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
- --------------------------------------------------------------------------------
(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, 2003 - April 30, 2004
Item 1. Reports to Stockholders.
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STATEMENT OF INVESTMENTS April 30, 2004 / Unaudited
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MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--99.3%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--25.1%
- --------------------------------------------------------------------------------
AUTO COMPONENTS--1.6%
Gentex Corp. 382,100 $ 15,027,993
- --------------------------------------------------------------------------------
AUTOMOBILES--1.5%
Harley-Davidson, Inc. 237,700 13,387,264
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--6.1%
International Game
Technology 147,400 5,562,876
- --------------------------------------------------------------------------------
P.F. Chang's China
Bistro, Inc. 1 179,700 8,780,142
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Ruby Tuesday, Inc. 620,500 18,565,360
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Starbucks Corp. 1 443,614 17,238,840
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Station Casinos, Inc. 110,000 4,958,800
----------------
55,106,018
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LEISURE EQUIPMENT & PRODUCTS--2.7%
Brunswick Corp. 370,300 15,223,033
- --------------------------------------------------------------------------------
Marvel
Enterprises, Inc. 1 489,900 9,303,201
----------------
24,526,234
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MEDIA--2.4%
Getty Images, Inc. 1 165,500 9,036,300
- --------------------------------------------------------------------------------
Univision
Communications,
Inc., Cl. A 1 370,600 12,544,810
----------------
21,581,110
- --------------------------------------------------------------------------------
MULTILINE RETAIL--0.0%
Family Dollar
Stores, Inc. 753 24,201
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SPECIALTY RETAIL--8.5%
Bed Bath &
Beyond, Inc. 1 336,900 12,505,728
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Chico's FAS, Inc. 1 396,200 16,137,226
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O'Reilly
Automotive, Inc. 1 439,900 19,747,111
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PetsMart, Inc. 637,700 17,664,290
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Ross Stores, Inc. 235,300 7,176,650
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Urban
Outfitters, Inc. 1 82,300 3,799,791
----------------
77,030,796
MARKET VALUE
SHARES SEE NOTE 1
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TEXTILES, APPAREL & LUXURY GOODS--2.3%
Coach, Inc. 1 500,483 $ 21,320,576
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CONSUMER STAPLES--2.0%
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FOOD & STAPLES RETAILING--2.0%
Whole Foods
Market, Inc. 231,700 18,533,683
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ENERGY--5.8%
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ENERGY EQUIPMENT & SERVICES--2.9%
BJ Services Co. 1 213,000 9,478,500
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Smith
International, Inc. 1 301,700 16,518,075
----------------
25,996,575
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OIL & GAS--2.9%
Apache Corp. 344,200 14,411,654
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XTO Energy, Inc. 439,000 11,721,300
----------------
26,132,954
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FINANCIALS--7.5%
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--1.9%
Commerce
Bancorp, Inc. 305,200 17,399,452
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--3.7%
Investors Financial
Services Corp. 386,300 15,015,481
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Legg Mason, Inc. 201,500 18,550,090
----------------
33,565,571
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INSURANCE--1.9%
AMBAC Financial
Group, Inc. 251,200 17,332,800
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HEALTH CARE--19.5%
- --------------------------------------------------------------------------------
BIOTECHNOLOGY--8.3%
Celgene Corp. 1 174,400 9,014,736
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Gen-Probe, Inc. 1 228,800 7,628,192
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Gilead Sciences, Inc. 1 355,500 21,625,065
- --------------------------------------------------------------------------------
Idexx
Laboratories, Inc. 1 156,500 9,587,190
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Invitrogen Corp. 1 245,900 17,761,357
- --------------------------------------------------------------------------------
Martek
Biosciences Corp. 1 153,200 9,726,668
----------------
75,343,208
11 | OPPENHEIMER MIDCAP FUND
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STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--3.4%
Stryker Corp. 98,700 $ 9,764,391
- --------------------------------------------------------------------------------
Varian Medical
Systems, Inc. 1 242,826 20,844,184
-------------
30,608,575
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--7.8%
Coventry Health
Care, Inc. 1 302,950 12,675,428
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Health Management
Associates, Inc., Cl. A 967,500 22,378,275
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Lincare
Holdings, Inc. 1 468,400 16,267,532
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Patterson Dental Co. 1 266,000 19,604,200
-------------
70,925,435
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PHARMACEUTICALS--0.0%
Mylan
Laboratories, Inc. 1,885 43,185
- --------------------------------------------------------------------------------
INDUSTRIALS--12.2%
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--2.2%
Expeditors International
of Washington, Inc. 492,100 19,777,499
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--6.0%
Apollo Group,
Inc., Cl. A 1 269,289 24,472,984
- --------------------------------------------------------------------------------
Corporate Executive
Board Co. 288,200 14,885,530
- --------------------------------------------------------------------------------
Stericycle, Inc. 1 312,100 14,924,622
-------------
54,283,136
- --------------------------------------------------------------------------------
MACHINERY--1.0%
Donaldson Co., Inc. 323,000 8,859,890
- --------------------------------------------------------------------------------
ROAD & RAIL--1.4%
C.H. Robinson
Worldwide, Inc. 320,000 13,132,800
- --------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS--1.6%
Fastenal Co. 264,700 14,524,089
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INFORMATION TECHNOLOGY--27.2%
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--0.9%
Comverse
Technology, Inc. 1 503,500 8,237,260
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--5.2%
CDW Corp. 324,200 $ 20,259,258
- --------------------------------------------------------------------------------
Jabil Circuit, Inc. 1 470,100 12,405,939
- --------------------------------------------------------------------------------
Thermo
Electron Corp. 1 506,000 14,775,200
-------------
47,440,397
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INTERNET SOFTWARE & SERVICES--1.0%
VeriSign, Inc. 1 569,000 9,177,970
- --------------------------------------------------------------------------------
IT SERVICES--6.8%
Affiliated Computer
Services, Inc., Cl. A 1 285,600 13,851,600
- --------------------------------------------------------------------------------
Alliance Data
Systems Corp. 1 212,600 7,392,102
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Cognizant
Technology
Solutions Corp. 1 206,700 8,941,842
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Fiserv, Inc. 1 463,000 16,927,280
- --------------------------------------------------------------------------------
Sungard Data
Systems, Inc. 1 549,100 14,315,037
-------------
61,427,861
- --------------------------------------------------------------------------------
OFFICE ELECTRONICS--2.0%
Zebra Technologies
Corp., Cl. A 1 242,900 17,802,141
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--2.3%
Linear
Technology Corp. 361,500 12,880,246
- --------------------------------------------------------------------------------
Silicon
Laboratories, Inc. 1 173,800 8,194,670
-------------
21,074,916
- --------------------------------------------------------------------------------
SOFTWARE--9.0%
Adobe Systems, Inc. 404,600 16,726,164
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Amdocs Ltd. 1 523,000 13,885,650
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Electronic Arts, Inc. 1 379,700 19,220,414
- --------------------------------------------------------------------------------
Intuit, Inc. 1 277,800 11,798,166
- --------------------------------------------------------------------------------
Symantec Corp. 1 448,100 20,186,905
-------------
81,817,299
-------------
Total Common Stocks
(Cost $781,986,012) 901,440,888
12 | OPPENHEIMER MIDCAP FUND
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
PREFERRED STOCKS--0.1%
Axsun Technologies,
Inc., Cv., Series C 1,2,3 771,208 $ 390,308
- --------------------------------------------------------------------------------
Centerpoint Broadband
Technologies, Inc.,
Cv., Series D 1,2 556,586 --
- --------------------------------------------------------------------------------
fusionOne, Inc., 8%
Non-Cum. Cv.,
Series D 1,2,3 1,675,894 38,043
- --------------------------------------------------------------------------------
ITF Optical
Technologies, Inc.,
Cv., Series A 1,2,3 200,000 96,300
--------------
Total Preferred Stocks
Cost $29,100,098) 524,651
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.7%
Undivided interest of 1.13% in joint repurchase
agreement (Principal Amount/Market Value
$554,815,000, with a maturity value of
$554,860,310) with PaineWebber, Inc.,
0.98%, dated 4/30/04, to be repurchased
at $6,294,514 on 5/3/04, collateralized
by Federal National Mortgage Assn.,
5.50%--6.50%, 7/1/32--11/1/33, with
a value of $566,733,053
(Cost $6,294,000) $ 6,294,000 $ 6,294,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE
(COST $817,380,110) 100.1% 908,259,539
- --------------------------------------------------------------------------------
LIABILITIES
IN EXCESS OF
OTHER ASSETS (0.1) (876,302)
----------------------------------
NET ASSETS 100.0% $ 907,383,237
==================================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. Identifies issues considered to be illiquid or restricted. See Note 5 of
Notes to Financial Statements.
3. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer, and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the period ended April 30, 2004.
The aggregate fair value of securities of affiliated companies held by the Fund
as of April 30, 2004 amounts to $524,651. Transactions during the period in
which the issuer was an affiliate are as follows:
SHARES SHARES
OCTOBER 31, GROSS GROSS APRIL 30, UNREALIZED
2003 ADDITIONS REDUCTIONS 2004 DEPRECIATION
- --------------------------------------------------------------------------------------------------------------------
STOCKS AND/OR WARRANTS
Axsun Technologies, Inc., Cv.,
Series C 771,208 -- -- 771,208 $ 8,609,689
fusionOne, Inc., 8% Non-Cum. Cv.,
Series D 1,675,894 -- -- 1,675,894 9,062,062
ITF Optical Technologies, Inc., Cv.,
Series A 200,000 -- -- 200,000 4,903,700
-----------------
$ 22,575,451
=================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
13 | OPPENHEIMER MIDCAP FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
April 30, 2004
- -----------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $794,280,008) $ 907,734,888
Affiliated companies (cost $23,100,102) 524,651
-------------------
908,259,539
- -----------------------------------------------------------------------------------------------------------------
Cash 567,416
- -----------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 960,455
Interest and dividends 110,879
Other 13,331
-------------------
Total assets 909,911,620
- -----------------------------------------------------------------------------------------------------------------
LIABILITIES
Payables and other liabilities:
Shares of beneficial interest redeemed 1,681,607
Shareholder communications 365,767
Distribution and service plan fees 182,876
Trustees' compensation 158,207
Transfer and shareholder servicing agent fees 128,399
Other 11,527
-------------------
Total liabilities 2,528,383
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS $ 907,383,237
===================
- -----------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $ 1,935,250,197
- -----------------------------------------------------------------------------------------------------------------
Accumulated net investment loss (6,521,893)
- -----------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (1,112,224,496)
- -----------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 90,879,429
------------------
NET ASSETS $ 907,383,237
==================
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
$442,342,937 and 30,672,395 shares of beneficial interest outstanding) $14.42
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $15.30
- -----------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $320,794,945
and 23,318,200 shares of beneficial interest outstanding) $13.76
- -----------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $106,296,179
and 7,729,305 shares of beneficial interest outstanding) $13.75
- -----------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $19,054,330
and 1,331,943 shares of beneficial interest outstanding) $14.31
- -----------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $18,894,846 and 1,272,467 shares of beneficial interest outstanding) $14.85
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
15 | OPPENHEIMER MIDCAP FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
For the Six Months Ended April 30, 2004
- ----------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $7,200) $ 1,124,618
- ----------------------------------------------------------------------------------------------------------------
Interest 79,934
---------------
Total investment income 1,204,552
- ----------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 3,092,777
- ----------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 523,535
Class B 1,605,400
Class C 518,016
Class N 43,591
- ----------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 964,226
Class B 893,153
Class C 277,424
Class N 50,965
Class Y 26,553
- ----------------------------------------------------------------------------------------------------------------
Shareholder communications:
Class A 68,772
Class B 82,407
Class C 19,931
Class N 806
- ----------------------------------------------------------------------------------------------------------------
Trustees' compensation 25,778
- ----------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 6,042
- ----------------------------------------------------------------------------------------------------------------
Other 59,853
---------------
Total expenses 8,259,229
Less reduction to custodian expenses (710)
Less voluntary waiver of transfer and shareholder servicing agent fees:
Class A (219,496)
Class B (337,448)
Class C (100,332)
Class N (21,298)
---------------
Net expenses 7,579,945
- ----------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (6,375,393)
- ----------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on investments 107,007,840
- ----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation on investments (73,808,305)
- ----------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 26,824,142
===============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16 | OPPENHEIMER MIDCAP FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2004 OCTOBER 31,
(UNAUDITED) 2003
- ----------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment loss $ (6,375,393) $ (10,614,521)
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 107,007,840 (67,296,474)
- ----------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (73,808,305) 233,645,940
-----------------------------------------
Net increase in net assets resulting from operations 26,824,142 155,734,945
- ----------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
Net increase (decrease) in net assets resulting from beneficial interest
transactions:
Class A (1,859,686) 2,926,569
Class B (16,220,509) (20,575,816)
Class C 85,852 2,421,302
Class N 1,942,142 5,137,432
Class Y 1,170,200 6,801,730
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS
Total increase 11,942,141 152,446,162
- ----------------------------------------------------------------------------------------------------------------------
Beginning of period 895,441,096 742,994,934
-----------------------------------------
End of period (including accumulated net investment
loss of $6,521,893 and $146,500, respectively) $ 907,383,237 $ 895,441,096
=========================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17 | OPPENHEIMER MIDCAP FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2004 OCT. 31,
CLASS A (UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 13.97 $ 11.43 $ 14.42 $ 30.41 $ 19.88 $ 10.83
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.07) (.12) (.13) (.02) .04 (.04)
Net realized and unrealized gain (loss) .52 2.66 (2.86) (15.97) 10.49 9.11
---------------------------------------------------------------
Total from investment operations .45 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 $ 14.42 $ 13.97 $ 11.43 $ 14.42 $ 30.41 $ 19.88
===============================================================
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 3.22% 22.22% (20.74)% (52.58)% 52.97% 83.79%
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $442,343 $430,514 $351,983 $532,338 $1,055,967 $167,879
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $434,130 $366,050 $460,797 $718,814 $ 728,168 $ 60,644
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income (loss) (1.06)% (1.01)% (1.06)% (0.09)% 0.28% (0.49)%
Total expenses 1.43% 1.61% 1.68% 1.33% 1.16% 1.40%
Expenses after expense reimbursement
or fee waiver and reduction
to custodian expenses 1.33% 1.32% 1.47% 1.32% N/A 3 N/A 3
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 91% 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
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2004 OCT. 31,
CLASS B (UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 13.37 $ 11.02 $ 14.02 $ 29.79 $ 19.62 $ 10.77
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.14) (.23) (.30) (.15) (.07) (.07)
Net realized and unrealized gain (loss) .53 2.58 (2.70) (15.62) 10.24 8.94
---------------------------------------------------------------
Total from investment operations .39 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 $ 13.76 $ 13.37 $ 11.02 $ 14.02 $ 29.79 $ 19.62
===============================================================
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 2.92% 21.33% (21.40)% (52.94)% 51.83% 82.40%
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $320,795 $327,880 $291,397 $438,962 $874,830 $118,611
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $322,704 $291,209 $385,917 $592,096 $594,390 $ 40,455
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment loss (1.84)% (1.75)% (1.85)% (0.84)% (0.48)% (1.25)%
Total expenses 2.32% 2.51% 2.48% 2.08% 1.91% 2.16%
Expenses after expense reimbursement
or fee waiver and reduction
to custodian expenses 2.11% 2.06% 2.27% 2.07% N/A 3 N/A 3
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 91% 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
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2004 OCT. 31,
CLASS C (UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 13.37 $ 11.02 $ 14.02 $ 29.78 $ 19.60 $ 10.76
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.12) (.20) (.30) (.15) (.07) (.06)
Net realized and unrealized gain (loss) .50 2.55 (2.70) (15.61) 10.25 8.92
---------------------------------------------------------------
Total from investment operations .38 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 $ 13.75 $ 13.37 $ 11.02 $ 14.02 $ 29.78 $ 19.60
===============================================================
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 2.84% 21.33% (21.40)% (52.92)% 51.94% 82.38%
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $106,296 $103,271 $ 83,351 $128,230 $247,566 $26,482
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $104,160 $ 87,528 $112,436 $170,129 $161,221 $ 9,066
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment loss (1.83)% (1.77)% (1.84)% (0.85)% (0.48)% (1.26)%
Total expenses 2.29% 2.49% 2.47% 2.08% 1.91% 2.16%
Expenses after expense reimbursement
or fee waiver and reduction
to custodian expenses 2.10% 2.08% 2.26% 2.07% N/A 3 N/A 3
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 91% 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
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2004 OCT. 31,
CLASS N (UNAUDITED) 2003 2002 2001 1
- ---------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 13.87 $ 11.38 $ 14.40 $ 19.54
- ---------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.10) (.17) (.14) (.05)
Net realized and unrealized gain (loss) .54 2.66 (2.88) (5.09)
----------------------------------------
Total from investment operations .44 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 $ 14.31 $ 13.87 $ 11.38 $ 14.40
========================================
- ---------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 3.17% 21.88% (20.97) (26.31)%
- ---------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $19,054 $16,606 $8,846 $2,268
- ---------------------------------------------------------------------------------------------------
Average net assets (in thousands) $17,539 $11,846 $6,576 $1,250
- ---------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (1.30)% (1.34)% (1.28)% (0.94)%
Total expenses 1.80% 1.86% 1.87% 1.73%
Expenses after expense reimbursement
or fee waiver and reduction
to custodian expenses 1.56% 1.64% 1.66% 1.72%
- ---------------------------------------------------------------------------------------------------
Portfolio turnover rate 91% 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, 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
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2004 OCT. 31,
CLASS Y (UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 14.35 $ 11.71 $ 14.69 $ 30.86 $ 20.07 $ 10.88
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.06) (.19) (.08) (.08) (.02) (.01)
Net realized and unrealized gain (loss) .56 2.83 (2.90) (16.09) 10.81 9.22
---------------------------------------------------------------
Total from investment operations .50 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 $ 14.85 $ 14.35 $ 11.71 $ 14.69 $ 30.86 $ 20.07
===============================================================
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 3.48% 22.55% (20.29)% (52.40)% 53.76% 84.69%
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $18,895 $17,171 $7,419 $4,759 $115 $2
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $17,182 $11,928 $6,449 $2,720 $ 33 $2
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income (loss) (0.72)% (0.80)% (0.39)% (0.12)% 0.60% (0.06)%
Total expenses 1.02% 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 N/A 3,4 N/A 3 1.02% N/A 3 N/A 3
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 91% 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 Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer MidCap Fund (the Fund) is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company. The
Fund's investment objective is to seek capital appreciation. The Fund's
investment advisor is OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B, Class C, Class N and Class Y shares. Class
A shares are sold at their offering price, which is normally net asset value
plus a front-end sales charge. Class B, Class C and Class N shares are sold
without a front-end sales charge but may be subject to a contingent deferred
sales charge (CDSC). Class N shares are sold only through retirement plans.
Retirement plans that offer Class N shares may impose charges on those
accounts. Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC. All classes of shares have identical
rights and voting privileges with respect to the Fund in general and exclusive
voting rights on matters that affect that class alone. 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. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. 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 may be valued primarily using dealer-supplied valuations or a
portfolio pricing service authorized by the Board of Trustees. Securities
(including restricted securities) for which market quotations are not readily
available are valued at their fair value. Foreign securities whose values have
been materially affected by what the Manager identifies as a significant event
occurring before the Fund's assets are valued but after the close of their
respective foreign exchanges will be fair valued. 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
23 | OPPENHEIMER MIDCAP FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
securities and investment income are translated at the rates of exchange
prevailing on the respective dates of such transactions.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in
the values of assets and liabilities, including investments in securities at
fiscal period end, resulting from changes in exchange rates.
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.
- --------------------------------------------------------------------------------
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. 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.
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.
As of April 30, 2004, the Fund had available for federal income tax purposes
an estimated unused capital loss carryforward of $1,111,882,745 expiring by
2012. This estimated capital
24 | OPPENHEIMER MIDCAP FUND
loss carryforward represents carryforward as of the end of the last fiscal
year, increased for losses deferred under tax accounting rules to the current
fiscal year and is increased or decreased by capital losses or gains realized
in the first six months of the current fiscal year. During the six months ended
April 30, 2004 and the year ended October 31, 2003, the Fund used $107,007,840
and $0, respectively, of carryforward to offset capital gains realized.
As of October 31, 2003, the Fund had available for federal income tax purposes
unused capital loss carryforwards as follows:
EXPIRING
------------------------------------
2006 $ 2,792,572
2007 3,516,822
2008 142,020,390
2009 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.
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for
the Fund's independent trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service. During the six months
ended April 30, 2004, the Fund's projected benefit obligations were increased
by $7,668 and payments of $3,871 were made to retired trustees, resulting in an
accumulated liability of $150,293 as of April 30, 2004.
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. For purposes of determining the amount owed to the Trustee under the
plan, deferred amounts are treated as though equal dollar amounts had been
invested in shares of the Fund or in other Oppenheimer funds selected by the
Trustee. The Fund does purchase shares of the funds selected for deferral by
the Trustee in amounts equal to his or her deemed investment, resulting in a
Fund asset equal to the deferred compensation liability. Such assets are
included as a component of "Other" within the asset section of the Statement of
Assets and Liabilities. 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.
- --------------------------------------------------------------------------------
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.
25 | OPPENHEIMER MIDCAP FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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, if applicable,
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 U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
In the ordinary course of business, the Fund enters into contracts that
contain a variety of indemnifications. The Fund's maximum exposure under these
arrangements is unknown. However, the Fund has not had prior claims or losses
pursuant to these contracts and expects the risk of loss to be remote.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
SIX MONTHS ENDED APRIL 30, 2004 YEAR ENDED OCTOBER 31, 2003
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------
CLASS A
Sold 4,560,324 $ 64,780,613 8,268,487 $ 100,143,126
Acquisition-Note 6 -- -- 317,478 4,460,569
Redeemed (4,713,272) (66,640,299) (8,568,434) (101,677,126)
-----------------------------------------------------------------------------
Net increase (decrease) (152,948) $ (1,859,686) 17,531 $ 2,926,569
=============================================================================
- ------------------------------------------------------------------------------------------------------------
CLASS B
Sold 2,028,399 $ 27,478,194 4,126,736 $ 48,252,675
Acquisition-Note 6 -- -- 38,399 517,234
Redeemed (3,225,300) (43,698,703) (6,086,687) (69,345,725)
-----------------------------------------------------------------------------
Net decrease (1,196,901) $ (16,220,509) (1,921,552) $ (20,575,816)
=============================================================================
- ------------------------------------------------------------------------------------------------------------
CLASS C
Sold 1,092,726 $ 14,750,075 2,083,749 $ 24,228,356
Acquisition-Note 6 -- -- 33,708 453,714
Redeemed (1,088,278) (14,664,223) (1,956,908) (22,260,768)
-----------------------------------------------------------------------------
Net increase 4,448 $ 85,852 160,549 $ 2,421,302
=============================================================================
26 | OPPENHEIMER MIDCAP FUND
SIX MONTHS ENDED APRIL 30, 2004 YEAR ENDED OCTOBER 31, 2003
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------
CLASS N
Sold 437,218 $ 6,154,939 680,615 $ 8,317,381
Acquisition-Note 6 -- -- 11,483 160,308
Redeemed (302,455) (4,212,797) (271,906) (3,340,257)
---------------------------------------------------------------------------
Net increase 134,763 $ 1,942,142 420,192 $ 5,137,432
===========================================================================
- ------------------------------------------------------------------------------------------------------------
CLASS Y
Sold 386,676 $ 5,683,293 896,395 $ 11,097,195
Acquisition-Note 6 -- -- 52 743
Redeemed (310,374) (4,513,093) (333,575) (4,296,208)
---------------------------------------------------------------------------
Net increase 76,302 $ 1,170,200 562,872 $ 6,801,730
===========================================================================
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the six months ended April 30, 2004, were
$808,462,213 and $815,580,994, 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 which 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.
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICES. The Fund pays the Manager a fee of $1,500 per year for
preparing and filing the Fund's tax returns.
- --------------------------------------------------------------------------------
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 six months ended April 30, 2004, the
Fund paid $1,573,191 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $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 for all classes to 0.35% of average annual net assets per class. This
undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12B-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
27 | OPPENHEIMER MIDCAP FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
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. The Distributor currently uses all of those fees to
pay dealers, brokers, banks and other financial institutions quarterly for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years. Fees incurred by the Fund under the Plan are detailed in the Statement
of Operations.
- --------------------------------------------------------------------------------
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 to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. 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 0.25% per year on Class N shares. The
Distributor also receives a service fee of up to 0.25% per year under each
plan. If either the Class B, Class C or Class N plan is terminated by the Fund
or by the shareholders of a class, the Board of Trustees and its independent
trustees must determine whether the Distributor shall be entitled to payment
from the Fund of all or a portion of the service fee and/or asset-based sales
charge in respect to shares sold prior to the effective date of such
termination. The Distributor's aggregate uncompensated expenses under the plan
at April 30, 2004 for Class B, Class C and Class N shares were $17,672,032,
$3,569,075 and $340,975, respectively. Fees incurred by the Fund under the
plans are detailed in the Statement of Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption
proceeds prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- -------------------------------------------------------------------------------------------------------------------------
April 30, 2004 $256,294 $6,247 $410,441 $8,775 $5,074
28 | OPPENHEIMER MIDCAP FUND
- --------------------------------------------------------------------------------
5. ILLIQUID OR RESTRICTED SECURITIES
As of April 30, 2004, 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 April 30, 2004 was
$524,651, which represents 0.06% of the Fund's net assets, all of which are
considered restricted. Information concerning restricted securities is as
follows:
VALUATION
AS OF UNREALIZED
SECURITY ACQUISITION DATES COST APRIL 30, 2004 DEPRECIATION
- -------------------------------------------------------------------------------------------------------------
STOCKS AND/OR WARRANTS
Axsun Technologies, Inc., Cv.,
Series C 12/13/00 $8,999,998 $390,308 $8,609,690
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 38,043 9,062,061
ITF Optical Technologies, Inc.,
Cv., Series A 4/7/00 5,000,000 96,300 4,903,700
- --------------------------------------------------------------------------------
6. 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.
29 | OPPENHEIMER MIDCAP FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. 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 (the SEC) 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. The
SEC's order requires the Fund's Board of Trustees to adopt operating policies
and procedures to administer interfund borrowing and lending. 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 six
months ended or at April 30, 2004.
- --------------------------------------------------------------------------------
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.
30 | OPPENHEIMER MIDCAP FUND
Item 2. Code of Ethics
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer, principal
accounting officer or controller or persons performing similar functions.
Item 3. Audit Committee Financial Expert
The Board of Trustees of the registrant has determined that the
registrant 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 applicable to semiannual reports.
Item 5. Not applicable
Item 6. Schedule of Investments
Not applicable
Item 7. Not applicable
Item 8. Not applicable
Item 9. Submission of Matters to a Vote of Security Holders
The Board is responsible for approving nominees for election as
trustees. To assist in this task, the Board has designated the Audit Committee
as the nominating committee for the Board. It reviews and recommends nominees to
the Board. The Committee is comprised entirely of disinterested trustees as
defined in Section 2(a)(19) of the Investment Company Act of 1940.
The Audit Committee charter describes the responsibilities of the
Committee in nominating candidates for election as independent Trustees of the
Registrant. The Registrant's Board has adopted a written charter for the
Committee. A current copy of the Audit Committee charter is available to
shareholders on the OppenheimerFunds website at www.oppenheimerfunds.com.
Under the current policy, if the Board determines that a vacancy
exists or is likely to exist on the Board, the Audit Committee of the Board will
consider candidates for Board membership including recommended by Registrant
shareholders. The Audit Committee will consider nominees recommended by
independent Board members or recommended by any other Board members including
Board members affiliated with the Registrant's investment advisors. The
Committee may, upon Board approval, retain an executive search firm to assist in
screening potential candidates. Upon Board approval, the Audit Committee may
also use the services of legal, financial, or other external counsel that it
deems necessary or desirable in the screening process. Shareholders wishing to
submit a nominee for election to the Board may do so by mailing their submission
to the offices of OppenheimerFunds, Inc., 6803 South Tucson Way, Centennial, CO
80112, to the attention of the Board of Trustees of the named Registrant, c/o
the Secretary of the Registrant.
The Committee's process for identifying and evaluating nominees for
trustees includes a number of factors. In screening candidates for board
membership, whether the candidate is suggested by Board members, shareholders or
others, the Committee considers the candidate's professional experience,
soundness of judgment, integrity, ability to make independent, analytical
inquiries, collegiality, willingness and ability to devote the time required to
perform Board activities adequately, ability to represent the interests of all
shareholders of the Registrant, and diversity relative to the board's
composition. Candidates are expected to provide a mix of attributes, experience,
perspective and skills necessary to effectively advance the interests of
shareholders.
Item 10. Controls and Procedures
(a) Based on their evaluation of registrant's disclosure controls and
procedures (as defined in rule 30a-2(c) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(c)) as of April 30, 2004,
registrant's principal executive officer and principal financial
officer found registrant's disclosure controls and procedures to
provide reasonable assurances 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 over financial reporting that occurred during the
registrant's last fiscal half-year that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
Item 11. Exhibits.
(a) Exhibit attached hereto. (Attach code of ethics as exhibit)
(b) Exhibits attached hereto. (Attach certifications as exhibits)