<PAGE>
[COVER PAGE]
OPPENHEIMER MIDCAP FUND
Semiannual Report February 28, 1998
[LOGO-FOUR HANDS} OPPENHEIMERFUNDSsm
THE RIGHT WAY TO INVEST
<PAGE>
BRIDGET A. MACASKILL
President
Oppenheimer
MidCap Fund
DEAR SHAREHOLDER,
These have been very positive times for many American investors. The U.S.
economy has continued to grow at a moderate pace, unemployment has fallen to its
lowest level in 30 years and inflation has also fallen to a record low. In fact,
long-term interest rates have fallen to their lowest level since the government
began issuing 30-year Treasury bonds in 1977.
What benefits does this provide to the average American? First, when
unemployment levels are low, many individuals tend to feel a greater sense of
job security and can command higher wages because there are fewer unemployed
workers vying for their jobs. Second, many homeowners are opting to refinance
their existing home mortgage loans and take advantage of lower financing rates.
And third, because wages are increasing faster than the rate of inflation, a
paycheck may stretch further and investors, as consumers, are able to enjoy a
higher level of disposable income. This extra income can be put to use in many
ways, including allocating more money to investment opportunities.
Some industry analysts have tempered such positive news by suggesting that if
the rate of inflation falls any lower, it might actually trigger a period of
DEFLATION, where we see the prices of American goods and services decline. While
lower prices may sound like positive news, in reality it isn't because when
prices fall too low, it erodes the value of those goods to the producer. That
is, when economic conditions force a decrease in the price of goods, companies
have to sell more of those items in order to make the same amount of profit,
which translates into greater difficulties for corporations to improve their
bottom lines.
At OppenheimerFunds, we do not believe we will see a period of deflation in the
United States. The fundamental factors that have driven the U.S. market still
appear to be in place: an economy that's in its eighth year of expansion with
moderate growth, low unemployment, virtually no inflation and low interest
rates. However, because of economic uncertainties in other parts of the world,
particularly Asia, we expect to see slower growth for stocks in 1998 and a year
in which double-digit returns from the equity markets are unlikely. It's also
possible that we may see investors favor the fixed, more secure interest
payments offered from the bond markets.
In closing, we'd like to reassure you that as professional money managers, we
continue to keep a watchful eye on these situations and are closely monitoring
your fund's investments. In times like these, your financial advisor can be of
invaluable assistance to you in helping review your financial plan and guide
your investments accordingly.
Thank you for your confidence in OppenheimerFunds, THE RIGHT WAY TO INVEST. We
look forward to helping you reach your investment goals in the future.
/s/Bridget A. Macaskill
Bridget A. Macaskill
March 20, 1998
2 Oppenheimer MidCap Fund
<PAGE>
PAUL LAROCCO(1)
Portfolio Manager
Q + A
An interview with your Fund's manager.
HOW HAS THE FUND PERFORMED?
Since its inception on December 1, 1997, the Fund has performed favorably. As of
February 28, 1998, the Oppenheimer Mid Cap Fund's Class A shares delivered a
cumulative total return of 18.10%.(2)
WHAT IS THE FUND'S STOCK SELECTION STRATEGY?
We use a "bottom-up" stock selection approach to identify companies that have
medium market capitalizations between $1 billion and $5 billion, have the
potential to achieve long-term earnings growth rates and have the potential to
create new markets. In addition, quantitative screens enable us to target
companies with revenue growth over 20%. We pay particular attention to companies
with a history of positive earnings revisions -- looking for reports that meet
or exceed expectations.
WHAT IS THE STRATEGIC ADVANTAGE OF THE FUND?
We believe mid-cap companies offer "the best of both worlds" between small- and
large-cap companies. That's because mid-caps can offer the growth potential of
small companies with the added stability of a larger enterprise. And since there
are approximately twice as many mid-cap companies as there are large-cap
companies, there is a greater opportunity to discover stocks with attractive
growth rates and valuations.
Unlike large multinational companies, most mid-cap companies tend to be based
domestically, so they have less exposure to Asian economic woes and the impact
of a strong U.S. dollar overseas. These companies are still small and nimble
enough to grow at faster rates than can large-cap companies. In addition,
mid-cap companies have less cyclical exposure. If these companies are taking
market share from larger companies or introducing new products, they can grow
through a cyclical slowdown. In contrast, a large company with a dominant market
share generally can't gain more share and will be more susceptible to swings in
the economy.
On the other hand, compared to their small-cap counterparts, mid-cap companies
tend to have already experienced their first phase of growth. Often, as a
medium-sized company matures, management shifts away from the original company
founder or entrepreneur. Instead, they tend to favor more business-oriented
leaders who are typically better-prepared to handle the next growth stage and
diversify the company with new product lines.
WHAT TYPES OF COMPANIES DOES THE FUND PURSUE?
We aggressively seek companies in industries with the potential for growth, new
technologies and innovative products and services. Specifically, we look for
sustainable earnings growth, such as a company with a new product or service
that enables them to gain market share or create a market that wasn't there
before. Companies can also grow through cost-cutting, but that type of growth
typically isn't very sustainable because there's a limit to how far a company
can cut back.
WHAT ARE SOME OF THE FUND'S MAJOR HOLDINGS?
One of the Fund's largest holdings, Saville Systems, is a
1. Bruce Bartlett is the Fund's portfolio manager as of April 1, 1998.
2. Past performance does not guarantee future results. Includes changes in net
asset value per share without deducting any sales charges. Such performance
would have been lower if sales charges were taken into account.
3 Oppenheimer MidCap Fund
<PAGE>
company that designs modern consolidated billing systems for telecommunications
companies. The growing variety of long-distance and local telephone providers,
cable companies who seek to provide telephone service, and wireless and cellular
service providers has spurred an increasing need to coordinate and streamline
billing processes. Existing billing systems are not capable of being modified to
handle all these new services on a single statement.
Another top holding, Allied Waste Industries, Inc., is a waste disposal company
that is currently growing its revenues by about 30% per year. This traditional
"Mom and Pop" industry is rapidly consolidating and, in the process, is creating
greater efficiencies of scale, good volume and pricing. At some point, we
believe only a handful of players will own the entire waste disposal market,
which should make for very good margins for these companies.
On the specialty retail side, General Nutrition Centers have benefited from the
growing trend of people taking better care of themselves by using herbal
remedies and natural treatments rather than going to a doctor. Besides the
category doing well, GNC has demonstrated good execution as a retailer through
strong management and cost containment.
In the healthcare arena, we've invested in a company that specializes in
respiratory treatments on two fronts. First, they give new life to older
products from large drug companies that have shifted their focus to
billion-dollar blockbusters. Secondly, they are developing a proprietary drug
delivery device for asthma sufferers that ensures exact dosages and is easier
for patients to take, a major improvement over current devices.
WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS?
We are optimistic for the Fund in its first year. We believe the market will be
a lot more focused on mid-cap companies in the coming months. As the earnings
growth of large companies slows, due to events in Asia, a slowing U.S. Economy,
and a stronger dollar, investors should begin to look for growth in other areas.
Since mid-cap companies tend to have less exposure to these factors, we believe
they should be able to grow through this global slowdown. By adding new products
and services, or gaining market share, these companies can generate earnings
independently. The combination of growth and liquidity in mid-cap stocks should
attract the interest of investors seeking new opportunities in the market.
4 Oppenheimer MidCap Fund
<PAGE>
================================================================================
STATEMENT OF INVESTMENTS FEBRUARY 28, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
<S> <C> <C> <C>
==========================================================================================================================
COMMON STOCKS - 87.9%
- --------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 9.5%
- --------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 2.1%
- --------------------------------------------------------------------------------------------------------------------------
Outback Steakhouse, Inc. (1) 2,500 $ 89,375
- --------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 7.4%
- --------------------------------------------------------------------------------------------------------------------------
General Nutrition Cos., Inc. (1) 2,000 79,500
- --------------------------------------------------------------------------------------------------------------------------
Pier 1 Imports, Inc. 5,000 133,750
- --------------------------------------------------------------------------------------------------------------------------
Stage Stores, Inc. (1) 2,500 105,000
---------
318,250
- --------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 18.7%
- --------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 3.6%
- --------------------------------------------------------------------------------------------------------------------------
BioChem Pharma, Inc. (1) 3,000 67,312
- --------------------------------------------------------------------------------------------------------------------------
Biogen, Inc. (1) 2,000 88,250
---------
155,562
- --------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 12.8%
- --------------------------------------------------------------------------------------------------------------------------
Concentra Managed Care, Inc. (1) 2,500 85,781
- --------------------------------------------------------------------------------------------------------------------------
McKesson Corp. 2,000 104,250
- --------------------------------------------------------------------------------------------------------------------------
PhyCor, Inc. (1) 4,000 102,875
- --------------------------------------------------------------------------------------------------------------------------
Quintiles Transnational Corp. (1) 2,000 97,750
- --------------------------------------------------------------------------------------------------------------------------
Total Renal Care Holdings, Inc. (1) 5,000 160,938
---------
551,594
- --------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 2.3%
- --------------------------------------------------------------------------------------------------------------------------
Blyth Industries, Inc. (1) 3,300 99,206
- --------------------------------------------------------------------------------------------------------------------------
ENERGY - 3.7%
- --------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 2.5%
- --------------------------------------------------------------------------------------------------------------------------
Santa Fe International Corp. 2,000 70,874
- --------------------------------------------------------------------------------------------------------------------------
Stolt Comex Seaway SA (1) 1,500 36,188
---------
107,062
- --------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED - 1.2%
- --------------------------------------------------------------------------------------------------------------------------
Global Industries Ltd. (1) 3,000 51,750
- --------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 8.5%
- --------------------------------------------------------------------------------------------------------------------------
BANKS - 2.0%
- --------------------------------------------------------------------------------------------------------------------------
Providian Financial Corp. 1,500 85,125
- --------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 6.5%
- --------------------------------------------------------------------------------------------------------------------------
C.I.T. Group, Inc., Cl. A (1) 3,400 112,200
- --------------------------------------------------------------------------------------------------------------------------
CMAC Investment Corp. 1,000 67,000
- --------------------------------------------------------------------------------------------------------------------------
Finova Group, Inc. 1,800 99,000
---------
278,200
- --------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 9.0%
- --------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 9.0%
- --------------------------------------------------------------------------------------------------------------------------
AccuStaff, Inc. (1) 2,000 56,500
- --------------------------------------------------------------------------------------------------------------------------
Allied Waste Industries, Inc. (1) 6,000 129,000
- --------------------------------------------------------------------------------------------------------------------------
Renaissance Worldwide, Inc. (1) 2,000 118,750
- --------------------------------------------------------------------------------------------------------------------------
USA Waste Services, Inc. (1) 2,000 83,250
---------
387,500
</TABLE>
5 Oppenheimer MidCap Fund
<PAGE>
================================================================================
STATEMENT OF INVESTMENTS (UNAUDITED)(CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 38.5%
- --------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 2.3%
- --------------------------------------------------------------------------------------------------------------------------
Citrix Systems, Inc. (1) 2,400 $ 100,950
- --------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 21.7%
- --------------------------------------------------------------------------------------------------------------------------
DoubleClick, Inc. (1) 2,300 73,456
- --------------------------------------------------------------------------------------------------------------------------
Electronic Arts, Inc. 3,000 132,375
- --------------------------------------------------------------------------------------------------------------------------
First Consulting Group, Inc. 4,500 84,375
- --------------------------------------------------------------------------------------------------------------------------
HBO & Co. 1,600 86,600
- --------------------------------------------------------------------------------------------------------------------------
JDA Software Group, Inc. (1) 1,000 48,375
- --------------------------------------------------------------------------------------------------------------------------
Micromuse, Inc. (1) 3,000 57,000
- --------------------------------------------------------------------------------------------------------------------------
Network Associates, Inc. (1) 3,000 193,875
- --------------------------------------------------------------------------------------------------------------------------
New Era of Networks, Inc. (1) 4,000 75,000
- --------------------------------------------------------------------------------------------------------------------------
Saville Systems Ireland plc, Sponsored ADR (1) 3,100 145,313
- --------------------------------------------------------------------------------------------------------------------------
Visio Corp. (1) 1,000 36,000
-----------
932,369
- --------------------------------------------------------------------------------------------------------------------------
ELECTRONICS - 5.3%
- --------------------------------------------------------------------------------------------------------------------------
Sanmina Corp. (1) 1,700 135,469
- --------------------------------------------------------------------------------------------------------------------------
Teradyne, Inc. (1) 2,000 94,375
-----------
229,844
- --------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 9.2%
- --------------------------------------------------------------------------------------------------------------------------
Advanced Radio Telecom Corp. (1) 8,000 102,500
- --------------------------------------------------------------------------------------------------------------------------
Corsair Communications, Inc. (1) 4,000 82,000
- --------------------------------------------------------------------------------------------------------------------------
P-COM, Inc. (1) 5,000 101,250
- --------------------------------------------------------------------------------------------------------------------------
Uniphase Corp. (1) 2,800 112,175
-----------
397,925
-----------
Total Common Stocks (Cost $3,371,696) 3,784,712
FACE
AMOUNT
==========================================================================================================================
REPURCHASE AGREEMENTS - 11.6%
- --------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 5.63%, dated 2/27/98,
to be repurchased at $500,235 on 3/2/98, collateralized by U.S. Treasury Bonds,
9.125%--12.75%, 5/15/04--2/15/15, with a value of $291,303, and U.S. Treasury
Nts., 5.875%--7.25%, 8/31/01--5/15/06, with a value of $219,274 (Cost $500,000) $500,000 500,000
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $3,871,696) 99.5% 4,284,712
- --------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.5 20,720
-------- ----------
NET ASSETS 100.0% $4,305,432
======== ==========
</TABLE>
1. Non-income producing security.
See accompanying Notes to Financial Statements.
6 Oppenheimer MidCap Fund
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1998 (UNAUDITED)
<TABLE>
<S> <C>
============================================================================================================================
ASSETS
Investments, at value (including repurchase agreement of $500,000)
(cost $3,871,696)--see accompanying statement $4,284,712
- -----------------------------------------------------------------------------------------------------------------------------
Cash 134,479
- -----------------------------------------------------------------------------------------------------------------------------
Receivables:
Investments sold 184,511
Shares of beneficial interest sold 74,739
Interest and dividends 763
- -----------------------------------------------------------------------------------------------------------------------------
Deferred organization costs - Note 1 14,500
- -----------------------------------------------------------------------------------------------------------------------------
Other 291
-----------
Total assets 4,693,995
============================================================================================================================
LIABILITIES
Payables and other liabilities:
Investments purchased 375,008
Organization costs 9,286
Distribution and service plan fees 1,482
Transfer and shareholder servicing agent fees 897
Shares of beneficial interest redeemed 50
Other 1,840
-----------
Total liabilities 388,563
============================================================================================================================
NET ASSETS $4,305,432
==========
============================================================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $3,875,083
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated net investment loss (5,133)
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 22,466
- -----------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 413,016
----------
Net assets $4,305,432
==========
</TABLE>
7 Oppenheimer MidCap Fund
<PAGE>
================================================================================
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)(CONTINUED)
<TABLE>
<S> <C>
============================================================================================================================
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$2,784,067 and 235,824 shares of beneficial interest outstanding) $11.81
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $12.53
- -----------------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $996,521
and 84,611 shares of beneficial interest outstanding) $11.78
- -----------------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $523,662
and 44,424 shares of beneficial interest outstanding) $11.79
- -----------------------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $1,182 and 100 shares of beneficial interest outstanding) $11.82
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer MidCap Fund
<PAGE>
================================================================================
STATEMENT OF OPERATIONS FOR THE PERIOD FROM DECEMBER 1, 1997 (COMMENCEMENT OF
OPERATIONS) TO FEBRUARY 28, 1998 (UNAUDITED)
<TABLE>
<S> <C>
=============================================================================================================================
INVESTMENT INCOME
Interest $ 6,784
- -----------------------------------------------------------------------------------------------------------------------------
Dividends 744
---------
Total income 7,528
=============================================================================================================================
EXPENSES
Management fees - Note 4 5,293
- -----------------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees - Note 4:
Class A 1,051
Class B 1,760
Class C 816
- -----------------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees - Note 4 1,465
- -----------------------------------------------------------------------------------------------------------------------------
Shareholder reports 800
- -----------------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 390
- -----------------------------------------------------------------------------------------------------------------------------
Registration and filing fees 300
- -----------------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 245
- -----------------------------------------------------------------------------------------------------------------------------
Other 541
---------
Total expenses 12,661
=============================================================================================================================
NET INVESTMENT LOSS (5,133)
=============================================================================================================================
REALIZED AND UNREALIZED GAIN
Net realized gain on investments 22,466
- -----------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 413,016
---------
Net realized and unrealized gain 435,482
=============================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $430,349
=========
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer MidCap Fund
<PAGE>
================================================================================
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
PERIOD ENDED
FEBRUARY 28, 1998(1)
<S> <C>
=============================================================================================================================
OPERATIONS
Net investment income (loss) $ ( 5,133)
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain 22,466
- -----------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 413,016
-----------
Net increase in net assets resulting from operations 430,349
=============================================================================================================================
BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from beneficial
interest transactions - Note 2:
Class A 2,476,872
Class B 936,752
Class C 460,459
Class Y 1,000
=============================================================================================================================
NET ASSETS
Total increase 4,305,432
- -----------------------------------------------------------------------------------------------------------------------------
Beginning of period --
-----------
End of period (including accumulated net investment loss of
$5,133 for the period ended 2/28/98) $4,305,432
===========
</TABLE>
1. For the period from December 1, 1997 (commencement of operations) to
February 28, 1998.
See accompanying Notes to Financial Statements.
10 Oppenheimer MidCap Fund
<PAGE>
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------------ ------------ ------------- ------------
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
FEBRUARY 28, FEBRUARY 28, FEBRUARY 28, FEBRUARY 28,
1998(1) 1998(1) 1998(1) 1998(1)
<S> <C> <C> <C> <C>
====================================================================================================================================
PER SHARE OPERATING DATA
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.01) (.02) (.02) --
Net realized and unrealized gain 1.82 1.80 1.81 1.82
------ ------ ------ ------
Total income from investment
operations 1.81 1.78 1.79 1.82
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.81 $11.78 $11.79 $11.82
====== ====== ====== ======
====================================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(2) 13.89% 13.60% 13.69% 13.98%
====================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $2,784 $997 $524 $1
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,847 $725 $337 $1
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income (0.46)% (1.10)% (1.30)% (0.23)%
Expenses 1.49% 2.24% 2.25% 1.26%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 76.9% 76.9% 76.9% 76.9%
Average brokerage commission rate(5) $0.0600 $0.0600 $0.0600 $0.0600
</TABLE>
1. For the period from December 1, 1997 (commencement of operations) to
February 28, 1998.
2. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or commencement of operations), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended February 28, 1998 were $5,572,951 and $2,223,720, respectively.
5. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
11 Oppenheimer MidCap Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer MidCap Fund (the Fund) is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end management investment
company. The Fund's investment objective is to seek capital appreciation. The
Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund
offers Class A, Class B, Class C, and Class Y shares. Class A shares are sold
with a front-end sales charge. Class B and Class C shares may be subject to a
contingent deferred sales charge. All classes of shares have identical rights to
earnings, assets and voting privileges, except that each class has its own
expenses directly attributable to that class and exclusive voting rights with
respect to matters affecting that class. Classes A, B and C have separate
distribution and/or service plans. No such plan has been adopted for Class Y
shares. Class B shares will automatically convert to Class A shares six years
after the date of purchase. The following is a summary of significant accounting
policies consistently followed by the Fund.
INVESTMENT VALUATION. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount.
REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily 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 continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
ORGANIZATION COSTS. The Manager advanced $14,500 for organization and start-up
costs of the Fund. Such expenses are being amortized over a five-year period
from the date operations commenced. In the event that all or part of the
Manager's initial investment in shares of the Fund is withdrawn during the
amortization period, the redemption proceeds will be reduced to reimburse the
Fund for any unamortized expenses, in the same ratio as the number of shares
redeemed bears to the number of initial shares outstanding at the time of such
redemption.
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of the distributions
made during the year from net investment income or net realized gains may differ
from its ultimate characterization for federal income tax purposes. Also, due to
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the fiscal year in which the income or realized gain
was recorded by the Fund.
OTHER. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the life of
the respective securities, in accordance with federal income tax requirements.
Realized gains and losses on investments and options written and unrealized
appreciation and depreciation are determined on an identified cost basis, which
is the same basis used for federal income tax purposes.
12 Oppenheimer MidCap Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
OTHER (continued)
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
PERIOD ENDED FEBRUARY 28, 1998(1)
SHARES AMOUNT
<S> <C> <C>
Class A:
Sold 320,593 $3,349,958
Redeemed (84,769) (873,086)
------- ----------
Net increase 235,824 $2,476,872
======= ==========
Class B:
Sold 183,659 $1,929,403
Redeemed (99,048) (992,651)
------- ----------
Net increase 84,611 $ 936,752
======= ==========
Class C:
Sold 61,789 $ 634,880
Redeemed (17,365) (174,421)
------- ----------
Net increase 44,424 $ 460,459
======= ==========
Class Y:
Sold 100 $ 1,000
Redeemed -- --
------- ----------
Net increase 100 $ 1,000
======= ==========
</TABLE>
1. For the period from December 1, 1997 (commencement of operations) to
February 28, 1998.
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At February 28, 1998, net unrealized appreciation on investments of $413,016 was
composed of gross appreciation of $441,708, and gross depreciation of $28,692.
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for an annual fee of 0.75% of
the first $200 million of average annual net assets, 0.72% of the next $200
million, 0.69% of the next $200 million, 0.66% of the next $200 million, and
0.60% of average annual net assets in excess of $800 million.
For the period ended February 28, 1998, commissions (sales charges paid by
investors) on sales of Class A shares totaled $15,612, of which $3,509 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B shares
totaled $14,596.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer and
shareholder servicing agent for the Fund and for other registered investment
companies. OFS's total costs of providing such services are allocated ratably to
these companies.
13 Oppenheimer MidCap Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)(Continued)
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued)
The Fund has adopted a Service Plan for Class A shares to reimburse OFDI for a
portion of its costs incurred in connection with the personal service and
maintenance of shareholder accounts that hold Class A shares. Reimbursement is
made quarterly at an annual rate that may not exceed 0.25% of the average annual
net assets of Class A shares of the Fund. OFDI uses the service fee to reimburse
brokers, dealers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that hold Class
A shares.
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its costs in distributing Class B and Class C
shares and servicing accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B and Class C shares for its
services rendered in distributing Class B and Class C shares. OFDI also receives
a service fee of 0.25% per year to compensate dealers for providing personal
services for accounts that hold Class B and C shares. Each fee is computed on
the average annual net assets of Class B or Class C shares, determined as of the
close of each regular business day. During the period ended February 28, 1998,
OFDI retained $1,406 as compensation for Class B sales commissions and service
fee advances, as well as financing costs. If either Plan is terminated by the
Fund, the Board of Trustees may allow the Fund to continue payments of the
asset-based sales charge to OFDI for distributing shares before the Plan was
terminated. At February 28, 1998, OFDI had incurred excess distribution and
servicing costs of $12,590 for Class B.
13 Oppenheimer MidCap Fund
<PAGE>
OPPENHEIMER MIDCAP FUND
OFFICERS AND TRUSTEES Bridget A. Macaskill, Chairman of the Board of
Directors and President
Paul Y. Clinton, Director
Thomas W. Courtney, Director
Lacy B. Herrmann, Director
George Loft, Director
Robert C. Doll, Jr., Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
INVESTMENT ADVISOR OppenheimerFunds, Inc.
DISTRIBUTOR OppenheimerFunds Distributor, Inc.
TRANSFER AND OppenheimerFunds Services
SHAREHOLDER SERVICING
AGENT
CUSTODIAN OF The Bank of New York
PORTFOLIO SECURITIES
INDEPENDENT ACCOUNTANTS Price Waterhouse LLP
LEGAL COUNSEL Gordon Altman Butowsky Weitzen Shalov & Wein
The financial statements included herein have
been taken from the records of the Fund without
examination of the independent accountants.
This is a copy of a report to shareholders of
Oppenheimer MidCap Fund. This report must be
preceded or accompanied by a Prospectus of
Oppenheimer MidCap Fund. For material information
concerning the Fund, see the Prospectus.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by
any bank, and are not insured by the FDIC or any
other agency, and involve investment risks,
including possible loss of the principal amount
invested.
15 Oppenheimer MidCap Fund
<PAGE>
RS0745.01.0298 April 29, 1998
