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 31
----------
Date of reporting period: 04/30/2007
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ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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- --------------------------------------------------------------------------------
TOP TEN COMMON STOCK INDUSTRIES
- --------------------------------------------------------------------------------
Health Care Equipment & Supplies 7.6%
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Internet Software & Services 7.3
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Commercial Services & Supplies 7.1
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Software 6.5
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Oil & Gas 5.9
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Aerospace & Defense 5.2
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Specialty Retail 5.2
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Hotels, Restaurants & Leisure 5.2
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Textiles, Apparel & Luxury Goods 4.8
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Semiconductors & Semiconductor Equipment 4.5
Portfolio holdings and allocations are subject to change. Percentages are as of
April 30, 2007, and are based on net assets.
TOP TEN COMMON STOCK HOLDINGS
- --------------------------------------------------------------------------------
BE Aerospace, Inc. 2.3%
- --------------------------------------------------------------------------------
Crocs, Inc. 2.3
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Volcom, Inc. 2.0
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Hologic, Inc. 1.9
- --------------------------------------------------------------------------------
VeriFone Holdings, Inc. 1.7
- --------------------------------------------------------------------------------
Focus Media Holding Ltd., ADR 1.7
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Urban Outfitters, Inc. 1.7
- --------------------------------------------------------------------------------
Allscripts Healthcare Solutions, Inc. 1.6
- --------------------------------------------------------------------------------
Smith & Wesson Holding Corp. 1.6
- --------------------------------------------------------------------------------
Kodiak Oil & Gas Corp. 1.5
Portfolio holdings and allocations are subject to change. Percentages are as of
April 30, 2007, and are based on net assets.
For up-to-date Top 10 Fund Holdings, please visit www.oppenheimerfunds.com.
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10 | OPPENHEIMER EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
SECTOR ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Information Technology 27.0%
Internet Software & Services 7.4
Software 6.6
Semiconductors & Semiconductor Equipment 4.5
Electronic Equipment & Instruments 3.9
IT Services 2.4
Communications Equipment 1.8
Computers & Peripherals 0.4
Consumer Discretionary 20.7
Health Care 18.0
Industrials 15.9
Energy 7.2
Financials 4.0
Telecommunication Services 2.2
Materials 2.2
Consumer Staples 1.7
Utilities 1.1
Portfolio holdings and allocations are subject to change. Percentages are as of
April 30, 2007, and are based on the total market value of common stocks.
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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). Because Class B shares convert to
Class A shares 72 months after purchase, the "since inception" return for Class
B uses Class A performance for the period after conversion. Class 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, 2007.
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
described in the Statement of Additional Information). Therefore,
14 | OPPENHEIMER EMERGING GROWTH FUND
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
(11/1/06) (4/30/07) APRIL 30, 2007
- ----------------------------------------------------------------------------
Class A Actual $ 1,000.00 $ 1,078.60 $ 8.23
- ----------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,016.91 7.98
- ----------------------------------------------------------------------------
Class B Actual 1,000.00 1,073.50 12.41
- ----------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,012.89 12.05
- ----------------------------------------------------------------------------
Class C Actual 1,000.00 1,074.20 12.31
- ----------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,012.99 11.95
- ----------------------------------------------------------------------------
Class N Actual 1,000.00 1,077.40 9.52
- ----------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,015.67 9.24
- ----------------------------------------------------------------------------
Class Y Actual 1,000.00 1,081.40 4.86
- ----------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,020.13 4.72
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,
excluding indirect expenses from affiliated fund, based on the 6-month period
ended April 30, 2007 are as follows:
CLASS EXPENSE RATIOS
- -----------------------------
Class A 1.59%
- -----------------------------
Class B 2.40
- -----------------------------
Class C 2.38
- -----------------------------
Class N 1.84
- -----------------------------
Class Y 0.94
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Manager and 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.
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15 | OPPENHEIMER EMERGING GROWTH FUND
STATEMENT OF INVESTMENTS April 30, 2007 / Unaudited
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--98.8%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--20.5%
- --------------------------------------------------------------------------------
AUTO COMPONENTS--0.5%
Spartan Motors, Inc. 22,100 $ 629,408
- --------------------------------------------------------------------------------
DIVERSIFIED CONSUMER SERVICES--1.5%
New Oriental
Education &
Technology Group,
Inc., Sponsored ADR 1 20,900 914,375
- --------------------------------------------------------------------------------
Sotheby's 16,800 867,216
-----------------
1,781,591
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--5.2%
Chipotle Mexican
Grill, Inc., Cl. A 1 15,880 1,035,852
- --------------------------------------------------------------------------------
Chipotle Mexican
Grill, Inc., Cl. B 1 15,280 915,578
- --------------------------------------------------------------------------------
Life Time Fitness, Inc. 1 28,780 1,479,292
- --------------------------------------------------------------------------------
Penn National
Gaming, Inc. 1 22,000 1,063,480
- --------------------------------------------------------------------------------
WMS Industries, Inc. 1 40,690 1,621,903
-----------------
6,116,105
- --------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS--1.6%
Smith & Wesson
Holding Corp. 1 137,570 1,887,460
- --------------------------------------------------------------------------------
MEDIA--1.7%
Focus Media
Holding Ltd., ADR 1 54,920 2,032,040
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--5.2%
Aeropostale, Inc. 1 13,800 567,870
- --------------------------------------------------------------------------------
Casual Male Retail
Group, Inc. 1 51,900 597,369
- --------------------------------------------------------------------------------
Guess?, Inc. 15,120 595,728
- --------------------------------------------------------------------------------
J. Crew Group, Inc. 1 24,100 975,809
- --------------------------------------------------------------------------------
Urban Outfitters, Inc. 1 78,590 2,024,478
- --------------------------------------------------------------------------------
Zumiez, Inc. 1 35,430 1,398,068
-----------------
6,159,322
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--4.8%
Crocs, Inc. 1 48,150 $ 2,690,622
- --------------------------------------------------------------------------------
Phillips/Van Heusen
Corp. 12,710 710,489
- --------------------------------------------------------------------------------
Volcom, Inc. 1 55,790 2,343,738
-----------------
5,744,849
- --------------------------------------------------------------------------------
CONSUMER STAPLES--1.6%
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS--1.6%
Bare Escentuals, Inc. 1 24,800 1,002,664
- --------------------------------------------------------------------------------
Chattem, Inc. 1 16,520 943,953
-----------------
1,946,617
- --------------------------------------------------------------------------------
ENERGY--7.2%
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--1.3%
Dril-Quip, Inc. 1 13,800 696,900
- --------------------------------------------------------------------------------
Oceaneering
International, Inc. 1 15,530 738,296
- --------------------------------------------------------------------------------
Superior Offshore
International, Inc. 1 4,300 78,561
-----------------
1,513,757
- --------------------------------------------------------------------------------
OIL & GAS--5.9%
Arena Resources, Inc. 1 12,300 577,485
- --------------------------------------------------------------------------------
Carrizo Oil &
Gas, Inc. 1 17,100 630,135
- --------------------------------------------------------------------------------
Kodiak Oil &
Gas Corp. 1 296,090 1,835,758
- --------------------------------------------------------------------------------
Quicksilver
Resources, Inc. 1 35,010 1,465,519
- --------------------------------------------------------------------------------
SXR Uranium
One, Inc. 1 113,245 1,698,828
- --------------------------------------------------------------------------------
World Fuel
Services Corp. 17,040 787,418
-----------------
6,995,143
- --------------------------------------------------------------------------------
FINANCIALS--3.9%
- --------------------------------------------------------------------------------
CAPITAL MARKETS--2.6%
Cohen & Steers, Inc. 25,670 1,317,128
- --------------------------------------------------------------------------------
GFI Group, Inc. 1 11,970 828,923
- --------------------------------------------------------------------------------
Greenhill & Co., Inc. 15,000 948,750
-----------------
3,094,801
16 | OPPENHEIMER EMERGING GROWTH FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
INSURANCE--0.5%
Philadelphia
Consolidated Holding
Co. 1 13,550 $ 588,070
- --------------------------------------------------------------------------------
REAL ESTATE MANAGEMENT & DEVELOPMENT--0.8%
Grubb & Ellis Co. 1 83,000 979,400
- --------------------------------------------------------------------------------
HEALTH CARE--17.8%
- --------------------------------------------------------------------------------
BIOTECHNOLOGY--1.2%
Digene Corp. 1 32,130 1,473,161
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--7.6%
ev3, Inc. 1 31,680 565,488
- --------------------------------------------------------------------------------
Hologic, Inc. 1 39,360 2,265,168
- --------------------------------------------------------------------------------
Immucor, Inc. 1 36,090 1,177,617
- --------------------------------------------------------------------------------
Inverness Medical
Innovations, Inc. 1 26,590 1,064,930
- --------------------------------------------------------------------------------
Kyphon, Inc. 1 31,300 1,458,893
- --------------------------------------------------------------------------------
Meridian Bioscience, Inc. 27,290 811,332
- --------------------------------------------------------------------------------
NuVasive, Inc. 1 43,500 1,120,995
- --------------------------------------------------------------------------------
Volcano Corp. 1 28,300 571,094
-----------------
9,035,517
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--3.2%
Bio-Reference
Laboratories, Inc. 1 33,600 906,192
- --------------------------------------------------------------------------------
HMS Holdings Corp. 1 53,800 1,192,208
- --------------------------------------------------------------------------------
Psychiatric Solutions,
Inc. 1 48,250 1,692,128
-----------------
3,790,528
- --------------------------------------------------------------------------------
HEALTH CARE TECHNOLOGY--2.2%
Allscripts Healthcare
Solutions, Inc. 1 73,480 1,943,546
- --------------------------------------------------------------------------------
Omnicell, Inc. 1 29,420 674,895
-----------------
2,618,441
- --------------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES--2.7%
Advanced Magnetics,
Inc. 1 13,270 873,166
- --------------------------------------------------------------------------------
ICON plc, Sponsored
ADR 1 37,660 1,767,384
- --------------------------------------------------------------------------------
Illumina, Inc. 1 18,630 607,897
-----------------
3,248,447
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
PHARMACEUTICALS--0.9%
Medicines Co. (The) 1 44,010 $ 1,002,548
- --------------------------------------------------------------------------------
INDUSTRIALS--15.7%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--5.2%
Aeroviroment, Inc. 1 54,000 1,155,600
- --------------------------------------------------------------------------------
BE Aerospace, Inc. 1 74,420 2,727,493
- --------------------------------------------------------------------------------
Innovative Solutions
& Support, Inc. 1 37,800 1,025,892
- --------------------------------------------------------------------------------
Ladish Co., Inc. 1 31,630 1,286,076
-----------------
6,195,061
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--0.5%
Hub Group, Inc., Cl. A 1 15,740 566,640
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--7.1%
Clean Harbors, Inc. 1 13,570 631,276
- --------------------------------------------------------------------------------
Corrections Corp. of
America 1 26,500 1,505,200
- --------------------------------------------------------------------------------
FTI Consulting, Inc.1 30,000 1,103,100
- --------------------------------------------------------------------------------
Geo Group, Inc. (The) 1 29,090 1,489,408
- --------------------------------------------------------------------------------
Huron Consulting
Group, Inc. 1 8,300 502,565
- --------------------------------------------------------------------------------
Information Services
Group, Inc. 1 94,900 724,087
- --------------------------------------------------------------------------------
Resources Connection,
Inc. 1 37,930 1,144,348
- --------------------------------------------------------------------------------
Taleo Corp., Cl. A 1 56,640 863,760
- --------------------------------------------------------------------------------
TeleTech Holdings, Inc. 1 12,150 458,420
-----------------
8,422,164
- --------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING--1.0%
Quanta Services, Inc. 1 41,700 1,146,333
- --------------------------------------------------------------------------------
MACHINERY--1.9%
Bucyrus International,
Inc., Cl. A 13,600 853,264
- --------------------------------------------------------------------------------
Force Protection, Inc. 1 37,140 805,938
- --------------------------------------------------------------------------------
RBC Bearings, Inc. 1 17,800 676,578
-----------------
2,335,780
17 | OPPENHEIMER EMERGING GROWTH FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--26.8%
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--1.8%
CommScope, Inc. 1 20,700 $ 965,655
- --------------------------------------------------------------------------------
Comtech Group, Inc. 1 24,940 439,942
- --------------------------------------------------------------------------------
F5 Networks, Inc. 1 9,890 759,354
-----------------
2,164,951
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--0.4%
Emulex Corp. 1 23,800 499,324
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--3.9%
Cogent, Inc. 1 77,500 1,088,100
- --------------------------------------------------------------------------------
Daktronics, Inc. 47,370 1,079,089
- --------------------------------------------------------------------------------
FLIR Systems, Inc. 1 45,190 1,829,743
- --------------------------------------------------------------------------------
L-1 Identity Solutions,
Inc. 1 31,400 603,508
-----------------
4,600,440
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--7.3%
Aquantive, Inc. 1 22,400 685,664
- --------------------------------------------------------------------------------
Bankrate, Inc. 1 26,360 1,064,153
- --------------------------------------------------------------------------------
DealerTrack Holdings,
Inc. 1 32,930 1,086,690
- --------------------------------------------------------------------------------
Digital River, Inc. 1 10,600 620,418
- --------------------------------------------------------------------------------
Equinix, Inc. 1 7,500 626,025
- --------------------------------------------------------------------------------
GigaMedia Ltd. 1 47,400 667,392
- --------------------------------------------------------------------------------
Liquidity Services, Inc. 1 45,790 956,095
- --------------------------------------------------------------------------------
Perficient, Inc. 1 26,400 559,680
- --------------------------------------------------------------------------------
Savvis, Inc. 1 9,970 514,153
- --------------------------------------------------------------------------------
VistaPrint Ltd. 1 30,010 1,121,774
- --------------------------------------------------------------------------------
Vocus, Inc. 1 35,370 795,471
-----------------
8,697,515
- --------------------------------------------------------------------------------
IT SERVICES--2.4%
Syntel, Inc. 21,700 760,802
- --------------------------------------------------------------------------------
VeriFone Holdings, Inc. 1 57,720 2,036,939
-----------------
2,797,741
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT--4.5%
ANADIGICS, Inc. 1 79,600 $ 854,904
- --------------------------------------------------------------------------------
ATMI, Inc. 1 21,600 668,088
- --------------------------------------------------------------------------------
FormFactor, Inc. 1 20,510 846,858
- --------------------------------------------------------------------------------
Tessera Technologies,
Inc. 1 19,420 830,982
- --------------------------------------------------------------------------------
Varian Semiconductor
Equipment Associates,
Inc. 1 19,000 1,260,840
- --------------------------------------------------------------------------------
Verigy Ltd. 1 33,700 851,599
-----------------
5,313,271
- --------------------------------------------------------------------------------
SOFTWARE--6.5%
Ansys, Inc. 1 19,580 1,002,496
- --------------------------------------------------------------------------------
Blackboard, Inc. 1 14,200 487,202
- --------------------------------------------------------------------------------
Comverge, Inc. 1 780 16,731
- --------------------------------------------------------------------------------
Concur Technologies,
Inc. 1 48,700 865,399
- --------------------------------------------------------------------------------
FalconStor Software,
Inc. 1 71,200 820,224
- --------------------------------------------------------------------------------
Nuance
Communications, Inc. 1 69,570 1,072,074
- --------------------------------------------------------------------------------
Synchronoss
Technologies, Inc. 1 55,320 1,241,381
- --------------------------------------------------------------------------------
The9 Ltd., ADR 1 13,750 562,513
- --------------------------------------------------------------------------------
THQ, Inc. 1 36,350 1,213,000
- --------------------------------------------------------------------------------
Ultimate Software
Group, Inc. (The) 1 17,600 485,760
-----------------
7,766,780
- --------------------------------------------------------------------------------
MATERIALS--2.1%
- --------------------------------------------------------------------------------
CHEMICALS--0.5%
Albemarle Corp. 14,560 618,072
- --------------------------------------------------------------------------------
METALS & MINING--1.6%
Carpenter Technology
Corp. 4,700 570,439
- --------------------------------------------------------------------------------
Gammon Lake
Resources, Inc. 1 56,400 910,860
- --------------------------------------------------------------------------------
RTI International
Metals, Inc. 1 4,800 452,496
-----------------
1,933,795
18 | OPPENHEIMER EMERGING GROWTH FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--2.2%
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--2.2%
Cbeyond, Inc. 1 19,082 $ 663,672
- --------------------------------------------------------------------------------
Cogent Communications
Group, Inc. 1 40,800 1,038,768
- --------------------------------------------------------------------------------
Time Warner Telecom,
Inc., Cl. A 1 45,900 940,950
-----------------
2,643,390
- --------------------------------------------------------------------------------
UTILITIES--1.0%
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES--1.0%
ITC Holdings Corp. 29,600 1,245,563
-----------------
Total Common Stocks
(Cost $99,692,753) 117,584,025
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
INVESTMENTS IN AFFILIATED COMPANIES--2.0%
- --------------------------------------------------------------------------------
Oppenheimer Institutional
Money Market Fund,
Cl. E, 5.21% 2,3
(Cost $2,315,211) 2,315,211 $ 2,315,211
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE (COST
$102,007,964) 100.8% 119,899,236
- --------------------------------------------------------------------------------
LIABILITIES IN EXCESS
OF OTHER ASSETS (0.8) (937,750)
-----------------------------
NET ASSETS 100.0% $ 118,961,486
=============================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. Rate shown is the 7-day yield as of April 30, 2007.
3. Is or was an affiliate, as defined in the Investment Company Act of 1940, at
or during the period ended April 30, 2007, by virtue of the Fund owning at least
5% of the voting securities of the issuer or as a result of the Fund and the
issuer having the same investment advisor. Transactions during the period in
which the issuer was an affiliate are as follows:
SHARES SHARES
OCTOBER 31, GROSS GROSS APRIL 30,
2006 ADDITIONS REDUCTIONS 2007
- ---------------------------------------------------------------------------------------------------------------
Oppenheimer Institutional
Money Market Fund, Cl. E, 5.21% -- 43,599,734 41,284,523 2,315,211
VALUE DIVIDEND
SEE NOTE 1 INCOME
- ---------------------------------------------------------------------------------------------------------------
Oppenheimer Institutional
Money Market Fund, Cl. E, 5.21% $ 2,315,211 $ 47,104
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19 | OPPENHEIMER EMERGING GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
April 30, 2007
- ---------------------------------------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $99,692,753) $ 117,584,025
Affiliated companies (cost $2,315,211) 2,315,211
----------------
119,899,236
- ---------------------------------------------------------------------------------------------------------
Cash 56,357
- ---------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 3,437,587
Interest and dividends 7,336
Other 9,558
----------------
Total assets 123,410,074
- ---------------------------------------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 3,897,589
Shares of beneficial interest redeemed 415,178
Transfer and shareholder servicing agent fees 40,692
Shareholder communications 39,758
Distribution and service plan fees 22,852
Trustees' compensation 17,278
Other 15,241
----------------
Total liabilities 4,448,588
- ---------------------------------------------------------------------------------------------------------
NET ASSETS $ 118,961,486
================
- ---------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ---------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 10,128
- ---------------------------------------------------------------------------------------------------------
Additional paid-in capital 92,723,335
- ---------------------------------------------------------------------------------------------------------
Accumulated net investment loss (1,005,917)
- ---------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 9,342,668
- ---------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies 17,891,272
----------------
NET ASSETS $ 118,961,486
================
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
$68,681,074 and 5,739,101 shares of beneficial interest outstanding) $ 11.97
Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price) $ 12.70
- ---------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $21,048,065
and 1,860,302 shares of beneficial interest outstanding) $ 11.31
- ---------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $17,842,347
and 1,573,388 shares of beneficial interest outstanding) $ 11.34
- ---------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $7,919,014
and 674,725 shares of beneficial interest outstanding) $ 11.74
- ---------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $3,470,986 and 280,070 shares of beneficial interest outstanding) $ 12.39
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | OPPENHEIMER EMERGING GROWTH FUND
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
For the Six Months Ended April 30, 2007
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends:
Unaffiliated companies $ 59,643
Affiliated companies 47,104
- --------------------------------------------------------------------------------
Interest 2,782
-------------
Total investment income 109,529
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 536,020
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 82,030
Class B 106,781
Class C 89,566
Class N 19,548
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 129,866
Class B 49,336
Class C 41,331
Class N 19,787
Class Y 32
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 20,042
Class B 9,958
Class C 5,503
Class N 1,158
- --------------------------------------------------------------------------------
Trustees' compensation 6,158
- --------------------------------------------------------------------------------
Custodian fees and expenses 333
- --------------------------------------------------------------------------------
Other 22,183
-------------
Total expenses 1,139,632
Less reduction to custodian expenses (170)
Less waivers and reimbursements of expenses (35,961)
-------------
Net expenses 1,103,501
- --------------------------------------------------------------------------------
NET INVESTMENT LOSS (993,972)
22 | OPPENHEIMER EMERGING GROWTH FUND
- ---------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- ---------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments $ 9,969,369
Foreign currency transactions (4,109)
-------------
Net realized gain 9,965,260
- ---------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments (117,690)
Translation of assets and liabilities denominated in foreign currencies 72,988
-------------
Net change in unrealized appreciation (44,702)
- ---------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 8,926,586
=============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | OPPENHEIMER EMERGING GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2007 OCTOBER 31,
(UNAUDITED) 2006
- --------------------------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------------------------
Net investment loss $ (993,972) $ (1,967,505)
- --------------------------------------------------------------------------------------------------
Net realized gain 9,965,260 9,315,800
- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (44,702) 3,701,405
--------------------------------
Net increase in net assets resulting from operations 8,926,586 11,049,700
- --------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (3,791,531) --
Class B (1,247,993) --
Class C (1,030,400) --
Class N (437,120) --
Class Y (158,535) --
--------------------------------
(6,665,579) --
- --------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from beneficial
interest transactions:
Class A (3,764,495) 6,867,762
Class B (1,704,994) (381,192)
Class C (1,068,481) 1,443,314
Class N 28,147 2,121,521
Class Y 369,343 464,687
--------------------------------
(6,140,480) 10,516,092
- --------------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------
Total increase (decrease) (3,879,473) 21,565,792
- --------------------------------------------------------------------------------------------------
Beginning of period 122,840,959 101,275,167
--------------------------------
End of period (including accumulated net investment loss of
$1,005,917 and $11,945, respectively) $ 118,961,486 $ 122,840,959
================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | OPPENHEIMER EMERGING GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2007 OCT. 31,
CLASS A (UNAUDITED) 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.72 $ 10.44 $ 9.57 $ 10.30 $ 5.84 $ 8.45
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.08) 1 (.16) 1 (.14) 1 (.15) 1 (.08) (.10)
Net realized and unrealized gain (loss) .97 1.44 1.01 (.58) 4.54 (2.51)
-------------------------------------------------------------------------------
Total from investment operations .89 1.28 .87 (.73) 4.46 (2.61)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Distributions from net realized gain (.64) -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.97 $ 11.72 $ 10.44 $ 9.57 $ 10.30 $ 5.84
===============================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.86% 12.26% 9.09% (7.09)% 76.37% (30.89)%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 68,681 $ 70,971 $ 57,563 $ 59,819 $ 59,396 $ 19,310
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 69,257 $ 70,613 $ 58,690 $ 62,749 $ 28,386 $ 24,497
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (1.40)% (1.34)% (1.43)% (1.57)% (1.48)% (1.35)%
Total expenses 1.61% 4 1.58% 1.65% 1.68% 1.77% 1.85%
Expenses after payments, waivers
and/or reimbursements and
reduction to custodian expenses 1.59% 1.56% 1.63% 1.67% 1.72% 1.78%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 123% 213% 207% 212% 204% 263%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the value calculated on the last
business day of the fiscal period. Sales charges are not reflected in the total
returns. Total returns are not annualized for periods of less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Expenses including indirect expenses from affiliated fund were as follows:
Six Months Ended April 30, 2007 1.61%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER EMERGING GROWTH FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2007 OCT. 31,
CLASS B (UNAUDITED) 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.16 $ 10.02 $ 9.26 $ 10.05 $ 5.74 $ 8.38
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.12) 1 (.24) 1 (.22) 1 (.23) 1 (.09) (.12)
Net realized and unrealized gain (loss) .91 1.38 .98 (.56) 4.40 (2.52)
-------------------------------------------------------------------------------
Total from investment operations .79 1.14 .76 (.79) 4.31 (2.64)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Distributions from net realized gain (.64) -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.31 $ 11.16 $ 10.02 $ 9.26 $ 10.05 $ 5.74
===============================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.35% 11.38% 8.21% (7.86)% 75.09% (31.50)%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 21,048 $ 22,473 $ 20,653 $ 21,669 $ 20,520 $ 6,395
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 21,568 $ 23,201 $ 21,439 $ 22,359 $ 10,544 $ 6,979
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (2.22)% (2.14)% (2.22)% (2.44)% (2.20)% (2.22)%
Total expenses 2.51% 4 2.46% 2.62% 2.67% 2.83% 2.74%
Expenses after payments, waivers and/or
reimbursements and reduction
to custodian expenses 2.40% 2.37% 2.44% 2.55% 2.44% 2.67%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 123% 213% 207% 212% 204% 263%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the value calculated on the last
business day of the fiscal period. Sales charges are not reflected in the total
returns. Total returns are not annualized for periods of less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Expenses including indirect expenses from affiliated fund were as follows:
Six Months Ended April 30, 2007 2.51%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER EMERGING GROWTH FUND
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2007 OCT. 31,
CLASS C (UNAUDITED) 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.18 $ 10.04 $ 9.27 $ 10.06 $ 5.75 $ 8.39
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.12) 1 (.24) 1 (.22) 1 (.23) 1 (.11) (.08)
Net realized and unrealized gain (loss) .92 1.38 .99 (.56) 4.42 (2.56)
-------------------------------------------------------------------------------
Total from investment operations .80 1.14 .77 (.79) 4.31 (2.64)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Distributions from net realized gain (.64) -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.34 $ 11.18 $ 10.04 $ 9.27 $ 10.06 $ 5.75
===============================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.42% 11.36% 8.31% (7.85)% 74.96% (31.47)%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 17,842 $ 18,640 $ 15,679 $ 15,814 $ 13,887 $ 4,877
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 18,083 $ 18,933 $ 15,550 $ 16,085 $ 6,649 $ 3,061
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (2.20)% (2.11)% (2.20)% (2.39)% (2.22)% (2.25)%
Total expenses 2.49% 4 2.39% 2.50% 2.55% 2.65% 2.72%
Expenses after payments, waivers and/or
reimbursements and reduction
to custodian expenses 2.38% 2.33% 2.40% 2.50% 2.47% 2.65%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 123% 213% 207% 212% 204% 263%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the value calculated on the last
business day of the fiscal period. Sales charges are not reflected in the total
returns. Total returns are not annualized for periods of less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Expenses including indirect expenses from affiliated fund were as follows:
Six Months Ended April 30, 2007 2.49%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER EMERGING GROWTH FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2007 OCT. 31,
CLASS N (UNAUDITED) 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.52 $ 10.29 $ 9.45 $ 10.21 $ 5.81 $ 8.43
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.09) 1 (.18) 1 (.17) 1 (.18) 1 (.10) (.08)
Net realized and unrealized gain (loss) .95 1.41 1.01 (.58) 4.50 (2.54)
-------------------------------------------------------------------------------
Total from investment operations .86 1.23 .84 (.76) 4.40 (2.62)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Distributions from net realized gain (.64) -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.74 $ 11.52 $ 10.29 $ 9.45 $ 10.21 $ 5.81
===============================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.74% 11.95% 8.89% (7.44)% 75.73% (31.08)%
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 7,919 $ 7,743 $ 5,067 $ 4,570 $ 2,425 $ 594
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 7,891 $ 6,521 $ 5,046 $ 3,375 $ 1,125 $ 412
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (1.66)% (1.58)% (1.68)% (1.88)% (1.76)% (1.63)%
Total expenses 1.99% 4 2.00% 2.20% 2.17% 2.14% 2.18%
Expenses after payments, waivers and/or
reimbursements and reduction
to custodian expenses 1.84% 1.80% 1.87% 2.00% 2.00% 2.11%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 123% 213% 207% 212% 204% 263%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the value calculated on the last
business day of the fiscal period. Sales charges are not reflected in the total
returns. Total returns are not annualized for periods of less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Expenses including indirect expenses from affiliated fund were as follows:
Six Months Ended April 30, 2007 1.99%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | OPPENHEIMER EMERGING GROWTH FUND
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2007 OCT. 31,
CLASS Y (UNAUDITED) 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.08 $ 10.70 $ 9.75 $ 10.43 $ 5.88 $ 8.47
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.04) 1 (.09) 1 (.08) 1 (.10) 1 (.09) (.08)
Net realized and unrealized gain (loss) .99 1.47 1.03 (.58) 4.64 (2.51)
-------------------------------------------------------------------------------
Total from investment operations .95 1.38 .95 (.68) 4.55 (2.59)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Distributions from net realized gain (.64) -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.39 $ 12.08 $ 10.70 $ 9.75 $ 10.43 $ 5.88
===============================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 8.14% 12.90% 9.74% (6.52)% 77.38% (30.58)%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 3,471 $ 3,014 $ 2,313 $ 2,819 $ 2,913 $ 657
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 3,283 $ 2,968 $ 2,540 $ 3,182 $ 1,449 $ 532
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.75)% (0.79)% (0.77)% (0.98)% (0.92)% (0.84)%
Total expenses 0.94% 4 1.01% 0.98% 1.08% 1.15% 1.48%
Expenses after payments, waivers and/or
reimbursements and reduction
to custodian expenses 0.94% 1.01% 0.97% 1.08% 1.15% 1.29%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 123% 213% 207% 212% 204% 263%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the value calculated on the last
business day of the fiscal period. Sales charges are not reflected in the total
returns. Total returns are not annualized for periods of less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Expenses including indirect expenses from affiliated fund were as follows:
Six Months Ended April 30, 2007 0.94%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | 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(R) 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
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
30 | OPPENHEIMER EMERGING GROWTH FUND
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. Options are
valued daily based upon the last sale price on the principal exchange on which
the option is traded. 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. Investments in
open-end registered investment companies (including affiliated funds) are valued
at that fund's net asset value. Short-term "money market type" debt securities
with remaining maturities of sixty days or less are valued at amortized cost
(which approximates market value).
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income are translated into U.S. dollars as of the close of the New
York Stock Exchange (the "Exchange"), normally 4:00 P.M. Eastern time, on each
day the Exchange is open for business. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
INVESTMENT IN OPPENHEIMER INSTITUTIONAL MONEY MARKET FUND. The Fund is permitted
to invest daily available cash balances in an affiliated money market fund. The
Fund may invest the available cash in Class E shares of Oppenheimer
Institutional Money Market Fund ("IMMF") which seeks current income and
stability of principal. IMMF is a registered open-end management investment
company, regulated as a money market fund under the Investment Company Act of
1940, as amended. The Manager is also the investment advisor of IMMF. The Fund's
investment in IMMF is included in the Statement of Investments. As a
shareholder, the Fund is subject to its proportional share of IMMF's
31 | OPPENHEIMER EMERGING GROWTH FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
Class E expenses, including its management fee. The Manager will waive fees
and/or reimburse Fund expenses in an amount equal to the indirect management
fees incurred through the Fund's investment in IMMF.
- --------------------------------------------------------------------------------
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.
During the fiscal year ended October 31, 2006, the Fund utilized $217,219
of capital loss carryforward to offset capital gains realized in that fiscal
year.
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan (the
"Plan") for the Fund's independent trustees. Benefits are based on years of
service and fees paid to each trustee during their period of service. The Plan
was frozen with respect to adding new participants effective December 31, 2006
(the "Freeze Date") and existing Plan Participants as of the Freeze Date will
continue to receive accrued benefits under the Plan. Active independent trustees
as of the Freeze Date have each elected a distribution method with respect to
their benefits under the Plan. During the six months ended April 30, 2007, the
Fund's projected benefit obligations were increased by $4,635 and payments of
$2,364 were made to retired trustees, resulting in an accumulated liability of
$11,023 as of April 30, 2007.
The Board of Trustees has adopted a compensation deferral 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
32 | OPPENHEIMER EMERGING GROWTH FUND
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 compensation deferral 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 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. Such interest expense and other custodian fees may be paid
with these earnings.
- --------------------------------------------------------------------------------
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.
33 | OPPENHEIMER EMERGING GROWTH FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 2007 YEAR ENDED OCTOBER 31, 2006
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------
CLASS A
Sold 661,427 $ 7,673,010 3,039,298 $ 36,021,329
Dividends and/or distributions
reinvested 317,121 3,643,715 -- --
Redeemed (1,294,949) (15,081,220) 1 (2,496,601) (29,153,567) 2
------------------------------------------------------------------
Net increase (decrease) (316,401) $ (3,764,495) 542,697 $6,867,762
==================================================================
- ---------------------------------------------------------------------------------------------------
CLASS B
Sold 145,124 $ 1,598,131 547,365 $ 6,216,597
Dividends and/or distributions
reinvested 109,890 1,196,706 -- --
Redeemed (408,766) (4,499,831) 1 (594,424) (6,597,789) 2
------------------------------------------------------------------
Net decrease (153,752) $ (1,704,994) (47,059) $ (381,192)
==================================================================
- ---------------------------------------------------------------------------------------------------
CLASS C
Sold 189,809 $ 2,092,625 797,419 $ 9,028,627
Dividends and/or distributions
reinvested 87,900 959,869 -- --
Redeemed (371,430) (4,120,975) 1 (692,303) (7,585,313) 2
------------------------------------------------------------------
Net increase (decrease) (93,721) $ (1,068,481) 105,116 $ 1,443,314
==================================================================
- ---------------------------------------------------------------------------------------------------
CLASS N
Sold 154,202 $ 1,753,217 418,716 $ 4,825,668
Dividends and/or distributions
reinvested 36,477 411,466 -- --
Redeemed (188,038) (2,136,536) 1 (239,109) (2,704,147) 2
------------------------------------------------------------------
Net increase 2,641 $ 28,147 179,607 $ 2,121,521
==================================================================
- ---------------------------------------------------------------------------------------------------
CLASS Y
Sold 69,958 $ 842,822 120,353 $ 1,494,694
Dividends and/or distributions
reinvested 13,351 158,471 -- --
Redeemed (52,787) (631,950) 1 (86,928) (1,030,007) 2
------------------------------------------------------------------
Net increase 30,522 $ 369,343 33,425 $ 464,687
==================================================================
1. Net of redemption fees of $277, $86, $72, $31 and $13 for Class A, Class B,
Class C, Class N and Class Y, respectively.
2. Net of redemption fees of $4,743, $1,595, $1,288, $417 and $197 for Class A,
Class B, Class C, Class N and Class Y, respectively.
34 | OPPENHEIMER EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations and investments in IMMF, for the six months ended
April 30, 2007, were as follows:
PURCHASES SALES
- ----------------------------------------------------------------------------
Investment securities $ 144,863,160 $ 158,400,022
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
annual rate of average net assets as shown in the following table:
FEE SCHEDULE
---------------------------------
Up to $200 million 0.90%
Next $200 million 0.85
Next $200 million 0.80
Over $600 million 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, 2007, the Fund paid
$197,922 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.
- --------------------------------------------------------------------------------
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
35 | OPPENHEIMER EMERGING GROWTH FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
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 determines its uncompensated expenses under the
plan at calendar quarter ends. The Distributor's aggregate uncompensated
expenses under the plan at March 31, 2007 for Class B, Class C and Class N
shares were $16,862, $282,182 and $83,541, 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, 2007 $ 32,031 $ 203 $ 25,949 $ 1,732 $ 92
- --------------------------------------------------------------------------------
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, 2007,
OFS waived $8,289, $11,370, $9,506 and $5,897 for Class A, Class B, Class C and
Class N shares, respectively. This undertaking may be amended or withdrawn at
any time.
The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's investment in
IMMF. During the six months ended April 30, 2007, the Manager waived $899 for
IMMF management fees.
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.
36 | OPPENHEIMER EMERGING GROWTH FUND
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation or
depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of April 30, 2007, the Fund had no outstanding foreign currency
contracts.
- --------------------------------------------------------------------------------
6. RECENT ACCOUNTING PRONOUNCEMENTS
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Fund's tax returns to determine whether it
is "more-likely-than-not" that tax positions taken in the Fund's tax return will
be ultimately sustained. A tax liability and expense must be recorded in respect
of any tax position that, in Management's judgment, will not be fully realized.
FIN 48 is effective for fiscal years beginning after December 15, 2006. As of
April 30, 2007, the Manager has evaluated the implications of FIN 48 and does
not currently anticipate a material impact to the Fund's financial statements.
The Manager will continue to monitor the Fund's tax positions prospectively for
potential future impacts.
In September 2006, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 157, FAIR VALUE MEASUREMENTS. This standard establishes a
single authoritative definition of fair value, sets out a framework for
measuring fair value and expands disclosures about fair value measurements. SFAS
No. 157 applies to fair value measurements already required or permitted by
existing standards. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. As of April 30, 2007, the Manager does not believe the
adoption of SFAS No. 157 will materially impact the financial statement amounts;
however, additional disclosures may be required about the inputs used to develop
the measurements and the effect of certain of the measurements on changes in net
assets for the period.
37 | 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.
38 | 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 about the
nature and extent of the services provided to the Fund and information regarding
the Manager's key personnel who 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
all administrative and clerical personnel who 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.
39 | OPPENHEIMER EMERGING GROWTH FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
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 account of the fact 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 Robert
Corbett 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 on the boards 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 its members have become
knowledgeable about 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 and from 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 retail front-end load and no-load
small-cap growth funds advised by the Manager and by other investment advisers.
The Board noted that the Fund's three-year and five-year performance were below
its peer group median. However its one-year performance was better than its peer
group median.
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 the fees and services for 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 and actual management fees and total expenses are lower than
its peer median.
40 | OPPENHEIMER EMERGING GROWTH FUND
ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may
realize economies of scale in managing and supporting the Fund, the extent to
which those economies of scale benefit the Fund's shareholders and the current
level of Fund assets in relation to the Fund's breakpoint schedule for its
management fees. The Board also noted the Fund's breakpoints, which are intended
to share economies of scale that may exist as the Fund grows with its
shareholders.
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.
41 | 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 04/30/2007, 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: 06/12/2007
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: 06/12/2007
By: /s/ Brian W. Wixted
---------------------------
Brian W. Wixted
Principal Financial Officer
Date: 06/12/2007