and incorporated herein by reference. (iii) Powers of Attorney for Brian Wruble and John V. Murphy: Previously filed with Post Effective Amendment No. 49 to the Registration Statement of Oppenheimer Quest Value Fund, Inc., (Reg. 2-65223), 2/26/02, and incorporated herein by reference. Item 17. Undertakings - ---------------------- (1) N/A. (2) N/A. (3) The undersigned registrant agrees to file, in a post-effective amendment to the Registration Statement, a final tax opinion and consent relating to the Reorganization within a reasonable time within the Closing Date. (4) Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and/or the Investment Company Act of 1940, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York and State of New York on the 27th day of June, 2003. OPPENHEIMER MIDCAP FUND By: /s/ John V. Murphy* ------------------------------------------- John V. Murphy, President & Principal Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities on the dates indicated: Signatures Title Date - ---------- ----- ---- /s/ Thomas W. Courtney* Chairman of the June 27, 2003 - -----------------------------Board of Trustees Thomas W. Courtney /s/ John V. Murphy* President & Principal - -----------------------------Executive Officer June 27, 2003 John V. Murphy /s/ Brian W. Wixted* Treasurer and Chief - -------------------------- Financial and June 27, 2003 Brian W. Wixted Accounting Officer /s/ Paul Y. Clinton* Trustee June 27, 2003 - ----------------------- Paul Y. Clinton /s/ Robert G. Galli* - ------------------------ Trustee June 27, 2003 Robert G. Galli /s/ Lacy B. Herrmann* Trustee June 27, 2003 - --------------------------- Lacy B. Herrmann /s/ Brian Wruble* Trustee June 27, 2003 - --------------------- Brian Wruble *By: /s/ Robert G. Zack - ----------------------------------------- June 27, 2003 Robert G. Zack, Attorney-in-Fact
OPPENHEIMER MIDCAP FUND EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 16(14)(i) Consent of Deloitte and Touche LLP 16(14)(ii) Consent of KPMG LLP 16(12) Tax Opinion Relating to Reorganization