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OPPENHEIMER MIDCAP FUND
Supplement dated February 11, 2003 to the
Statement of Additional Information
dated December 23, 2002
The Statement of Additional Information is changed as follows:
1. The fourth paragraph on page 11, titled "Futures," is replaced with the
following:
The Fund can buy and sell futures contracts that relate to (1) stock
indices (these are referred to as "stock index futures"), (2) an
individual stock ("single stock futures"), (3) foreign currencies
(these are referred to as "forward contracts"), and (4) commodities
(these are referred to as "commodity futures").
2. In the section titled "Futures" on page 11, the following is added as
the third paragraph:
A single stock future obligates the seller to deliver (and the
purchaser to take) cash or a specified equity security to settle the
futures transaction. Either party could also enter into an
offsetting contract to close out the position. Single stock futures
trade on a very limited number of exchanges, with contracts
typically not fungible among the exchanges.
February 11, 2003 PX0745.016
Oppenheimer
MidCap Fund
Prospectus dated December 23, 2002
Oppenheimer MidCap Fund is a mutual
fund that seeks capital appreciation
to make your investment grow. It
emphasizes investments in common
stocks of growth companies having a
market capitalization between $2
billion and $11.5 billion.
This Prospectus contains
important information about the
Fund's objective, its investment
policies, strategies and risks. It
also contains important information
about how to buy and sell shares of
the Fund and other account
features. Please read this
Prospectus carefully before you
As with all mutual funds, the invest and keep it for future
Securities and Exchange Commission reference about your account.
has not approved or disapproved the
Fund's securities nor has it
determined that this Prospectus is
accurate or complete. It is a
criminal offense to represent
otherwise.
1234
Contents
ABOUT THE FUND
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The Fund's Investment Objective and Strategies
Main Risks of Investing in the Fund
The Fund's Past Performance
Fees and Expenses of the Fund
About the Fund's Investments
How the Fund is Managed
ABOUT YOUR ACCOUNT
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How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Class N Shares
Class Y Shares
Special Investor Services
AccountLink
PhoneLink
OppenheimerFunds Internet Website
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Financial Highlights
ABOUT THE FUND
The Fund's Investment Objective and Strategies
WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks capital appreciation.
WHAT DOES THE FUND MAINLY INVEST IN? The Fund invests mainly in equity
securities, such as common and preferred stocks, and securities convertible
into common stock. It invests primarily in equity securities of U.S.
companies, but can also buy foreign stocks. Under normal market conditions,
the Fund invests at least 80% of its net assets (plus borrowings for
investment purposes) in equity securities of growth companies that have a
market capitalization of between $2 billion and $11.5 billion (referred to as
"mid-cap"stocks). The Fund may invest its assets in a variety of industry
categories, although it may from time to time emphasize investments in one or
more industries. For example, the Fund has, at certain times, invested a
significant amount of its assets in technology companies. A technology
company is defined as a company using, producing and/or developing technology
products. The types of companies the Fund's investment advisor,
OppenheimerFunds, Inc. (the "Manager") considers to be technology companies
can be expected to change over time as developments in technology occur.
HOW DOES THE PORTFOLIO MANAGER DECIDE WHAT SECURITIES TO BUY OR SELL? In
selecting securities for the Fund, the Fund's portfolio manager looks for
high-growth companies using a "bottom-up" stock selection process. The
"bottom-up" approach focuses on fundamental analysis of individual issuers
before considering overall economic, market or industry trends. The stock
selection process includes analysis of other business and economic factors
that might contribute to the company's stock appreciation. The portfolio
manager also looks for companies with revenues growing at above-average rates
that might support and sustain above-average earnings, and companies whose
revenue growth is primarily driven by strength in unit volume sales. While
this process and the inter-relationship of the factors used may change over
time, and its implementation may vary in particular cases, the portfolio
manager currently searches primarily for stocks of companies having the
following characteristics:
o Market capitalization between $2 billion and $11.5 billion;
o What the portfolio manager believes to be a high rate of sustainable
earnings growth;
o Revenue growth the portfolio manager expects to be at a rate greater
than 10% annually;
o Established companies that are well-positioned to take advantage of
product or technology advances in their industry or related growth
sector.
If the portfolio manager discerns a slowdown in the company's internal
revenue growth or earnings growth or a negative movement in the company's
fundamental economic condition, he will consider selling that stock if there
are other investment alternatives that offer what he believes to be better
appreciation possibilities.
WHO IS THE FUND DESIGNED FOR? The Fund is designed primarily for investors
seeking capital growth in their investment over the long term. Those
investors should be willing to assume the greater risks of short-term share
price fluctuations that are typical for an aggressive growth fund focusing on
mid-cap stock investments. The Fund does not seek current income and the
income from its investments will likely be small. It is not designed for
investors needing current income or preservation of capital. Because of its
focus on long-term growth, the Fund may be appropriate for some portion of a
retirement plan investment for investors with a high risk tolerance. However,
the Fund is not a complete investment program.
Main Risks of Investing in the Fund
All investments have risks to some degree. The Fund's investments in stocks
are subject to changes in their value from a number of factors described
below. There is also the risk that poor security selection by the Manager
will cause the Fund to underperform other funds having similar objectives.
RISKS OF INVESTING IN STOCKS. Stocks fluctuate in price, and their
short-term volatility at times may be great. Because the Fund invests
primarily in common stocks, the value of the Fund's portfolio will be
affected by changes in the stock markets and the special economic and other
factors that might primarily affect the prices of mid-cap stocks in the
market. Market risk will affect the Fund's net asset value per share, which
will fluctuate as the values of the Fund's portfolio securities change. A
variety of factors can affect the price of a particular stock and the prices
of individual stocks do not all move in the same direction uniformly or at
the same time. Different stock markets may behave differently from each
other.
Other factors can affect a particular stock's price, such as poor
earnings reports by the issuer, loss of major customers, major litigation
against the issuer, or changes in government regulations affecting the issuer
or its industry.
Industry and Sector Focus. At times the Fund may increase the relative
emphasis of its investments in a particular industry or sector. The
prices of stocks of issuers in a particular industry or sector may go
up and down in response to changes in economic conditions, government
regulations, availability of basic resources or supplies, or other
events that affect that industry or sector more than others. To the
extent that the Fund increases the relative emphasis of its investments
in a particular industry or sector, its share values may fluctuate in
response to events affecting that industry or sector.
Risks of Growth Stocks. Stocks of growth companies, particularly newer
companies, may offer opportunities for greater long-term capital
appreciation but may be more volatile than stocks of larger, more
established companies. They have greater risks if the company's
earnings growth or stock price fails to increase as expected.
Risks of Technology Stocks. To the extent the Fund is invested in stocks of
technology companies, the value of the Fund's shares is particularly
vulnerable to risks affecting technology companies and/or companies
having investments in technology, including market and economic events
that affect those technology companies. The technology sector has
historically exhibited great fluctuations in valuations. We take this
into account when evaluating the long-term merits of our investments.
The stock prices of technology companies during the past few years have
been highly volatile, largely due to the rapid pace of product change
and development within this sector. This phenomenon may also result in
future stock price volatility. In addition, technologies that are
dependent on consumer demand may be more sensitive to changes in
consumer spending patterns. Technology companies focusing on the
information and telecommunications sectors may also be subject to
international, federal and state regulations and may be adversely
affected by changes in those regulations.
SPECIAL RISKS OF MID-CAP STOCKS. While stocks of mid-cap companies may offer
greater capital appreciation potential than investments in larger
capitalization companies, they may also present greater risks. Mid-cap
stocks tend to be more sensitive to changes in an issuer's earnings
expectations. They tend to have lower trading volumes than large
capitalization securities. As a result, they may experience more abrupt and
erratic price movements.
Since mid-cap companies typically reinvest a high proportion of
earnings in their own businesses, they may lack the dividend yield that can
help cushion their total return in a declining market. Many mid-cap stocks
are traded in over-the-counter markets and therefore may be less liquid than
stocks of larger exchange-traded issuers. That means the Fund could have
greater difficulty selling a security at an acceptable price, especially in
periods of market volatility. That factor increases the potential for losses
to the Fund.
HOW RISKY IS THE FUND OVERALL? The risks described above collectively form
the overall risk profile of the Fund, and can affect the value of the Fund's
investments, its investment performance and its prices per share. Particular
investments and investment strategies also have risks. These risks mean that
you can lose money by investing in the Fund. When you redeem your shares,
they may be worth more or less than what you paid for them. There is no
assurance that the Fund will achieve its investment objective. The Fund
focuses its investments on mid-cap equity securities for long-term growth,
and in the short term, they can be volatile. The price of the Fund's shares
can go up and down substantially. The Fund generally does not use
income-oriented investments to help cushion the Fund's total return from
changes in stock prices, except for defensive purposes. In the
OppenheimerFunds spectrum, the Fund is an aggressive investment vehicle,
designed for investors willing to assume greater risks in the hope of
achieving greater gains. In the short-term the Fund may be less volatile
than small-cap and emerging markets stock funds, but it may be subject to
greater fluctuations in its share prices than funds that emphasize large
capitalization stocks, or funds that focus on both stocks and bonds.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
The Fund's Past Performance
The bar chart and table below show one measure of the risks of investing in
the Fund, by showing the Fund's performance (for its Class A shares) from
year to year for the full calendar years since the Fund's inception and by
showing how the average annual total returns of the Fund's shares, both
before and after taxes, compare to those of a broad-based market index.
The after-tax returns are shown for Class A shares only and are
calculated using the historical highest individual federal marginal income
tax rates in effect during the periods shown, and do not reflect the impact
of state or local taxes. The after-tax returns for the other classes of
shares will vary. In certain cases, the figure representing "Return After
Taxes on Distributions and Sale of Fund Shares" may be higher than the other
return figures for the same period. A higher after-tax return results when a
capital loss occurs upon redemption and translates into an assumed tax
deduction that benefits the shareholder. The after-tax returns are calculated
based on certain assumptions mandated by regulation and your actual after-tax
returns may differ from those shown, depending on your individual tax
situation. The after-tax returns set forth below are not relevant to
investors who hold their fund shares through tax-deferred arrangements such
as 401(k) plans or IRAs or to institutional investors not subject to tax. The
Fund's past investment performance, before and after taxes, is not
necessarily an indication of how the Fund will perform in the future.
Annual Total Returns (Class A) (as of 12/31 each year)
[See appendix to prospectus for data in bar chart showing annual total
returns]
Sales charges and taxes are not included in the calculations of return in
this bar chart, and if those charges and taxes were included, the returns may
be less than those shown.
For the period from 1/1/02 through 9/30/02, the cumulative return (not
annualized) before taxes for Class A shares was -29.32%.
During the period shown in the bar chart, the highest return (not annualized)
before taxes for a calendar quarter was 43.43% (4Qtr `99) and the lowest
return (not annualized) before taxes for a calendar quarter was -32.06% (4Qtr
`00).
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Average Annual Total Returns
------------------------------ 5 Years
for the periods ended (or life of
December 31, 2001 1 Year class, if less)
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Class A Shares (inception
12/1/97) -37.92% 9.55%
Return Before Taxes -37.92% 9.54%
Return After Taxes on
Distributions -23.09% 7.83%
Return After Taxes on
Distributions and Sale of
Fund Shares
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S&P MidCap 400 Index
(reflects no deduction for
fees, expenses or taxes) -0.62% 13.18%1
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