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.
Two World Financial Center, New York, New York 10281-1008
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(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
--------------
Date of fiscal year end: October 31
Date of reporting period: November 1, 2002 - October 31, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
How has the Fund performed? Below is a discussion by OppenheimerFunds, Inc., of
the Fund's performance during its fiscal year ended October 31, 2003, followed
by a graphical comparison of the Fund's performance to an appropriate
broad-based market index.
Management's Discussion of Fund Performance. Over the 12-month period ended
October 31, 2003, the Fund delivered positive results, posting a 22.22% return
for its Class A shares (without sales charge). This compares with a 30.73% total
return for the S&P Mid-Cap 400 Index, the Fund's benchmark, during the same
period. The Fund's performance was driven primarily by the upturn in growth
stock prices that began in March 2003 and continued throughout the remainder of
the period, representing a major shift from the downward-trending stock market
of the previous three years.
Throughout the period, the Fund's investment strategy remained focused on
companies generating real growth by increasing sales and revenues, rather than
those experiencing a temporary rise in earnings from acquisitions, accounting
gimmicks or cost-cutting methods. Specifically, we targeted companies producing
greater-than-average earnings and revenue growth that we believed were
sustainable. This approach enabled us to control some of the risks implicit in
growth-oriented stock investing. We also maintained the Fund's disciplined focus
on mid-cap stocks. Many mid-cap stocks offer higher growth rates than most large
companies, and greater stability and predictability than most small ones. As a
result, we believe they offer higher probabilities of success and lower
probabilities of failure than other segments of the equities market. In our
opinion, these intrinsic characteristics make mid-cap stocks particularly
attractive for disciplined growth investors seeking to build wealth over the
long term.
Early in the period, we found a relatively large number of attractive
investment opportunities meeting the Fund's investment criteria in the health
care area. Biotechnology holdings, such as Gilead Sciences, Inc., delivered
exceptionally strong performance during the period, supported by a rapidly
increasing number of approved products with wide applications. The Fund's
performance was also boosted by its investments in medical products companies,
such as Varian Medical Systems, Inc., and generic drug producers, many of which
benefited from significant new drug approvals.
As the reporting period progressed, we found increasing numbers of technology
stocks exhibiting attractive fundamentals. Accordingly, we gradually shifted a
growing percentage of the Fund's assets into such stocks, reducing the Fund's
holdings among less attractive health care and financial investments. Although a
few technology holdings, such as Concord EFS, Inc., delivered disappointing
returns, most of the Fund's technology positions generated strong gains. Top
performers included software companies, such as Symantec Corp.; communications
services providers, such as UTStarcom, Inc.; and
6 | OPPENHEIMER MIDCAP FUND
semiconductor producers, such as Marvell Technology Group Ltd. The Fund also
achieved strong gains with its investments in consumer discretionary stocks,
particularly among media companies, such as InterActiveCorp, Univision
Communications, Inc.
Positive returns from these and other consumer-related holdings more than
offset some of the Fund's disappointments. Negative contributors to performance
included restaurant fast food chain Wendy's International, Inc., and healthcare
software vendor Cerner Corp. Significant underperformers in other areas included
SPX Corp. and Alliant Techsystems, Inc. The Fund's portfolio holdings,
allocations and strategies are subject to change.
Comparing the Fund's Performance to the Market. The graphs that follow show the
performance of a hypothetical $10,000 investment in each Class of shares of the
Fund held until October 31, 2003. In the case of Class A, Class B, Class C and
Class Y shares, performance is measured from the inception of each Class on
December 1, 1997. In the case of Class N shares, performance is measured from
inception of the Class on March 1, 2001. The Fund's performance reflects the
deduction of the maximum initial sales charge on Class A shares, the applicable
contingent deferred sales charge on Class B, Class C and Class N shares, and
reinvestments of all dividends and capital gains distributions.
The 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. The Fund's performance reflects the effects of Fund business and
operating expenses. While index comparisons may be useful to provide a benchmark
for the Fund's performance, it must be noted that the Fund's investments are not
limited to the securities in the index.
7 | OPPENHEIMER MIDCAP FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
[LINE CHART]
Oppenheimer MidCap Fund (Class A) S&P Mid-Cap 400 Index
12/01/1997 $ 9,425 $10,000
01/31/1998 9,519 10,190
04/30/1998 12,271 11,743
07/31/1998 11,744 10,848
10/31/1998 10,207 10,515
01/31/1999 13,390 11,892
04/30/1999 14,636 12,498
07/31/1999 16,382 12,943
10/31/1999 18,760 12,731
01/31/2000 25,875 13,795
04/30/2000 27,564 15,438
07/31/2000 29,716 15,713
10/31/2000 28,697 16,760
01/31/2001 23,903 17,052
04/30/2001 16,901 16,525
07/31/2001 15,618 16,591
10/31/2001 13,608 14,674
01/31/2002 13,910 16,493
04/30/2002 13,419 17,611
07/31/2002 11,201 14,491
10/31/2002 10,786 13,972
01/31/2003 10,182 13,759
04/30/2003 10,871 14,528
07/31/2003 12,617 16,498
10/31/2003 13,183 18,249
Average Annual Total Returns of Class A Shares of the Fund at 10/31/03*
1-Year 15.19% 5-Year 4.01% Since Inception 4.78%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
[LINE CHART]
Oppenheimer MidCap Fund (Class B) S&P Mid-Cap 400 Index
12/01/1997 $10,000 $10,000
01/31/1998 10,080 10,190
04/30/1998 12,980 11,743
07/31/1998 12,390 10,848
10/31/1998 10,770 10,515
01/31/1999 14,097 11,892
04/30/1999 15,379 12,498
07/31/1999 17,181 12,943
10/31/1999 19,644 12,731
01/31/2000 27,043 13,795
04/30/2000 28,766 15,438
07/31/2000 30,948 15,713
10/31/2000 29,827 16,760
01/31/2001 24,801 17,052
04/30/2001 17,502 16,525
07/31/2001 16,150 16,591
10/31/2001 14,037 14,674
01/31/2002 14,318 16,493
04/30/2002 13,787 17,611
07/31/2002 11,494 14,491
10/31/2002 11,034 13,972
01/31/2003 10,393 13,759
04/30/2003 11,084 14,528
07/31/2003 12,846 16,498
10/31/2003 13,287 18,249
Average Annual Total Returns of Class B Shares of the Fund at 10/31/03*
1-Year 16.33% 5-Year 4.11% Since Inception 4.92%
* See Notes on page 11 for further details.
8 | OPPENHEIMER MIDCAP FUND
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
[LINE CHART]
Oppenheimer MidCap Fund (Class C) S&P Mid-Cap 400 Index
12/01/1997 $10,000 $10,000
01/31/1998 10,090 10,190
04/30/1998 12,980 11,743
07/31/1998 12,400 10,848
10/31/1998 10,760 10,515
01/31/1999 14,087 11,892
04/30/1999 15,369 12,498
07/31/1999 17,171 12,943
10/31/1999 19,624 12,731
01/31/2000 27,023 13,795
04/30/2000 28,746 15,438
07/31/2000 30,938 15,713
10/31/2000 29,817 16,760
01/31/2001 24,791 17,052
04/30/2001 17,492 16,525
07/31/2001 16,140 16,591
10/31/2001 14,037 14,674
01/31/2002 14,318 16,493
04/30/2002 13,787 17,611
07/31/2002 11,484 14,491
10/31/2002 11,034 13,972
01/31/2003 10,393 13,759
04/30/2003 11,084 14,528
07/31/2003 12,846 16,498
10/31/2003 13,387 18,249
Average Annual Total Returns of Class C Shares of the Fund at 10/31/03*
1-Year 20.33% 5-Year 4.47% Since Inception 5.05%
Class N Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer MidCap Fund (Class N) S&P Mid-Cap 400 Index
03/01/2001 $10,000 $10,000
04/30/2001 9,161 10,278
07/31/2001 8,465 10,319
10/31/2001 7,370 9,126
01/31/2002 7,528 10,258
04/30/2002 7,257 10,953
07/31/2002 6,054 9,013
10/31/2002 5,824 8,690
01/31/2003 5,496 8,557
04/30/2003 5,865 9,036
07/31/2003 6,801 10,261
10/31/2003 7,098 11,350
Average Annual Total Returns of Class N Shares of the Fund at 10/31/03*
1-Year 20.88% Since Inception -12.06%
The performance information for the S&P Mid-Cap 400 Index in the graphs begins
on 11/30/97 for Class A, Class B, Class C and Class Y, and on 2/28/01 for Class
N shares.
Past performance cannot guarantee future results. Graphs are not drawn to same
scale.
9 | OPPENHEIMER MIDCAP FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
Class Y Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
[LINE CHART]
Oppenheimer MidCap Fund (Class Y) S&P Mid-Cap 400 Index
12/01/1997 $10,000 $10,000
01/31/1998 10,110 10,190
04/30/1998 13,040 11,743
07/31/1998 12,500 10,848
10/31/1998 10,880 10,515
01/31/1999 14,297 11,892
04/30/1999 15,639 12,498
07/31/1999 17,521 12,943
10/31/1999 20,095 12,731
01/31/2000 27,744 13,795
04/30/2000 29,596 15,438
07/31/2000 31,949 15,713
10/31/2000 30,898 16,760
01/31/2001 25,771 17,052
04/30/2001 18,232 16,525
07/31/2001 16,861 16,591
10/31/2001 14,708 14,674
01/31/2002 15,048 16,493
04/30/2002 14,538 17,611
07/31/2002 12,155 14,491
10/31/2002 11,724 13,972
01/31/2003 11,094 13,759
04/30/2003 11,844 14,528
07/31/2003 13,757 16,498
10/31/2003 14,368 18,249
Average Annual Total Returns of Class Y Shares of the Fund at 10/31/03*
1-Year 22.55% 5-Year 5.72% Since Inception 6.32%
* See Notes on page 11 for further details.
The performance information for the S&P Mid-Cap 400 Index in the graphs begins
on 11/30/97 for Class A, Class B, Class C and Class Y, and on 2/28/01 for Class
N shares.
Past performance cannot guarantee future results. Graphs are not drawn to same
scale.
10 | 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 and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares. 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.
11 | OPPENHEIMER MIDCAP FUND
STATEMENT OF INVESTMENTS October 31, 2003
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- -------------------------------------------------------
Common Stocks--97.7%
- -------------------------------------------------------
Consumer Discretionary--26.4%
- -------------------------------------------------------
Hotels, Restaurants & Leisure--0.8%
Starbucks Corp. 1 229,914 $ 7,265,282
- -------------------------------------------------------
Household Durables--3.1%
Garmin Ltd. 1 555,000 27,766,650
- -------------------------------------------------------
Internet & Catalog Retail--4.2%
InterActiveCorp 1 1,019,022 37,408,298
- -------------------------------------------------------
Leisure Equipment & Products--0.8%
Leapfrog
Enterprises, Inc. 1 218,000 7,536,260
- -------------------------------------------------------
Media--5.2%
Citadel Broadcasting
Corp. 1 504,500 9,938,650
- -------------------------------------------------------
Univision Communications,
Inc., Cl. A 1 1,075,000 36,496,250
-------------
46,434,900
- -------------------------------------------------------
Multiline Retail--3.0%
Family Dollar
Stores, Inc. 625,753 27,289,088
- -------------------------------------------------------
Specialty Retail--4.1%
Bed Bath & Beyond,
Inc. 1 565,000 23,865,600
- -------------------------------------------------------
Best Buy Co., Inc. 1 220,000 12,828,200
-------------
36,693,800
- -------------------------------------------------------
Textiles, Apparel & Luxury Goods--5.2%
Coach, Inc. 1 1,310,122 46,470,027
- -------------------------------------------------------
Financials--10.5%
- -------------------------------------------------------
Diversified Financial Services--1.1%
Ameritrade Holding
Corp. 1 350,000 4,774,000
- -------------------------------------------------------
E*TRADE Financial
Corp. 1 450,000 4,635,000
-------------
9,409,000
- -------------------------------------------------------
Insurance--3.4%
AMBAC Financial
Group, Inc. 81,600 5,772,384
- -------------------------------------------------------
MBIA, Inc. 408,700 24,362,607
-------------
30,134,991
Market Value
Shares See Note 1
- -------------------------------------------------------
Thrifts & Mortgage Finance--6.0%
Doral Financial
Corp. 200,000 $ 10,100,000
- -------------------------------------------------------
Radian Group, Inc. 831,100 43,965,190
-------------
54,065,190
- -------------------------------------------------------
Health Care--25.2%
- -------------------------------------------------------
Biotechnology--13.1%
Amylin Pharmaceuticals,
Inc. 1 405,000 11,068,650
- -------------------------------------------------------
Gilead Sciences, Inc. 1 762,300 41,606,334
- -------------------------------------------------------
ImClone Systems,
Inc. 1 734,500 25,523,875
- -------------------------------------------------------
Invitrogen Corp. 1 200,100 12,724,359
- -------------------------------------------------------
Medimmune, Inc. 1 1,000,000 26,660,000
-------------
117,583,218
- -------------------------------------------------------
Health Care Equipment & Supplies--5.8%
Stryker Corp. 124,000 10,057,640
- -------------------------------------------------------
Varian Medical
Systems, Inc. 1 650,326 41,581,844
-------------
51,639,484
- -------------------------------------------------------
Health Care Providers & Services--2.7%
Lincare Holdings,
Inc. 1 620,000 24,142,800
- -------------------------------------------------------
Pharmaceuticals--3.6%
Mylan Laboratories,
Inc. 1,352,827 32,670,772
- -------------------------------------------------------
Industrials--3.8%
- -------------------------------------------------------
Commercial Services & Supplies--3.8%
Apollo Group, Inc.,
Cl. A 1 362,889 23,054,339
- -------------------------------------------------------
Career Education
Corp. 1 200,000 10,710,000
-------------
33,764,339
- -------------------------------------------------------
Information Technology--31.8%
- -------------------------------------------------------
Communications Equipment--10.6%
QLogic Corp. 1 630,000 35,311,500
- -------------------------------------------------------
Scientific-Atlanta,
Inc. 893,500 26,447,600
- -------------------------------------------------------
UTStarcom, Inc. 1 1,065,900 33,575,850
-------------
95,334,950
12 | OPPENHEIMER MIDCAP FUND
Market Value
Shares See Note 1
- -------------------------------------------------------
Computers & Peripherals--3.0%
Network Appliance,
Inc. 1 1,100,000 $ 27,148,000
- -------------------------------------------------------
Electronic Equipment & Instruments--0.5%
CDW Corp. 75,000 4,503,750
- -------------------------------------------------------
Internet Software & Services--0.8%
Netease.com, Inc.,
ADR 1 150,000 6,810,000
- -------------------------------------------------------
IT Services--1.1%
Iron Mountain, Inc. 1 250,000 9,560,000
- -------------------------------------------------------
Semiconductors & Semiconductor Equipment--6.0%
Broadcom Corp.,
Cl. A 1 250,000 7,987,500
- -------------------------------------------------------
Marvell Technology
Group Ltd. 1 1,050,000 46,063,500
-------------
54,051,000
- -------------------------------------------------------
Software--9.8%
BEA Systems, Inc. 1 350,000 4,865,000
- -------------------------------------------------------
Mercury Interactive
Corp. 1 850,000 39,474,000
- -------------------------------------------------------
Symantec Corp. 1 650,000 43,322,500
-------------
87,661,500
-------------
Total Common Stocks
(Cost $682,109,197) 875,343,299
Preferred Stocks--0.1%
- -------------------------------------------------------
Axsun Technologies,
Inc., Cv., Series C 1,2,3 771,208 301,774
- -------------------------------------------------------
Centerpoint Broadband
Technologies, Inc., Cv.,
Series D 1,2 556,586 --
Shares
- -------------------------------------------------------
Preferred Stocks Continued
- -------------------------------------------------------
fusionOne, Inc., 8%
Non-Cum. Cv.,
Series D 1,2,3 1,675,894 $ 101,056
- -------------------------------------------------------
ITF Optical
Technologies, Inc.,
Cv., Series A 1,2,3 200,000 150,900
-------------
Total Preferred Stocks
(Cost $29,100,098) 553,730
Principal
Amount
- -------------------------------------------------------
Joint Repurchase Agreements--2.3%
- -------------------------------------------------------
Undivided interest of
13.54% in joint repurchase
agreement (Principal Amount/
Market Value $149,808,000,
with a maturity value of
$149,820,109) with Banc One
Capital Markets, Inc., 0.97%,
dated 10/31/03, to be
repurchased at $20,288,640
on 11/3/03, collateralized by
U.S. Treasury Bonds, 3.625%--
9%, 3/31/04--8/15/23, with a
value of $152,949,680
(Cost $20,287,000) $20,287,000 20,287,000
- -------------------------------------------------------
Total Investments, at Value
(Cost $731,496,295) 100.1% 896,184,029
- -------------------------------------------------------
Liabilities in
Excess of
Other Assets (0.1) (742,933)
---------------------
Net Assets 100.0% $895,441,096
=====================
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 October 31, 2003.
The aggregate fair value of securities of affiliated companies held by the Fund
as of October 31, 2003 amounts to $553,730. Transactions during the period in
which the issuer was an affiliate are as follows:
Shares Gross Gross Shares Unrealized
October 31, 2002 Additions Reductions October 31, 2003 Depreciation
- ---------------------------------------------------------------------------------------------------------------
Stocks and/or Warrants
Axsun Technologies, Inc., Cv., Series C 771,208 -- -- 771,208 $ 8,698,224
fusionOne, Inc., 8% Non-Cum. Cv., Series D 1,675,894 -- -- 1,675,894 8,999,048
ITF Optical Technologies, Inc., Cv., Series A 200,000 -- -- 200,000 4,849,100
------------
$22,546,372
============
See accompanying Notes to Financial Statements.
13 | OPPENHEIMER MIDCAP FUND
STATEMENT OF ASSETS AND LIABILITIES October 31, 2003
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Assets
- -----------------------------------------------------------------------------------
Investments, at value--see accompanying statement:
Unaffiliated companies (cost $708,396,193) $ 895,630,299
Affiliated companies (cost $23,100,102) 553,730
----------------
896,184,029
- -----------------------------------------------------------------------------------
Cash 612,159
- -----------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 1,057,832
Interest and dividends 1,120
Other 43,918
----------------
Total assets 897,899,058
- -----------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 1,496,484
Shareholder reports 428,309
Distribution and service plan fees 183,534
Transfer and shareholder servicing agent fees 167,842
Trustees' compensation 148,061
Other 33,732
----------------
Total liabilities 2,457,962
- -----------------------------------------------------------------------------------
Net Assets $895,441,096
================
- -----------------------------------------------------------------------------------
Composition of Net Assets
- -----------------------------------------------------------------------------------
Paid-in capital $ 1,950,132,198
- -----------------------------------------------------------------------------------
Accumulated net investment loss (146,500)
- -----------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (1,219,232,336)
- -----------------------------------------------------------------------------------
Net unrealized appreciation on investments 164,687,734
----------------
Net Assets $ 895,441,096
================
14 | OPPENHEIMER MIDCAP FUND
- --------------------------------------------------------------------------------
Net Asset Value Per Share
- --------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net
assets of $430,513,814 and 30,825,343 shares of beneficial
interest outstanding) $13.97
Maximum offering price per share (net asset value plus sales
charge of 5.75% of offering price) $14.82
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $327,879,961 and 24,515,101
shares of beneficial interest outstanding) $13.37
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $103,270,927 and 7,724,857
shares of beneficial interest outstanding) $13.37
- --------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $16,605,640 and 1,197,180
shares of beneficial interest outstanding) $13.87
- --------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per
share (based on net assets of $17,170,754 and 1,196,165
shares of beneficial interest outstanding) $14.35
See accompanying Notes to Financial Statements.
15 | OPPENHEIMER MIDCAP FUND
STATEMENT OF OPERATIONS For the Year Ended October 31, 2003
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Investment Income
- -----------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $12,331) $ 1,358,910
- -----------------------------------------------------------------------------------
Interest 1,006,356
-------------
Total investment income 2,365,266
- -----------------------------------------------------------------------------------
Expenses
- -----------------------------------------------------------------------------------
Management fees 5,417,106
- -----------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 836,511
Class B 2,911,088
Class C 874,733
Class N 59,124
- -----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 2,161,864
Class B 2,094,438
Class C 613,820
Class N 67,420
Class Y 37,672
- -----------------------------------------------------------------------------------
Shareholder reports 568,468
- -----------------------------------------------------------------------------------
Trustees' compensation 31,779
- -----------------------------------------------------------------------------------
Custodian fees and expenses 9,155
- -----------------------------------------------------------------------------------
Other 39,629
-------------
Total expenses 15,722,807
Less reduction to custodian expenses (440)
Less voluntary waiver of transfer and shareholder
servicing agent fees--Class A (1,053,086)
Less voluntary waiver of transfer and shareholder
servicing agent fees--Class B (1,301,186)
Less voluntary waiver of transfer and shareholder
servicing agent fees--Class C (362,773)
Less voluntary waiver of transfer and shareholder
servicing agent fees--Class N (25,469)
Less voluntary waiver of transfer and shareholder
servicing agent fees--Class Y (66)
-------------
Net expenses 12,979,787
- -----------------------------------------------------------------------------------
Net Investment Loss (10,614,521)
- -----------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
- -----------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments (including premiums on options exercised) (67,549,653)
Closing and expiration of option contracts written 253,179
-------------
Net realized loss (67,296,474)
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 233,645,940
- -----------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $155,734,945
=============
See accompanying Notes to Financial Statements.
16 | OPPENHEIMER MIDCAP FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended October 31, 2003 2002
- -------------------------------------------------------------------------------------
Operations
- -------------------------------------------------------------------------------------
Net investment loss $(10,614,521) $ (14,191,329)
- -------------------------------------------------------------------------------------
Net realized loss (67,296,474) (235,256,189)
- -------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 233,645,940 31,615,304
-----------------------------
Net increase (decrease) in net assets
resulting from operations 155,734,945 (217,832,214)
- -------------------------------------------------------------------------------------
Beneficial Interest Transactions
- -------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A 2,926,569 (79,503,847)
Class B (20,575,816) (59,860,957)
Class C 2,421,302 (19,236,764)
Class N 5,137,432 8,462,388
Class Y 6,801,730 4,409,028
- -------------------------------------------------------------------------------------
Net Assets
- -------------------------------------------------------------------------------------
Total increase (decrease) 152,446,162 (363,562,366)
- -------------------------------------------------------------------------------------
Beginning of period 742,994,934 1,106,557,300
-----------------------------
End of period [including accumulated net investment
loss of $146,500 and $148,073, respectively] $895,441,096 $ 742,994,934
=============================
See accompanying Notes to Financial Statements.
17 | OPPENHEIMER MIDCAP FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Class A Year Ended October 31, 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------
Per Share Operating Data
- --------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.43 $14.42 $30.41 $19.88 $10.83
- --------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.12) (.13) (.02) .04 (.04)
Net realized and unrealized gain (loss) 2.66 (2.86) (15.97) 10.49 9.11
--------------------------------------------------
Total from investment operations 2.54 (2.99) (15.99) 10.53 9.07
- --------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions in excess of net realized gain -- -- -- -- (.02)
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $13.97 $11.43 $14.42 $30.41 $19.88
==================================================
- --------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 22.22% (20.74)% (52.58)% 52.97% 83.79%
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $430,514 $351,983 $532,338 $1,055,967 $167,879
- --------------------------------------------------------------------------------------------------
Average net assets (in thousands) $366,050 $460,797 $718,814 $ 728,168 $ 60,644
- --------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income (loss) (1.01)% (1.06)% (0.09)% 0.28% (0.49)%
Total expenses 1.61% 1.68% 1.33% 1.16% 1.40%
Expenses after expense reimbursement or
fee waiver and reduction to custodian expenses 1.32% 1.47% 1.32% N/A 3 N/A 3
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate 76% 51% 84% 23% 61%
<FN>
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
18 | OPPENHEIMER MIDCAP FUND
Class B Year Ended October 31, 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------
Per Share Operating Data
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.02 $14.02 $29.79 $19.62 $10.77
- -------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.23) (.30) (.15) (.07) (.07)
Net realized and unrealized gain (loss) 2.58 (2.70) (15.62) 10.24 8.94
-------------------------------------------------
Total from investment operations 2.35 (3.00) (15.77) 10.17 8.87
- -------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions in excess of net realized gain -- -- -- -- (.02)
- -------------------------------------------------------------------------------------------------
Net asset value, end of period $13.37 $11.02 $14.02 $29.79 $19.62
=================================================
- -------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 21.33% (21.40)% (52.94)% 51.83% 82.40%
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $327,880 $291,397 $438,962 $874,830 $118,611
- -------------------------------------------------------------------------------------------------
Average net assets (in thousands) $291,209 $385,917 $592,096 $594,390 $ 40,455
- -------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment loss (1.75)% (1.85)% (0.84)% (0.48)% (1.25)%
Total expenses 2.51% 2.48% 2.08% 1.91% 2.16%
Expenses after expense reimbursement or
fee waiver and reduction to custodian expenses 2.06% 2.27% 2.07% N/A 3 N/A 3
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate 76% 51% 84% 23% 61%
<FN>
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
19 | OPPENHEIMER MIDCAP FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
Class C Year Ended October 31, 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------
Per Share Operating Data
- --------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.02 $14.02 $29.78 $19.60 $10.76
- --------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.20) (.30) (.15) (.07) (.06)
Net realized and unrealized gain (loss) 2.55 (2.70) (15.61) 10.25 8.92
--------------------------------------------------
Total from investment operations 2.35 (3.00) (15.76) 10.18 8.86
- --------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions in excess of net realized gain -- -- -- -- (.02)
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $13.37 $11.02 $14.02 $29.78 $19.60
==================================================
- --------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 21.33% (21.40)% (52.92)% 51.94% 82.38%
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $103,271 $ 83,351 $128,230 $247,566 $26,482
- --------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 87,528 $112,436 $170,129 $161,221 $ 9,066
- --------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment loss (1.77)% (1.84)% (0.85)% (0.48)% (1.26)%
Total expenses 2.49% 2.47% 2.08% 1.91% 2.16%
Expenses after expense reimbursement or
fee waiver and reduction to custodian expenses 2.08% 2.26% 2.07% N/A 3 N/A 3
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate 76% 51% 84% 23% 61%
<FN>
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
20 | OPPENHEIMER MIDCAP FUND
Class N Year Ended October 31, 2003 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 (.17) (.14) (.05)
Net realized and unrealized gain (loss) 2.66 (2.88) (5.09)
----------------------------
Total from investment operations 2.49 (3.02) (5.14)
- --------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions in excess of net realized gain -- -- --
- --------------------------------------------------------------------------------------
Net asset value, end of period $13.87 $11.38 $14.40
============================
- --------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 21.88% (20.97)% (26.31)%
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $16,606 $8,846 $2,268
- --------------------------------------------------------------------------------------
Average net assets (in thousands) $11,846 $6,576 $1,250
- --------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (1.34)% (1.28)% (0.94)%
Total expenses 1.86% 1.87% 1.73%
Expenses after expense reimbursement or fee waiver
and reduction to custodian expenses 1.64% 1.66% 1.72%
- --------------------------------------------------------------------------------------
Portfolio turnover rate 76% 51% 84%
<FN>
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. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares.
3. Annualized for periods of less than one full year.
</FN>
See accompanying Notes to Financial Statements.
21 | OPPENHEIMER MIDCAP FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
Class Y Year Ended October 31, 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------
Per Share Operating Data
- --------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.71 $14.69 $30.86 $20.07 $10.88
- --------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.19) (.08) (.08) (.02) (.01)
Net realized and unrealized gain (loss) 2.83 (2.90) (16.09) 10.81 9.22
--------------------------------------------------
Total from investment operations 2.64 (2.98) (16.17) 10.79 9.21
- --------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions in excess of net realized gain -- -- -- -- (.02)
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $14.35 $11.71 $14.69 $30.86 $20.07
==================================================
- --------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 22.55% (20.29)% (52.40)% 53.76% 84.69%
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $17,171 $7,419 $4,759 $115 $2
- --------------------------------------------------------------------------------------------------
Average net assets (in thousands) $11,928 $6,449 $2,720 $ 33 $2
Ratios to average net assets: 2
Net investment income (loss) (0.80)% (0.39)% (0.12)% 0.60% (0.06)%
Total expenses 1.11% 0.83% 1.07% 0.74% 1.03%
Expenses after expense reimbursement or
fee waiver and reduction to custodian expenses N/A 3,4 N/A 3 1.02% N/A 3 N/A 3
- ------------------------------------------------------------------------------------------------
Portfolio turnover rate 76% 51% 84% 23% 61%
<FN>
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
22 | OPPENHEIMER MIDCAP FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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. Securities traded on NASDAQ are valued based on the closing price
provided by NASDAQ prior to the time when the Fund's assets are valued. In the
absence of a sale, the security is valued at the last sale price on the prior
trading day, if it is within the spread of the closing bid and asked prices, and
if not, at the closing bid price. Securities (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
using 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).
- --------------------------------------------------------------------------------
Foreign Currency Translation. The Fund's accounting records are maintained in
U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
23 | OPPENHEIMER MIDCAP FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
Joint Repurchase Agreements. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. Secured by U.S. government securities, these balances
are invested in one or more repurchase agreements. 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. In the
event of default by the other party to the agreement, retention of the
collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
Net Unrealized
Appreciation Based
Undistributed Undistributed Accumulated on Cost of Securities
Net Investment Long-Term Loss for Federal Income
Income Gain Carryforward 1,2 Tax Purposes
----------------------------------------------------------------------
$-- $-- $1,218,890,585 $164,304,562
1. As of October 31, 2003, the Fund had $1,218,890,585 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of October 31, 2003,
details of the capital loss carryforwards were as follows:
Expiring
-----------------------
2006 $ 2,792,572
2007 3,516,822
2008 142,020,390
2009 765,032,406
2010 237,892,098
2011 67,636,297
---------------
Total $1,218,890,585*
===============
*Includes $41,420 from capital loss carryforward acquired in the September 4,
2003 merger with Oppenheimer Select Managers Gartmore Millennium Growth Fund II.
2. During the fiscal years ended October 31, 2003 and October 31, 2002, the Fund
did not utilize any capital loss carryforwards.
24 | OPPENHEIMER MIDCAP FUND
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund.
Accordingly, the following amounts have been reclassified for October 31, 2003.
Net assets of the Fund were unaffected by the reclassifications.
From To (From) Net
Ordinary Capital Tax Return Investment
Loss Gain (Loss) of Capital Loss
----------------------------------------------------
$10,616,094 $-- $-- $10,616,094
No distributions were paid during the years ended October 31, 2003 and October
31, 2002.
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of October 31, 2003 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
Federal tax cost of securities and
other investments $731,879,467
============
Gross unrealized appreciation $209,203,512
Gross unrealized depreciation (44,898,950)
------------
Net unrealized appreciation $164,304,562
============
- --------------------------------------------------------------------------------
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 year ended October
31, 2003, the Fund's projected benefit obligations were increased by $2,296 and
payments of $3,871 were made to retired trustees, resulting in an accumulated
liability of $146,496 as of October 31, 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, deferred amounts are treated as though equal dollar amounts had
been invested in shares of the Fund or are invested in other Oppenheimer funds
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. Amounts will be deferred
until distributed in accordance to the Plan.
25 | OPPENHEIMER MIDCAP FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
Investment Income. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
Expense Offset Arrangement. The reduction of custodian fees represents earnings
on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
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:
Year Ended October 31, 2003 Year Ended October 31, 2002
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------
Class A
Sold 8,268,487 $ 100,143,126 10,246,014 $ 140,041,291
Acquisition--Note 7 317,478 4,460,569 -- --
Redeemed (8,568,434) (101,677,126) (16,353,774) (219,545,138)
----------------------------------------------------------
Net increase (decrease) 17,531 $ 2,926,569 (6,107,760) $ (79,503,847)
==========================================================
- --------------------------------------------------------------------------------------
Class B
Sold 4,126,736 $ 48,252,675 5,434,402 $ 72,796,103
Acquisition--Note 7 38,399 517,234 -- --
Redeemed (6,086,687) (69,345,725) (10,300,242) (132,657,060)
----------------------------------------------------------
Net decrease (1,921,552) $ (20,575,816) (4,865,840) $ (59,860,957)
==========================================================
26 | OPPENHEIMER MIDCAP FUND
Year Ended October 31, 2003 Year Ended October 31, 2002
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------
Class C
Sold 2,083,749 $ 24,228,356 2,545,426 $ 33,944,222
Acquisition--Note 7 33,708 453,714 -- --
Redeemed (1,956,908) (22,260,768) (4,128,477) (53,180,986)
--------------------------------------------------------
Net increase (decrease) 160,549 $ 2,421,302 (1,583,051) $(19,236,764)
========================================================
- ------------------------------------------------------------------------------------
Class N
Sold 680,615 $ 8,317,381 900,502 $ 11,916,305
Acquisition--Note 7 11,483 160,308 -- --
Redeemed (271,906) (3,340,257) (281,019) (3,453,917)
--------------------------------------------------------
Net increase 420,192 $ 5,137,432 619,483 $ 8,462,388
========================================================
- ------------------------------------------------------------------------------------
Class Y
Sold 896,395 $ 11,097,195 505,761 $ 7,112,046
Acquisition--Note 7 52 743 -- --
Redeemed (333,575) (4,296,208) (196,412) (2,703,018)
--------------------------------------------------------
Net increase 562,872 $ 6,801,730 309,349 $ 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 year ended October 31, 2003, were
$581,090,574 and $524,817,149, 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 a fee at an annual rate
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 per account fee. For the year ended October 31, 2003, the Fund paid
$2,635,732 to OFS for services to the Fund.
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.
27 | OPPENHEIMER MIDCAP FUND
NOTES TO FINANCIAL STATEMENTS 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
Year Ended Shares Distributor Distributor 1 Distributor 1 Distributor 1 Distributor 1
- -------------------------------------------------------------------------------------------------------
October 31, 2003 $1,153,285 $343,111 $110,893 $1,259,674 $178,412 $50,872
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
Year Ended Distributor Distributor Distributor Distributor
- --------------------------------------------------------------------------------
October 31, 2003 $10,288 $922,794 $17,185 $23,146
- --------------------------------------------------------------------------------
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 year ended October 31, 2003, expense under
the Class A Plan totaled $836,511, all of which were paid by the Distributor to
recipients, which included $18,433 retained by the Distributor and $87,235 which
was 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.
28 | OPPENHEIMER MIDCAP FUND
Distribution fees paid to the Distributor for the year ended October 31, 2003,
were as follows:
Distributor's
Distributor's Aggregate
Aggregate Uncompensated
Uncompensated Expenses as %
Total Expenses Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
- -------------------------------------------------------------------------------
Class B Plan $2,911,088 $2,107,461 $17,953,833 5.48%
Class C Plan 874,733 194,066 3,338,760 3.23
Class N Plan 59,124 47,438 277,097 1.67
- -------------------------------------------------------------------------------
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.
29 | OPPENHEIMER MIDCAP FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. Option Activity Continued
Written option activity for the year ended October 31, 2003 was as follows:
Call Options
-------------------------
Number of Amount of
Contracts Premiums
-----------------------------------------------------------------
Options outstanding as of October 31, 2002 -- $ --
Options written 2,140 328,571
Options closed or expired (1,855) (253,179)
Options exercised (285) (75,392)
----------------------
Options outstanding as of October 31, 2003 -- $ --
======================
- --------------------------------------------------------------------------------
6. Illiquid or Restricted Securities
As of October 31, 2003, investments in securities included issues that are
illiquid or restricted. Restricted securities are 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 October 31, 2003 was $553,730, which
represents 0.06% of the Fund's net assets, all of which are considered
restricted. Information concerning restricted securities is as follows:
Acquisition Valuation as of Unrealized
Security Dates Cost October 31, 2003 Depreciation
- -----------------------------------------------------------------------------------------------
Stocks and/or Warrants
Axsun Technologies, Inc., Cv., Series C 12/13/00 $8,999,998 $301,774 $8,698,224
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 9,100,104 101,056 8,999,048
ITF Optical Technologies, Inc., Cv.,
Series A 4/7/00 5,000,000 150,900 4,849,100
30 | OPPENHEIMER MIDCAP FUND
- --------------------------------------------------------------------------------
7. Acquisition of Oppenheimer Select Managers Gartmore Millennium Growth Fund II
On September 4, 2003, the Fund acquired all of the net assets of Oppenheimer
Select Managers Gartmore Millennium Growth Fund II, pursuant to an Agreement and
Plan of Reorganization approved by the Oppenheimer Select Managers Gartmore
Millennium Growth Fund II shareholders on August 29, 2003. The Fund issued (at
an exchange ratio of 0.525672 for Class A, 0.537854 for Class B, 0.538216 for
Class C, 0.524906 for Class N and 0.515156 for Class Y of the Fund to one share
of Oppenheimer MidCap Fund 317,478; 38,399; 33,708; 11,483 and 52 shares of
beneficial interest for Class A, Class B, Class C, Class N and Class Y,
respectively, valued at $4,460,569, $517,234, $453,714, $160,308 and $743 in
exchange for the net assets, resulting in combined Class A net assets of
$430,352,457, Class B net assets of $328,027,097, Class C net assets of
$102,832,057, Class N net assets of $15,671,309 and Class Y net assets of
$16,967,112 on September 4, 2003. The net assets acquired included net
unrealized appreciation of $858,837 and an unused capital loss carryforward of
$1,913,251, potential utilization subject to tax limitations. The exchange
qualified as a tax-free reorganization for federal income tax purposes.
- --------------------------------------------------------------------------------
8. Borrowing and Lending Arrangements
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 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 year
ended or at October 31, 2003.
31 | OPPENHEIMER MIDCAP FUND
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders of
Oppenheimer MidCap Fund:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer MidCap Fund, including the statement of investments, as of October
31, 2003, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the four years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for the year ended October 31, 1999 were
audited by other auditors whose report dated November 19, 1999, expresses an
unqualified opinion on this information.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2003, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Oppenheimer MidCap Fund as of October 31, 2003, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the four
years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
Denver, Colorado
November 21, 2003
32 | OPPENHEIMER MIDCAP FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2004, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2003. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
A portion, if any, of the dividends paid by the Fund during the fiscal year
ended October 31, 2003 which are not designated as capital gain distributions
are eligible for lower individual income tax rates to the extent that the Fund
has received qualified dividend income as stipulated by recent tax legislation.
$1,371,241 of the Fund's fiscal year taxable income may be eligible for the
lower individual income tax rates. In early 2004, shareholders of record will
receive information regarding the percentage of distributions that are eligible
for lower individual income tax rates.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
Portfolio Proxy Voting
Policies and Procedures Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.225.5677, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund will be
required to file new Form N-PX, with its complete proxy voting record for the 12
months ended June 30th, no later than August 31st of each year. The first such
filing is due no later than August 31, 2004, for the twelve months ended June
30, 2004. Once filed, the Fund's Form N-PX filing will be available (i) without
charge, upon request, by calling the Fund toll-free at 1.800.225.5677, and (ii)
on the SEC's website at www.sec.gov.
33 | OPPENHEIMER MIDCAP FUND
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Name, Position(s) Held with Principal Occupation(s) During Past 5 Years; Other Trusteeships/Directorships Held
Fund, Length of Service, Age by Trustee; Number of Portfolios in Fund Complex Currently Overseen by Trustee
INDEPENDENT The address of each Trustee in the chart below is 6803 S. Tucson Way,
TRUSTEES Centennial, CO 80112-3924. Each Trustee serves for an indefinite term, until his
or her resignation, retirement, death or removal.
Thomas W. Courtney, Principal of Courtney Associates, Inc. (venture capital firm); former General
Chairman of the Partner of Trivest Venture Fund (private venture capital fund); former President
Board of Trustees, of Investment Counseling Federated Investors, Inc.; Trustee of the following
Trustee (since 1997) open-end investment companies: Cash Assets Trust, PIMCO ADVISORS VIT, Tax Free
Age: 70 Trust of Arizona and Hawaiian Tax Free Trust. Oversees 10 portfolios in the
OppenheimerFunds complex.
Paul Y. Clinton, Principal of Clinton Management Associates, a financial and venture capital
Trustee (since 1997) consulting firm; Trustee of the following open-end investment companies: Trustee
Age: 71 of Capital Cash Management Trust, Prime Cash Fund, PIMCO ADVISORS VIT and
Narragansett Insured Tax-Free Income Fund. Formerly: Director, External Affairs,
Kravco Corporation, a national real estate owner and property management
corporation; President of Essex Management Corporation, a management consulting
company; a general partner of Capital Growth Fund, a venture capital
partnership; a general partner of Essex Limited Partnership, an investment
partnership; President of Geneve Corp., a venture capital fund; Chairman of
Woodland Capital Corp., a small business investment company; and Vice President
of W.R. Grace & Co. Oversees 10 portfolios in the OppenheimerFunds complex.
Robert G. Galli, A trustee or director of other Oppenheimer funds. Oversees 35 portfolios in the
Trustee (since 1998) OppenheimerFunds complex.
Age: 70
Lacy B. Herrmann, Chairman and Chief Executive Officer of Aquila Management Corporation, the
Trustee (since 1997) sponsoring organization and manager, administrator and/or sub-adviser to the
Age: 74 following open-end investment companies, and Chairman of the Board of Trustees
and President of each: Churchill Cash Reserves Trust, Aquila-Cascadia Equity
Fund, Cash Assets Trust, Prime Cash Fund, Narragansett Insured Tax-Free Income
Fund, Tax-Free Fund For Utah, Churchill Tax-Free Fund of Kentucky, Tax-Free Fund
of Colorado, Tax-Free Trust of Oregon, Tax-Free Trust of Arizona, Hawaiian
Tax-Free Trust, and Aquila Rocky Mountain Equity Fund and PIMCO ADVISORS VIT;
Vice President, Director, Secretary, and formerly Treasurer of Aquila
Distributors, Inc., distributor of the above funds; President and Chairman of
the Board of Trustees of Capital Cash Management Trust ("CCMT"), and an Officer
and Trustee/Director of its predecessors; President and Director of STCM
Management Company, Inc., sponsor and adviser to CCMT; Chairman, President and a
Director of InCap Management Corporation, formerly sub-adviser and administrator
of Prime Cash Fund and Short Term Asset Reserves; Trustee Emeritus of Brown
University. Oversees 10 portfolios in the OppenheimerFunds complex.
34 | OPPENHEIMER MIDCAP FUND
Brian Wruble, Special Limited Partner (since January 1999) of Odyssey Investment Partners, LLC
Trustee (since 2001) (private equity investment); General Partner (since September 1996) of Odyssey
Age: 60 Partners, L.P. (hedge fund in distribution since 1/1/97); Board of Governing
Trustees (since August 1990) of The Jackson Laboratory (non-profit); Trustee
(since May 1992) of Institute for Advanced Study (educational institute);
formerly Trustee (May 2000 - 2002) of Research Foundation of AIMR (investment
research, non-profit); Governor, Jerome Levy Economics Institute of Bard College
(economics research) (August 1990-September 2001); Director of Ray & Berendtson,
Inc. (executive search firm) (May 2000-April 2002). Oversees 10 portfolios in
the OppenheimerFunds complex.
- --------------------------------------------------------------------------------------------------------------------------
OFFICERS The address of the Officers in the chart below is as follows: for Messrs. Murphy
and Zack Two World Financial Center, 225 Liberty St., New York, NY 10281-1008,
for Mr. Wixted, 6803 S. Tucson Way, Centennial, CO 80112-3924. Each Officer
serves for an annual term or until his or her earlier resignation, death or
removal.
John V. Murphy, Chairman, Chief Executive Officer and director (since June 2001) and President
President (since 2001) (since September 2000) of the Manager; President and a director or trustee of
Age: 54 other Oppenheimer funds; President and a director (since July 2001) of
Oppenheimer Acquisition Corp. (the Manager's parent holding company) and of
Oppenheimer Partnership Holdings, Inc. (a holding company subsidiary of the
Manager); a director (since November 2001) of OppenheimerFunds Distributor, Inc.
(a subsidiary of the Manager); Chairman and a director (since July 2001) of
Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer
agent subsidiaries of the Manager); President and a director (since July 2001)
of OppenheimerFunds Legacy Program (a charitable trust program established by
the Manager); a director of the investment advisory subsidiaries of the Manager:
OFI Institutional Asset Management, Inc. and Centennial Asset Management
Corporation (since November 2001), HarbourView Asset Management Corporation and
OFI Private Investments, Inc. (since July 2001); President (since November 1,
2001) and a director (since July 2001) of Oppenheimer Real Asset Management,
Inc.; a director (since November 2001) of Trinity Investment Management Corp.
and Tremont Advisers, Inc. (Investment advisory affiliates of the Manager);
Executive Vice President (since February 1997) of Massachusetts Mutual Life
Insurance Company (the Manager's parent company); a director (since June 1995)
of DLB Acquisition Corporation (a holding company that owns the shares of David
L. Babson & Company, Inc.); formerly, Chief Operating Officer (September
2000-June 2001) of the Manager; President and trustee (November 1999-November
2001) of MML Series Investment Fund and MassMutual Institutional Funds (open-end
investment companies); a director (September 1999-August 2000) of C.M. Life
Insurance Company; President, Chief Executive Officer and director (September
1999-August 2000) of MML Bay State Life Insurance Company; a director (June
1989-June 1998) of Emerald Isle Bancorp and Hibernia Savings Bank (a
wholly-owned subsidiary of Emerald Isle Bancorp). Oversees 72 portfolios as
Trustee/Officer and 10 portfolios as Officer in the OppenheimerFunds complex.
John O'Hare, Vice President and Senior Portfolio Manager of the Manager since September 2003;
Vice President an officer of 2 portfolios in the OppenheimerFunds complex. Formerly Executive
(since 2003) Vice President and Portfolio Manager (June 2000 - August 2003) and Portfolio
Age: 45 Manager and Senior Vice President (August 1997 - June 2000) at Geneva Capital
Management, Ltd.
35 | OPPENHEIMER MIDCAP FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
Brian W. Wixted, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer
Treasurer (since 1999) (since March 1999) of HarbourView Asset Management Corporation, Shareholder
Age: 44 Services, Inc., Oppenheimer Real Asset Management Corporation, Shareholder
Financial Services, Inc., Oppenheimer Partnership Holdings, Inc., OFI Private
Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. and
OppenheimerFunds plc (since May 2000) and OFI Institutional Asset Management,
Inc. (since November 2000) (offshore fund management subsidiaries of the
Manager); Treasurer and Chief Financial Officer (since May 2000) of Oppenheimer
Trust Company (a trust company subsidiary of the Manager); Assistant Treasurer
(since March 1999) of Oppenheimer Acquisition Corp. and OppenheimerFunds Legacy
Program (since April 2000); formerly Principal and Chief Operating Officer
(March 1995-March 1999), Bankers Trust Company-Mutual Fund Services Division. An
officer of 82 portfolios in the OppenheimerFunds complex.
Robert G. Zack, Senior Vice President (since May 1985) and General Counsel (since February 2002)
Secretary (since 2001) of the Manager; General Counsel and a director (since November 2001) of
Age: 55 OppenheimerFunds Distributor, Inc.; Senior Vice President and General Counsel
(since November 2001) of HarbourView Asset Management Corporation; Vice
President and a director (since November 2000) of Oppenheimer Partnership
Holdings, Inc.; Senior Vice President, General Counsel and a director (since
November 2001) of Shareholder Services, Inc., Shareholder Financial Services,
Inc., OFI Private Investments, Inc., Oppenheimer Trust Company and OFI
Institutional Asset Management, Inc.; General Counsel (since November 2001) of
Centennial Asset Management Corporation; a director (since November 2001) of
Oppenheimer Real Asset Management, Inc.; Assistant Secretary and a director
(since November 2001) of OppenheimerFunds International Ltd.; Vice President
(since November 2001) of OppenheimerFunds Legacy Program; Secretary (since
November 2001) of Oppenheimer Acquisition Corp.; formerly Acting General Counsel
(November 2001-February 2002) and Associate General Counsel (May 1981-October
2001) of the Manager; Assistant Secretary of Shareholder Services, Inc. (May
1985-November 2001), Shareholder Financial Services, Inc. (November
1989-November 2001); OppenheimerFunds International Ltd. and OppenheimerFunds
plc (October 1997-November 2001). An officer of 82 portfolios in the
OppenheimerFunds complex.
The Fund's Statement of Additional Information contains additional information
about the Fund's Trustees and is available without charge upon request.
36 | OPPENHEIMER MIDCAP FUND
ITEM 2. CODE OF ETHICS
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the Fund has determined that the Fund does not have an
audit committee financial expert serving on its Audit Committee. In this regard,
no member of the Audit Committee was identified as having all of the technical
attributes identified in Instruction 2(b) to Item 3 of Form N-CSR to qualify as
an "audit committee financial expert," whether through the type of specialized
education or experience described in that Instruction. The Board has concluded
that while the members of the Audit Committee collectively have the necessary
attributes and experience required to serve effectively as an Audit Committee,
no single member possesses all of the required technical attributes through the
particular methods of education or experience set forth in the Instructions to
be designated as an audit committee financial expert.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES - NOT REQUIRED
ITEM 5. NOT APPLICABLE
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 October 31, 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.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)