<PAGE> 1
ANNUAL REPORT OCTOBER 31, 1999
OPPENHEIMER
MIDCAP FUND
[PHOTO]
[OPPENHEIMER LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
CONTENTS
1 President's Letter
3 An Interview
with Your Fund's
Manager
8 Fund Performance
14 FINANCIAL
STATEMENTS
30 REPORT OF
INDEPENDENT
ACCOUNTANTS
31 Federal
Income Tax
Information
32 Officers and Trustees
33 OppenheimerFunds
Family
REPORT HIGHLIGHTS
THROUGHOUT THE RECENT ONE-YEAR PERIOD, U.S. ECONOMIC GROWTH REMAINED ROBUST;
however, fears of a slowdown and rising interest rates fueled widespread
economic uncertainty.
THE TECHNOLOGY AND SPECIALTY RETAILING SECTORS CONTRIBUTED MOST to the Fund's
performance.
WE SOLD POSITIONS IN HEALTHCARE, FINANCIAL SERVICES AND OTHER SECTORS that
failed to maintain our standard for high rates of revenue growth.
AVERAGE ANNUAL
TOTAL RETURNS
For the 1-Year Period
Ended 10/31/99*
CLASS A
Without With
Sales Chg. Sales Chg.
- ----------------------------
83.79% 73.22%
CLASS B
Without With
Sales Chg. Sales Chg.
- ----------------------------
82.40% 77.40%
CLASS C
Without With
Sales Chg. Sales Chg.
- ----------------------------
82.38% 81.38%
CLASS Y
Without With
Sales Chg. Sales Chg.
- ----------------------------
84.69% 84.69%
NOT FDIC INSURED.
NO BANK GUARANTEE.
MAY LOSE VALUE.
* See page 12 for further details.
<PAGE> 3
[PHOTO]
BRIDGET A. MACASKILL
President
Oppenheimer
MidCap Fund
PRESIDENT'S LETTER
DEAR SHAREHOLDER,
Whenever a new year begins--let alone a new decade or century--it makes sense to
pause a moment to assess where we've been and where we're going.
In retrospect, U.S. stocks and bonds in 1999 were subject to sudden and
substantial swings in investor sentiment because of economic uncertainty. When
the year began, investors were concerned that growth in the United States might
slow in response to economic weakness overseas. At mid-year, investors were
concerned that the economy was too strong, potentially rekindling inflationary
pressures. Yet, by year end, it became clearer that while the U.S. economy grew
robustly in 1999, inflation remained at low levels. Indeed, investors appeared
more comfortable with the economy after the Federal Reserve Board demonstrated
its inflation-fighting resolve by raising interest rates three times between
June and November.
As is normal in a rising-interest-rate environment, bond prices generally
declined in 1999, led lower by U.S. Treasury bonds. In the stock market, while
most major indices advanced, strong performance was mostly limited to a handful
of large-capitalization growth companies, principally in the technology arena.
Smaller and value-oriented stocks provided particularly lackluster returns, and
overall, foreign stocks outperformed U.S. stocks in 1999.
Looking forward, we expect the U.S. economy to remain on a
moderate-growth, low-inflation course. As recent revisions of 1999's economic
statistics demonstrated, the economy has defied many analysts' forecasts by
growing at a strong rate, which should be positive for the bond market.
Similarly, positive economic forces could help the stock market's performance
broaden to include value-oriented and smaller stocks.
We see particularly compelling opportunities outside of the U.S. market.
Many foreign stocks also ended 1999 more attractively valued than large-cap U.S.
stocks, and economic trends in overseas markets could lead to higher stock
prices. In Europe, corporate restructuring has just begun, giving
1 OPPENHEIMER MIDCAP FUND
<PAGE> 4
PRESIDENT'S LETTER
companies there the same potential for cost-cutting and productivity
improvements that U.S. companies enjoyed 10 years ago. In Japan and Asia,
economic recovery is expected to gain strength, which could allow stocks to
rally from relatively low levels.
Another 1999 trend that should remain in force in 2000 is the growth of
businesses related to the Internet. The rise of e-commerce has been good for
consumers and the economy because of greater price competition, which has helped
keep inflation under control. The Internet has also been good for investors, as
even companies with no earnings have seen their stock prices soar. Clearly,
while the Internet is here to stay, not all "dot-com" companies will survive,
and many of these high-flying Internet stocks will eventually--and perhaps very
suddenly--return to more reasonable levels. The long-term winners are most
likely to be companies that support the Internet's growth with content or
infrastructure.
What else is in store for investors in 2000? While we do not have an
infallible crystal ball, we believe that in almost any investment environment,
consistent success stems from an unwavering focus on fundamental investment
principles such as maintaining a long-term perspective, using diversification to
manage risks and availing oneself of the services of a knowledgeable financial
advisor. Indeed, these principles serve as the foundation for every investment
we offer, helping to make OppenheimerFunds The Right Way to Invest in 2000 and
beyond.
Sincerely,
/s/ BRIDGET A. MACASKILL
Bridget A. Macaskill
November 19, 1999
These general market views represent opinions of OppenheimerFunds, Inc. and are
not intended to predict or depict performance of any particular fund. Specific
discussion, as it applies to your Fund, is contained in the pages that follow.
2 OPPENHEIMER MIDCAP FUND
<PAGE> 5
[PHOTO]
PORTFOLIO MANAGEMENT
TEAM (L TO R)
John Doney
Bruce Bartlett
(Portfolio Manager)
AN INTERVIEW WITH YOUR FUND'S MANAGER
HOW DID THE FUND PERFORM DURING THE ONE-YEAR PERIOD THAT ENDED OCTOBER 31,
1999?
A. We are very pleased with Oppenheimer MidCap Fund's performance. During the
past year, the Fund not only showed strong growth in net asset value, it also
significantly outperformed its benchmarks, the S&P MidCap 400 Index and the
Lipper Mid-Cap Fund Index.
For the one-year period ending October 31, 1999, the Fund's Class A
shares produced an average annual total return, without sales charges, of
83.79%.(1) For the same period, the S&P MidCap 400 Index generated a return of
21.07% while the Lipper Mid-Cap Fund Index produced a return of 35.89%.(2)
TO WHAT DO YOU ATTRIBUTE THE FUND'S SUCCESS?
Throughout the past period, U.S. economic growth remained robust. However, the
possibility that growth might slow in the face of global economic turmoil and
rising domestic interest rates fueled widespread economic uncertainty. In such
an environment, the market tends to reward companies that appear most likely to
deliver strong and sustainable growth. These are precisely the kinds of
companies our stock selection process is designed to identify.
1. 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.
2. The performance of the indices reflects the reinvestment of dividends, but
does not consider the effect of transaction costs.
3 OPPENHEIMER MIDCAP FUND
<PAGE> 6
"OUR GOAL IS TO IDENTIFY TOMORROW'S BUSINESS GIANTS TODAY, AND TO ENABLE OUR
INVESTORS TO SHARE IN [THAT] FINANCIAL SUCCESS."
AN INTERVIEW WITH YOUR FUND'S MANAGER
WHY FOCUS ON MID-CAP GROWTH COMPANIES?
The mid-cap universe offers a wealth of investment opportunities that are likely
to perform well in a wide range of market conditions. That's because many
mid-cap companies exhibit the rapid growth characteristics usually associated
with successful smaller companies, while having matured beyond the risky
start-up phase. In other words, investing in attractive mid-cap companies offers
the best of both worlds, with the established business models and proven
management track records of larger-cap companies and the sustainably high growth
rates of emerging enterprises.
Our goal is to take advantage of such opportunities by investing only in
mid-cap companies that exhibit particularly strong growth characteristics, such
as accelerating revenue increases. We then continue to hold those investments as
long as the company shows strong growth. As a result, our portfolio may include
companies that have grown into large-cap enterprises since we acquired their
stock. However, the Fund's average market cap of approximately $3.6 billion
remains in the mid-cap range.
4 OPPENHEIMER MIDCAP FUND
<PAGE> 7
"WE FOUND MANY OF OUR MOST COMPELLING GROWTH OPPORTUNITIES IN THE AREAS OF
PHOTONICS AND OPTICAL NETWORKING."
WHAT SPECIFIC TYPES OF COMPANIES DID YOU FIND MOST ATTRACTIVE?
Technology was our single largest area of investment, growing from approximately
34% of the Fund's common stock holdings at the beginning of the period to
approximately 50% by the end of the period. We found many of our most compelling
growth opportunities in the areas of photonics and optical networking. By the
end of the period, more than 10% of the portfolio was invested in such
companies, including JDS Uniphase Corp. (JDSU) and Harmonic, Inc. (HLIT). JDSU
is one of the nation's leading providers of equipment for the fiberoptic
communications market. This large-cap company resulted from the summer 1999
merger of two of the Fund's mid-cap holdings, JDS Fitel, Inc., and Uniphase
Corp. The newly merged company continued to meet our growth criteria, and so
remained one of the Fund's largest--and most successful--holdings. HLIT, a
company with a market capitalization of approximately $2.2 billion, makes
fiberoptic systems for cable, wireless and satellite networks. We believe its
high price/earnings and price/book ratios (two important measures of relative
value) are more than justified by the company's rapid and accelerating rate of
revenue growth: over 28% for the last three years, and close to 100% during the
first six months of 1999. That revenue growth resulted in rapid appreciation of
the company's stock: more than 300% in the last six months of the period.
5 OPPENHEIMER MIDCAP FUND
<PAGE> 8
AVERAGE ANNUAL
TOTAL RETURNS
For the Periods Ended 9/30/99(3)
Class A Since
1-Year Inception
- -----------------------------------
63.95% 34.62%
Class B Since
1-Year Inception
- -----------------------------------
67.91% 36.40%
Class C Since
1-Year Inception
- -----------------------------------
71.56% 38.00%
Class Y Since
1-Year Inception
- -----------------------------------
74.81% 39.71%
AN INTERVIEW WITH YOUR FUND'S MANAGER
In the specialty retail area, we invested in a number of attractive companies
that benefited from robust demand for high-end consumer products. Other holdings
in this sector, such as Best Buy Co., Inc. (BBY), have profited handsomely from
rapid growth in the market for digital appliances such as cameras, DVD players
and high definition TV. BBY is a $12 billion company with a price/earnings ratio
of approximately 45 and a price/book ratio of approximately 10, both of which
exceed market averages. Its accelerating rates of revenue growth (over 11% for 3
years and 20% for one year) and earnings growth (approximately 57% for three
years and 106% for one year) led to a tripling of the stock price during the
period.
DID YOU REDUCE INVESTMENTS IN ANY AREAS?
We trimmed our holdings in the healthcare sector, with the exception of the
high-growth biotechnology area. We also eliminated our financial sector
holdings, since financial companies failed to meet our criteria for revenue and
earnings growth. We also sold positions in various other companies that were
beginning to exhibit slower revenue growth. Although a company may temporarily
compensate for lower revenues by curbing spending or increasing productivity,
over the long term we believe that a decline in a company's rate of revenue
growth indicates a likelihood of slower earnings growth and a lower stock price.
Accordingly, we eliminated our positions in the solid waste industry and in a
major provider of corporate management services.
3. See page 12 for further details.
6 OPPENHEIMER MIDCAP FUND
<PAGE> 9
SECTOR ALLOCATION(4)
[PIE CHART]
<TABLE>
<S> <C>
- - Technology 50.0%
- - Consumer
Cyclicals 19.5
- - Consumer
Staples 13.6
- - Capital Goods 6.8
- - Communication
Services 5.8
- - Healthcare 3.7
- - Utilities 0.6
</TABLE>
WHAT IS YOUR OUTLOOK FOR THE FUTURE?
We remain enthusiastic about the potential for the mid-cap companies in which we
invest. Many of today's largest and most successful companies were mid-cap
enterprises just a few years ago. We believe that such exceptional growth
opportunities continue to exist. Our goal is to identify tomorrow's business
giants today, and to enable our investors to share in the financial success that
long-term investments in great companies can produce. It is our commitment to
mid-cap growth investing and our disciplined strategy that makes Oppenheimer
MidCap Fund part of The Right Way to Invest.
<TABLE>
<CAPTION>
TOP 10 STOCK HOLDINGS(4)
- -------------------------------------------------------------------------------
<S> <C>
JDS Uniphase Corp. 6.9%
- -------------------------------------------------------------------------------
Tandy Corp. 5.1
- -------------------------------------------------------------------------------
SDL, Inc. 5.1
- -------------------------------------------------------------------------------
Royal Caribbean Cruises Ltd. 4.4
- -------------------------------------------------------------------------------
QLogic Corp. 4.4
- -------------------------------------------------------------------------------
Vitesse Semiconductor Corp. 4.2
- -------------------------------------------------------------------------------
E-Tek Dynamics, Inc. 3.9
- -------------------------------------------------------------------------------
Tiffany & Co. 3.9
- -------------------------------------------------------------------------------
Harmonic, Inc. 3.6
- -------------------------------------------------------------------------------
Veritas Software Corp. 3.6
<CAPTION>
TOP 5 INDUSTRIES(4)
- -------------------------------------------------------------------------------
<S> <C>
Electronics 29.2%
- -------------------------------------------------------------------------------
Retail: Specialty 16.5
- -------------------------------------------------------------------------------
Computer Software 7.8
- -------------------------------------------------------------------------------
Broadcasting 6.2
- -------------------------------------------------------------------------------
Communications Equipment 6.1
</TABLE>
4. Portfolio is subject to change. Percentages are as of October 31, 1999, and
are based on total market value of common stocks.
7 OPPENHEIMER MIDCAP FUND
<PAGE> 10
FUND PERFORMANCE
HOW HAS THE FUND PERFORMED?
Below is a discussion, by the Manager, of the Fund's performance during its
fiscal year ended October 31, 1999, followed by a graphical comparison of the
Fund's performance to an appropriate broad-based market index.
MANAGEMENT'S DISCUSSION OF PERFORMANCE. The fiscal year that ended October 31,
1999, was marked by persistent concerns regarding the sustainability of U.S.
economic growth. These conditions favored the stocks of companies most likely to
deliver sustained growth in the face of a slowdown. Since these are precisely
the types of companies the Fund targets, performance proved strong throughout
the period. We also benefited from the intrinsic characteristics of
fast-growing, well-established mid-cap companies, which combine high growth
potential with proven business models. Our largest areas of investment were
technology and specialty retail, both of which contributed strongly to the
Fund's success. At the same time, we trimmed healthcare holdings, eliminated
financial industry holdings, and sold other holdings that evidenced slowing
revenue growth. The Fund's portfolio holdings, allocations and strategies are
subject to change.
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the
performance of a hypothetical $10,000 investment in each Class of shares of the
Fund held until October 31, 1999. Performance is measured from the inception of
all the classes on December 1, 1997. The Fund's performance reflects the
deduction of the maximum initial sales charge on Class A shares, the applicable
contingent deferred sales charge on Class B and Class C shares, and reinvestment
of all dividends and capital gains distributions.
8 OPPENHEIMER MIDCAP FUND
<PAGE> 11
The Fund's performance is compared to that of the S&P MidCap 400 Index. The S&P
MidCap 400 Index is an unmanaged index of 400 domestic stocks chosen for market
size liquidity, and industry group representation. Index performance reflects
the reinvestment of income but does not consider the effect of transaction
costs, and none of the data in the graphs shows the effect of taxes. The Fund's
performance reflects the effects of Fund business and operating expenses. While
index comparisons may be useful to provide a benchmark for the Fund's
performance, it must be noted that the Fund's investments are not limited to the
securities in the index.
9 OPPENHEIMER MIDCAP FUND
<PAGE> 12
FUND PERFORMANCE
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer MidCap Fund (Class A)
and S&P MidCap 400 Index
[THE FOLLOWING TABLE WAS ORIGINALLY A LINE GRAPH IN THE PRINTED MATERIALS.]
<TABLE>
<CAPTION>
Date Oppenheimer MidCap Fund Class A S&P MidCap 400 Index
<S> <C> <C>
12/1/97 $ 9,425 $10,000
10/31/98 10,207 10,515
10/31/99 18,760 12,731
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF CLASS A SHARES OF THE FUND AT 10/31/99(1)
1-YEAR 73.22% LIFE 38.85%
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer MidCap Fund (Class B)
and S&P MidCap 400 Index
[THE FOLLOWING TABLE WAS ORIGINALLY A LINE GRAPH IN THE PRINTED MATERIALS.]
<TABLE>
<CAPTION>
Date Oppenheimer MidCap Fund Class B S&P MidCap 400 Index
<S> <C> <C>
12/1/97 $10,000 $10,000
10/31/98 10,770 10,515
10/31/99 19,244 12,731
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF CLASS B SHARES OF THE FUND AT 10/31/99(1)
1-YEAR 77.40% LIFE 40.71%
1. See page 12 for further details.
10 OPPENHEIMER MIDCAP FUND
<PAGE> 13
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer MidCap Fund (Class C)
and S&P MidCap 400 Index
[THE FOLLOWING TABLE WAS ORIGINALLY A LINE GRAPH IN THE PRINTED MATERIALS.]
<TABLE>
<CAPTION>
Date Oppenheimer MidCap Fund Class C S&P MidCap 400 Index
<S> <C> <C>
12/1/97 $10,000 $10,000
10/31/98 10,760 10,515
10/31/99 19,624 12,731
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF CLASS C SHARES OF THE FUND AT 10/31/99(1)
1-YEAR 81.38% LIFE 42.16%
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer MidCap Fund (Class Y)
and S&P MidCap 400 Index
[THE FOLLOWING TABLE WAS ORIGINALLY A LINE GRAPH IN THE PRINTED MATERIALS.]
<TABLE>
<CAPTION>
Date Oppenheimer MidCap Fund Class Y S&P MidCap 400 Index
<S> <C> <C>
12/1/97 $10,000 $10,000
10/31/98 10,880 10,515
10/31/99 20,095 12,731
</TABLE>
AVERAGE ANNUAL TOTAL RETURN OF CLASS Y SHARES OF THE FUND AT 10/31/99(1)
1-YEAR 84.69% LIFE 43.92%
The performance information for S&P MidCap 400 Index in the graphs begins on
11/30/97.
Past performance is not predictive of future performance.
11 OPPENHEIMER MIDCAP FUND
<PAGE> 14
NOTES
IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT PAST PERFORMANCE
DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. BECAUSE OF ONGOING
MARKET VOLATILITY, THE FUND'S PERFORMANCE MAY BE SUBJECT TO SUBSTANTIAL
SHORT-TERM CHANGES. FOR UPDATES ON THE FUND'S PERFORMANCE, PLEASE CONTACT YOUR
FINANCIAL ADVISOR, CALL US AT 1.800.525.7048 OR VISIT OUR WEBSITE,
WWW.OPPENHEIMERFUNDS.COM.
Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown.
CLASS A. The inception date of the Fund was 12/1/97. The average annual total
returns are shown net of the applicable 5.75% maximum initial sales charge.
CLASS B shares of the Fund were first publicly offered on 12/1/97. The average
annual total returns are shown net of the applicable contingent deferred sales
charges of 5% (1-year) and 4% (since inception). The ending account value shown
in the graph is net of the applicable 4% contingent deferred sales charge. 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 12/1/97.
The average annual total returns are shown net of the applicable 1% contingent
deferred sales charge for the one-year period. Class C shares are subject to an
annual 0.75% asset-based sales charge.
CLASS Y shares of the Fund were first publicly offered on 12/1/97.
Class Y shares are offered only to certain institutional investors under special
agreement with the Distributor.
An explanation of the different performance calculations is in the Fund's
prospectus.
12 OPPENHEIMER MIDCAP FUND
<PAGE> 15
- -------------------------------------------------
FINANCIALS
13 OPPENHEIMER MIDCAP FUND
<PAGE> 16
STATEMENT OF INVESTMENTS October 31, 1999
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
===================================================================================================================
<S> <C> <C>
COMMON STOCKS--78.5%
- -------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--5.4%
- -------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--3.1%
E-Tek Dynamics, Inc.(1) 144,000 $ 9,594,000
- -------------------------------------------------------------------------------------------------------------------
MANUFACTURING--2.3%
Optical Coating Laboratory, Inc. 66,000 7,053,750
- -------------------------------------------------------------------------------------------------------------------
COMMUNICATION SERVICES--4.6%
- -------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS: LONG DISTANCE--4.6%
Audiocodes Ltd.(1) 31,200 1,887,600
- -------------------------------------------------------------------------------------------------------------------
Broadcom Corp., Cl. A(1) 15,000 1,917,187
- -------------------------------------------------------------------------------------------------------------------
Brocade Communications Systems, Inc.(1) 11,400 3,066,600
- -------------------------------------------------------------------------------------------------------------------
Copper Mountain Networks, Inc.(1) 11,100 818,625
- -------------------------------------------------------------------------------------------------------------------
Exodus Communications, Inc.(1) 48,000 4,128,000
- -------------------------------------------------------------------------------------------------------------------
Global Crossing Ltd.(1) 32,749 1,133,934
- -------------------------------------------------------------------------------------------------------------------
Global TeleSystems Group, Inc.(1) 56,000 1,340,500
--------------
14,292,446
- -------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--15.3%
- -------------------------------------------------------------------------------------------------------------------
CONSUMER SERVICES--2.4%
Young & Rubicam, Inc. 161,800 7,402,350
- -------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY--12.9%
Abercrombie & Fitch Co., Cl. A(1) 77,000 2,098,250
- -------------------------------------------------------------------------------------------------------------------
Ann Taylor Stores Corp.(1) 53,000 2,255,812
- -------------------------------------------------------------------------------------------------------------------
Best Buy Co., Inc.(1) 96,000 5,334,000
- -------------------------------------------------------------------------------------------------------------------
Circuit City Stores--Circuit City Group 110,000 4,695,625
- -------------------------------------------------------------------------------------------------------------------
Linens 'N Things, Inc.(1) 99,000 3,935,250
- -------------------------------------------------------------------------------------------------------------------
Tandy Corp. 200,000 12,587,500
- -------------------------------------------------------------------------------------------------------------------
Tiffany & Co. 160,600 9,555,700
--------------
40,462,137
- -------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--10.6%
- -------------------------------------------------------------------------------------------------------------------
BROADCASTING--4.8%
Hispanic Broadcasting Corp.(1) 60,000 4,860,000
- -------------------------------------------------------------------------------------------------------------------
Spanish Broadcasting System, Inc., Cl. A(1) 59,000 1,570,875
- -------------------------------------------------------------------------------------------------------------------
Univision Communications, Inc., Cl. A(1) 102,100 8,684,881
--------------
15,115,756
</TABLE>
14 OPPENHEIMER MIDCAP FUND
<PAGE> 17
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ENTERTAINMENT--4.7%
Royal Caribbean Cruises Ltd. 205,000 $10,877,812
- -------------------------------------------------------------------------------------------------------------------
SFX Entertainment, Inc., Cl. A(1) 112,250 3,921,734
-------------
14,799,546
- -------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS--1.1%
Dial Corp. (The) 152,500 3,564,687
- -------------------------------------------------------------------------------------------------------------------
HEALTHCARE--2.9%
- -------------------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS--2.9%
Biogen, Inc.(1) 94,000 6,967,750
- -------------------------------------------------------------------------------------------------------------------
Genentech, Inc.(1) 5,600 816,200
- -------------------------------------------------------------------------------------------------------------------
IDEC Pharmaceuticals Corp.(1) 11,000 1,278,062
-------------
9,062,012
- -------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--39.2%
- -------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE--4.5%
Antec Corp.(1) 162,200 7,866,700
- -------------------------------------------------------------------------------------------------------------------
Juniper Networks, Inc.(1) 2,700 744,187
- -------------------------------------------------------------------------------------------------------------------
Lexmark International Group, Inc., Cl. A(1) 72,000 5,620,500
-------------
14,231,387
- -------------------------------------------------------------------------------------------------------------------
COMPUTER SERVICES--0.9%
eToys, Inc.(1) 11,000 657,250
- -------------------------------------------------------------------------------------------------------------------
Foundry Networks, Inc.(1) 3,200 606,400
- -------------------------------------------------------------------------------------------------------------------
High Speed Access Corp.(1) 10,000 263,125
- -------------------------------------------------------------------------------------------------------------------
N2H2, Inc.(1) 67,500 599,063
- -------------------------------------------------------------------------------------------------------------------
NextCard, Inc.(1) 12,200 380,488
- -------------------------------------------------------------------------------------------------------------------
Smith-Gardner & Associates, Inc.(1) 29,300 282,013
-------------
2,788,339
- -------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE--6.1%
Akamai Technologies, Inc.(1) 3,400 493,638
- -------------------------------------------------------------------------------------------------------------------
Alteon Websystems, Inc.(1) 2,400 172,200
- -------------------------------------------------------------------------------------------------------------------
Citrix Systems, Inc.(1) 94,000 6,027,750
- -------------------------------------------------------------------------------------------------------------------
Sapient Corp.(1) 24,500 3,132,938
- -------------------------------------------------------------------------------------------------------------------
Telemate.Net Software, Inc.(1) 40,300 513,825
- -------------------------------------------------------------------------------------------------------------------
Veritas Software Corp.(1) 82,000 8,845,750
-------------
19,186,101
</TABLE>
15 OPPENHEIMER MIDCAP FUND
<PAGE> 18
STATEMENT OF INVESTMENTS Continued
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMUNICATIONS EQUIPMENT--4.8%
Harmonic, Inc.(1) 150,000 $ 8,906,250
- -------------------------------------------------------------------------------------------------------------------
Scientific-Atlanta, Inc. 105,000 6,011,250
--------------
14,917,500
- -------------------------------------------------------------------------------------------------------------------
ELECTRONICS--22.9%
Gemstar International Group Ltd.(1) 75,000 6,515,625
- -------------------------------------------------------------------------------------------------------------------
Intel Corp. 12,900 998,944
- -------------------------------------------------------------------------------------------------------------------
JDS Uniphase Corp.(1) 101,708 16,972,523
- -------------------------------------------------------------------------------------------------------------------
LSI Logic Corp.(1) 149,300 7,940,894
- -------------------------------------------------------------------------------------------------------------------
QLogic Corp.(1) 103,000 10,724,875
- -------------------------------------------------------------------------------------------------------------------
SDL, Inc.(1) 102,000 12,577,875
- -------------------------------------------------------------------------------------------------------------------
Vitesse Semiconductor Corp.(1) 225,000 10,321,875
- -------------------------------------------------------------------------------------------------------------------
Waters Corp.(1) 107,500 5,710,938
--------------
71,763,549
- -------------------------------------------------------------------------------------------------------------------
UTILITIES--0.5%
- -------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--0.5%
Calpine Corp.(1) 26,200 1,509,775
--------------
Total Common Stocks (Cost $179,945,947) 245,743,335
<CAPTION>
FACE
AMOUNT
===================================================================================================================
<S> <C> <C>
REPURCHASE AGREEMENTS--21.0%
Repurchase agreement with First Chicago Capital Markets, 5.20%
dated 10/29/99, to be repurchased at $65,628,427 on 11/1/99,
collateralized by U.S. Treasury Nts., 4.875%-8%, 7/31/00-11/15/28,
with a value of $35,207,940 and U.S. Treasury Bonds, 7.125%-11.75%,
2/15/01-2/15/23, with a value of $31,751,491 (Cost $65,600,000) $65,600,000 65,600,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $245,545,947) 99.5% 311,343,335
- -------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.5 1,630,247
----------------------------------
NET ASSETS 100.0% $312,973,582
==================================
</TABLE>
1. Non-income-producing security.
See accompanying Notes to Financial Statements.
16 OPPENHEIMER MIDCAP FUND
<PAGE> 19
STATEMENT OF ASSETS AND LIABILITIES October 31, 1999
<TABLE>
<S> <C>
===================================================================================================================
ASSETS
Investments, at value (including repurchase agreements of $65,600,000)
(cost $245,545,947)--see accompanying statement $311,343,335
- -------------------------------------------------------------------------------------------------------------------
Cash 51,788
- -------------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 4,879,094
Investments sold 3,441,491
Interest and dividends 36,552
Other 2,027
--------------
Total assets 319,754,287
===================================================================================================================
LIABILITIES
Payables and other liabilities:
Investments purchased 6,199,506
Shares of beneficial interest redeemed 369,876
Transfer and shareholder servicing agent fees 37,399
Distribution and service plan fees 50,553
Trustees' compensation 7,198
Other 116,173
--------------
Total liabilities 6,780,705
===================================================================================================================
NET ASSETS $312,973,582
==============
===================================================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $253,629,991
- -------------------------------------------------------------------------------------------------------------------
Overdistributed net investment income (6,808)
- -------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (6,446,989)
- -------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 65,797,388
--------------
Net assets $312,973,582
==============
</TABLE>
17 OPPENHEIMER MIDCAP FUND
<PAGE> 20
STATEMENT OF ASSETS AND LIABILITIES 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
$167,878,790 and 8,445,003 shares of beneficial interest outstanding) $19.88
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $21.09
- -------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $118,611,241
and 6,045,877 shares of beneficial interest outstanding) $19.62
- -------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $26,481,544
and 1,351,117 shares of beneficial interest outstanding) $19.60
- -------------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $2,007 and 100 shares of beneficial interest outstanding) $20.07
</TABLE>
See accompanying Notes to Financial Statements.
18 OPPENHEIMER MIDCAP FUND
<PAGE> 21
STATEMENT OF OPERATIONS For the Year Ended October 31, 1999
<TABLE>
<S> <C>
===================================================================================================================
INVESTMENT INCOME
Interest $ 796,212
- -------------------------------------------------------------------------------------------------------------------
Dividends 203,711
-------------
Total income 999,923
===================================================================================================================
EXPENSES
Management fees 817,885
- -------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 137,881
Class B 401,529
Class C 90,027
- -------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 239,989
- -------------------------------------------------------------------------------------------------------------------
Shareholder reports 105,452
- -------------------------------------------------------------------------------------------------------------------
Registration and filing fees 63,137
- -------------------------------------------------------------------------------------------------------------------
Trustees' compensation 17,946
- -------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 6,719
- -------------------------------------------------------------------------------------------------------------------
Other 38,696
-------------
Total expenses 1,919,261
Less expenses paid indirectly (4,419)
-------------
Net expenses 1,914,842
===================================================================================================================
NET INVESTMENT LOSS (914,919)
===================================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments (3,700,393)
Closing of futures contracts 102,975
Foreign currency transactions 1,474
-------------
Net realized loss (3,595,944)
- -------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 65,603,264
-------------
Net realized and unrealized gain 62,007,320
===================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $61,092,401
=============
</TABLE>
See accompanying Notes to Financial Statements.
19 OPPENHEIMER MIDCAP FUND
<PAGE> 22
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
OCTOBER 31, OCTOBER 31,
1999 1998(1)
===================================================================================================================
<S> <C> <C>
OPERATIONS
Net investment loss $ (914,919) $ (68,156)
- -------------------------------------------------------------------------------------------------------------------
Net realized loss (3,595,944) (2,757,709)
- -------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 65,603,264 194,124
----------------------------------
Net increase (decrease) in net assets resulting from operations 61,092,401 (2,631,741)
===================================================================================================================
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Distributions in excess of net realized gain:
Class A (23,126) --
Class B (13,593) --
Class C (4,026) --
===================================================================================================================
BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from beneficial interest transactions:
Class A 119,533,021 15,972,120
Class B 88,747,417 8,617,664
Class C 18,791,983 2,890,462
Class Y -- 1,000
===================================================================================================================
NET ASSETS
Total increase 288,124,077 24,849,505
- -------------------------------------------------------------------------------------------------------------------
Beginning of period 24,849,505 --
----------------------------------
End of period (including overdistributed net investment
income of $6,808 for the period ended October 31, 1999) $312,973,582 $24,849,505
==================================
</TABLE>
1. For the period from December 1, 1997 (commencement of operations) to October
1, 1998.
See accompanying Notes to Financial Statements.
20 OPPENHEIMER MIDCAP FUND
<PAGE> 23
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A CLASS B
YEAR YEAR
ENDED ENDED
OCTOBER 31, OCTOBER 31,
1999 1998(1) 1999 1998(1)
====================================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $10.83 $10.00 $10.77 $10.00
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.04) (.02) (.07) (.05)
Net realized and unrealized gain 9.11 .85 8.94 .82
----------------------------------------------------------------
Total income from investment operations 9.07 .83 8.87 .77
- --------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Distributions in excess of net realized gain (.02) -- (.02) --
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $19.88 $10.83 $19.62 $10.77
================================================================
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 83.79% 8.30% 82.40% 7.70%
====================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $167,879 $14,607 $118,611 $7,654
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 60,644 $ 7,185 $ 40,455 $3,521
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income (loss) (0.49)% (0.33)% (1.25)% (1.06)%
Expenses 1.40% 1.59%(4) 2.16% 2.35%(4)
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 61% 117% 61% 117%
</TABLE>
1. For the period from December 1, 1997 (commencement of operations) to October
31, 1998.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), 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 for periods of less than one full year.
4. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
5. 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 October 31, 1999, were $222,751,365 and $59,330,540, respectively.
See accompanying Notes to Financial Statements.
21 OPPENHEIMER MIDCAP FUND
<PAGE> 24
FINANCIAL HIGHLIGHTS Continued
<TABLE>
<CAPTION>
CLASS C CLASS Y
YEAR YEAR
ENDED ENDED
OCTOBER 31, OCTOBER 31,
1999 1998(1) 1999 1998(1)
====================================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $10.76 $10.00 $10.88 $10.00
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.06) (.05) (.01) .01
Net realized and unrealized gain 8.92 .81 9.22 .87
----------------------------------------------------------------
Total income from investment operations 8.86 .76 9.21 .88
- --------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Distributions in excess of net realized gain (.02) -- (.02) --
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $19.60 $10.76 $20.07 $10.88
================================================================
====================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(2) 82.38% 7.60% 84.69% 8.80%
====================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $26,482 $2,587 $2 $1
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 9,066 $1,271 $2 $1
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income (loss) (1.26)% (1.07)% (0.06)% 0.05%
Expenses 2.16% 2.35%(4) 1.03% 1.09%(4)
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 61% 117% 61% 117%
</TABLE>
1. For the period from December 1, 1997 (commencement of operations) to October
31, 1998.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), 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 for periods of less than one full year.
4. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
5. 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 October 31, 1999, were $222,751,365 and $59,330,540, respectively.
See accompanying Notes to Financial Statements.
22 OPPENHEIMER MIDCAP FUND
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer MidCap Fund (the Fund) is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end management investment
company. The Fund's investment objective is 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 on investments up to $1 million. Class B and Class C
shares may be subject to a contingent deferred sales charge (CDSC). Class Y
shares are sold to certain institutional investors without either a front-end
sales charge or a CDSC. All classes of shares have identical rights 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.
- --------------------------------------------------------------------------------
SECURITIES 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. Foreign currency exchange contracts are valued based on the
closing prices of the foreign currency contract rates in the London foreign
exchange markets on a daily basis as provided by a reliable bank or dealer.
Options are valued based upon the last sale price on the principal exchange on
which the option is traded or, in the absence of any transactions that day, the
value is based upon the last sale price on the prior trading date if it is
within the spread between the closing bid and asked prices. If the last sale
price is outside the spread, the closing bid is used.
23 OPPENHEIMER MIDCAP FUND
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), 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. As of October 31, 1999, the Fund had
available for federal income tax purposes an unused capital loss carryover of
approximately $6,310,000, which expires between 2006 and 2007.
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted a nonfunded retirement plan for the
Fund's independent Trustees. Benefits are based on years of service and fees
paid to each Trustee during the years of service. During the year ended October
31, 1999, a provision of $6,808 was made for the Fund's projected benefit
obligations, resulting in an accumulated liability of $6,808 as of October 31,
1999.
The Board of Trustees has adopted a deferred compensation plan for
independent Trustees that enables Trustees to elect to defer receipt of all or a
portion of annual compensation they are entitled to receive from the Fund. Under
the plan, the compensation deferred is periodically adjusted as though an
equivalent amount had been invested for the Trustees in shares of one or more
Oppenheimer funds selected by the Trustee. The amount paid to the Trustee under
the plan will be determined based upon the performance of the selected funds.
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
income per share.
24 OPPENHEIMER MIDCAP FUND
<PAGE> 27
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of 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.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended October 31, 1999, amounts have been reclassified to reflect a
decrease in paid-in capital of $911,479, a decrease in overdistributed net
investment income of $908,111, and a decrease in accumulated net realized loss
on investments of $3,368.
- --------------------------------------------------------------------------------
EXPENSE OFFSET ARRANGEMENTS. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Foreign dividend income is often
recorded on the payable date. Realized gains and losses on investments and
unrealized appreciation and depreciation are determined on an identified cost
basis, which is the same basis used for federal income tax purposes.
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.
25 OPPENHEIMER MIDCAP FUND
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
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>
YEAR ENDED OCTOBER 31, 1999 PERIOD ENDED OCTOBER 31, 1998(1)
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Sold 8,300,323 $138,625,655 1,814,456 $21,297,357
Dividends and/or
distributions reinvested 1,765 21,575 -- --
Redeemed (1,206,313) (19,114,209) (465,228) (5,325,237)
-------------------------------------------------------------------------
Net increase 7,095,775 $119,533,021 1,349,228 $15,972,120
=========================================================================
- --------------------------------------------------------------------------------------------------------------------
CLASS B
Sold 6,071,612 $100,987,612 1,028,170 $12,132,431
Dividends and/or
distributions reinvested 1,088 13,216 -- --
Redeemed (737,801) (12,253,411) (317,192) (3,514,767)
-------------------------------------------------------------------------
Net increase 5,334,899 $ 88,747,417 710,978 $ 8,617,664
=========================================================================
- --------------------------------------------------------------------------------------------------------------------
CLASS C
Sold 1,337,614 $ 22,505,897 332,549 $ 3,888,969
Dividends and/or
distributions reinvested 315 3,822 -- --
Redeemed (227,345) (3,717,736) (92,016) (998,507)
-------------------------------------------------------------------------
Net increase 1,110,584 $ 18,791,983 240,533 $ 2,890,462
=========================================================================
- --------------------------------------------------------------------------------------------------------------------
CLASS Y
Sold -- $ -- 100 $ 1,000
Dividends and/or
distributions reinvested -- -- -- --
Redeemed -- -- -- --
-------------------------------------------------------------------------
Net increase -- $ -- 100 $ 1,000
=========================================================================
</TABLE>
1. For the period from December 1, 1997 (commencement of operations) to October
31, 1998.
================================================================================
3. UNREALIZED GAINS AND LOSSES ON SECURITIES
As of October 31, 1999, net unrealized appreciation on securities of $65,797,388
was composed of gross appreciation of $69,208,630, and gross depreciation of
$3,411,242.
26 OPPENHEIMER MIDCAP FUND
<PAGE> 29
================================================================================
4. MANAGEMENT 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 an annual fee of
0.75% of the first $200 million of average annual net assets of the Fund, 0.72%
of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200
million, and 0.60% of average annual net assets in excess of $800 million. The
Fund's management fee for the year ended October 31, 1999, was 0.74% of the
average annual net assets for each class of shares.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer and shareholder servicing agent for the Fund and other
Oppenheimer funds. OFS's total costs of providing such services are allocated
ratably to these funds.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN FEES. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the period
indicated.
<TABLE>
<CAPTION>
AGGREGATE CLASS A COMMISSIONS COMMISSIONS COMMISSIONS
FRONT-END FRONT-END ON CLASS A ON CLASS B ON CLASS C
SALES CHARGES SALES CHARGES SHARES SHARES SHARES
ON CLASS A RETAINED BY ADVANCED BY ADVANCED BY ADVANCED BY
YEAR ENDED SHARES DISTRIBUTOR DISTRIBUTOR(1) DISTRIBUTOR(1) DISTRIBUTOR(1)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
October 31, 1999 $1,197,997 $346,132 $88,165 $2,031,676 $127,146
</TABLE>
1. The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B and Class C shares from its own
resources at the time of sale.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
CONTINGENT DEFERRED CONTINGENT DEFERRED CONTINGENT DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES
YEAR ENDED RETAINED BY DISTRIBUTOR RETAINED BY DISTRIBUTOR RETAINED BY DISTRIBUTOR
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
October 31, 1999 $-- $60,374 $2,899
</TABLE>
The Fund has adopted a Service Plan for Class A shares and Distribution
and Service Plans for Class B and Class C shares under Rule 12b-1 of the
Investment Company Act. Under those plans the Fund pays the Distributor for all
or a portion of its costs incurred in connection with the distribution and/or
servicing of the shares of the particular class.
27 OPPENHEIMER MIDCAP FUND
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
CLASS A SERVICE PLAN FEES. Under the Class A service plan, the Distributor
currently uses the fees it receives from the Fund to pay brokers, dealers and
other financial institutions. The Class A service plan permits reimbursements to
the Distributor at a rate of up to 0.25% of average annual net assets of Class A
shares. The Distributor makes payments to plan recipients quarterly at an annual
rate not to exceed 0.25% of the average annual net assets consisting of Class A
shares of the Fund. For the fiscal year ended October 31, 1999, payments under
the Class A plan totaled $137,881, all of which was paid by the Distributor to
recipients. That included $10,716 paid to an affiliate of the Distributor's
parent company. Any unreimbursed expenses the Distributor incurs with respect to
Class A shares in any fiscal year cannot be recovered in subsequent years.
- --------------------------------------------------------------------------------
CLASS B AND CLASS C DISTRIBUTION AND SERVICE PLAN FEES. Under each plan, service
fees and distribution fees are computed on the average of the net asset value of
shares in the respective class, determined as of the close of each regular
business day during the period. The Class B and Class C plans provide for the
Distributor to be compensated at a flat rate, whether the Distributor's
distribution expenses are more or less than the amounts paid by the Fund under
the plan during the period for which the fee is paid.
The Distributor retains the asset-based sales charge on Class B shares.
The Distributor retains the asset-based sales charge on Class C shares during
the first year the shares are outstanding. The asset-based sales charges on
Class B and Class C shares allow investors to buy shares without a front-end
sales charge while allowing the Distributor to compensate dealers that sell
those shares.
The Distributor's actual expenses in selling Class B and Class C shares
may be more than the payments it receives from the contingent deferred sales
charges collected on redeemed shares and from the Fund under the plans. If
either the Class B or the Class C plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales charge
to the Distributor for distributing shares before the plan was terminated. The
plans allow for the carry-forward of distribution expenses, to be recovered from
asset-based sales charges in subsequent fiscal periods.
Distribution fees paid to the Distributor for the year ended October 31, 1999,
were as follows:
<TABLE>
<CAPTION>
DISTRIBUTOR'S DISTRIBUTOR'S
AGGREGATE UNREIMBURSED
UNREIMBURSED EXPENSES AS %
TOTAL PAYMENTS AMOUNT RETAINED EXPENSES OF NET ASSETS
UNDER PLAN BY DISTRIBUTOR UNDER PLAN OF CLASS
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Plan $401,529 $356,457 $2,361,112 1.99%
Class C Plan 90,027 60,254 215,174 0.81
</TABLE>
28 OPPENHEIMER MIDCAP FUND
<PAGE> 31
================================================================================
5. FUTURES CONTRACTS
The Fund may buy and sell futures contracts in order to gain exposure to or to
seek to protect against changes in interest rates. The Fund may also buy or
write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases in
interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Fund may also purchase futures contracts to gain
exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund may recognize a realized gain or loss when the contract is
closed or expires.
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable
and/or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include
the possibility that there may be an illiquid market and that a change in the
value of the contract or option may not correlate with changes in the value of
the underlying securities.
================================================================================
6. BANK BORROWINGS
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.45%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of 0.08%
per annum.
The Fund had no borrowings outstanding during the year ended October 31,
1999.
29 OPPENHEIMER MIDCAP FUND
<PAGE> 32
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
OF OPPENHEIMER MIDCAP FUND
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Oppenheimer MidCap Fund (the Fund)
at October 31, 1999, and the results of its operations for the year then ended,
the changes in its net assets for each of the periods indicated and the
financial highlights for each of the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as financial statements) are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial presentation. We believe that our audits, which
included confirmation of securities at October 31, 1999, by correspondence with
the custodian, provide a reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Denver, Colorado
November 19, 1999
30 OPPENHEIMER MIDCAP FUND
<PAGE> 33
FEDERAL INCOME TAX INFORMATION Unaudited
================================================================================
In early 2000 shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1999. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
Distributions of $0.0150, per share were paid to Class A, Class B and
Class C shareholders, respectively, on December 16, 1998.
The foregoing information is presented to assist shareholders in
reporting distributions received from the Fund to the Internal Revenue Service.
Because of the complexity of the federal regulations which may affect your
individual tax return and the many variations in state and local tax
regulations, we recommend that you consult your tax advisor for specific
guidance.
31 OPPENHEIMER MIDCAP FUND
<PAGE> 34
OPPENHEIMER MIDCAP FUND
================================================================================
OFFICERS AND TRUSTEES Bridget A. Macaskill, Chairman of the Board of
Trustees and President
Paul Y. Clinton, Trustee
Thomas W. Courtney, Trustee
Robert G. Galli, Trustee
Lacy B. Herrmann, Trustee
George Loft, Trustee
Bruce Bartlett, Vice President
Andrew J. Donohue, Secretary
Brian W. Wixted, Treasurer
Robert G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
================================================================================
INVESTMENT ADVISOR OppenheimerFunds, Inc.
================================================================================
DISTRIBUTOR OppenheimerFunds Distributor, Inc.
================================================================================
TRANSFER AND SHAREHOLDER OppenheimerFunds Services
SERVICING AGENT
================================================================================
CUSTODIAN OF The Bank of New York
PORTFOLIO SECURITIES
================================================================================
INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP
================================================================================
LEGAL COUNSEL Mayer, Brown & Platt
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, ARE NOT INSURED BY THE FDIC OR ANY OTHER
AGENCY, AND INVOLVE INVESTMENT RISKS, INCLUDING
THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED.
32 OPPENHEIMER MIDCAP FUND
<PAGE> 35
OPPENHEIMERFUNDS FAMILY
<TABLE>
<S> <C> <C>
==================================================================================================
GLOBAL EQUITY
Developing Markets Fund Global Fund
International Small Company Fund Quest Global Value Fund
Europe Fund Global Growth & Income Fund
International Growth Fund
==================================================================================================
EQUITY
Stock Stock & Bond
Enterprise Fund(1) Main Street(R) Growth & Income Fund
Discovery Fund Quest Opportunity Value Fund
Main Street(R) Small Cap Fund Total Return Fund
Quest Small Cap Value Fund Quest Balanced Value Fund
MidCap Fund Capital Income Fund(2)
Capital Appreciation Fund Multiple Strategies Fund
Growth Fund Disciplined Allocation Fund
Disciplined Value Fund Convertible Securities Fund
Quest Value Fund
Trinity Growth Fund Specialty
Trinity Core Fund Real Asset Fund
Trinity Value Fund Gold & Special Minerals Fund
==================================================================================================
FIXED INCOME
Taxable Municipal
International Bond Fund California Municipal Fund(3)
World Bond Fund Main Street(R) California Municipal Fund(3)
High Yield Fund Florida Municipal Fund(3)
Champion Income Fund New Jersey Municipal Fund(3)
Strategic Income Fund New York Municipal Fund(3)
Bond Fund Pennsylvania Municipal Fund(3)
Senior Floating Rate Fund Municipal Bond Fund
U.S. Government Trust Insured Municipal Fund
Limited-Term Government Fund Intermediate Municipal Fund
Rochester Division
Rochester Fund Municipals
Limited Term New York Municipal Fund
==================================================================================================
MONEY MARKET(4)
Money Market Fund Cash Reserves
</TABLE>
1. Effective July 1, 1999, this fund is closed to new investors. See prospectus
for details.
2. On 4/1/99, the Fund's name was changed from "Oppenheimer Equity Income Fund."
3. Available to investors only in certain states.
4. An investment in money market funds is neither insured nor guarnteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds may seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in these funds.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc.
Two World Trade Center, New York, NY 10048-0203
(C) Copyright 1999 OppenheimerFunds, Inc. All rights reserved.
33 OPPENHEIMER MIDCAP FUND
<PAGE> 36
INFORMATION AND SERVICES
As an Oppenheimer fund shareholder, you can benefit from special services
designed to make investing simple. Whether it's automatic investment plans,
timely market updates, or immediate account access, you can count on us whenever
you need assistance. So call us today, or visit our website--we're here to help.
INTERNET
24-hr access to account information and transactions
WWW.OPPENHEIMERFUNDS.COM
- ---------------------------------------------------------------------
GENERAL INFORMATION
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
1.800.525.7048
- ---------------------------------------------------------------------
TELEPHONE TRANSACTIONS
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
1.800.852.8457
- ---------------------------------------------------------------------
PHONELINK
24-hr automated information and automated transactions
1.800.533.3310
- ---------------------------------------------------------------------
TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD)
Mon-Fri 8:30am-7pm ET
1.800.843.4461
- ---------------------------------------------------------------------
OPPENHEIMERFUNDS INFORMATION HOTLINE
24 hours a day, timely and insightful messages on the
economy and issues that may affect your investments
1.800.835.3104
- ---------------------------------------------------------------------
TRANSFER AND SHAREHOLDER SERVICING AGENT
OppenheimerFunds Services
P.O. Box 5270, Denver, CO 80217-5270
RA0745.001.1099 December 30, 1999
[LOGO] OppenheimerFunds(R)
Distributor, Inc.
