[photo of mountains]
Annual Report October 31, 2000
Oppenheimer
MidCap Fund
[logo] OppenheimerFunds(R)
The Right Way to Invest
<PAGE>
REPORT HIGHLIGHTS
Market volatility remained high throughout the 12-month period due to rising
interest rates and inflation concerns, but the U.S. economy continued to exhibit
strong growth.
Technology was the most powerful contributor to the Fund's performance,
particularly in the areas of photonics and optical networking.
Mid-cap stocks were the leading market sector during the period.
CONTENTS
1 President's Letter
3 An Interview
with Your Fund's
Manager
7 Fund Performance
12 Financial
Statements
30 Independent
Auditors' Report
31 Federal
Income Tax
Information
32 Officers and
Trustees
Average Annual
Total Returns*
For the 1-Year Period
Ended 10/31/00
Class A
Without With
Sales Chg. Sales Chg.
------------------------
52.97% 44.17%
Class B
Without With
Sales Chg. Sales Chg.
------------------------
51.83% 46.83%
Class C
Without With
Sales Chg. Sales Chg.
------------------------
51.94% 50.94%
Class Y
------------------------
53.76%
*See Notes on page 10 for further details.
<PAGE>
PRESIDENT'S LETTER
[photo]
Bridget A. Macaskill
President
Oppenheimer
MidCap Fund
Dear Shareholder,
Over the past several decades, our investment teams have learned the importance
of avoiding complacency when it comes to navigating the financial markets--
especially when times are good. Right now, times appear particularly good. The
U.S. economy is in its tenth year of expansion. In the bond market, U.S.
Treasury issues have been performing favorably over the past year. In addition,
despite volatility in the second quarter, the stock market has been providing
attractive returns from a wide spectrum of industry sectors, capitalization
ranges and investment styles.
We have arrived at this juncture after months of monitoring the rapid pace of
global economic growth and its implications for inflation, as well as the
Federal Reserve Board's evolving monetary policy. At this point, economic
indicators suggest a dampening of short-term inflationary pressures. While
recent increases in oil prices are certainly taking their toll, we don't believe
this signals a return to 1970's-style inflation. Accordingly, if the Fed
continues in its diligence, the economy could maintain its healthy rate of
growth.
In the bond market, the achievement of a federal budget surplus has prompted
the Treasury to buy back many of its long-term securities. The resulting supply
shortage boosted these securities' returns, causing an inversion of the yield
curve--an unusual situation in which shorter term Treasuries yield more than
their longer term counterparts. Other bond sectors are offering many
opportunities in the form of attractive valuations.
Perhaps most important is that we have begun to see encouraging signs in the
stock market. Formerly high-flying Internet stocks have generally come down to
earth, and investors have begun to refocus on companies with strong business
fundamentals and justifiable valuations. Investors have also returned to
long-neglected, value-oriented companies.
1 | OPPENHEIMER MIDCAP FUND
<PAGE>
PRESIDENT'S LETTER
What else do these various trends tell us? They tell us that the ability to
discriminate between long-term potential and short-lived fads has become more
critical than ever. Trying to generate good long-term performance requires
tracking the best companies through intensive research, combined with
hard-earned experience.
At OppenheimerFunds, our seasoned portfolio management teams fight
complacency by remaining constantly aware of the risks that face the economy and
financial markets. Virtually anything could affect the overall markets--a surge
in inflation, a decline in productivity, deteriorating corporate earnings, or
even the new Administration's proposals regarding tax reform, healthcare and
Social Security. However, by remaining vigilant in our quest for fundamentally
sound businesses, we believe we can find good investments that can weather
market volatility.
In this environment, we encourage you to consult your financial
advisor and to stay on track with your long-term financial plan. For our part,
we will continue to monitor the opportunities and risks ever present in the
financial markets. Thank you for your confidence in OppenheimerFunds, The Right
Way to Invest.
Sincerely,
/S/ Bridget A. Macaskill
Bridget A. Macaskill
November 21, 2000
These general market views represent opinions of OppenheimerFunds, Inc. and are
not intended to predict or depict performance of the securities markets or any
particular fund. Specific discussion, as it applies to your Fund, is contained
in the pages that follow. Stocks and bonds have different types of investment
risks; stocks are subject to market volatility and bonds are subject to credit
and interest rate risks.
2 | OPPENHEIMER MIDCAP FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGER
[photo]
Portfolio Management
Team (l to r)
Julie Ryan
Ian Horowitz
Bruce Bartlett
(Portfolio Manager)
Jin Chon
Q How would you characterize the Fund's performance during the 12-month period
that ended October 31, 2000?
A. We are very pleased that Oppenheimer MidCap Fund delivered such strong
performance despite a volatile environment for many of the stocks in which we
invest. The Fund achieved significant growth, Class A shares generated a 52.97%
average annual total return, without sales charge, for the period that ended
October 31, 2000. In addition, the Fund outperformed its benchmarks for the same
one-year time period: the S&P Mid-Cap 400 Index produced a 31.65% return and the
Lipper Mid-Cap Growth Fund Index generated a 34.54% return.(1) We believe that
disciplined adherence to our stock-selection approach, focusing on a company's
true internal revenue growth, enabled us to benefit from some of the best
performing stocks in our investment universe.
What made this such a volatile period?
Throughout the fiscal year, investors struggled to weigh the positive impact of
encouraging economic data against the negative impact of rising interest rates.
In late 1999 and early 2000, equity markets were driven higher by continued
strength in the U.S. economy, low rates of inflation, growing evidence of global
economic recovery and diminishing fears of Y2K-related problems. On the other
hand, interest rate hikes by the Federal Reserve Board threatened corporate
profitability and heightened concerns about the potential for rising inflation.
In March 2000, interest rate concerns finally took their toll on many of the
growth-oriented stocks in which the Fund invests. Throughout the remainder of
the period, prices for
1.The S&P Mid-Cap 400 Index is an unmanaged index of 400 domestic stocks chosen
for market size, liquidity, and industry group representation. The Lipper
Mid-Cap Growth Index includes funds that, by portfolio practice, invest at least
75% of their equity assets in companies with market capitalizations (on a
three-year basis) of less than 300% of the dollar-weighted median market
capitalization of the S&P Mid-Cap 400 Index. Index performance reflects the
reinvestment of dividends but does not consider the effect of capital gains,
transaction costs, or taxes.
3 | OPPENHEIMER MIDCAP FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGER
most equities rose and fell sharply in response to the positive or negative
economic news of the moment. Companies that failed to fully deliver on earnings
expectations were punished especially severely, as were those giving indications
of slowing growth. Nevertheless, mid-cap stocks generally remained the market's
best performing sector, as they had since early 1999. Success in growth-oriented
stocks was concentrated among companies that exceeded earnings expectations and
showed signs of continued growth acceleration.
How did you manage the Fund in light of these conditions?
Our mid-cap strategy is well suited to attempt to deliver strong performance in
the face of difficult market conditions, such as those of the past year. We
concentrate our investments in companies that show evidence of rapid growth from
within, and that we believe are positioned to continue to prosper well into the
future. These are the companies we consider most likely to produce consistently
strong earnings growth even during challenging economic times. Generally, when
one of our holdings begins to show signs that the quality of its earnings is
deteriorating, we are quick to sell our position, often before difficulties
become apparent to most of the investment community. Furthermore, we maintain
our strict adherence to this strategy regardless of short-term market
volatility, keeping an unwavering eye on long-term results.
Throughout the recent period, we continued to invest in mid-cap companies
exhibiting particularly strong growth characteristics. We found the greatest
number of such companies in the technology sector, particularly among photonics
and optical-networking leaders, such as Newport Corp. and JDS Uniphase Corp.
Such companies are providing the building blocks essential to today's rapidly
evolving digital communications systems and the expansion of the Internet. We
also participated in a select group of private placements in the photonics
field, investing in attractive companies that had not yet gone public. The Fund
benefited when some of these companies were acquired by the industry's major
players.
[callout]
"Disciplined adherence to our stock-selection approach enabled us to share in
the growth of some of the best performing stocks in our investment universe."
4 | OPPENHEIMER MIDCAP FUND
<PAGE>
In other areas of technology, we scored successes with companies providing
semiconductors to the communications industry, such as PMC-Sierra, Inc. and
Applied Micro Circuits Corp. We also invested in promising companies developing
hardware and software for the next generation of wireless personal productivity
devices. Such devices are leading the way toward the convergence of the Internet
and wireless communications.
Did you increase or reduce investments in other sectors?
Although we found relatively few attractive growth opportunities outside of
technology, we did invest in select companies in widely diversified sectors of
the economy. For example, we invested in Calpine Corp., a power utility that is
benefiting from deregulation and rising energy prices, and in retailer Tiffany &
Co., which we believe is well positioned to benefit from strong consumer
spending. However, we sold positions in various other consumer-sector 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.
What is your outlook for the future?
We remain comfortable with the Fund's relatively high level of exposure to
technology. Technology has been a driving force behind the nation's ongoing
economic expansion, creating fast-growing new industries while rapidly
increasing the productivity of existing businesses. We believe technology is
likely to continue to power global economic development for years to come.
We also remain enthusiastic about the potential for the mid-cap companies in
which we invest. Mid-cap stocks were the leading market segment during the
period. They are attractive to many investors because they offer higher growth
rates than most mature, large-cap companies and, at the same time, have achieved
greater stability and predictability than most small-cap
Average Annual
Total Returns
For the Periods Ended 9/30/00(2)
Class A Since
1-Year Inception
------------------------
77.40% 51.54%
Class B Since
1-Year Inception
------------------------
81.86% 53.17%
Class C Since
1-Year Inception
------------------------
86.01% 53.64%
Class Y Since
1-Year Inception
------------------------
89.20% 55.50%
2. See page 10 for further details.
5 | OPPENHEIMER MIDCAP FUND
<PAGE>
companies. As a result, we believe they offer higher probabilities of success
and lower probabilities of failure than other segments of the equities market.
Many of today's largest and most successful companies were mid-cap enterprises
just a few years ago. In fact, some of the Fund's largest holdings, such as JDS
Uniphase Corp., were mid-caps when we bought them, but have since grown into
market leaders. We continue to seek to identify tomorrow's business giants
today, and to enable our investors to share in the financial success that can
result from long-term investments in great companies. That's what makes
Oppenheimer MidCap Fund part of The Right Way to Invest.
Sector Allocation(3)
[pie chart]
Technology 63.2%
Computer
Software 20.3
Electronics 18.9
Communications
Equipment 17.7
Computer
Services 4.4
Computer
Hardware 1.9
Communication
Services 9.8
Capital Goods 9.7
Consumer
Cyclicals 8.1
Utilities 4.2
Healthcare 3.5
Consumer
Staples 1.5
Top Ten Common Stock Holdings(4)
-----------------------------------------------------------
Newport Corp. 6.7%
-----------------------------------------------------------
JDS Uniphase Corp. 4.6
-----------------------------------------------------------
SDL, Inc. 3.5
-----------------------------------------------------------
Research In Motion Ltd. 3.3
-----------------------------------------------------------
Calpine Corp. 3.2
-----------------------------------------------------------
Waters Corp. 3.0
-----------------------------------------------------------
Mercury Interactive Corp. 3.0
-----------------------------------------------------------
Rational Software Corp. 2.9
-----------------------------------------------------------
Micromuse, Inc. 2.8
-----------------------------------------------------------
Jabil Circuit, Inc. 2.6
Top Five Common Stock Industries(4)
-----------------------------------------------------------
Computer Software 15.7%
-----------------------------------------------------------
Electronics 14.5
-----------------------------------------------------------
Communications Equipment 13.6
-----------------------------------------------------------
Manufacturing 7.5
-----------------------------------------------------------
Telecommunications: Long Distance 6.0
3. Portfolio is subject to change. Percentages are as of October 31, 2000, and
are based on total market value of common stocks.
4. Portfolio is subject to change. Percentages are as of October 31, 2000, and
are based on net assets.
6 | OPPENHEIMER MIDCAP FUND
<PAGE>
FUND PERFORMANCE
How has the Fund performed? Below is a discussion by OppenheimerFunds, Inc. of
the Fund's performance during its fiscal year ended October 31, 2000, followed
by a graphical comparison of the Fund's performance to an appropriate
broad-based market index.
Management's discussion of performance. During the fiscal year that ended
October 31, 2000, the U.S. economy enjoyed robust growth, but rising interest
rates led to high levels of stock market volatility. Nevertheless, the Fund
performed strongly as a result of our disciplined adherence to our mid-cap,
growth-oriented strategy. We focused the majority of the Fund's holdings in
fast-growing areas of technology, including photonics, optical networking and
communications, achieving our greatest gains during the first five months of the
period. In late March and April, many technology stocks were hurt by rising
interest rates, and gave up a portion of their earlier gains. However, most of
our holdings met or exceeded earnings expectations and continued to deliver
accelerating rates of growth, thereby positioning the Fund to perform well
throughout the period. 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, 2000. 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
reinvestments of all dividends and capital gains distributions.
The Fund's performance is compared to that of the S&P Mid-Cap 400 Index. The
S&P Mid-Cap 400 is an unmanaged index of 400 domestic stocks chosen for market
size, liquidity, and industry group representation. Index performance reflects
the reinvestment of dividends but does not consider the effect of capital gains
or 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.
7 | OPPENHEIMER MIDCAP FUND
<PAGE>
FUND PERFORMANCE
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
<TABLE>
<CAPTION>
Oppenheimer MidCap Fund (Class A) S&P Mid-Cap 400 Index
<S> <C> <C>
12/01/97 9425 10000
01/31/98 9519 10190
04/30/98 12271 11743
07/31/98 11744 10848
10/31/98 10207 10515
01/31/99 13390 11892
04/30/99 14636 12498
07/31/99 16382 12943
10/31/99 18760 12731
01/31/00 25875 13795
04/30/00 27564 15438
07/31/00 29716 15713
10/31/00 28697 16760
</TABLE>
Average Annual Total Return of Class A Shares of the Fund at 10/31/00(1)
1-Year 44.17% Life 43.54%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
<TABLE>
<CAPTION>
Oppenheimer MidCap Fund (Class B) S&P Mid-Cap 400 Index
<S> <C> <C>
12/01/97 10000 10000
01/31/98 10080 10190
04/30/98 12980 11743
07/31/98 12390 10848
10/31/98 10770 10515
01/31/99 14097 11892
04/30/99 15379 12498
07/31/99 17181 12943
10/31/99 19644 12731
01/31/00 27043 13795
04/30/00 28766 15438
07/31/00 30948 15713
10/31/00 29527 16760
</TABLE>
Average Annual Total Return of Class B Shares of the Fund at 10/31/00(1)
1-Year 46.83% Life 44.95%
1. See page 10 for further details.
8 | OPPENHEIMER MIDCAP FUND
<PAGE>
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
<TABLE>
<CAPTION>
Oppenheimer MidCap Fund (Class C) S&P Mid-Cap 400 Index
<S> <C> <C>
12/01/97 10000 10000
01/31/98 10090 10190
04/30/98 12980 11743
07/31/98 12400 10848
10/31/98 10760 10515
01/31/99 14087 11892
04/30/99 15369 12498
07/31/99 17171 12943
10/31/99 19624 12731
01/31/00 27023 13795
04/30/00 28746 15438
07/31/00 30938 15713
10/31/00 29817 16760
</TABLE>
Average Annual Total Return of Class C Shares of the Fund at 10/31/00(1)
1-Year 50.94% Life 45.44%
Class Y Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
<TABLE>
<CAPTION>
Oppenheimer MidCap Fund (Class Y) S&P Mid-Cap 400 Index
<S> <C> <C>
12/01/97 10000 10000
01/31/98 10110 10190
04/30/98 13040 11743
07/31/98 12500 10848
10/31/98 10880 10515
01/31/99 14297 11892
04/30/99 15639 12498
07/31/99 17521 12943
10/31/99 20095 12731
01/31/00 27744 13795
04/30/00 29596 15438
07/31/00 31949 15713
10/31/00 30898 16760
</TABLE>
Average Annual Total Return of Class Y Shares of the Fund at 10/31/00(1)
1-Year 53.76% Life 47.22%
The performance information for S&P Mid-Cap 400 Index in the graphs begins on
11/30/97.
Past performance is not predictive of future performance.
9 | OPPENHEIMER MIDCAP FUND
<PAGE>
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. The Fund's returns
at 10/31/00 include results for periods of exceptional market performance that
are not typical of historical results. You should not expect those growth rates
to continue. Because of ongoing market volatility, the Fund's performance has
been subject to substantial short-term fluctuations and current performance may
be less than the results shown. For quarterly updates on the Fund's performance,
please contact your financial advisor, call us at 1.800.525.7048 or visit our
website at 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. The Fund's total returns shown do
not show the effects of income taxes on an individual's investment. Taxes may
reduce your actual investment returns on income or gains paid by the Fund or any
gains you may realize if you sell your shares.
Class A shares of the Fund were first publicly offered on 12/1/97. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 5.75%.
Class B shares of the Fund were first publicly offered on 12/1/97. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year) and 3% (inception). 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. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for the 1-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.
Class Y shares of the Fund were first publicly offered on 12/1/97. Class Y
shares are offered only to certain institutional investors under special
agreement with the Distributor.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
10 | OPPENHEIMER MIDCAP FUND
<PAGE>
Financials
11 | OPPENHEIMER MIDCAP FUND
<PAGE>
STATEMENT OF INVESTMENTS October 31, 2000
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
==================================================================================
<S> <C> <C>
Common Stocks--76.9%
----------------------------------------------------------------------------------
Capital Goods--7.5%
----------------------------------------------------------------------------------
Manufacturing--7.5%
C-MAC Industries, Inc.(1) 810,000 $ 44,955,000
----------------------------------------------------------------------------------
Celestica, Inc.(1) 260,000 18,687,500
----------------------------------------------------------------------------------
Flextronics International Ltd.(1) 558,000 21,204,000
----------------------------------------------------------------------------------
Jabil Circuit, Inc.(1) 1,005,000 57,347,812
----------------------------------------------------------------------------------
Millipore Corp. 395,000 20,737,500
------------
162,931,812
----------------------------------------------------------------------------------
Communication Services--7.6%
----------------------------------------------------------------------------------
Telecommunications: Long Distance--6.0%
Broadcom Corp., Cl. A(1) 30,000 6,671,250
----------------------------------------------------------------------------------
Brocade Communications Systems, Inc.(1) 95,600 21,737,050
----------------------------------------------------------------------------------
Copper Mountain Networks, Inc.(1) 702,200 8,031,412
----------------------------------------------------------------------------------
Corvis Corp.(1) 153,200 10,053,750
----------------------------------------------------------------------------------
Corvis Corp.(1,2) 894,072 41,071,432
----------------------------------------------------------------------------------
Cosine Communications, Inc.(1) 200,000 6,612,500
----------------------------------------------------------------------------------
Efficient Networks, Inc.(1) 447,000 18,753,047
----------------------------------------------------------------------------------
Exfo Electro-Optical Engineering, Inc.(1) 96,300 3,671,437
----------------------------------------------------------------------------------
Exodus Communications, Inc.(1) 392,000 13,156,500
------------
129,758,378
----------------------------------------------------------------------------------
Telecommunications: Wireless--1.6%
Aether Systems, Inc.(1) 362,400 29,218,500
----------------------------------------------------------------------------------
Nextel Partners, Inc., Cl. A(1) 198,500 4,863,250
------------
34,081,750
----------------------------------------------------------------------------------
Consumer Cyclicals--6.1%
----------------------------------------------------------------------------------
Media--0.5%
WPP Group plc, Sponsored ADR 181,028 12,106,247
----------------------------------------------------------------------------------
Retail: Specialty--5.6%
Best Buy Co., Inc.(1) 39,700 1,992,444
----------------------------------------------------------------------------------
BJ's Wholesale Club, Inc.(1) 525,000 17,292,187
----------------------------------------------------------------------------------
RadioShack Corp. 820,000 48,892,500
----------------------------------------------------------------------------------
Tiffany & Co. 1,281,200 54,691,225
------------
122,868,356
----------------------------------------------------------------------------------
Consumer Staples--1.2%
----------------------------------------------------------------------------------
Broadcasting--1.2%
Gemstar-TV Guide International, Inc.(1) 150,000 10,284,375
----------------------------------------------------------------------------------
Hispanic Broadcasting Corp.(1) 260,400 8,137,500
----------------------------------------------------------------------------------
Univision Communications, Inc., Cl. A(1) 186,800 7,145,100
------------
25,566,975
12 | OPPENHEIMER MIDCAP FUND
<PAGE>
Market Value
Shares See Note 1
----------------------------------------------------------------------------------
Healthcare--2.7%
----------------------------------------------------------------------------------
Healthcare: Drugs--2.3%
Abgenix, Inc.(1) 132,200 $ 10,427,275
----------------------------------------------------------------------------------
ImClone Systems, Inc.(1) 200,000 10,937,500
----------------------------------------------------------------------------------
Medarex, Inc.(1) 462,200 28,251,975
------------
49,616,750
----------------------------------------------------------------------------------
Healthcare: Supplies & Services--0.4%
Affymetrix, Inc.(1) 154,000 8,527,750
----------------------------------------------------------------------------------
Technology--48.6%
----------------------------------------------------------------------------------
Computer Hardware--1.4%
Digital Lightwave, Inc.(1) 100,000 5,068,750
----------------------------------------------------------------------------------
Handspring, Inc.(1) 275,600 19,929,325
----------------------------------------------------------------------------------
Juniper Networks, Inc.(1) 34,200 6,669,000
------------
31,667,075
----------------------------------------------------------------------------------
Computer Services--3.4%
Applied Micro Circuits Corp.(1) 376,800 28,801,650
----------------------------------------------------------------------------------
Blue Martini Software, Inc.(1) 30,000 1,128,750
----------------------------------------------------------------------------------
Finisar Corp.(1) 1,000,000 28,812,500
----------------------------------------------------------------------------------
Foundry Networks, Inc.(1) 186,400 12,383,950
----------------------------------------------------------------------------------
Sonus Networks, Inc.(1) 77,400 2,670,300
------------
73,797,150
----------------------------------------------------------------------------------
Computer Software--15.7%
Akamai Technologies, Inc.(1) 3,400 173,400
----------------------------------------------------------------------------------
Interwoven, Inc.(1) 147,000 14,810,250
----------------------------------------------------------------------------------
Kana Communications, Inc.(1) 160,000 3,760,000
----------------------------------------------------------------------------------
McDATA Corp., Cl. B1 70,800 5,901,844
----------------------------------------------------------------------------------
Mercury Interactive Corp.(1) 588,000 65,268,000
----------------------------------------------------------------------------------
Micromuse, Inc.(1) 365,000 61,935,938
----------------------------------------------------------------------------------
Portal Software, Inc.(1) 470,000 16,538,125
----------------------------------------------------------------------------------
Rational Software Corp.(1) 1,070,000 63,865,625
----------------------------------------------------------------------------------
RealNetworks, Inc.(1) 135,000 2,782,266
----------------------------------------------------------------------------------
Research in Motion Ltd.(1) 715,000 71,500,000
----------------------------------------------------------------------------------
Sapient Corp.(1) 178,000 6,330,125
----------------------------------------------------------------------------------
StorageNetworks, Inc.(1) 13,200 837,375
----------------------------------------------------------------------------------
Veritas Software Corp.(1) 194,500 27,427,539
------------
341,130,487
13 | OPPENHEIMER MIDCAP FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
Market Value
Shares See Note 1
----------------------------------------------------------------------------------
Communications Equipment--13.6%
Antec Corp.(1) 67,200 $ 819,000
----------------------------------------------------------------------------------
Audiocodes Ltd.(1) 432,400 17,106,825
----------------------------------------------------------------------------------
Avanex Corp.(1) 65,000 6,601,563
----------------------------------------------------------------------------------
Bookham Technology plc, ADR(1) 806,100 27,155,494
----------------------------------------------------------------------------------
Bookham Technology plc, ADR(1,2) 315,856 7,448,279
----------------------------------------------------------------------------------
CIENA Corp.(1) 180,000 18,922,500
----------------------------------------------------------------------------------
New Focus, Inc.(1) 197,300 12,528,550
----------------------------------------------------------------------------------
Newport Corp. 1,274,800 145,586,144
----------------------------------------------------------------------------------
Nortel Networks Corp. 22,710 1,033,305
----------------------------------------------------------------------------------
ONI Systems Corp.(1) 152,500 12,362,031
----------------------------------------------------------------------------------
Scientific-Atlanta, Inc. 660,000 45,168,750
----------------------------------------------------------------------------------
UTStarcom, Inc.(1) 61,800 1,236,000
--------------
295,968,441
----------------------------------------------------------------------------------
Electronics--14.5%
JDS Uniphase Corp.(1) 1,232,444 100,367,158
----------------------------------------------------------------------------------
PMC-Sierra, Inc.(1) 200,000 33,900,000
----------------------------------------------------------------------------------
QLogic Corp.(1) 206,000 19,930,500
----------------------------------------------------------------------------------
SDL, Inc.(1) 294,000 76,219,500
----------------------------------------------------------------------------------
Vitesse Semiconductor Corp.(1) 285,000 19,932,188
----------------------------------------------------------------------------------
Waters Corp.(1) 910,000 66,031,875
--------------
316,381,221
----------------------------------------------------------------------------------
Utilities--3.2%
----------------------------------------------------------------------------------
Electric Utilities--3.2%
Calpine Corp.(1) 889,000 70,175,438
--------------
Total Common Stocks (Cost $1,313,014,836) 1,674,577,830
==================================================================================
Preferred Stocks--1.4%
Centerpoint Broadband Technologies, Inc.,
Non-Cum. Cv., Series D(1,2) 556,586 5,999,997
----------------------------------------------------------------------------------
fusionOne, Inc., 8% Cv., Series D(1,2) 1,675,894 9,100,105
----------------------------------------------------------------------------------
ITF Optical Technologies, Inc., Cv., Series A(1,2) 200,000 5,000,000
----------------------------------------------------------------------------------
Tellium, Inc., Cv., Series E(1,2) 366,667 11,000,010
--------------
Total Preferred Stocks (Cost $31,100,112) 31,100,112
14 | OPPENHEIMER MIDCAP FUND
<PAGE>
Principal Market Value
Amount See Note 1
====================================================================================
Convertible Corporate Bonds and Notes--0.2%
Cyras Systems, Inc., 4.50% Cv. Nts., 8/15/05(3)
(Cost $3,150,000) $ 3,150,000 $ 3,417,750
====================================================================================
Repurchase Agreements--22.5%
Repurchase agreement with Deutsche Bank Securities
Inc., 6.51%, dated 10/31/00, to be repurchased at
$491,125,796 on 11/1/00, collateralized by U.S.
Treasury Nts., 6.125%-6.625%, 7/31/01-8/15/07, with
a value of $109,387,358 and U.S. Treasury Bonds,
3.875%-8.875%, 8/15/17-4/15/29, with a value of
$393,076,366 (Cost $491,037,000) 491,037,000 491,037,000
------------------------------------------------------------------------------------
Total Investments, at Value (Cost $1,838,301,948) 101.0% 2,200,132,692
------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (1.0) (21,655,503)
-----------------------------
Net Assets 100.0% $2,178,477,189
=============================
</TABLE>
Footnotes to Statement of Investments
1. Non-income-producing security.
2. Identifies issues considered to be illiquid or restricted--See Note 5 of
Notes to Financial Statements.
3. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $3,417,750 or 0.16% of the Fund's net
assets as of October 31, 2000.
See accompanying Notes to Financial Statements
15 | OPPENHEIMER MIDCAP FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES October 31, 2000
<TABLE>
==================================================================================
<S> <C>
Assets
Investments, at value (including repurchase agreements of
$491,037,000) (cost $1,838,301,948)--see accompanying statement $2,200,132,692
----------------------------------------------------------------------------------
Cash 115,860
----------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 11,945,059
Interest and dividends 117,675
Other 7,483
--------------
Total assets 2,212,318,769
==================================================================================
Liabilities
Payables and other liabilities:
Investments purchased 30,974,284
Shares of beneficial interest redeemed 1,300,880
Distribution and service plan fees 463,637
Transfer and shareholder servicing agent fees 360,389
Trustees' compensation 228,906
Other 513,484
--------------
Total liabilities 33,841,580
==================================================================================
Net Assets $2,178,477,189
==============
==================================================================================
Composition of Net Assets
Paid-in capital $1,968,177,024
----------------------------------------------------------------------------------
Accumulated net investment loss (192,223)
----------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (151,338,356)
----------------------------------------------------------------------------------
Net unrealized appreciation on investments 361,830,744
--------------
Net Assets $2,178,477,189
==============
==================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on
net assets of $1,055,966,746 and 34,727,713 shares of
beneficial interest outstanding) $30.41
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $32.27
----------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $874,829,675 and 29,367,126 shares of beneficial
interest outstanding) $29.79
----------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $247,566,117 and 8,313,438 shares of beneficial
interest outstanding) $29.78
----------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $114,651 and 3,715 shares of beneficial
interest outstanding) $30.86
</TABLE>
See accompanying Notes to Financial Statements.
16 | OPPENHEIMER MIDCAP FUND
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended October 31, 2000
<TABLE>
==================================================================================
<S> <C>
Investment Income
Interest $ 20,726,776
----------------------------------------------------------------------------------
Dividends 502,979
------------
Total income 21,229,755
==================================================================================
Expenses
Management fees 9,665,786
----------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 1,751,015
Class B 5,924,043
Class C 1,606,363
----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 1,282,894
Class B 1,048,655
Class C 283,990
----------------------------------------------------------------------------------
Trustees' compensation 232,946
----------------------------------------------------------------------------------
Custodian fees and expenses 44,613
----------------------------------------------------------------------------------
Other 1,020,402
------------
Total expenses 22,860,707
Less expenses paid indirectly (30,907)
------------
Net expenses 22,829,800
==================================================================================
Net Investment Loss (1,600,045)
==================================================================================
Realized and Unrealized Gain (Loss)
Net realized loss on investments (144,891,367)
----------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 296,033,356
------------
Net realized and unrealized gain 151,141,989
==================================================================================
Net Increase in Net Assets Resulting from Operations $149,541,944
============
</TABLE>
See accompanying Notes to Financial Statements.
17 | OPPENHEIMER MIDCAP FUND
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended October 31, 2000 1999
==================================================================================
<S> <C> <C>
Operations
Net investment loss $ (1,600,045) $ (914,919)
----------------------------------------------------------------------------------
Net realized gain (loss) (144,891,367) (3,595,944)
----------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 296,033,356 65,603,264
-----------------------------
Net increase in net assets resulting from operations 149,541,944 61,092,401
==================================================================================
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 805,221,452 119,533,021
Class B 700,136,215 88,747,417
Class C 210,488,193 18,791,983
Class Y 115,803 --
==================================================================================
Net Assets
Total increase 1,865,503,607 288,124,077
----------------------------------------------------------------------------------
Beginning of period 312,973,582 24,849,505
-----------------------------
End of period (including accumulated net investment
loss of $192,223 and $6,808, respectively) $2,178,477,189 $312,973,582
=============================
</TABLE>
See accompanying Notes to Financial Statements.
18 | OPPENHEIMER MIDCAP FUND
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A Year Ended October 31, 2000 1999 1998(1)
=================================================================================================
<S> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $19.88 $10.83 $10.00
-------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment gain (loss) .04 (.04) (.02)
Net realized and unrealized gain 10.49 9.11 .85
------------------------------------
Total income from investment operations 10.53 9.07 .83
-------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Total distributions in excess of net realized gain -- (.02) --
-------------------------------------------------------------------------------------------------
Net asset value, end of period $30.41 $19.88 $10.83
====================================
=================================================================================================
Total Return, at Net Asset Value(2) 52.97% 83.79% 8.30%
=================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $1,055,967 $167,879 $14,607
-------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 728,168 $ 60,644 $ 7,185
-------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment gain (loss) 0.28% (0.49)% (0.33)%
Expenses 1.16% 1.40% 1.59%(4)
-------------------------------------------------------------------------------------------------
Portfolio turnover rate 23% 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 has not been grossed up to reflect the effect of expenses paid
indirectly.
See accompanying Notes to Financial Statements.
19 | OPPENHEIMER MIDCAP FUND
<PAGE>
FINANCIAL HIGHLIGHTS Continued
<TABLE>
<CAPTION>
Class B Year Ended October 31, 2000 1999 1998(1)
=================================================================================================
<S> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $19.62 $10.77 $10.00
-------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.07) (.07) (.05)
Net realized and unrealized gain 10.24 8.94 .82
------------------------------------
Total income from investment operations 10.17 8.87 .77
-------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Total distributions in excess of net realized gain -- (.02) --
-------------------------------------------------------------------------------------------------
Net asset value, end of period $29.79 $19.62 $10.77
====================================
=================================================================================================
Total Return, at Net Asset Value(2) 51.83% 82.40% 7.70%
=================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $874,830 $118,611 $7,654
-------------------------------------------------------------------------------------------------
Average net assets (in thousands) $594,390 $ 40,455 $3,521
-------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment loss (0.48)% (1.25)% (1.06)%
Expenses 1.91% 2.16% 2.35%(4)
-------------------------------------------------------------------------------------------------
Portfolio turnover rate 23% 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 has not been grossed up to reflect the effect of expenses paid
indirectly.
See accompanying Notes to Financial Statements.
20 | OPPENHEIMER MIDCAP FUND
<PAGE>
<TABLE>
<CAPTION>
Class C Year Ended October 31, 2000 1999 1998(1)
=================================================================================================
<S> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $19.60 $10.76 $10.00
-------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.07) (.06) (.05)
Net realized and unrealized gain 10.25 8.92 .81
------------------------------------
Total income from investment operations 10.18 8.86 .76
-------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Total distributions in excess of net realized gain -- (.02) --
-------------------------------------------------------------------------------------------------
Net asset value, end of period $29.78 $19.60 $10.76
====================================
=================================================================================================
Total Return, at Net Asset Value(2) 51.94% 82.38% 7.60%
=================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $247,566 $26,482 $2,587
-------------------------------------------------------------------------------------------------
Average net assets (in thousands) $161,221 $ 9,066 $1,271
-------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment loss (0.48)% (1.26)% (1.07)%
Expenses 1.91% 2.16% 2.35%(4)
-------------------------------------------------------------------------------------------------
Portfolio turnover rate 23% 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 has not been grossed up to reflect the effect of expenses paid
indirectly.
See accompanying Notes to Financial Statements.
21 | OPPENHEIMER MIDCAP FUND
<PAGE>
FINANCIAL HIGHLIGHTS Continued
<TABLE>
<CAPTION>
Class Y Year Ended October 31, 2000 1999 1998(1)
=================================================================================================
<S> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $20.07 $10.88 $10.00
-------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income gain (loss) (.02) (.01) .01
Net realized and unrealized gain 10.81 9.22 .87
------------------------------------
Total income from investment operations 10.79 9.21 .88
-------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Total distributions in excess of net realized gain -- (.02) --
-------------------------------------------------------------------------------------------------
Net asset value, end of period $30.86 $20.07 $10.88
====================================
=================================================================================================
Total Return, at Net Asset Value(2) 53.76% 84.69% 8.80%
=================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $115 $2 $1
-------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 33 $2 $1
-------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income (loss) 0.60% (0.06)% 0.05%
Expenses 0.74% 1.03% 1.09%(4)
-------------------------------------------------------------------------------------------------
Portfolio turnover rate 23% 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 has not been grossed up to reflect the effect of expenses paid
indirectly.
See accompanying Notes to Financial Statements.
22 | OPPENHEIMER MIDCAP FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. Significant Accounting Policies
Oppenheimer MidCap Fund (the Fund) is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company. The
Fund's investment objective is to seek capital appreciation. The Fund's
investment advisor is OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B, Class C and Class Y shares. Class A
shares are sold at their offering price, which is normally net asset value plus
a front-end sales charge. Class B and Class C shares are sold without a
front-end sales charge but 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. Securities listed or traded on National Stock Exchanges or
other domestic or foreign exchanges are valued based on the last sale price of
the security traded on that exchange prior to the time when the Fund's assets
are valued. In the absence of a sale, the security is valued at the last sale
price on the prior trading day, if it is within the spread of the closing bid
and asked prices, and if not, at the closing bid price. Securities (including
restricted securities) for which quotations are not readily available are valued
primarily using dealer-supplied valuations, a portfolio pricing service
authorized by the Board of Trustees, or at their fair value. Fair value is
determined in good faith under consistently applied procedures under the
supervision of the Board of Trustees. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).
--------------------------------------------------------------------------------
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.
23 | OPPENHEIMER MIDCAP FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
1. Significant Accounting Policies Continued
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, 2000, the Fund had available for federal income tax purposes
an unused capital loss carryover as follows:
Expiring
--------------------------------------
2006 $ 2,792,572
--------------------------------------
2007 3,516,822
--------------------------------------
2008 142,020,390
--------------------------------------------------------------------------------
Trustees' Compensation. The Fund has adopted an unfunded retirement plan for the
Fund's independent Board of 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, 2000, a provision of $185,415 was made for the Fund's projected
benefit obligations, resulting in an accumulated liability of $192,223 as of
October 31, 2000.
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 Board of Trustees in shares of one
or more Oppenheimer funds selected by the trustee. The amount paid to the Board
of Trustees 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 investment income per share.
24 | OPPENHEIMER MIDCAP FUND
<PAGE>
--------------------------------------------------------------------------------
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 Dividends and Distributions to Shareholders. Net investment
income (loss) and net realized gain (loss) may differ for financial statement
and tax purposes. The character of dividends and distributions made during the
fiscal year from net investment income or net realized gains may differ from its
ultimate characterization for federal income tax purposes. Also, due to timing
of dividends and distributions, the fiscal year in which amounts are distributed
may differ from the fiscal year in which the income or 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, 2000, amounts have been reclassified to reflect a
decrease in paid-in capital of $1,414,630. Accumulated net investment loss was
decreased by the same amount. Net assets of the Fund were unaffected by the
reclassifications.
--------------------------------------------------------------------------------
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. Certain dividends from foreign
securities will be recorded as soon as the Fund is informed of the dividend if
such information is obtained subsequent to the ex-dividend 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>
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, 2000 Year Ended October 31, 1999
Shares Amount Shares Amount
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Sold 33,833,586 $1,036,803,331 8,300,323 $138,625,655
Dividends and/or
distributions reinvested -- -- 1,765 21,575
Redeemed (7,550,876) (231,581,879) (1,206,313) (19,114,209)
---------------------------------------------------------------
Net increase 26,282,710 $ 805,221,452 7,095,775 $119,533,021
===============================================================
------------------------------------------------------------------------------------------------
Class B
Sold 27,648,563 $ 830,933,407 6,071,612 $100,987,612
Dividends and/or
distributions reinvested -- -- 1,088 13,216
Redeemed (4,327,314) (130,797,192) (737,801) (12,253,411)
---------------------------------------------------------------
Net increase 23,321,249 $ 700,136,215 5,334,899 $ 88,747,417
===============================================================
------------------------------------------------------------------------------------------------
Class C
Sold 9,424,959 $ 281,662,027 1,337,614 $ 22,505,897
Dividends and/or
distributions reinvested -- -- 315 3,822
Redeemed (2,462,638) (71,173,834) (227,345) (3,717,736)
---------------------------------------------------------------
Net increase 6,962,321 $ 210,488,193 1,110,584 $ 18,791,983
===============================================================
------------------------------------------------------------------------------------------------
Class Y
Sold 3,687 $ 118,326 -- $ --
Dividends and/or
distributions reinvested -- -- -- --
Redeemed (72) (2,523) -- --
---------------------------------------------------------------
Net increase 3,615 $ 115,803 -- $ --
===============================================================
</TABLE>
================================================================================
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended October 31, 2000, were
$1,570,864,252 and $258,656,241, respectively.
As of October 31, 2000, unrealized appreciation (depreciation) based on cost of
securities for federal income tax purposes of $1,841,310,521 was:
Gross unrealized appreciation $ 550,040,210
Gross unrealized depreciation (191,218,039)
-------------
Net unrealized appreciation $ 358,822,171
=============
26 | OPPENHEIMER MIDCAP FUND
<PAGE>
================================================================================
4. Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for 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, 2000, was an annualized
rate of 0.65%, before any waiver by the Manager if applicable.
--------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund on an
"at-cost" basis. OFS also acts as the transfer and shareholder servicing agent
for the other Oppenheimer 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, 2000 $8,001,647 $2,223,986 $601,117 $15,049,373 $1,293,236
</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, 2000 $-- $762,760 $39,189
</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>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
4. 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 purchased. 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 year ended October 31, 2000, payments
under the Class A plan totaled $1,751,015 prior to Manager waiver if applicable,
all of which were paid by the Distributor to recipients, and included $127,010
paid to an affiliate of the Manager. 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 asset-based sales charges from the Fund under
the plans. If any 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 carryforward 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, 2000,
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 $5,924,043 $5,159,537 $15,739,209 1.80%
Class C Plan 1,606,363 880,338 1,973,573 0.80
</TABLE>
28 | OPPENHEIMER MIDCAP FUND
<PAGE>
================================================================================
5. Illiquid or Restricted Securities
As of October 31, 2000, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. The Fund intends to invest no more
than 15% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of October 31, 2000, was $79,619,823,
which represents 3.65% of the Fund's net assets, all of which is considered
restricted. Information concerning restricted securities is as follows:
<TABLE>
<CAPTION>
Valuation
Acquisition Cost Per Unit as of Unrealized
Security Date Per Unit Oct. 31, 2000 Appreciation
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stocks and Warrants
Bookham Technology plc, ADR 2/24/00 $15.83 $23.58 $ 2,448,279
----------------------------------------------------------------------------------------
Centerpoint Broadband Technologies,
Inc., Non-Cum. Cv., Series D 10/23/00 10.78 10.78 --
----------------------------------------------------------------------------------------
Corvis Corp. 12/16/99 6.71 45.94 35,071,464
----------------------------------------------------------------------------------------
fusionOne, Inc., 8% Cv., Series D 9/6/00 5.43 5.43 --
----------------------------------------------------------------------------------------
ITF Optical Technologies, Inc.,
Cv., Series A 4/7/00 25.00 25.00 --
----------------------------------------------------------------------------------------
Tellium, Inc., Cv., Series E 9/20/00 30.00 30.00 --
</TABLE>
================================================================================
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 or at October
31, 2000.
29 | OPPENHEIMER MIDCAP FUND
<PAGE>
INDEPENDENT AUDITORS' REPORT
================================================================================
The Board of Trustees and Shareholders of
Oppenheimer MidCap Fund:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer MidCap Fund as of October 31, 2000,
and the related statement of operations, the statement of changes in net assets,
and the financial highlights for the year ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended October 31, 1999, and the financial highlights for the year
ended October 31, 1999, and the eleven months ended October 31, 1998, were
audited by other auditors whose report dated November 19, 1999, expressed an
unqualified opinion on this information.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2000, by correspondence with the custodian
and brokers; and where confirmations were not received from brokers, we
performed other auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer MidCap Fund as of October 31, 2000, and the results of its
operations, the changes in its net assets, and the financial highlights for the
year then ended, in conformity with accounting principles generally accepted in
the United States of America.
KPMG LLP
Denver, Colorado
November 21, 2000
30 | OPPENHEIMER MIDCAP FUND
<PAGE>
FEDERAL INCOME TAX INFORMATION Unaudited
================================================================================
In early 2001 shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 2000. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
31 | OPPENHEIMER MIDCAP FUND
<PAGE>
OPPENHEIMER MIDCAP FUND
<TABLE>
====================================================================================================
<S> <C>
Officers and Directors Bridget A. Macaskill, Chairman of the Board of Directors and President
Paul Y. Clinton, Director
Thomas W. Courtney, Director
Robert G. Galli, Director
Lacy B. Herrmann, Director
George Loft, Director
Bruce L. Bartlett, Vice President
Andrew J. Donohue, Secretary
Brian W. Wixted, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
====================================================================================================
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 Auditors KPMG LLP
====================================================================================================
Legal Counsel Mayer, Brown & Platt
For more complete information about Oppenheimer MidCap Fund,
please refer to the Prospectus. To obtain a copy, call
your financial advisor, or call OppenheimerFunds Distributor, Inc. at
1.800.525.7048, or visit the OppenheimerFunds Internet website at
www.oppenheimerfunds.com.
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.
Oppenheimer funds are distributed by OppenheimerFunds Distributor,
Inc., Two World Trade Center, New York, NY 10048-0203.
(C)Copyright 2000 OppenheimerFunds, Inc. All rights reserved.
</TABLE>
32 | OPPENHEIMER MIDCAP FUND
<PAGE>
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
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Internet
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Ticker Symbols Class A: OMDAX Class B: OMDBX Class C: OMDCX Class Y: N/A
1. At times this website may be inaccessible or its transaction feature may be
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RA0745.001.1000 December 30, 2000
