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 - October 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN COMMON STOCK HOLDINGS
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Adobe Systems, Inc. 2.9%
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Expeditors International of Washington, Inc. 2.8
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Gilead Sciences, Inc. 2.6
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Coach, Inc. 2.4
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Patterson Cos., Inc. 2.3
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Affiliated Computer Services, Inc., Cl. A 2.3
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Symantec Corp. 2.3
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Fastenal Co. 2.3
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Whole Foods Market, Inc. 2.2
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Legg Mason, Inc. 2.2
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2004, and are based on net assets.
For more current Fund holdings, please visit www.oppenheimerfunds.com.
TOP TEN COMMON STOCK INDUSTRIES
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Specialty Retail 8.6%
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Software 8.5
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Health Care Equipment & Supplies 7.4
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Health Care Providers & Services 7.2
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Diversified Financial Services 5.4
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IT Services 5.4
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Hotels, Restaurants & Leisure 4.7
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Biotechnology 4.1
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Commercial Services & Supplies 3.8
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Energy Equipment & Services 3.4
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2004, and are based on net assets.
8 | OPPENHEIMER MIDCAP FUND
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SECTOR ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Consumer Discretionary 23.9%
Information Technology 22.9
Health Care 19.1
Industrials 14.6
Financials 10.8
Energy 6.4
Consumer Staples 2.3
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2004, and are based on common stocks.
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9 | OPPENHEIMER MIDCAP FUND
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED OCTOBER 31, 2004, FOLLOWED
BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE
BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. The Fund produced positive
performance for its fiscal year, although it underperformed its benchmark the
S&P Mid-Cap 400 Index. Overall, the Fund's performance can be attributed to
strong stock selection. However, the greatest negative effect on performance
came from the consumer discretionary sector.
Of the sectors that did well for the Fund over the past year, we would
emphasize the energy sector. The best performing energy-related stock in the
portfolio was a domestic natural gas producer. In the financials sector, we
performed essentially in line with the index, up 11% versus 10.8%. Beyond this,
we did very well in the information technology and industrials sectors. Our
information technology stocks were up, on average, a little over 3%, while the
index was down over 12%, the result of effective stock picking in a sector that
generally underperformed. Effective stock picking also spelled the difference in
the industrials sector, where the Fund returned over 16%, while the index was up
only 1.25%. In information technology, top contributors included Symantec, Corp.
and Adobe Systems, Inc. In industrials, Expeditors International of Washington,
Inc., and Apollo Group, Inc. led the way. Elsewhere, the Fund prospered in the
consumer staples sector with an investment in Whole Foods Market, Inc. In the
medical technology sector, Gilead Sciences, Inc. contributed the most. As noted,
our outperformance was due to effective stock selection, which emphasizes high
quality businesses with predictable, sustainable earnings.
Undermining performance for the year were, among others, investments in
the airlines sector. Airline stocks, such as Southwest Airlines and Jet Blue,
were in the portfolio at the start of the year, but we removed them early on in
appreciation of rising fuel prices and the incredible challenges they and others
like them face on a long-term basis. Of the remaining sectors, as noted,
restaurants and retail struggled. However, the greatest overall negative effect
on performance came from the consumer discretionary sector, where we were
slightly overweight relative to the index (24% vs. 22%). Elsewhere, we had no
positions in the utilities sector (which is a small part of the index, in any
event), nor did we own stocks in the materials sector.
10 | OPPENHEIMER MIDCAP FUND
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, 2004. 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. Past performance
cannot guarantee future results.
The Fund's performance is compared to that of the S&P Mid-Cap 400
Index. The S&P Mid-Cap 400 Index is an unmanaged index of 400 domestic stocks
chosen for market size liquidity, and industry group representation. Index
performance reflects the reinvestment of income but does not consider the effect
of transaction costs, and none of the data in the graphs shows the effect of
taxes. The Fund's performance reflects the effects of the Fund's 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 investments in the index.
11 | OPPENHEIMER MIDCAP FUND
FUND PERFORMANCE DISCUSSION
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CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer MidCap Fund (Class A)
S&P Mid-Cap 400 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer MidCap S&P Mid-Cap
Fund (Class A) 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 18,266
01/31/2004 13,230 19,638
04/30/2004 13,608 19,532
07/31/2004 13,400 19,440
10/31/2004 14,193 20,283
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
10/31/04
1-Year 1.47% 5-Year -6.54% Since Inception (12/1/97) 5.19%
12 | OPPENHEIMER MIDCAP FUND
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer MidCap Fund (Class B)
S&P Mid-Cap 400 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer MidCap S&P Mid-Cap
Fund (Class B) 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 13,387 18,266
01/31/2004 13,431 19,638
04/30/2004 13,815 19,532
07/31/2004 13,604 19,440
10/31/2004 14,409 20,283
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
10/31/04
1-Year 1.88% 5-Year -6.52% Since Inception (12/1/97) 5.42%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE "SINCE INCEPTION" RETURN FOR CLASS
B USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 17 FOR
FURTHER INFORMATION.
13 | OPPENHEIMER MIDCAP FUND
FUND PERFORMANCE DISCUSSION
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CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer MidCap Fund (Class C)
S&P Mid-Cap 400 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer MidCap S&P Mid-Cap
Fund (Class C) 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 18,266
01/31/2004 13,407 19,638
04/30/2004 13,767 19,532
07/31/2004 13,527 19,440
10/31/2004 14,308 20,283
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
10/31/04
1-Year 5.88% 5-Year -6.12% Since Inception (12/1/97) 5.32%
14 | OPPENHEIMER MIDCAP FUND
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
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer MidCap S&P Mid-Cap
Fund (Class N) 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 11,361
01/31/2004 7,119 12,214
04/30/2004 7,323 12,148
07/31/2004 7,201 12,090
10/31/2004 7,625 12,615
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
10/31/04
1-Year 6.43% 5-Year N/A Since Inception (3/1/01) -7.13%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 17 FOR FURTHER
INFORMATION.
15 | OPPENHEIMER MIDCAP FUND
FUND PERFORMANCE DISCUSSION
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CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer MidCap Fund (Class Y)
S&P Mid-Cap 400 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer MidCap S&P Mid-Cap
Fund (Class Y) 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 18,266
01/31/2004 14,438 19,638
04/30/2004 14,868 19,532
07/31/2004 14,648 19,440
10/31/2004 15,529 20,283
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 10/31/04
1 Year 8.08% 5 Year -5.02% Since Inception (12/1/97) 6.57%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 17 FOR FURTHER
INFORMATION.
16 | OPPENHEIMER MIDCAP FUND
NOTES
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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.
Investors should consider the Fund's investment objectives, risks, and other
charges and expenses carefully before investing. The Fund's prospectus contains
this and other information about the Fund, and may be obtained by asking your
financial advisor, calling us at 1.800.525.7048 or visiting our website at
www.oppenheimerfunds.com. Read the prospectus carefully before investing.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
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) and 2% (5-year). Class B shares are subject to an
annual 0.75% asset-based sales charge. Because Class B shares convert to Class A
shares 72 months after purchase, the "since inception" return for Class B uses
Class A performance for the period after conversion.
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 1-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 1-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.
17 | OPPENHEIMER MIDCAP FUND
FUND EXPENSES
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FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended October 31, 2004.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), or a $12.00 fee imposed annually
on accounts valued at less than $500.00 (subject to exceptions described in
18 | OPPENHEIMER MIDCAP FUND
the Statement of Additional Information). Therefore, the "hypothetical" lines of
the table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(5/1/04) (10/31/04) OCTOBER 31, 2004
- -------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,043.00 $ 6.85
- -------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,018.45 6.77
- -------------------------------------------------------------------------------
Class B Actual 1,000.00 1,038.50 10.87
- -------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,014.53 10.74
- -------------------------------------------------------------------------------
Class C Actual 1,000.00 1,039.30 10.77
- -------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,014.63 10.64
- -------------------------------------------------------------------------------
Class N Actual 1,000.00 1,041.20 8.09
- -------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,017.24 7.99
- -------------------------------------------------------------------------------
Class Y Actual 1,000.00 1,044.40 5.00
- -------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,020.26 4.94
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 184/366
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended October 31, 2004 are as follows:
CLASS EXPENSE RATIOS
- ---------------------------
Class A 1.33%
- ---------------------------
Class B 2.11
- ---------------------------
Class C 2.09
- ---------------------------
Class N 1.57
- ---------------------------
Class Y 0.97
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Transfer Agent that can be terminated at any time, without advance
notice. The "Financial Highlights" tables in the Fund's financial statements,
included in this report, also show the gross expense ratios, without such
waivers or reimbursements.
19 | OPPENHEIMER MIDCAP FUND
STATEMENT OF INVESTMENTS October 31, 2004
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--98.0%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--23.4%
- --------------------------------------------------------------------------------
AUTO COMPONENTS--1.5%
Gentex Corp. 433,700 $14,316,437
- --------------------------------------------------------------------------------
AUTOMOBILES--1.5%
Harley-Davidson, Inc. 258,200 14,864,574
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--4.7%
P.F. Chang's China
Bistro, Inc. 1 243,000 12,354,120
- --------------------------------------------------------------------------------
Ruby Tuesday, Inc. 510,900 12,619,230
- --------------------------------------------------------------------------------
Starbucks Corp. 1 392,714 20,766,716
-----------
45,740,066
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES--0.9%
Harman
International
Industries, Inc. 68,700 8,256,366
- --------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS--2.1%
Brunswick Corp. 433,900 20,358,588
- --------------------------------------------------------------------------------
MEDIA--1.7%
Getty Images, Inc. 1 287,300 16,988,049
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--8.6%
Bed Bath &
Beyond, Inc. 1 424,600 17,319,434
- --------------------------------------------------------------------------------
Chico's FAS, Inc. 1 387,600 15,515,628
- --------------------------------------------------------------------------------
O'Reilly
Automotive, Inc. 1 499,300 21,499,858
- --------------------------------------------------------------------------------
PetsMart, Inc. 620,100 19,830,798
- --------------------------------------------------------------------------------
Urban Outfitters,
Inc. 1 237,100 9,721,100
-----------
83,886,818
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--2.4%
Coach, Inc. 1 494,183 23,043,753
- --------------------------------------------------------------------------------
CONSUMER STAPLES--2.3%
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--2.3%
Whole Foods
Market, Inc. 268,800 21,888,384
- --------------------------------------------------------------------------------
ENERGY--6.3%
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--3.4%
BJ Services Co. 285,200 14,545,200
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES Continued
Smith
International, Inc. 1 314,800 $18,283,584
-----------
32,828,784
- --------------------------------------------------------------------------------
OIL & GAS--2.9%
Apache Corp. 361,800 18,343,260
- --------------------------------------------------------------------------------
XTO Energy, Inc. 297,300 9,923,874
-----------
28,267,134
- --------------------------------------------------------------------------------
FINANCIALS--10.6%
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--2.2%
Commerce
Bancorp, Inc. 363,900 21,557,436
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--5.4%
Chicago Mercantile
Exchange (The) 84,400 14,831,612
- --------------------------------------------------------------------------------
Investors Financial
Services Corp. 422,400 16,258,176
- --------------------------------------------------------------------------------
Legg Mason, Inc. 342,900 21,846,159
-----------
52,935,947
- --------------------------------------------------------------------------------
INSURANCE--3.0%
AMBAC Financial
Group, Inc. 270,500 21,115,230
- --------------------------------------------------------------------------------
Brown & Brown, Inc. 184,500 7,704,720
-----------
28,819,950
- --------------------------------------------------------------------------------
HEALTH CARE--18.7%
- --------------------------------------------------------------------------------
BIOTECHNOLOGY--4.1%
Celgene Corp. 1 243,200 7,203,584
- --------------------------------------------------------------------------------
Gen-Probe, Inc. 1 208,600 7,309,344
- --------------------------------------------------------------------------------
Gilead Sciences,
Inc. 1 728,000 25,210,640
-----------
39,723,568
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--7.4%
Bard (C.R.), Inc. 265,100 15,057,680
- --------------------------------------------------------------------------------
Cooper Cos., Inc.
(The) 173,500 12,205,725
- --------------------------------------------------------------------------------
Idexx Laboratories,
Inc. 1 99,200 4,944,128
20 | OPPENHEIMER MIDCAP FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES Continued
Stryker Corp. 181,900 $ 7,838,071
- --------------------------------------------------------------------------------
Thermo Electron
Corp. 1 530,700 15,390,300
- --------------------------------------------------------------------------------
Varian Medical
Systems, Inc. 1 424,252 17,033,718
-----------
72,469,622
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--7.2%
Coventry Health
Care, Inc. 1 381,250 15,593,125
- --------------------------------------------------------------------------------
Health Management
Associates, Inc., Cl. A 1,036,000 21,403,760
- --------------------------------------------------------------------------------
Lincare Holdings,
Inc. 1 290,500 10,678,780
- --------------------------------------------------------------------------------
Patterson Cos., Inc. 1 593,200 22,245,000
-----------
69,920,665
- --------------------------------------------------------------------------------
INDUSTRIALS--14.3%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--2.2%
L-3 Communications
Holdings, Inc. 180,600 11,906,958
- --------------------------------------------------------------------------------
Rockwell Collins, Inc. 262,700 9,317,969
-----------
21,224,927
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--2.8%
Expeditors
International of
Washington, Inc. 472,000 26,951,200
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--3.8%
Apollo Group,
Inc., Cl. A 1 889 58,674
- --------------------------------------------------------------------------------
Corporate Executive
Board Co. 313,200 19,935,180
- --------------------------------------------------------------------------------
Stericycle, Inc. 1 383,900 17,402,187
-----------
37,396,041
- --------------------------------------------------------------------------------
MACHINERY--1.5%
Donaldson Co., Inc. 479,700 14,247,090
- --------------------------------------------------------------------------------
ROAD & RAIL--1.8%
C.H. Robinson
Worldwide, Inc. 323,600 17,454,984
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS--2.2%
Fastenal Co. 397,300 $21,942,879
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--22.4%
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--1.6%
Comverse
Technology, Inc. 1 741,900 15,312,816
- --------------------------------------------------------------------------------
ITF Optical
Technologies, Inc. 1,2 384,000 265,805
-----------
15,578,621
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--2.0%
CDW Corp. 322,700 20,017,081
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--1.3%
VeriSign, Inc. 1 468,100 12,559,123
- --------------------------------------------------------------------------------
IT SERVICES--5.4%
Affiliated Computer
Services, Inc., Cl. A 1 404,400 22,060,020
- --------------------------------------------------------------------------------
Alliance Data
Systems Corp. 1 281,700 11,910,276
- --------------------------------------------------------------------------------
Fiserv, Inc. 1 520,400 18,495,016
-----------
52,465,312
- --------------------------------------------------------------------------------
OFFICE ELECTRONICS--1.8%
Zebra Technologies
Corp., Cl. A 1 323,750 17,155,513
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--1.8%
Linear Technology
Corp. 453,900 17,193,732
- --------------------------------------------------------------------------------
SOFTWARE--8.5%
Adobe Systems, Inc. 500,600 28,048,618
- --------------------------------------------------------------------------------
Amdocs Ltd. 1 593,700 14,931,555
- --------------------------------------------------------------------------------
Electronic Arts, Inc. 1 299,400 13,449,048
- --------------------------------------------------------------------------------
Intuit, Inc. 1 106,800 4,844,448
- --------------------------------------------------------------------------------
Symantec Corp. 1 386,200 21,990,228
-----------
83,263,897
-----------
Total Common Stocks
(Cost $791,157,725) 953,316,541
21 | OPPENHEIMER MIDCAP FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
PREFERRED STOCKS--0.0%
- --------------------------------------------------------------------------------
Axsun Technologies,
Inc., Cv., Series C 1,2,3 771,20 $ 252,802
- --------------------------------------------------------------------------------
Centerpoint Broadband
Technologies, Inc., Cv.,
Series D 1,2 556,586 --
-----------
Total Preferred Stocks
(Cost $14,999,994) 252,802
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--1.8%
- --------------------------------------------------------------------------------
Undivided interest of 2.89% in joint
repurchase agreement (Principal Amount/
Value $595,058,000, with a maturity value
of $595,147,755) with UBS Warburg LLC,
1.81%, dated 10/29/04, to be repurchased
at $17,215,596 on 11/1/04, collateralized
by Federal National Mortgage Assn.,
5.50%, 1/1/34--4/1/34, with a
value of $607,720,116
(Cost $17,213,000) $ 17,213,000 $ 17,213,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE
(COST $823,370,719) 99.8% 970,782,343
- --------------------------------------------------------------------------------
OTHER ASSETS
NET OF LIABILITIES 0.2 2,116,180
------------------------------
NET ASSETS 100.0% $972,898,523
==============================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. Illiquid or restricted security. 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 October 31, 2004.
The aggregate fair value of securities of affiliated companies held by the Fund
as of October 31, 2004 amounts to $252,802. Transactions during the period in
which the issuer was an affiliate are as follows:
SHARES SHARES
OCT. 31, GROSS GROSS OCT. 31, UNREALIZED REALIZED DIVIDEND
2003 ADDITIONS REDUCTIONS 2004 DEPRECIATION GAIN INCOME
- -----------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS
Axsun Technologies,
Inc., Cv., Series C 771,208 -- -- 771,208 $8,747,195 $ -- $--
fusionOne, Inc.,
8% Non-Cum
Cv., Series D 1,675,894 -- 1,675,894 -- -- 8,736,100 --
ITF Optical
Technologies,
Inc., Cv., Series A 200,000 184,000* 384,000 -- -- -- --
------------------------------------
$8,747,195 $8,736,100 $--
====================================
*Issued as the result of a stock split.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | OPPENHEIMER MIDCAP FUND
STATEMENT OF ASSETS AND LIABILITIES October 31, 2004
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $814,370,722) $ 970,529,541
Affiliated companies (cost $8,999,997) 252,802
----------------
970,782,343
- ------------------------------------------------------------------------------------
Cash 717,908
- ------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 2,994,769
Shares of beneficial interest sold 911,061
Interest and dividends 126,232
Other 8,312
----------------
Total assets 975,540,625
- ------------------------------------------------------------------------------------
LIABILITIES
- ------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 1,797,157
Transfer and shareholder servicing agent fees 242,376
Shareholder communications 205,253
Distribution and service plan fees 194,819
Trustees' compensation 167,850
Other 34,647
----------------
Total liabilities 2,642,102
- ------------------------------------------------------------------------------------
NET ASSETS $ 972,898,523
================
- ------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ------------------------------------------------------------------------------------
Paid-in capital $ 1,951,582,203
- ------------------------------------------------------------------------------------
Accumulated net investment loss (165,364)
- ------------------------------------------------------------------------------------
Accumulated net realized loss on investments (1,125,929,940)
- ------------------------------------------------------------------------------------
Net unrealized appreciation on investments 147,411,624
----------------
NET ASSETS $ 972,898,523
================
23 | OPPENHEIMER MIDCAP FUND
STATEMENT OF ASSETS AND LIABILITIES Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- --------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $504,291,744 and 33,529,515 shares of beneficial interest outstanding) $15.04
Maximum offering price per share (net asset value plus sales charge of 5.75%
of offering price) $15.96
- --------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net assets
of $312,315,072 and 21,853,772 shares of beneficial interest outstanding) $14.29
- --------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net assets
of $110,018,329 and 7,700,461 shares of beneficial interest outstanding) $14.29
- --------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net assets
of $22,487,917 and 1,509,089 shares of beneficial interest outstanding) $14.90
- --------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based
on net assets of $23,785,461 and 1,533,205 shares of beneficial interest outstanding) $15.51
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | OPPENHEIMER MIDCAP FUND
STATEMENT OF OPERATIONS For the Year Ended October 31, 2004
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------
INVESTMENT INCOME
- ----------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $7,200) $ 2,456,436
- ----------------------------------------------------------------------
Interest 149,776
-------------
Total investment income 2,606,212
- ----------------------------------------------------------------------
EXPENSES
- ----------------------------------------------------------------------
Management fees 6,352,334
- ----------------------------------------------------------------------
Distribution and service plan fees:
Class A 1,111,508
Class B 3,166,513
Class C 1,052,106
Class N 94,715
- ----------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 2,025,128
Class B 1,704,643
Class C 546,056
Class N 110,995
Class Y 56,539
- ----------------------------------------------------------------------
Shareholder communications:
Class A 106,621
Class B 161,154
Class C 33,303
Class N 305
- ----------------------------------------------------------------------
Trustees' compensation 54,773
- ----------------------------------------------------------------------
Custodian fees and expenses 11,839
- ----------------------------------------------------------------------
Other 115,006
-------------
Total expenses 16,703,538
Less reduction to custodian expenses (1,380)
Less payments and waivers of expenses (1,207,102)
-------------
Net expenses 15,495,056
- ----------------------------------------------------------------------
NET INVESTMENT LOSS (12,888,844)
- ----------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- ----------------------------------------------------------------------
Net realized gain on:
Investments:
Unaffiliated companies 84,566,296
Affiliated companies 8,736,100
Net increase from payment by affiliate 36,160
-------------
Net realized gain 93,338,556
- ----------------------------------------------------------------------
Net change in unrealized appreciation on investments (17,276,110)
- ----------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 63,173,602
=============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER MIDCAP FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2004 2003
- --------------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------------
Net investment loss $ (12,888,844) $ (10,614,521)
- --------------------------------------------------------------------------------------
Net realized gain (loss) 93,338,556 (67,296,474)
- --------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (17,276,110) 233,645,940
-------------------------------
Net increase in net assets resulting from operations 63,173,602 155,734,945
- --------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- --------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A 41,101,126 2,926,569
Class B (36,309,315) (20,575,816)
Class C (222,383) 2,421,302
Class N 4,493,365 5,137,432
Class Y 5,221,032 6,801,730
- --------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------
Total increase 77,457,427 152,446,162
- --------------------------------------------------------------------------------------
Beginning of period 895,441,096 742,994,934
-------------------------------
End of period (including accumulated net investment
loss of $165,364 and $146,500, respectively) $ 972,898,523 $ 895,441,096
===============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER MIDCAP FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED OCTOBER 31, 2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.97 $ 11.43 $ 14.42 $ 30.41 $ 19.88
- ------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.17) (.12) (.13) (.02) .04
Net realized and unrealized gain (loss) 1.24 2.66 (2.86) (15.97) 10.49
----------------------------------------------------------------
Total from investment operations 1.07 2.54 (2.99) (15.99) 10.53
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 15.04 $ 13.97 $ 11.43 $ 14.42 $ 30.41
================================================================
- ------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 7.66% 22.22% (20.74)% (52.58)% 52.97%
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $504,292 $430,514 $351,983 $532,338 $1,055,967
- ------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $457,926 $366,050 $460,797 $718,814 $ 728,168
- ------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income (loss) (1.05)% (1.01)% (1.06)% (0.09)% 0.28%
Total expenses 1.42% 1.61% 1.68% 1.33% 1.16%
Expenses after payments and waivers
and reduction to custodian expenses 1.33% 1.32% 1.47% 1.32% N/A 3
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 114% 76% 51% 84% 23%
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%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER MIDCAP FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS B YEAR ENDED OCTOBER 31, 2004 2003 2002 2001 2000
- -----------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.37 $ 11.02 $ 14.02 $ 29.79 $ 19.62
- -----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.30) (.23) (.30) (.15) (.07)
Net realized and unrealized gain (loss) 1.22 2.58 (2.70) (15.62) 10.24
---------------------------------------------------------------
Total from investment operations .92 2.35 (3.00) (15.77) 10.17
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 14.29 $ 13.37 $ 11.02 $ 14.02 $ 29.79
===============================================================
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 6.88% 21.33% (21.40)% (52.94)% 51.83%
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $312,315 $327,880 $291,397 $438,962 $874,830
- -----------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $316,748 $291,209 $385,917 $592,096 $594,390
- -----------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment loss (1.83)% (1.75)% (1.85)% (0.84)% (0.48)%
Total expenses 2.30% 2.51% 2.48% 2.08% 1.91%
Expenses after payments and waivers
and reduction to custodian expenses 2.12% 2.06% 2.27% 2.07% N/A 3
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 114% 76% 51% 84% 23%
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%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | OPPENHEIMER MIDCAP FUND
CLASS C YEAR ENDED OCTOBER 31, 2004 2003 2002 2001 2000
- -----------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.37 $ 11.02 $ 14.02 $ 29.78 $ 19.60
- -----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.25) (.20) (.30) (.15) (.07)
Net realized and unrealized gain (loss) 1.17 2.55 (2.70) (15.61) 10.25
---------------------------------------------------------------
Total from investment operations .92 2.35 (3.00) (15.76) 10.18
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 14.29 $ 13.37 $ 11.02 $ 14.02 $ 29.78
================================================================
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 6.88% 21.33% (21.40)% (52.92)% 51.94%
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $110,018 $103,271 $ 83,351 $128,230 $247,566
- -----------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $105,285 $ 87,528 $112,436 $170,129 $161,221
- -----------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment loss (1.81)% (1.77)% (1.84)% (0.85)% (0.48)%
Total expenses 2.26% 2.49% 2.47% 2.08% 1.91%
Expenses after payments and waivers
and reduction to custodian expenses 2.10% 2.08% 2.26% 2.07% N/A 3
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 114% 76% 51% 84% 23%
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%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER MIDCAP FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS N YEAR ENDED OCTOBER 31, 2004 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 (.18) (.17) (.14) (.05)
Net realized and unrealized gain (loss) 1.21 2.66 (2.88) (5.09)
---------------------------------------------
Total from investment operations 1.03 2.49 (3.02) (5.14)
- -----------------------------------------------------------------------------------------
Net asset value, end of period $ 14.90 $ 13.87 $ 11.38 $ 14.40
=============================================
- -----------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.43% 21.88% (20.97)% (26.31)%
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $22,488 $16,606 $ 8,846 $ 2,268
- -----------------------------------------------------------------------------------------
Average net assets (in thousands) $18,969 $11,846 $ 6,576 $ 1,250
- -----------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (1.28)% (1.34)% (1.28)% (0.94)%
Total expenses 1.80% 1.86% 1.87% 1.73%
Expenses after payments and waivers
and reduction to custodian expenses 1.57% 1.64% 1.66% 1.72%
- -----------------------------------------------------------------------------------------
Portfolio turnover rate 114% 76% 51% 84%
1. For the period from March 1, 2001 (inception of offering) to October 31,
2001.
2. Assumes an investment on the business day before the first day of the fiscal
period, 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.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30 | OPPENHEIMER MIDCAP FUND
CLASS Y YEAR ENDED OCTOBER 31, 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.35 $ 11.71 $ 14.69 $ 30.86 $20.07
- ----------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.13) (.19) (.08) (.08) (.02)
Net realized and unrealized gain (loss) 1.29 2.83 (2.90) (16.09) 10.81
--------------------------------------------------------
Total from investment operations 1.16 2.64 (2.98) (16.17) 10.79
- ----------------------------------------------------------------------------------------------------
Net asset value, end of period $ 15.51 $ 14.35 $ 11.71 $ 14.69 $30.86
=========================================================
- ----------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 8.08% 22.55% (20.29)% (52.40)% 53.76%
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $23,785 $17,171 $ 7,419 $ 4,759 $ 115
- ----------------------------------------------------------------------------------------------------
Average net assets (in thousands) $19,540 $11,928 $ 6,449 $ 2,720 $ 33
- ----------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income (loss) (0.69)% (0.80)% (0.39)% (0.12)% 0.60%
Total expenses 0.98% 1.11% 0.83% 1.07% 0.74%
Expenses after payments and waivers
and reduction to custodian expenses N/A 3 N/A 3,4 N/A 3 1.02% N/A 3
- ----------------------------------------------------------------------------------------------------
Portfolio turnover rate 114% 76% 51% 84% 23%
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%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31 | 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, however, the institutional investor
may impose charges on accounts. 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 due to each class having its own expenses, such
as transfer and shareholder servicing agent fees and shareholder
communications, directly attributable to that class. Class 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.
Corporate, government and municipal debt instruments having a remaining
maturity in excess of 60 days and all mortgage-backed securities will be valued
at the mean between the "bid" and "asked" prices. 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 and domestic 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 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
32 | OPPENHEIMER MIDCAP FUND
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 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. 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. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.
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.
33 | OPPENHEIMER MIDCAP FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM ACCUMULATED LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3 TAX PURPOSES
-------------------------------------------------------------------------
$-- $-- $1,125,748,750 $146,969,773
1. As of October 31, 2004, the Fund had $1,125,748,750 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, 2004,
details of the capital loss carryforwards were as follows:
EXPIRING
------------------------------
2008 $ 54,968,709
2009 765,251,646 4
2010 237,892,098
2011 67,636,297
---------------
Total $ 1,125,748,750
===============
2. During the fiscal year ended October 31, 2004, the Fund utilized $93,361,075
of capital loss carryforward to offset capital gains realized in that fiscal
year.
3. During the fiscal year ended October 31, 2003, the Fund did not utilize any
capital loss carryforward.
4. Includes $260,660 of capital loss carryforwards acquired in the September 4,
2003 merger of Oppenheimer Select Managers Gartmore Millennium Growth Fund II.
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, 2004. Net assets of the
Fund were unaffected by the reclassifications.
INCREASE TO
REDUCTION TO ACCUMULATED NET
REDUCTION TO ACCUMULATED NET REALIZED LOSS
PAID-IN CAPITAL INVESTMENT LOSS ON INVESTMENTS
--------------------------------------------------------------
$12,833,820 $12,869,980 $36,160
No distributions were paid during the years ended October 31, 2004 and October
31, 2003.
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, 2004 are noted
below. The primary difference between
34 | OPPENHEIMER MIDCAP FUND
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 $ 823,812,570
=============
Gross unrealized appreciation $ 181,681,734
Gross unrealized depreciation (34,711,961)
-------------
Net unrealized appreciation $ 146,969,773
=============
- --------------------------------------------------------------------------------
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, 2004, the Fund's projected benefit obligations were increased by $15,651 and
payments of $3,871 were made to retired trustees, resulting in an accumulated
liability of $158,276 as of October 31, 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 purchases 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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. The Fund pays interest to its custodian on
such cash overdrafts at a rate equal to the Federal Funds Rate plus 0.50%. The
Reduction to Custodian Expenses line item, if applicable, represents earnings on
cash balances maintained by the Fund during the period. Such interest expense
and other custodian fees may be paid with these earnings.
35 | OPPENHEIMER MIDCAP FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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.
- --------------------------------------------------------------------------------
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, 2004 YEAR ENDED OCTOBER 31, 2003
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------
CLASS A
Sold 12,246,136 $ 177,432,418 8,268,487 $ 100,143,126
Acquisition-Note 6 -- -- 317,478 4,460,569
Redeemed (9,541,964) (136,331,292) (8,568,434) (101,677,126)
-----------------------------------------------------------
Net increase 2,704,172 $ 41,101,126 17,531 $ 2,926,569
===========================================================
- --------------------------------------------------------------------------------------
CLASS B
Sold 3,400,008 $ 46,414,529 4,126,736 $ 48,252,675
Acquisition-Note 6 -- -- 38,399 517,234
Redeemed (6,061,337) (82,723,844) (6,086,687) (69,345,725)
-----------------------------------------------------------
Net decrease (2,661,329) $ (36,309,315) (1,921,552) $ (20,575,816)
===========================================================
- --------------------------------------------------------------------------------------
CLASS C
Sold 2,068,251 $ 28,190,122 2,083,749 $ 24,228,356
Acquisition-Note 6 -- -- 33,708 453,714
Redeemed (2,092,647) (28,412,505) (1,956,908) (22,260,768)
-----------------------------------------------------------
Net increase (decrease) (24,396) $ (222,383) 160,549 $ 2,421,302
===========================================================
- --------------------------------------------------------------------------------------
CLASS N
Sold 849,973 $ 12,080,873 680,615 $ 8,317,381
Acquisition-Note 6 -- -- 11,483 160,308
Redeemed (538,064) (7,587,508) (271,906) (3,340,257)
-----------------------------------------------------------
Net increase 311,909 $ 4,493,365 420,192 $ 5,137,432
===========================================================
- --------------------------------------------------------------------------------------
CLASS Y
Sold 908,690 $ 13,499,650 896,395 $ 11,097,195
Acquisition-Note 6 -- -- 52 743
Redeemed (571,650) (8,278,618) (333,575) (4,296,208)
-----------------------------------------------------------
Net increase 337,040 $ 5,221,032 562,872 $ 6,801,730
===========================================================
36 | OPPENHEIMER MIDCAP FUND
- --------------------------------------------------------------------------------
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, 2004, were
$1,042,594,551 and $1,040,932,136, 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 year ended October 31, 2004, the Fund paid
$3,161,855 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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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 and Class C shares and 0.25% per year
37 | OPPENHEIMER MIDCAP FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
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 October 31, 2004 for Class B, Class C and Class N shares were
$16,926,277, $3,719,875 and $376,075, 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
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- --------------------------------------------------------------------------------------------------
October 31, 2004 $438,751 $15,043 $767,386 $18,618 $12,823
- --------------------------------------------------------------------------------
PAYMENTS AND WAIVERS OF EXPENSES. Following a review of its use of brokerage
commissions for sales that is permitted under its investment advisory agreement,
the Fund's Manager terminated that practice in July 2003. Subsequently, the
Manager paid the Fund $36,160, an amount equivalent to certain of such
commissions incurred in prior years.
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. During the
year ended October 31, 2004, OFS waived $404,191, $586,665, $172,572 and $43,674
for Class A, Class B, Class C and Class N shares, respectively. This undertaking
may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
5. ILLIQUID OR RESTRICTED SECURITIES
As of October 31, 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 will not invest more than 15% of
its net assets (determined at the time of purchase and reviewed periodically) in
38 | OPPENHEIMER MIDCAP FUND
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, 2004 was $518,607, which represents 0.05% of the
Fund's net assets, all of which are considered restricted. Information
concerning restricted securities is as follows:
VALUATION
ACQUISITION AS OF UNREALIZED
SECURITY DATES COST OCT. 31, 2004 DEPRECIATION
- ---------------------------------------------------------------------------------------------------------
STOCKS AND/OR WARRANTS
Axsun Technologies, Inc., Cv., Series C 12/13/00 $ 8,999,997 $252,802 $8,747,195
Centerpoint Broadband Technologies, Inc.,
Cv., Series D 10/23/00 5,999,997 -- 5,999,997
ITF Optical Technologies, Inc. 4/7/00 5,000,000 265,805 4,734,195
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
7. LITIGATION
Six complaints have been filed as putative derivative and class actions against
the Manager, OFS and the Distributor (collectively, "OppenheimerFunds"), as well
as 51 of the Oppenheimer funds (collectively, the "Funds") including this Fund,
and nine Directors/Trustees of certain of the Funds other than this Fund
(collectively, the "Directors/Trustees"). The complaints allege that the Manager
charged excessive fees for distribution and other costs, improperly used assets
of the Funds in the form of directed brokerage commissions and 12b-1 fees to pay
brokers to promote sales of the Funds, and failed to properly disclose the use
of Fund assets to make those payments in violation of the Investment Company Act
of 1940 and the Investment Advisers Act of 1940. The complaints further allege
that by permitting and/or participating in those actions, the Directors/Trustees
breached their fiduciary duties to Fund shareholders under the
39 | OPPENHEIMER MIDCAP FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. LITIGATION Continued
Investment Company Act of 1940 and at common law. By order dated October 27,
2004, these six actions, and future related actions, were consolidated by the
U.S. District Court for the Southern District of New York into a single
consolidated proceeding in contemplation of the filing of a superseding
consolidated and amended complaint.
OppenheimerFunds believes that it is premature to render any opinion as to
the likelihood of an outcome unfavorable to them, the Funds or the
Directors/Trustees and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss. However,
OppenheimerFunds, the Funds and the Directors/Trustees believe that the
allegations contained in the complaints are without merit and intend to defend
these lawsuits vigorously.
40 | OPPENHEIMER MIDCAP FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 2004, 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 five 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.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). 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, 2004, 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, 2004, 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 five
years in the period then ended, in conformity with U.S. generally accepted
accounting principles.
KPMG LLP
Denver, Colorado
December 16, 2004
41 | OPPENHEIMER MIDCAP FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2005, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2004. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
- --------------------------------------------------------------------------------
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS 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 1.800.525.7048, (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 is 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 Fund's Form N-PX filing is available (i) without charge, upon
request, by calling the Fund toll-free at 1.800.525.7048, and (ii) on the SEC's
website at www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at www.sec.gov. Those
forms may be reviewed and copied at the SEC's Public Reference Room in
Washington D.C. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
42 | 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, CENTENNIAL,
TRUSTEES CO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, UNTIL HIS RESIGNATION,
RETIREMENT, DEATH OR REMOVAL.
THOMAS W. COURTNEY, Principal of Courtney Associates, Inc. (venture capital firm); former General
Chairman of the Board Partner of Trivest Venture Fund (private venture capital fund); former President
of Trustees, Trustee of Investment Counseling Federated Investors, Inc.; Trustee of the following
(since 1997) open-end investment companies: Cash Assets Trust, PIMCO ADVISORS VIT, Tax
Age: 71 Free Trust of Arizona and 4 funds for the Hawaiian Tax Free Trust. Oversees 11
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 of
Age: 73 Capital Cash Management Trust, Prime Cash Fund, PIMCO ADVISORS VIT and
Narragansett Insured Tax-Free Income Fund. Formerly a director of OCC Cash
Reserves, Inc. (open-end investment company) (1989-December 2002). Oversees
11 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: 71
LACY B. HERRMANN, Chairman and Chief Executive Officer of Aquila Management Corporation,
Trustee (since 1997) the sponsoring organization and manager, administrator and/or sub-adviser to
Age: 75 the 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, 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.
Formerly Chairman of the Board of Trustees and President of Hawaiian Tax-Free
Trust. Oversees 11 portfolios in the OppenheimerFunds complex.
BRIAN WRUBLE, General Partner (since September 1995) of Odyssey Partners, L.P. (hedge funds
Trustee (since 2001) in distribution since 1/1/97); Director (since September 2004) of Special Value
Age: 61 Opportunities Fund, LLC; Investment Advisory Board (since October 2004)
of Zurich Financial Services; Board of Governing Trustees (since August 1990)
of The Jackson Laboratory (genetics laboratory, non profit); Trustee (since May
1992) of Institute for Advanced Study (educational institute); Formerly Special
Limited Partner (1999-2004) and Managing Principal (through December 1998)
of Odyssey Investment Partners, LLC (private equity investment); Trustee (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.
43 | OPPENHEIMER MIDCAP FUND
TRUSTEES AND OFFICERS Unaudited / Continued
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OFFICERS THE ADDRESS OF THE OFFICERS IN THE CHART BELOW IS AS FOLLOWS: FOR MESSRS. MURPHY,
O'HARE, AND ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH FLOOR, NEW
YORK, NY 10281-1008, AND FOR MR. WIXTED AND MR. VANDEHEY, 6803 S. TUCSON WAY,
CENTENNIAL, CO 80112-3924. EACH OFFICER SERVES FOR AN INDEFINITE TERM OR UNTIL HIS
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
Age: 55 of 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 following investment advisory subsidiaries of the
Manager: OFI Institutional Asset Management, Inc., Centennial Asset Management
Corporation, Trinity Investment Management Corporation and Tremont
Capital Management, Inc. (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.; 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 Babson Capital Management LLC); a member
of the Investment Company Institute's Board of Governors (elected to serve
from October 3, 2003 through September 30, 2006). 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 63 portfolios as Trustee/Director and 21 additional
portfolios as Officer in the OppenheimerFunds complex.
JOHN O'HARE, Vice President of the Manager since September 2003; an officer of 2 portfolios
Vice President and Portfolio in the OppenheimerFunds complex. Formerly Executive Vice President and
Manager (since 2003) Portfolio Manager (June 2000 - August 2003) and Portfolio Manager and Senior
Age: 46 Vice President (August 1997 - June 2000) at Geneva Capital Management, Ltd.
(an investment advisor). Mr. O'Hare holds a BBA in Finance and Economics from
the University of Wisconsin and is a Chartered Financial Analyst.
BRIAN W. WIXTED, Senior Vice President and Treasurer (since March 1999) of the Manager;
Treasurer (since 1999) Treasurer of HarbourView Asset Management Corporation, Shareholder Financial
Age: 45 Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management
Corporation, and Oppenheimer Partnership Holdings, Inc. (since March 1999),
of OFI Private Investments, Inc. (since March 2000), of OppenheimerFunds
International Ltd. and OppenheimerFunds plc (since May 2000), of OFI Institutional
Asset Management, Inc. (since November 2000), and of OppenheimerFunds
Legacy Program (a Colorado non-profit corporation) (since June 2003); Treasurer
and Chief Financial Officer (since May 2000) of OFI Trust Company (a trust
company subsidiary of the Manager); Assistant Treasurer (since March 1999) of
Oppenheimer Acquisition Corp. Formerly Assistant Treasurer of Centennial Asset
44 | OPPENHEIMER MIDCAP FUND
BRIAN W. WIXTED, Management Corporation (March 1999-October 2003) and OppenheimerFunds
Continued Legacy Program (April 2000-June 2003); Principal and Chief Operating Officer
(March 1995-March 1999) at Bankers Trust Company-Mutual Fund Services
Division. An officer of 84 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since
Secretary (since 2001) February 2002) of the Manager; General Counsel and a director (since November
Age: 56 2001) of the Distributor; General Counsel (since November 2001) of Centennial
Asset Management Corporation; Senior Vice President and General Counsel
(since November 2001) of HarbourView Asset Management Corporation;
Secretary and General Counsel (since November 2001) of Oppenheimer
Acquisition Corp.; Assistant Secretary and a director (since October 1997) of
OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President
and a director (since November 2001) of Oppenheimer Partnership Holdings,
Inc.; a director (since November 2001) of Oppenheimer Real Asset Management,
Inc.; Senior Vice President, General Counsel and a director (since November 2001)
of Shareholder Financial Services, Inc., Shareholder Services, Inc., OFI Private
Investments, Inc. and OFI Trust Company; Vice President (since November 2001)
of OppenheimerFunds Legacy Program; Senior Vice President and General
Counsel (since November 2001) of OFI Institutional Asset Management, Inc.; a
director (since June 2003) of OppenheimerFunds (Asia) Limited. Formerly Senior
Vice President (May 1985-December 2003), 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); and OppenheimerFunds International Ltd. (October 1997-November
2001). An officer of 84 portfolios in the OppenheimerFunds complex.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer (since March 2004) of the
Vice President and Manager; Vice President (since June 1983) of OppenheimerFunds Distributor,
Chief Compliance Officer Inc., Centennial Asset Management Corporation and Shareholder Services, Inc.
(since 2004) Formerly (until February 2004) Vice President and Director of Internal Audit of
Age: 54 the Manager. An officer of 84 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, BY
CALLING 1.800.525.7048.
45 | 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
(a) Audit Fees
The principal accountant for the audit of the registrant's annual
financial statements billed $15,000 in fiscal 2004 and $15,000 in
fiscal 2003.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees in fiscal 2004 and $6,500
in fiscal 2003.
The principal accountant for the audit of the registrant's annual
financial statements billed $39,500 in fiscal 2004 and no such fees
in fiscal 2003 to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant.
Such fees include, among others: due diligence related to mergers
and acquisitions, accounting consultations and audits in connection
with acquisitions and internal control reviews.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed $6,000 in fiscal 2004 and $5,000 in
fiscal 2003 to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant.
Such fees include, among others: tax compliance, tax planning and
tax advice. Tax compliance generally involves preparation of
original and amended tax returns, claims for a refund and tax
payment-planning services. Tax planning and tax advice includes
assistance with tax audits and appeals, tax advice related to
mergers and acquisitions and requests for rulings or technical
advice from taxing authorities.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual
financial statements billed $103 in fiscal 2004 and $121 in fiscal
2003.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees during the last two fiscal
years to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant.
Such fees include the cost to the principal accountant of attending
audit committee meetings.
(e) (1) During its regularly scheduled periodic meetings, the
registrant's audit committee will pre-approve all audit,
audit-related, tax and other services to be provided by the
principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its
Chairman for any subsequent new engagements that arise between
regularly scheduled meeting dates provided that any fees such
pre-approved are presented to the audit committee at its next
regularly scheduled meeting.
Pre-approval of non-audit services is waived provided that: 1) the
aggregate amount of all such services provided constitutes no more
than five percent of the total amount of fees paid by the registrant
to it principal accountant during the fiscal year in which services
are provided 2) such services were not recognized by the registrant
at the time of engagement as non-audit services and 3) such services
are promptly brought to the attention of the audit committee of the
registrant and approved prior to the completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed $45,603 in fiscal 2004 and $11,621 in
fiscal 2003 to the registrant and the registrant's investment
adviser or any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the
registrant related to non-audit fees. Those billings did not include
any prohibited non-audit services as defined by the Securities
Exchange Act of 1934.
(h) The registrant's audit committee of the board of trustees has
considered whether the provision of non-audit services that were
rendered to the registrant's investment
adviser, and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services
to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal account's independence. No such services
were rendered.
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 October 31, 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)(NOT
APPLICABLE TO SEMIANNUAL REPORTS)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)