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 811-10071
OPPENHEIMER EMERGING GROWTH 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
Date of reporting period: APRIL 30, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
- --------------------------------------------------------------------------------
TOP TEN COMMON STOCK INDUSTRIES
- --------------------------------------------------------------------------------
Health Care Equipment & Supplies 11.5%
- --------------------------------------------------------------------------------
Semiconductors & Semiconductor Equipment 10.7
- --------------------------------------------------------------------------------
Hotels, Restaurants & Leisure 6.7
- --------------------------------------------------------------------------------
Software 5.2
- --------------------------------------------------------------------------------
Internet Software & Services 4.7
- --------------------------------------------------------------------------------
Energy Equipment & Services 4.6
- --------------------------------------------------------------------------------
Commercial Services & Supplies 4.5
- --------------------------------------------------------------------------------
Internet & Catalog Retail 4.1
- --------------------------------------------------------------------------------
Pharmaceuticals 3.5
- --------------------------------------------------------------------------------
Textiles, Apparel & Luxury Goods 3.2
Portfolio holdings and allocations are subject to change. Percentages are as of
April 30, 2006, and are based on net assets.
TOP TEN COMMON STOCK HOLDINGS
- --------------------------------------------------------------------------------
SBA Communications Corp. 1.9%
- --------------------------------------------------------------------------------
Ultimate Software Group, Inc. (The) 1.7
- --------------------------------------------------------------------------------
Redback Networks, Inc. 1.6
- --------------------------------------------------------------------------------
Life Time Fitness, Inc. 1.6
- --------------------------------------------------------------------------------
Central European Media Enterprises Ltd., Cl. A 1.6
- --------------------------------------------------------------------------------
Akamai Technologies, Inc. 1.6
- --------------------------------------------------------------------------------
Hydril Co. 1.5
- --------------------------------------------------------------------------------
NutriSystem, Inc. 1.5
- --------------------------------------------------------------------------------
Volcom, Inc. 1.5
- --------------------------------------------------------------------------------
Netlogic Microsystems, Inc. 1.4
Portfolio holdings and allocations are subject to change. Percentages are as of
April 30, 2006, and are based on net assets.
For up-to-date Top 10 Fund Holdings, please visit www.oppenheimerfunds.com.
10 | OPPENHEIMER EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
SECTOR ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Information Technology 29.4%
Semiconductors & Semiconductor Equipment 11.0
Software 5.3
Internet Software & Services 4.8
Communications Equipment 3.0
Electronic Equipment & Instruments 2.7
IT Services 1.6
Computers & Peripherals 1.0
Consumer Discretionary 21.3
Health Care 20.2
Industrials 14.1
Energy 5.5
Financials 3.4
Consumer Staples 2.9
Telecommunication Services 2.8
Materials 0.4
Portfolio holdings and allocations are subject to change. Percentages are as of
April 30, 2006, and are based on the total market value of common stocks.
- --------------------------------------------------------------------------------
11 | OPPENHEIMER EMERGING GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares. 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 11/1/00. 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 11/1/00. 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.
CLASS C shares of the Fund were first publicly offered on 11/1/00. 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.
12 | OPPENHEIMER EMERGING GROWTH FUND
CLASS Y shares of the Fund were first publicly offered on 11/1/00. 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.
13 | OPPENHEIMER EMERGING GROWTH FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
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 April 30, 2006.
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), redemption fees, or a $12.00 fee
imposed annually on accounts valued at less than $500.00 (subject to exceptions
14 | OPPENHEIMER EMERGING GROWTH FUND
described in 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
(11/1/05) (4/30/06) APRIL 30, 2006
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,231.80 $ 8.61
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,017.11 7.78
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,226.50 13.26
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,012.94 12.00
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,227.10 13.04
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,013.14 11.80
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,230.30 10.16
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,015.72 9.19
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 1,234.60 6.28
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,019.19 5.67
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 181/365
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended April 30, 2006 are as follows:
CLASS EXPENSE RATIOS
- ------------------------
Class A 1.55%
- ------------------------
Class B 2.39
- ------------------------
Class C 2.35
- ------------------------
Class N 1.83
- ------------------------
Class Y 1.13
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.
- --------------------------------------------------------------------------------
15 | OPPENHEIMER EMERGING GROWTH FUND
STATEMENT OF INVESTMENTS April 30, 2006 / Unaudited
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--97.4%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--20.7%
- --------------------------------------------------------------------------------
DISTRIBUTORS--0.6%
Keystone Automotive
Industries, Inc. 1 21,000 $ 867,300
- --------------------------------------------------------------------------------
DIVERSIFIED CONSUMER SERVICES--0.6%
INVESTools, Inc. 1 99,700 912,255
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--6.7%
BJ's Restaurants, Inc. 1 26,900 708,277
- --------------------------------------------------------------------------------
Chipotle Mexican Grill,
Inc., Cl. A 1 15,800 824,602
- --------------------------------------------------------------------------------
Life Time Fitness, Inc. 1 49,100 2,248,780
- --------------------------------------------------------------------------------
Orient-Express
Hotel Ltd. 35,200 1,443,200
- --------------------------------------------------------------------------------
Panera Bread Co.,
Cl. A 1 15,800 1,172,044
- --------------------------------------------------------------------------------
Scientific Games Corp.,
Cl. A 1 26,500 1,009,385
- --------------------------------------------------------------------------------
Texas Roadhouse, Inc.,
Cl. A 1 122,400 1,848,240
---------------
9,254,528
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--4.1%
Coldwater Creek, Inc. 1 60,750 1,698,570
- --------------------------------------------------------------------------------
NutriSystem, Inc. 1 30,000 2,035,800
- --------------------------------------------------------------------------------
VistaPrint Ltd. 1 59,800 1,912,404
---------------
5,646,774
- --------------------------------------------------------------------------------
MEDIA--2.5%
Central European
Media Enterprises Ltd.,
Cl. A 1 34,600 2,228,586
- --------------------------------------------------------------------------------
Focus Media
Holding Ltd., ADR 1 20,300 1,225,917
---------------
3,454,503
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--3.0%
Citi Trends, Inc. 1 26,900 1,305,995
- --------------------------------------------------------------------------------
Gymboree Corp. 1 30,700 923,456
- --------------------------------------------------------------------------------
Tractor Supply Co. 1 19,300 1,250,447
- --------------------------------------------------------------------------------
Zumiez, Inc. 1 22,000 715,000
---------------
4,194,898
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--3.2%
Carter's, Inc. 1 19,800 $ 1,333,728
- --------------------------------------------------------------------------------
Under Armour, Inc.,
Cl. A 1 28,300 1,040,874
- --------------------------------------------------------------------------------
Volcom, Inc. 1 56,600 2,018,922
---------------
4,393,524
- --------------------------------------------------------------------------------
CONSUMER STAPLES--2.9%
- --------------------------------------------------------------------------------
BEVERAGES--0.8%
Hansen Natural
Corp. 1 8,100 1,048,626
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--0.9%
Central European
Distribution Corp. 1 29,600 1,215,080
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS--1.2%
Herbalife Ltd. 1 49,300 1,715,640
- --------------------------------------------------------------------------------
ENERGY--5.4%
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--4.6%
Helix Energy Solutions
Group, Inc. 1 33,900 1,315,998
- --------------------------------------------------------------------------------
Hydril Co. 1 25,400 2,036,064
- --------------------------------------------------------------------------------
Superior Well
Services, Inc. 1 35,600 1,151,304
- --------------------------------------------------------------------------------
W-H Energy
Services, Inc. 1 36,200 1,819,050
---------------
6,322,416
- --------------------------------------------------------------------------------
OIL & GAS--0.8%
GMX Resources, Inc. 1 11,000 463,210
- --------------------------------------------------------------------------------
St. Mary Land &
Exploration Co. 15,500 653,480
---------------
1,116,690
- --------------------------------------------------------------------------------
FINANCIALS--3.3%
- --------------------------------------------------------------------------------
CAPITAL MARKETS--1.2%
Harris & Harris
Group, Inc. 43,500 562,455
- --------------------------------------------------------------------------------
optionsXpress
Holdings, Inc. 35,000 1,102,500
---------------
1,664,955
16 | OPPENHEIMER EMERGING GROWTH FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--0.6%
Nasdaq Stock
Market, Inc. 1 19,900 $ 744,658
- --------------------------------------------------------------------------------
Thomas Weisel Partners
Group, Inc. 1 1,700 34,459
---------------
779,117
- --------------------------------------------------------------------------------
REAL ESTATE--1.5%
CB Richard Ellis Group,
Inc., Cl. A 1 12,600 1,107,414
- --------------------------------------------------------------------------------
Trammell Crow Co. 1 25,000 973,250
---------------
2,080,664
- --------------------------------------------------------------------------------
HEALTH CARE--19.6%
- --------------------------------------------------------------------------------
BIOTECHNOLOGY--2.7%
Alkermes, Inc. 1 33,900 727,833
- --------------------------------------------------------------------------------
Arena
Pharmaceuticals, Inc. 1 66,500 941,640
- --------------------------------------------------------------------------------
Cubist
Pharmaceuticals, Inc. 1 42,400 961,208
- --------------------------------------------------------------------------------
Kendle
International, Inc. 1 30,000 1,126,500
---------------
3,757,181
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--11.5%
ArthroCare Corp. 1 22,200 1,006,326
- --------------------------------------------------------------------------------
Dexcom, Inc. 1 43,700 1,099,492
- --------------------------------------------------------------------------------
FoxHollow
Technologies, Inc. 1 25,000 778,750
- --------------------------------------------------------------------------------
Hologic, Inc. 1 37,800 1,801,926
- --------------------------------------------------------------------------------
Intermagnetics
General Corp. 1 87,400 1,898,328
- --------------------------------------------------------------------------------
Intuitive Surgical, Inc. 1 8,500 1,079,500
- --------------------------------------------------------------------------------
LifeCell Corp. 1 59,100 1,598,064
- --------------------------------------------------------------------------------
Meridian
Bioscience, Inc. 54,500 1,414,820
- --------------------------------------------------------------------------------
Neurometrix, Inc. 1 30,900 1,165,548
- --------------------------------------------------------------------------------
Spectranetics
Corp. (The) 1 65,400 840,390
- --------------------------------------------------------------------------------
Syneron Medical Ltd. 1 36,300 939,081
- --------------------------------------------------------------------------------
Ventana Medical
Systems, Inc. 1 20,900 1,017,830
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES Continued
Vital Images, Inc. 1 40,000 $ 1,337,200
---------------
15,977,255
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--1.9%
Chemed Corp. 24,800 1,351,352
- --------------------------------------------------------------------------------
Psychiatric
Solutions, Inc. 1 38,700 1,279,422
---------------
2,630,774
- --------------------------------------------------------------------------------
PHARMACEUTICALS--3.5%
Adams Respiratory
Therapeutics, Inc. 1 39,200 1,681,288
- --------------------------------------------------------------------------------
Aspreva Pharmaceuticals
Corp. 1 42,600 1,448,400
- --------------------------------------------------------------------------------
CollaGenex
Pharmaceuticals, Inc. 1 50,400 616,896
- --------------------------------------------------------------------------------
Nektar Therapeutics 1 52,300 1,124,973
---------------
4,871,557
- --------------------------------------------------------------------------------
INDUSTRIALS--13.7%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--1.8%
Argon ST, Inc. 1 34,700 1,153,081
- --------------------------------------------------------------------------------
DRS
Technologies, Inc. 23,700 1,316,061
---------------
2,469,142
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--0.8%
Hub Group, Inc.,
Cl. A 1 22,500 1,106,325
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--4.5%
American
Reprographics Co. 1 40,300 1,429,441
- --------------------------------------------------------------------------------
Heidrick & Struggles
International, Inc. 1 25,200 911,232
- --------------------------------------------------------------------------------
Kenexa Corp. 1 28,300 940,409
- --------------------------------------------------------------------------------
Mobile Mini, Inc. 1 34,600 1,141,108
- --------------------------------------------------------------------------------
Resources
Connection, Inc. 1 44,200 1,188,980
- --------------------------------------------------------------------------------
UTEK Corp. 2 43,600 705,448
---------------
6,316,618
17 | OPPENHEIMER EMERGING GROWTH FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING--0.4%
Washington Group
International, Inc. 10,000 $ 556,100
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--1.7%
Energy Conversion
Devices, Inc. 1 26,700 1,335,267
- --------------------------------------------------------------------------------
Energy Conversion
Devices, Inc. 1 20,000 1,000,200
---------------
2,335,467
- --------------------------------------------------------------------------------
MACHINERY--2.1%
Actuant Corp., Cl. A 21,200 1,355,740
- --------------------------------------------------------------------------------
RBC Bearings, Inc. 1 65,400 1,549,326
---------------
2,905,066
- --------------------------------------------------------------------------------
MARINE--1.5%
Omega Navigation
Enterprises, Inc., Cl. A 1 55,800 895,590
- --------------------------------------------------------------------------------
UTi Worldwide, Inc. 36,400 1,135,316
---------------
2,030,906
- --------------------------------------------------------------------------------
ROAD & RAIL--0.9%
Celadon Group, Inc. 1 47,300 1,286,087
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--28.7%
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--2.9%
F5 Networks, Inc. 1 30,800 1,803,648
- --------------------------------------------------------------------------------
Redback
Networks, Inc. 1 101,400 2,271,360
---------------
4,075,008
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--1.0%
Rackable
Systems, Inc. 1 26,400 1,356,696
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--2.6%
Brightpoint, Inc. 1 46,975 1,572,723
- --------------------------------------------------------------------------------
Daktronics, Inc. 29,700 1,164,834
- --------------------------------------------------------------------------------
Multi-Fineline
Electronix, Inc. 1 15,100 880,028
---------------
3,617,585
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--4.7%
Akamai
Technologies, Inc. 1 64,400 2,169,636
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES Continued
j2 Global
Communications,
Inc. 1 33,900 $ 1,664,151
- --------------------------------------------------------------------------------
Openwave
Systems, Inc. 1 57,200 1,064,492
- --------------------------------------------------------------------------------
WebEx
Communications,
Inc. 1 45,500 1,608,425
---------------
6,506,704
- --------------------------------------------------------------------------------
IT SERVICES--1.6%
Aquantive, Inc. 1 52,700 1,320,662
- --------------------------------------------------------------------------------
SRA International,
Inc., Cl. A 1 28,000 896,560
---------------
2,217,222
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT--10.7%
Atheros
Communications,
Inc. 1 32,200 817,558
- --------------------------------------------------------------------------------
ATMI, Inc. 1 31,700 900,280
- --------------------------------------------------------------------------------
Diodes, Inc. 1 36,000 1,466,640
- --------------------------------------------------------------------------------
FormFactor, Inc. 1 25,100 1,046,419
- --------------------------------------------------------------------------------
Hittite
Microwave Corp. 1 29,840 1,161,074
- --------------------------------------------------------------------------------
Intevac, Inc. 1 45,500 1,278,550
- --------------------------------------------------------------------------------
Microsemi Corp. 1 56,500 1,543,580
- --------------------------------------------------------------------------------
Netlogic
Microsystems, Inc. 1 47,600 1,916,852
- --------------------------------------------------------------------------------
SiRF Technology
Holdings, Inc. 1 50,200 1,714,330
- --------------------------------------------------------------------------------
Supertex, Inc. 1 33,100 1,278,322
- --------------------------------------------------------------------------------
Trident
Microsystems, Inc. 1 64,500 1,715,700
---------------
14,839,305
- --------------------------------------------------------------------------------
SOFTWARE--5.2%
Bottomline
Technologies, Inc. 1 79,800 939,246
- --------------------------------------------------------------------------------
Concur
Technologies, Inc. 1 71,600 1,116,244
18 | OPPENHEIMER EMERGING GROWTH FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
SOFTWARE Continued
Informatica Corp. 1 88,300 $ 1,357,171
- --------------------------------------------------------------------------------
MICROS
Systems, Inc. 1 35,400 1,479,720
- --------------------------------------------------------------------------------
Ultimate Software
Group, Inc. (The) 1 90,800 2,321,756
---------------
7,214,137
- --------------------------------------------------------------------------------
MATERIALS--0.4%
- --------------------------------------------------------------------------------
CONSTRUCTION MATERIALS--0.4%
U.S. Concrete, Inc. 1 37,400 513,128
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--2.7%
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--0.8%
NeuStar, Inc., Cl. A 1 33,400 1,172,340
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--1.9%
SBA Communications
Corp. 1 102,900 2,584,848
---------------
Total Common Stocks
(Cost $104,298,441) 135,006,421
UNITS
- --------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- --------------------------------------------------------------------------------
Discovery
Laboratories, Inc.
Wts., Exp. 9/20/10 1,3
(Cost $0) 6,800 16,757
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--4.8%
- --------------------------------------------------------------------------------
Undivided interest of 0.72% in joint
repurchase agreement (Principal
Amount/Value $912,364,000, with
a maturity value of $912,721,343)
with UBS Warburg LLC, 4.70%, dated
4/28/06, to be repurchased at
$6,555,567 on 5/1/06, collateralized
by Federal National Mortgage
Assn., 5%, 3/1/34, with a
value of $933,734,744
(Cost $6,553,000) $ 6,553,000 $ 6,553,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE (COST
$110,851,441) 102.2% 141,576,178
- --------------------------------------------------------------------------------
LIABILITIES IN EXCESS
OF OTHER ASSETS (2.2) (2,986,515)
-------------------------------------
NET ASSETS 100.0% $ 138,589,663
=====================================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $705,448 or 0.51% of the Fund's net assets
as of April 30, 2006.
3. Illiquid or restricted security. The aggregate value of illiquid or
restricted securities as of April 30, 2006 was $16,757, which represents 0.01%
of the Fund's net assets, all of which is considered restricted. See Note 5 of
accompanying Notes.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19 | OPPENHEIMER EMERGING GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
APRIL 30, 2006
- ------------------------------------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------------------------------------
Investments, at value (cost $110,851,441)--see accompanying statement of investments $ 141,576,178
- ------------------------------------------------------------------------------------------------------
Cash 16,949
- ------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 1,626,948
Shares of beneficial interest sold 1,111,591
Interest and dividends 12,628
Other 7,156
---------------
Total assets 144,351,450
- ------------------------------------------------------------------------------------------------------
LIABILITIES
- ------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 5,469,206
Shares of beneficial interest redeemed 156,105
Transfer and shareholder servicing agent fees 37,154
Shareholder communications 33,452
Distribution and service plan fees 26,343
Trustees' compensation 11,264
Other 28,263
---------------
Total liabilities 5,761,787
- ------------------------------------------------------------------------------------------------------
NET ASSETS $ 138,589,663
===============
- ------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 10,948
- ------------------------------------------------------------------------------------------------------
Additional paid-in capital 100,808,426
- ------------------------------------------------------------------------------------------------------
Accumulated net investment loss (1,005,265)
- ------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 8,050,817
- ------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 30,724,737
---------------
NET ASSETS $ 138,589,663
===============
20 | OPPENHEIMER EMERGING GROWTH FUND
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- ------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$79,591,359 and 6,188,390 shares of beneficial interest outstanding) $ 12.86
Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price) $ 13.64
- ------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $26,376,745
and 2,146,024 shares of beneficial interest outstanding) $ 12.29
- ------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $21,811,226
and 1,771,024 shares of beneficial interest outstanding) $ 12.32
- ------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $7,202,590
and 569,107 shares of beneficial interest outstanding) $ 12.66
- ------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $3,607,743 and 273,111 shares of beneficial interest outstanding) $ 13.21
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | OPPENHEIMER EMERGING GROWTH FUND
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED APRIL 30, 2006
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Interest $ 64,454
- --------------------------------------------------------------------------------
Dividends 36,248
--------------
Total investment income 100,702
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 534,906
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 82,251
Class B 116,228
Class C 92,115
Class N 14,503
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 113,815
Class B 51,732
Class C 36,015
Class N 17,085
Class Y 2,642
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 17,658
Class B 9,857
Class C 5,147
Class N 939
- --------------------------------------------------------------------------------
Custodian fees and expenses 5,631
- --------------------------------------------------------------------------------
Trustees' compensation 3,780
- --------------------------------------------------------------------------------
Other 17,192
--------------
Total expenses 1,121,496
Less waivers and reimbursements of expenses (24,046)
--------------
Net expenses 1,097,450
- --------------------------------------------------------------------------------
NET INVESTMENT LOSS (996,748)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
- --------------------------------------------------------------------------------
Net realized gain on investments 8,584,386
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 16,490,168
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 24,077,806
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | OPPENHEIMER EMERGING GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2006 OCTOBER 31,
(UNAUDITED) 2005
- ------------------------------------------------------------------------------------------------------------------------
OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------
Net investment loss $ (996,748) $ (1,759,158)
- ------------------------------------------------------------------------------------------------------------------------
Net realized gain 8,584,386 9,846,777
- ------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 16,490,168 513,619
---------------------------------
Net increase in net assets resulting from operations 24,077,806 8,601,238
- ------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from beneficial interest
transactions:
Class A 8,068,853 (7,320,358)
Class B 1,029,018 (2,695,776)
Class C 2,439,004 (1,359,160)
Class N 961,978 136,703
Class Y 737,837 (778,500)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) 37,314,496 (3,415,853)
- ------------------------------------------------------------------------------------------------------------------------
Beginning of period 101,275,167 104,691,020
---------------------------------
End of period (including accumulated net investment loss of
$1,005,265 and $8,517, respectively) $ 138,589,663 $ 101,275,167
=================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | OPPENHEIMER EMERGING GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2006 OCT. 31,
CLASS A (UNAUDITED) 2005 2004 2003 2002 2001 1
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.44 $ 9.57 $ 10.30 $ 5.84 $ 8.45 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.08) 2 (.14) 2 (.15) 2 (.08) (.10) (.03)
Net realized and unrealized gain (loss) 2.50 1.01 (.58) 4.54 (2.51) (1.49)
---------------------------------------------------------------------------------------
Total from investment operations 2.42 .87 (.73) 4.46 (2.61) (1.52)
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment income -- -- -- -- -- (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.86 $ 10.44 $ 9.57 $ 10.30 $ 5.84 $ 8.45
=======================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 23.18% 9.09% (7.09)% 76.37% (30.89)% (15.22)%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 79,591 $ 57,563 $ 59,819 $ 59,396 $ 19,310 $ 20,392
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 69,224 $ 58,690 $ 62,749 $ 28,386 $ 24,497 $ 16,941
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (1.38)% (1.43)% (1.57)% (1.48)% (1.35)% (0.57)%
Total expenses 1.57% 1.65% 1.68% 1.77% 1.85% 1.58%
Expenses after payments and waivers and
reduction to custodian expenses 1.55% 1.63% 1.67% 1.72% 1.78% 1.58%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 86% 207% 212% 204% 263% 214%
1. For the period from November 1, 2000 (inception of offering) to October 31,
2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. 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 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.
4. Annualized for periods of less than one full year.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | OPPENHEIMER EMERGING GROWTH FUND
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2006 OCT. 31,
CLASS B (UNAUDITED) 2005 2004 2003 2002 2001 1
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.02 $ 9.26 $ 10.05 $ 5.74 $ 8.38 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.13) 2 (.22) 2 (.23) 2 (.09) (.12) (.07)
Net realized and unrealized gain (loss) 2.40 .98 (.56) 4.40 (2.52) (1.52)
---------------------------------------------------------------------------------------
Total from investment operations 2.27 .76 (.79) 4.31 (2.64) (1.59)
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment income -- -- -- -- -- (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.29 $ 10.02 $ 9.26 $ 10.05 $ 5.74 $ 8.38
=======================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 22.65% 8.21% (7.86)% 75.09% (31.50)% (15.96)%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 26,377 $ 20,653 $ 21,669 $ 20,520 $ 6,395 $ 3,866
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 23,517 $ 21,439 $ 22,359 $ 10,544 $ 6,979 $ 2,256
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (2.22)% (2.22)% (2.44)% (2.20)% (2.22)% (1.78)%
Total expenses 2.47% 2.62% 2.67% 2.83% 2.74% 2.47%
Expenses after payments and waivers and
reduction to custodian expenses 2.39% 2.44% 2.55% 2.44% 2.67% 2.47%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 86% 207% 212% 204% 263% 214%
1. For the period from November 1, 2000 (inception of offering) to October 31,
2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. 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 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.
4. Annualized for periods of less than one full year.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER EMERGING GROWTH FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2006 OCT. 31,
CLASS C (UNAUDITED) 2005 2004 2003 2002 2001 1
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.04 $ 9.27 $ 10.06 $ 5.75 $ 8.39 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.12) 2 (.22) 2 (.23) 2 (.11) (.08) (.04)
Net realized and unrealized gain (loss) 2.40 .99 (.56) 4.42 (2.56) (1.54)
---------------------------------------------------------------------------------------
Total from investment operations 2.28 .77 (.79) 4.31 (2.64) (1.58)
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment income -- -- -- -- -- (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.32 $ 10.04 $ 9.27 $ 10.06 $ 5.75 $ 8.39
=======================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 22.71% 8.31% (7.85)% 74.96% (31.47)% (15.88)%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 21,811 $ 15,679 $ 15,814 $ 13,887 $ 4,877 $ 2,356
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 18,636 $ 15,550 $ 16,085 $ 6,649 $ 3,061 $ 1,022
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (2.18)% (2.20)% (2.39)% (2.22)% (2.25)% (1.76)%
Total expenses 2.39% 2.50% 2.55% 2.65% 2.72% 2.46%
Expenses after payments and waivers and
reduction to custodian expenses 2.35% 2.40% 2.50% 2.47% 2.65% 2.46%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 86% 207% 212% 204% 263% 214%
1. For the period from November 1, 2000 (inception of offering) to October 31,
2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. 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 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.
4. Annualized for periods of less than one full year.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER EMERGING GROWTH FUND
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2006 OCT. 31,
CLASS N (UNAUDITED) 2005 2004 2003 2002 2001 1
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.29 $ 9.45 $ 10.21 $ 5.81 $ 8.43 $ 8.28
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.10) 2 (.17) 2 (.18) 2 (.10) (.08) (.05)
Net realized and unrealized gain (loss) 2.47 1.01 (.58) 4.50 (2.54) .20
---------------------------------------------------------------------------------------
Total from investment operations 2.37 .84 (.76) 4.40 (2.62) .15
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment income -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.66 $ 10.29 $ 9.45 $ 10.21 $ 5.81 $ 8.43
=======================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 23.03% 8.89% (7.44)% 75.73% (31.08)% 1.81%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 7,203 $ 5,067 $ 4,570 $ 2,425 $ 594 $ 34
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 5,864 $ 5,046 $ 3,375 $ 1,125 $ 412 $ 16
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (1.66)% (1.68)% (1.88)% (1.76)% (1.63)% (1.69)%
Total expenses 2.06% 2.20% 2.17% 2.14% 2.18% 2.03%
Expenses after payments and waivers and
reduction to custodian expenses 1.83% 1.87% 2.00% 2.00% 2.11% 2.03%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 86% 207% 212% 204% 263% 214%
1. For the period from March 1, 2001 (inception of offering) to October 31,
2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. 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 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.
4. Annualized for periods of less than one full year.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER EMERGING GROWTH FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2006 OCT. 31,
CLASS Y (UNAUDITED) 2005 2004 2003 2002 2001 1
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.70 $ 9.75 $ 10.43 $ 5.88 $ 8.47 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.06) 2 (.08) 2 (.10) 2 (.09) (.08) .02
Net realized and unrealized gain (loss) 2.57 1.03 (.58) 4.64 (2.51) (1.51)
---------------------------------------------------------------------------------------
Total from investment operations 2.51 .95 (.68) 4.55 (2.59) (1.49)
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment income -- -- -- -- -- (.04)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.21 $ 10.70 $ 9.75 $ 10.43 $ 5.88 $ 8.47
=======================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 23.46% 9.74% (6.52)% 77.38% (30.58)% (14.99)%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 3,608 $ 2,313 $ 2,819 $ 2,913 $ 657 $ 232
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 2,818 $ 2,540 $ 3,182 $ 1,449 $ 532 $ 30
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (0.96)% (0.77)% (0.98)% (0.92)% (0.84)% (0.97)%
Total expenses 1.13% 0.98% 1.08% 1.15% 1.48% 3.87%
Expenses after payments and waivers and
reduction to custodian expenses 1.13% 0.97% 1.08% 1.15% 1.29% 1.28%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 86% 207% 212% 204% 263% 214%
1. For the period from November 1, 2000 (inception of offering) to October 31,
2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. 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 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.
4. Annualized for periods of less than one full year.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | OPPENHEIMER EMERGING GROWTH FUND
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Emerging Growth Fund (the Fund) is an open-end management investment
company registered under the Investment Company Act of 1940, as amended. 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 those 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 Fund assesses a 2% fee on the proceeds of
fund shares that are redeemed (either by selling or exchanging to another
Oppenheimer fund) within 30 days of their purchase. The fee, which is retained
by the Fund, is accounted for as an addition to paid-in capital.
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 may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. Securities listed or traded on National
Stock Exchanges or other domestic exchanges are valued based on the last sale
price of the security traded on that exchange prior to the time when the Fund's
assets are valued. Securities traded on NASDAQ are valued based on the closing
price provided by NASDAQ prior to the time when the Fund's assets are valued. In
the absence of a sale, the security is valued at the last sale price on the
prior trading day, if it is within the spread of the closing "bid" and "asked"
prices, and if not, at the closing bid price. Securities traded on foreign
exchanges are valued based on the last sale price on the principal exchange on
which the security is traded, as identified by the portfolio pricing service,
prior to the time when the Fund's assets are valued. In the absence of a sale,
the security is valued at the official closing price on the principal exchange.
Corporate, government and municipal debt instruments having a remaining maturity
in excess of sixty days and all mortgage-backed securities
29 | OPPENHEIMER EMERGING GROWTH FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
will be valued at the mean between the "bid" and "asked" prices. Futures
contracts traded on a commodities or futures exchange will be valued at the
final settlement price or official closing price on the principal exchange as
reported by such principal exchange at its trading session ending at, or most
recently prior to, the time when the Fund's assets are valued. 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 maturities of sixty days or less are valued at
amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. These balances are invested in one or more repurchase
agreements. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund.
As of April 30, 2006, the Fund had no estimated capital loss carryforward
available for federal income tax purposes. This estimated capital loss
carryforward represents carryforward as of the end of the last fiscal year,
increased for losses deferred under tax
30 | OPPENHEIMER EMERGING GROWTH FUND
accounting rules to the current fiscal year and is increased or decreased by
capital losses or gains realized in the first six months of the current fiscal
year. As of April 30, 2006, it is estimated that the Fund will utilize $217,219
of capital loss carryforward to offset realized capital gains. During the year
ended October 31, 2005, the Fund utilized $9,792,505 of capital loss
carryforward to offset capital gains realized in that fiscal year.
As of October 31, 2005, the Fund had available for federal income tax purposes
unused capital loss carryforward as follows:
EXPIRING
----------------------
2012 $217,219
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the
Fund's independent trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service. During the six months ended
April 30, 2006, the Fund's projected benefit obligations were increased by
$2,182 and payments of $658 were made to retired trustees, resulting in an
accumulated liability of $8,002 as of April 30, 2006.
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. Such cash overdrafts may result from the
effects of failed
31 | OPPENHEIMER EMERGING GROWTH FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
trades in portfolio securities and from cash outflows resulting from
unanticipated shareholder redemption activity. The Fund pays interest to its
custodian on such cash overdrafts, to the extent they are not offset by positive
cash balances maintained by the Fund, 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.
At April 30, 2006, the Fund had $1,266 of such earnings on cash balances
available to offset future custodian fees or interest expenses incurred during
the next fiscal year.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Fund's organizational documents provide current and former
trustees and officers with a limited indemnification against liabilities arising
in connection with the performance of their duties to the Fund. In the normal
course of business, the Fund may also enter into contracts that provide general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown as this would be dependent on future claims that may be made against the
Fund. The risk of material loss from such claims is considered remote.
- --------------------------------------------------------------------------------
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 $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
SIX MONTHS ENDED APRIL 30, 2006 YEAR ENDED OCTOBER 31, 2005
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------
CLASS A
Sold 1,825,151 $ 21,888,691 1,734,477 $ 17,642,771
Redeemed (1,149,566) (13,819,838) 1 (2,472,281) (24,963,129) 2
-------------------------------------------------------------------
Net increase (decrease) 675,585 $ 8,068,853 (737,804) $ (7,320,358)
===================================================================
- ----------------------------------------------------------------------------------------------------
CLASS B
Sold 334,518 $ 3,856,200 502,594 $ 4,918,860
Redeemed (249,607) (2,827,182) 1 (782,458) (7,614,636) 2
-------------------------------------------------------------------
Net increase (decrease) 84,911 $ 1,029,018 (279,864) $ (2,695,776)
===================================================================
32 | OPPENHEIMER EMERGING GROWTH FUND
SIX MONTHS ENDED APRIL 30, 2006 YEAR ENDED OCTOBER 31, 2005
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------
CLASS C
Sold 468,367 $ 5,378,498 622,823 $ 6,139,396
Redeemed (259,336) (2,939,494) 1 (766,585) (7,498,556) 2
-------------------------------------------------------------------
Net increase (decrease) 209,031 $ 2,439,004 (143,762) $ (1,359,160)
===================================================================
- ----------------------------------------------------------------------------------------------------
CLASS N
Sold 166,374 $ 2,013,694 216,202 $ 2,171,750
Redeemed (89,744) (1,051,716) 1 (207,078) (2,035,047) 2
-------------------------------------------------------------------
Net increase 76,630 $ 961,978 9,124 $ 136,703
===================================================================
- ----------------------------------------------------------------------------------------------------
CLASS Y
Sold 89,872 $ 1,131,431 76,057 $ 770,484
Redeemed (32,884) (393,594) 1 (149,113) (1,548,984) 2
-------------------------------------------------------------------
Net increase (decrease) 56,988 $ 737,837 (73,056) $ (778,500)
===================================================================
1. Net of redemption fees of $841, $285, $226, $71 and $34 for Class A, Class B,
Class C, Class N and Class Y, respectively.
2. Net of redemption fees of $3,625, $1,324, $960, $157 and $312 for Class A,
Class B, Class C, Class N and Class Y, respectively.
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the six months ended April 30, 2006, were as
follows:
PURCHASES SALES
- ------------------------------------------------------------------------
Investment securities $113,842,257 $101,044,114
- --------------------------------------------------------------------------------
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
average annual rate as shown in the following table:
FEE SCHEDULE
---------------------------------------------
Up to $200 million of net assets 0.90%
Next $200 million of net assets 0.85
Next $200 million of net assets 0.80
Over $600 million of net assets 0.75
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the six months ended April 30, 2006, the Fund paid
$189,792 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $10,000 per
annum 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.
33 | OPPENHEIMER EMERGING GROWTH FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's
Agreement with the 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
periodically 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 periodically 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
periods. 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% on Class B and
Class C shares and 0.25% on Class N shares. The Distributor also receives a
service fee of 0.25% per year under each plan. If either the Class B, Class C or
Class N plan is terminated by the Fund or by the shareholders of a class, the
Board of Trustees and its independent trustees must determine whether the
Distributor shall be entitled to payment from the Fund of all or a portion of
the service fee and/or asset-based sales charge in respect to shares sold prior
to the effective date of such termination. The Distributor's aggregate
uncompensated expenses under the plan at April 30, 2006 for Class B, Class C and
Class N shares were $104,189, $251,258 and $60,729, 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 following table for the period
indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ----------------------------------------------------------------------------------------------------
April 30, 2006 $52,184 $354 $21,201 $1,245 $1,154
34 | OPPENHEIMER EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. 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 six months ended April 30, 2006,
OFS waived $4,820, $9,002, $3,525 and $6,699 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 April 30, 2006, 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 10% of
its net assets (determined at the time of purchase and reviewed periodically) in
illiquid or restricted securities. Certain restricted securities, eligible for
resale to qualified institutional investors, are not subject to that limitation.
Securities that are illiquid or restricted are marked with the applicable
footnote on the Statement of Investments. Information concerning restricted
securities is as follows:
ACQUISITION VALUATION AS OF UNREALIZED
SECURITY DATE COST APRIL 30, 2006 APPRECIATION
- --------------------------------------------------------------------------------
Discovery
Laboratories, Inc.
Wts., Exp. 9/20/10 6/18/03 $-- $16,757 $16,757
- --------------------------------------------------------------------------------
6. LITIGATION
A consolidated amended complaint was filed as a putative class action against
the Manager and the Transfer Agent and other defendants (including 51 of the
Oppenheimer funds including the Fund) in the U.S. District Court for the
Southern District of New York on January 10, 2005 and was amended on March 4,
2005. The complaint alleged, among other things, that the Manager charged
excessive fees for distribution and other costs, and that by permitting and/or
participating in those actions, the Directors/Trustees and the Officers of the
funds breached their fiduciary duties to fund shareholders under the Investment
Company Act of 1940 and at common law. The plaintiffs sought unspecified
damages, an accounting of all fees paid, and an award of attorneys' fees and
litigation expenses.
In response to the defendants' motions to dismiss the suit, seven of the
eight counts in the complaint, including the claims against certain of the
Oppenheimer funds, as nominal defendants, and against certain present and former
Directors, Trustees and Officers of the funds, and the Distributor, as
defendants, were dismissed with prejudice, by court order dated March 10, 2006,
and the remaining count against the Manager and the Transfer Agent was dismissed
with prejudice by court order dated April 5, 2006. The plaintiffs filed an
appeal of those dismissals on May 11, 2006.
35 | OPPENHEIMER EMERGING GROWTH FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. LITIGATION Continued
The Manager believes that it is premature to render any opinion as to the
likelihood of an outcome unfavorable to it, the funds, the Directors/Trustees or
the Officers on the appeal of the decisions of the district court, and that no
estimate can yet be made with any degree of certainty as to the amount or range
of any potential loss. However, the Manager believes that the allegations
contained in the complaint are without merit and that there are substantial
grounds to sustain the district court's rulings.
36 | OPPENHEIMER EMERGING GROWTH FUND
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 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 voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in the Form N-PX filing 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
http://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.
37 | OPPENHEIMER EMERGING GROWTH FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Each year, the Board of Trustees (the "Board"), including a majority of the
independent Trustees, is required to determine whether to renew the Fund's
investment advisory agreement (the "Agreement"). The Investment Company Act of
1940, as amended, requires that the Board request and evaluate, and that the
Manager provide, such information as may be reasonably necessary to evaluate the
terms of the Agreement. The Board employs an independent consultant to prepare a
report that provides information, including comparative information that the
Board requests for that purpose. In addition, the Board receives information
throughout the year regarding Fund services, fees, expenses and performance.
The Manager and the independent consultant provided information to the
Board on the following factors: (i) the nature, quality and extent of the
Manager's services, (ii) the investment performance of the Fund and the Manager,
(iii) the fees and expenses of the Fund, including comparative expense
information, (iv) the profitability of the Manager and its affiliates, including
an analysis of the cost of providing services by the Manager and its affiliates,
(v) the extent to which economies of scale are realized as the Fund grows and
whether fee levels reflect these economies of scale for Fund investors and (vi)
other benefits to the Manager from its relationship with the Fund. The Board was
aware that there are alternatives to retaining the Manager.
NATURE AND EXTENT OF SERVICES. The Board considered information on the
nature and extent of the services provided to the Fund and information regarding
the Manager's key personnel that provide such services. The Manager's duties
include providing the Fund with the services of the portfolio manager and the
Manager's investment team, who provide research, analysis and other advisory
services in regard to the Fund's investments; securities trading services;
oversight of third party service providers; monitoring compliance with
applicable Fund policies and procedures and adherence to the Fund's investment
restrictions. The Manager is responsible for providing certain administrative
services to the Fund as well. Those services include providing, and supervising
the activities of, all administrative and clerical personnel that are necessary
in order to provide effective corporate administration for the Fund; compiling
and maintaining records with respect to the Fund's operations; preparing and
filing reports required by the Securities and Exchange Commission; preparing
periodic reports regarding the operations of the Fund for its shareholders;
preparing proxy materials for shareholder meetings; and preparing the
registration statements required by Federal and state securities laws for the
sale of the Fund's shares. The Manager also provides the Fund with office space,
facilities and equipment.
QUALITY OF SERVICES. The Board also considered the quality of the services
provided and the quality of the Manager's resources that are available to the
Fund. The Board took
38 | OPPENHEIMER EMERGING GROWTH FUND
account of the facts that the Manager has had over forty years of experience as
an investment adviser and that its assets under management rank it among the top
mutual fund managers in the United States. The Board evaluated the Manager's
administrative, accounting, legal and compliance services, and information the
Board has received regarding the experience and professional qualifications of
the Manager's personnel and the size and functions of its staff. In its
evaluation of the quality of the portfolio management services provided, the
Board considered the experience of the portfolio manager and the Manager's
Growth investment team and analysts. The Board members also considered their
experiences with the Manager and its officers and other personnel through their
service as directors or trustees of the Fund and other funds advised by the
Manager. The Board considered information regarding the quality of services
provided by affiliates of the Manager, which it also reviews at other times
during the year in connection with the renewal of the Fund's service agreements.
In light of the foregoing, the Board concluded that the Fund benefits from the
services provided under the Agreement as a result of the Manager's experience,
reputation, personnel, operations, and resources.
INVESTMENT PERFORMANCE OF THE MANAGER AND THE FUND. During the year, the
Manager provided information on the investment performance of the Fund and the
Manager at each Board meeting, including comparative performance information.
The Board also reviewed information, prepared by the Manager and by the
independent consultant, comparing the Fund's historical performance to relevant
market indices and to the performance of other small-cap growth funds advised by
the Manager and by other investment advisers. The Board noted that the Fund's
three-year performance was better than its peer group average. However its
one-year performance was below its peer group average.
MANAGEMENT FEES AND EXPENSES. The Board reviewed the fees paid to the
Manager and its affiliates and the other expenses borne by the Fund. The Board
also evaluated the comparability of the fees charged and the services provided
to the Fund to those of other clients or accounts advised by the Manager. The
independent consultant provided comparative data in regard to the fees and
expenses of the Fund, other small-cap growth funds and other funds with
comparable asset levels and distribution features. The Board noted that the
Fund's contractual management fees were lower than its peer group median and
average although its actual management fees and its total expenses were higher
than its peer group median and average.
ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may
realize economies of scale in managing and supporting the Fund, to what extent
those economies of scale benefit the Fund shareholders and the current level of
Fund assets in relation to the Fund's breakpoint schedule for its management
fees. The Board also noted
39 | OPPENHEIMER EMERGING GROWTH FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
the Fund's breakpoints, which are intended to share economies of scale that may
exist as the Fund grows with its shareholders.
PROFITS AND OTHER BENEFITS TO THE MANAGER. The Board considered
information regarding the Manager's costs in serving as the Fund's investment
adviser, including the costs associated with the personnel and systems necessary
to manage the Fund, and information regarding the Manager's profitability from
its relationship with the Fund. The Board considered that the Manager must be
able to pay and retain experienced professional personnel at competitive rates
to provide services to the Fund and that maintaining the financial viability of
the Manager is important in order for the Manager to continue to provide
significant services to the Fund and its shareholders. In addition to
considering the profits realized by the Manager, the Board considered
information regarding the direct and indirect benefits the Manager receives as a
result of its relationship with the Fund, including compensation paid to the
Manager's affiliates for services provided and research provided to the Manager
in connection with permissible brokerage arrangements (soft dollar
arrangements).
CONCLUSIONS. These factors were also considered by the independent
Trustees meeting separately from the full Board, assisted by experienced counsel
to the Fund and the independent Trustees. Fund counsel is independent of the
Manager within the meaning and intent of the Securities and Exchange Commission
Rules.
Based on its review of the information it received and its evaluations
described above, the Board, including a majority of the independent Trustees,
concluded that the nature, extent and quality of the services provided to the
Fund by the Manager are a benefit to the Fund and in the best interest of the
Fund's shareholders and that the amount and structure of the compensation
received by the Manager and its affiliates are reasonable in relation to the
services provided. Accordingly, the Board elected to continue the Agreement for
another year. In arriving at this decision, the Board did not single out any
factor or factors as being more important than others, but considered all of the
factors together. The Board judged the terms and conditions of the Agreement,
including the management fee, in light of all of the surrounding circumstances.
40 | OPPENHEIMER EMERGING GROWTH FUND
ITEM 2. CODE OF ETHICS.
Not applicable to semiannual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to semiannual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to semiannual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's Governance Committee (the "Committee") will evaluate potential
Board candidates to assess their qualifications. The Committee shall have the
authority, upon approval of the Board, to retain an executive search firm to
assist in this effort. The Committee may consider recommendations by business
and personal contacts of current Board members and by executive search firms
which the Committee may engage from time to time and may also consider
shareholder recommendations. The Committee may consider the advice and
recommendation of the Funds' investment manager and its affiliates in making
the selection.
2. The Committee shall screen candidates for Board membership. The Committee has
not established specific qualifications that it believes must be met by a
trustee nominee. In evaluating trustee nominees, the Committee considers,
among other things, an individual's background, skills, and experience;
whether the individual is an "interested person" as defined in the Investment
Company Act of 1940; and whether the individual would be deemed an "audit
committee financial expert" within the meaning of applicable SEC rules. The
Committee also considers whether the individual's background, skills, and
experience will complement the background, skills, and experience of other
nominees and will contribute to the Board. There are no differences in the
manner in which the Committee evaluates nominees for trustees based on
whether the nominee is recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the Board at
such times as the Committee meets to consider new nominees for the Board. The
Committee shall have the sole discretion to determine the candidates to
present to the Board and, in such cases where required, to shareholders.
Recommendations for trustee nominees should, at a minimum, be accompanied by
the following:
o the name, address, and business, educational, and/or other pertinent
background of the person being recommended;
o a statement concerning whether the person is an "interested person" as
defined in the Investment Company Act of 1940;
o any other information that the Funds would be required to include in a
proxy statement concerning the person if he or she was nominated; and
o the name and address of the person submitting the recommendation and, if
that person is a shareholder, the period for which that person held Fund
shares.
The recommendation also can include any additional information which the
person submitting it believes would assist the Committee in evaluating the
recommendation.
4. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company (the parent company of the Funds'
investment adviser) would be deemed an "interested person" under the
Investment Company Act of 1940. In addition, certain other relationships with
Massachusetts Mutual Life Insurance Company or its subsidiaries, with
registered broker-dealers, or with the Funds' outside legal counsel may cause
a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a trustee,
Committee members and other directors customarily interview the individual in
person. In addition, the individual customarily is asked to complete a
detailed questionnaire which is designed to elicit information which must be
disclosed under SEC and stock exchange rules and to determine whether the
individual is subject to any statutory disqualification from serving as a
trustee of a registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the registrant's disclosure controls and procedures
(as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR
270.30a-3(c)) as of April 30, 2006, the registrant's principal executive officer
and principal financial officer found the registrant's disclosure controls and
procedures to provide reasonable assurances that information required to be
disclosed by the 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.
There have been no changes in the registrant's internal controls over financial
reporting that occurred during the registrant's second fiscal quarter of the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a) (1) Not applicable to semiannual reports.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Exhibit attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Oppenheimer Emerging Growth Fund
By: /S/ JOHN V. MURPHY
------------------
John V. Murphy
Principal Executive Officer
Date: June 15, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /S/ JOHN V. MURPHY
------------------
John V. Murphy
Principal Executive Officer
Date: June 15, 2006
By: /S/ BRIAN W. WIXTED
-------------------
Brian W. Wixted
Principal Financial Officer
Date: June 15, 2006