UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-08297
OPPENHEIMER MIDCAP FUND
(Exact name of registrant as specified in charter)
6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924
(Address of principal executive offices) (Zip code)
ROBERT G. ZACK, ESQ.
OPPENHEIMERFUNDS, INC.
TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1008
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
Date of fiscal year end: OCTOBER 31
Date of reporting period: OCTOBER 31, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN COMMON STOCK INDUSTRIES
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IT Services 10.2%
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Software 9.9
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Health Care Equipment & Supplies 9.9
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Capital Markets 6.3
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Commercial Banks 5.4
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Specialty Retail 5.2
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Insurance 5.2
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Textiles, Apparel & Luxury Goods 4.6
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Commercial Services & Supplies 4.5
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Health Care Providers & Services 3.1
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2006, and are based on net assets.
TOP TEN COMMON STOCK HOLDINGS
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Alliance Data Systems Corp. 3.7%
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Bard (C.R.), Inc. 3.6
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Polo Ralph Lauren Corp. 3.2
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O'Reilly Automotive, Inc. 3.2
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Commerce Bancorp, Inc. 3.0
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Rockwell Collins, Inc. 3.0
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Varian Medical Systems, Inc. 2.7
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Intuit, Inc. 2.7
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Coventry Health Care, Inc. 2.5
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Stericycle, Inc. 2.5
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2006, and are based on net assets. For more current Fund holdings,
please visit www.oppenheimerfunds.com.
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8 | OPPENHEIMER MIDCAP FUND
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SECTOR ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Information Technology 24.1%
Financials 21.1
Health Care 17.1
Industrials 15.5
Consumer Discretionary 13.9
Energy 3.0
Materials 2.4
Consumer Staples 2.3
Telecommunication Services 0.6
Portfolio holdings and allocations are subject to change. Percentages are as of
October 31, 2006, and are based on the total market value of common stocks.
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9 | OPPENHEIMER MIDCAP FUND
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED OCTOBER 31, 2006, FOLLOWED
BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE
BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. For the 12-month period ending
October 31, 2006, Oppenheimer MidCap Fund's Class A shares (without sales
charge) produced positive results but underperformed its benchmark, the S&P
MidCap 400 Index. We attribute this relative underperformance to the Fund's
focus on higher-quality companies during a market environment that predominantly
favored lower-quality companies.
In terms of industries, top contributors included industrials and IT
services. The Fund's underweight in the energy and household durables areas also
benefited performance. In contrast, bottom-performers included the consumer
discretionary and healthcare sectors.
Regardless of broader market trends, we continue to follow a bottom-up,
research driven stock selection strategy that emphasizes higher-quality
securities. We target those companies we believe offer strong balance sheets,
stable earnings, sustainable growth rates and accomplished management teams. Due
to the Fund's focus on higher-quality stocks, the Fund tends to be negatively
impacted during investment environments that favor more speculative stocks, as
evidenced over the reporting period. Historically, during the end stages of a
bull market, many investors' appetite for risk increases and they tend to focus
on lower-quality companies in their pursuit of gaining higher investment
returns. As a result of this cyclical event, higher-quality companies, those
with strong balance sheets, stable earnings and sustainable growth rates, tend
to underperform. However, when economic growth slows, investors usually become
risk adverse and shift assets to higher-quality stocks, in which case
higher-quality issuers tend to outperform.
Over the period we made a few notable adjustments to the Fund's sector
weightings. For example, we significantly decreased the Fund's exposure to the
consumer discretionary sector, primarily due to our concerns over slower
economic growth. We also reduced the Fund's weighting to the energy sector. We
believe companies in this space will begin to show a deceleration in their
earnings growth as commodity prices have started to weaken. Additionally, we
greatly increased the Fund's weighting to the financials sector. Over the next
18 months, we believe the current inverted yield curve will steepen, which
should benefit the Fund's financial securities.
On the negative side of performance, in addition to higher quality stocks
falling out of favor, a number of individual holdings significantly detracted
from performance. In the consumer discretionary sector, specialty-retailers and
media stocks hurt results. Within specialty retailers, both Chico's FAS, Inc.
and Williams-Sonoma, Inc., suffered, as investors grew concerned over a slowdown
in consumer spending due to increasing oil prices. In
10 | OPPENHEIMER MIDCAP FUND
the media area, Getty Images, Inc., a leading provider of imagery, film and
digital services, declined as the company's business fundamentals deteriorated.
Also underperforming was NAVTEQ Corp., a manufacturer of digital maps used in
vehicle navigation systems. The company's sales were adversely affected as
higher oil prices negatively impacted the auto manufacturing industry, NAVTEQ's
primary customer. Top detractors in the healthcare sector included The Cooper
Companies, Inc., and PDL BioPharma, Inc. The Cooper Companies, Inc., a
manufacturer and marketer of specialty healthcare products, lost significant
market share as it failed to execute on its new contact lens product.
Biotechnology firm, PDL BioPharma, Inc., declined as it delayed a new product
launch and announced significantly higher costs to develop clinical drug trials.
As a result of the fundamental problems these securities incurred, we eliminated
all six of these stocks from the portfolio.
On the positive side, top contributions to performance came predominantly
from securities within the industrials and technology sectors. Within
industrials the best performers were Expeditors International of Washington,
Inc., a freight forwarding company and Fastenal Co., a nuts and bolts
distributor. Both companies outperformed due to a strong global economy, which
drove up demand for their respective services and products. In the technology
sector, strong performance came from IT services providers Cognizant Technology
Solutions Corp., an offshore outsourcing IT services provider and Alliance Data
Systems Corp., a provider of transaction, credit and marketing services. Both
companies continued to benefit from the strong outsourcing trend and delivered
very favorable earnings results. Additionally, fashion retailer, Polo Ralph
Lauren Corp. bucked the negative trend that overshadowed the specialty retail
market by successfully managing its brand, which led to higher than expected
sales. Lastly, the Fund benefited from its underweight in the energy and
household durables areas. Both areas declined due to volatile commodity prices.
MID-CAP STOCKS TEND TO BE MORE SENSITIVE TO CHANGES IN EARNINGS
EXPECTATIONS, AND TEND TO HAVE LOWER TRADING VOLUMES THAN LARGE-CAP SECURITIES,
AND THEREFORE THEY MAY EXPERIENCE MORE ABRUPT AND ERRATIC PRICE MOVEMENTS.
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, 2006. In the case of Class A, Class B, Class C and
Class Y shares, performance is measured from the inception of each Class on
December 1, 1997. In the case of Class N shares, performance is measured from
inception of the Class on March 1, 2001. 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, Class C and
11 | OPPENHEIMER MIDCAP FUND
FUND PERFORMANCE DISCUSSION
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Class N shares, and reinvestments of all dividends and capital gains
distributions. Past performance cannot guarantee future results.
The Fund's performance is compared to that of the S&P Mid-Cap 400 Index.
The S&P Mid-Cap 400 Index is an unmanaged index of 400 domestic stocks chosen
for market size liquidity, and industry group representation. Index performance
reflects the reinvestment of income but does not consider the effect of
transaction costs, and none of the data in the graphs shows the effect of taxes.
The Fund's performance reflects the effects of the Fund's 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 investments in the index.
12 | OPPENHEIMER MIDCAP FUND
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer MidCap Fund (Class A)
S&P Mid-Cap 400 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
MidCap Fund S&P Mid-Cap
(Class A) 400 Index
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12/01/1997 $ 9,425 $10,000
01/31/1998 $ 9,519 $10,190
04/30/1998 $12,271 $11,743
07/31/1998 $11,744 $10,848
10/31/1998 $10,207 $10,515
01/31/1999 $13,390 $11,892
04/30/1999 $14,636 $12,498
07/31/1999 $16,382 $12,943
10/31/1999 $18,760 $12,731
01/31/2000 $25,875 $13,795
04/30/2000 $27,564 $15,438
07/31/2000 $29,716 $15,713
10/31/2000 $28,697 $16,760
01/31/2001 $23,903 $17,052
04/30/2001 $16,901 $16,525
07/31/2001 $15,618 $16,591
10/31/2001 $13,608 $14,674
01/31/2002 $13,910 $16,493
04/30/2002 $13,419 $17,611
07/31/2002 $11,201 $14,491
10/31/2002 $10,786 $13,972
01/31/2003 $10,182 $13,759
04/30/2003 $10,871 $14,528
07/31/2003 $12,617 $16,498
10/31/2003 $13,183 $18,266
01/31/2004 $13,230 $19,638
04/30/2004 $13,608 $19,532
07/31/2004 $13,400 $19,440
10/31/2004 $14,193 $20,283
01/31/2005 $15,155 $21,819
04/30/2005 $14,664 $21,434
07/31/2005 $16,637 $24,473
10/31/2005 $16,571 $23,863
01/31/2006 $18,033 $26,686
04/30/2006 $18,411 $27,505
07/31/2006 $16,608 $25,521
10/31/2006 $17,618 $27,067
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
10/31/06
1-Year 0.21% 5-Year 4.06% Since Inception (12/1/97) 6.56%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PER-FORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CON-TINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS
C AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE "SINCE INCEPTION" RETURN FOR CLASS
B USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 18 FOR
FURTHER INFORMATION.
13 | OPPENHEIMER MIDCAP FUND
FUND PERFORMANCE DISCUSSION
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CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer MidCap Fund (Class B)
S&P Mid-Cap 400 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
MidCap Fund S&P Mid-Cap
(Class B) 400 Index
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12/01/1997 $10,000 $10,000
01/31/1998 $10,080 $10,190
04/30/1998 $12,980 $11,743
07/31/1998 $12,390 $10,848
10/31/1998 $10,770 $10,515
01/31/1999 $14,097 $11,892
04/30/1999 $15,379 $12,498
07/31/1999 $17,181 $12,943
10/31/1999 $19,644 $12,731
01/31/2000 $27,043 $13,795
04/30/2000 $28,766 $15,438
07/31/2000 $30,948 $15,713
10/31/2000 $29,827 $16,760
01/31/2001 $24,801 $17,052
04/30/2001 $17,502 $16,525
07/31/2001 $16,150 $16,591
10/31/2001 $14,037 $14,674
01/31/2002 $14,318 $16,493
04/30/2002 $13,787 $17,611
07/31/2002 $11,494 $14,491
10/31/2002 $11,034 $13,972
01/31/2003 $10,393 $13,759
04/30/2003 $11,084 $14,528
07/31/2003 $12,846 $16,498
10/31/2003 $13,387 $18,266
01/31/2004 $13,431 $19,638
04/30/2004 $13,815 $19,532
07/31/2004 $13,604 $19,440
10/31/2004 $14,409 $20,283
01/31/2005 $15,386 $21,819
04/30/2005 $14,888 $21,434
07/31/2005 $16,890 $24,473
10/31/2005 $16,823 $23,863
01/31/2006 $18,308 $26,686
04/30/2006 $18,691 $27,505
07/31/2006 $16,861 $25,521
10/31/2006 $17,886 $27,067
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
10/31/06
1-Year 0.49% 5-Year 4.16% Since Inception (12/1/97) 6.74%
14 | OPPENHEIMER MIDCAP FUND
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer MidCap Fund (Class C)
S&P Mid-Cap 400 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
MidCap Fund S&P Mid-Cap
(Class C) 400 Index
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12/01/1997 $10,000 $10,000
01/31/1998 $10,090 $10,190
04/30/1998 $12,980 $11,743
07/31/1998 $12,400 $10,848
10/31/1998 $10,760 $10,515
01/31/1999 $14,087 $11,892
04/30/1999 $15,369 $12,498
07/31/1999 $17,171 $12,943
10/31/1999 $19,624 $12,731
01/31/2000 $27,023 $13,795
04/30/2000 $28,746 $15,438
07/31/2000 $30,938 $15,713
10/31/2000 $29,817 $16,760
01/31/2001 $24,791 $17,052
04/30/2001 $17,492 $16,525
07/31/2001 $16,140 $16,591
10/31/2001 $14,037 $14,674
01/31/2002 $14,318 $16,493
04/30/2002 $13,787 $17,611
07/31/2002 $11,484 $14,491
10/31/2002 $11,034 $13,972
01/31/2003 $10,393 $13,759
04/30/2003 $11,084 $14,528
07/31/2003 $12,846 $16,498
10/31/2003 $13,387 $18,266
01/31/2004 $13,407 $19,638
04/30/2004 $13,767 $19,532
07/31/2004 $13,527 $19,440
10/31/2004 $14,308 $20,283
01/31/2005 $15,239 $21,819
04/30/2005 $14,728 $21,434
07/31/2005 $16,671 $24,473
10/31/2005 $16,580 $23,863
01/31/2006 $18,002 $26,686
04/30/2006 $18,343 $27,505
07/31/2006 $16,520 $25,521
10/31/2006 $17,492 $27,067
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
10/31/06
1-Year 4.49% 5-Year 4.50% Since Inception (12/1/97) 6.47%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PER-FORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CON-TINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS
C AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE "SINCE INCEPTION" RETURN FOR CLASS
B USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 18 FOR
FURTHER INFORMATION.
15 | OPPENHEIMER MIDCAP FUND
FUND PERFORMANCE DISCUSSION
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CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer MidCap Fund (Class N)
S&P Mid-Cap 400 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
MidCap Fund S&P Mid-Cap
(Class N) 400 Index
------------- -------------
03/01/2001 $10,000 $10,000
04/30/2001 $ 9,161 $10,278
07/31/2001 $ 8,465 $10,319
10/31/2001 $ 7,370 $ 9,126
01/31/2002 $ 7,528 $10,258
04/30/2002 $ 7,257 $10,953
07/31/2002 $ 6,054 $ 9,013
10/31/2002 $ 5,824 $ 8,690
01/31/2003 $ 5,496 $ 8,557
04/30/2003 $ 5,865 $ 9,036
07/31/2003 $ 6,801 $10,261
10/31/2003 $ 7,098 $11,361
01/31/2004 $ 7,119 $12,214
04/30/2004 $ 7,323 $12,148
07/31/2004 $ 7,201 $12,090
10/31/2004 $ 7,625 $12,615
01/31/2005 $ 8,137 $13,570
04/30/2005 $ 7,871 $13,331
07/31/2005 $ 8,925 $15,221
10/31/2005 $ 8,884 $14,841
01/31/2006 $ 9,662 $16,597
04/30/2006 $ 9,862 $17,107
07/31/2006 $ 8,889 $15,873
10/31/2006 $ 9,422 $16,834
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
10/31/06
1-Year 5.05% 5-Year 5.04% Since Inception (3/1/01) -1.05%
16 | OPPENHEIMER MIDCAP FUND
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer MidCap Fund (Class Y)
S&P Mid-Cap 400 Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
MidCap Fund S&P Mid-Cap
(Class Y) 400 Index
------------- -------------
12/01/1997 $10,000 $10,000
01/31/1998 $10,110 $10,190
04/30/1998 $13,040 $11,743
07/31/1998 $12,500 $10,848
10/31/1998 $10,880 $10,515
01/31/1999 $14,297 $11,892
04/30/1999 $15,639 $12,498
07/31/1999 $17,521 $12,943
10/31/1999 $20,095 $12,731
01/31/2000 $27,744 $13,795
04/30/2000 $29,596 $15,438
07/31/2000 $31,949 $15,713
10/31/2000 $30,898 $16,760
01/31/2001 $25,771 $17,052
04/30/2001 $18,232 $16,525
07/31/2001 $16,861 $16,591
10/31/2001 $14,708 $14,674
01/31/2002 $15,048 $16,493
04/30/2002 $14,538 $17,611
07/31/2002 $12,155 $14,491
10/31/2002 $11,724 $13,972
01/31/2003 $11,094 $13,759
04/30/2003 $11,844 $14,528
07/31/2003 $13,757 $16,498
10/31/2003 $14,368 $18,266
01/31/2004 $14,438 $19,638
04/30/2004 $14,868 $19,532
07/31/2004 $14,648 $19,440
10/31/2004 $15,529 $20,283
01/31/2005 $16,600 $21,819
04/30/2005 $16,080 $21,434
07/31/2005 $18,272 $24,473
10/31/2005 $18,212 $23,863
01/31/2006 $19,844 $26,686
04/30/2006 $20,285 $27,505
07/31/2006 $18,312 $25,521
10/31/2006 $19,444 $27,067
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 10/31/06
1-Year 6.76% 5-Year 5.74% Since Inception (12/1/97) 7.74%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PER-FORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CON-TINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS
C AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE "SINCE INCEPTION" RETURN FOR CLASS
B USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 18 FOR
FURTHER INFORMATION.
17 | OPPENHEIMER MIDCAP FUND
NOTES
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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 reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares.
INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER
CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS
THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR
FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT
WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
CLASS A shares of the Fund were first publicly offered on 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 2% (5-year). Class B shares are subject to an
annual 0.75% asset-based sales charge. Because Class B shares convert to Class A
shares 72 months after purchase, the "since inception" return for Class B uses
Class A performance for the period after conversion.
CLASS 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 N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
18 | OPPENHEIMER MIDCAP FUND
NOTES
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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.
19 | OPPENHEIMER MIDCAP FUND
FUND EXPENSES
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FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended October 31, 2006.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), or a $12.00 fee imposed annually
on accounts valued at less than $500.00 (subject to exceptions described in
20 | OPPENHEIMER MIDCAP FUND
the Statement of Additional Information). Therefore, the "hypothetical" lines of
the table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
5/1/06 10/31/06 OCTOBER 31, 2006
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $ 956.90 $ 6.33
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,018.75 6.53
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 953.60 9.95
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,015.07 10.26
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 953.60 10.00
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,015.02 10.31
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 955.40 7.57
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,017.49 7.81
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 958.50 4.30
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,020.82 4.44
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 184/365
(to reflect the one-half year period). Those annualized expense ratios,
excluding affiliated fund indirect expenses, based on the 6-month period ended
October 31, 2006 are as follows:
CLASS EXPENSE RATIOS
- --------------------------
Class A 1.28%
- --------------------------
Class B 2.01
- --------------------------
Class C 2.02
- --------------------------
Class N 1.53
- --------------------------
Class Y 0.87
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Manager and Transfer Agent that can be terminated at any time,
without advance notice. The "Financial Highlights" tables in the Fund's
financial statements, included in this report, also show the gross expense
ratios, without such waivers or reimbursements.
- --------------------------------------------------------------------------------
21 | OPPENHEIMER MIDCAP FUND
STATEMENT OF INVESTMENTS October 31, 2006
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--98.9%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--13.7%
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--2.3%
International Game
Technology 292,600 $ 12,438,426
- --------------------------------------------------------------------------------
Panera Bread Co.,
Cl. A 1 221,600 13,694,880
---------------
26,133,306
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES--0.3%
Harman International
Industries, Inc. 41,600 4,257,760
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--1.3%
Coldwater Creek, Inc. 1 486,300 14,827,287
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--5.2%
O'Reilly Automotive,
Inc. 1 1,128,500 36,439,265
- --------------------------------------------------------------------------------
Tiffany & Co. 371,600 13,273,552
- --------------------------------------------------------------------------------
Tractor Supply Co. 1 198,600 9,616,212
---------------
59,329,029
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--4.6%
Coach, Inc. 1 388,266 15,390,864
- --------------------------------------------------------------------------------
Polo Ralph Lauren
Corp. 523,600 37,175,600
---------------
52,566,464
- --------------------------------------------------------------------------------
CONSUMER STAPLES--2.2%
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--2.2%
Whole Foods
Market, Inc. 399,700 25,516,848
- --------------------------------------------------------------------------------
ENERGY--3.0%
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--1.1%
Smith International,
Inc. 314,600 12,420,408
- --------------------------------------------------------------------------------
OIL & GAS--1.9%
Murphy Oil Corp. 247,800 11,686,248
- --------------------------------------------------------------------------------
XTO Energy, Inc. 216,566 10,104,970
---------------
21,791,218
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
FINANCIALS--21.0%
- --------------------------------------------------------------------------------
CAPITAL MARKETS--6.3%
Affiliated Managers
Group, Inc. 1 213,600 $ 21,389,904
- --------------------------------------------------------------------------------
Greenhill & Co., Inc. 261,800 17,786,692
- --------------------------------------------------------------------------------
Investors Financial
Services Corp. 258,600 10,168,152
- --------------------------------------------------------------------------------
Legg Mason, Inc. 246,000 22,144,920
---------------
71,489,668
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--5.4%
Commerce Bancorp,
Inc. 985,200 34,403,184
- --------------------------------------------------------------------------------
East West Bancorp,
Inc. 291,700 10,649,967
- --------------------------------------------------------------------------------
Marshall & Ilsley
Corp. 359,700 17,244,018
---------------
62,297,169
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--1.7%
Chicago Mercantile
Exchange (The) 39,000 19,539,000
- --------------------------------------------------------------------------------
INSURANCE--5.2%
AMBAC Financial
Group, Inc. 195,900 16,355,691
- --------------------------------------------------------------------------------
Brown & Brown, Inc. 739,500 21,637,770
- --------------------------------------------------------------------------------
Philadelphia
Consolidated Holding
Co. 1 534,400 20,905,728
---------------
58,899,189
- --------------------------------------------------------------------------------
REAL ESTATE MANAGEMENT & DEVELOPMENT--2.4%
CB Richard Ellis
Group, Inc., Cl. A 1 922,400 27,699,672
- --------------------------------------------------------------------------------
HEALTH CARE--16.9%
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--9.9%
Bard (C.R.), Inc. 508,900 41,709,444
- --------------------------------------------------------------------------------
Gen-Probe, Inc. 1 124,200 5,945,454
- --------------------------------------------------------------------------------
IDEXX Laboratories,
Inc. 1 128,900 10,725,769
- --------------------------------------------------------------------------------
Intuitive Surgical, Inc. 1 59,400 5,891,292
- --------------------------------------------------------------------------------
ResMed, Inc. 1 406,700 17,890,733
22 | OPPENHEIMER MIDCAP FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES Continued
Varian Medical
Systems, Inc. 1 562,052 $ 30,834,173
---------------
112,996,865
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--3.1%
Coventry Health
Care, Inc. 1 612,825 28,772,134
- --------------------------------------------------------------------------------
Schein (Henry), Inc. 1 138,400 6,877,096
---------------
35,649,230
- --------------------------------------------------------------------------------
HEALTH CARE TECHNOLOGY--1.7%
Cerner Corp. 1 403,900 19,512,409
- --------------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES--2.2%
Covance, Inc. 1 426,400 24,944,400
- --------------------------------------------------------------------------------
INDUSTRIALS--15.3%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--3.0%
Rockwell Collins, Inc. 590,200 34,278,816
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--2.8%
C.H. Robinson
Worldwide, Inc. 341,500 14,254,210
- --------------------------------------------------------------------------------
Expeditors International
of Washington, Inc. 387,800 18,385,598
---------------
32,639,808
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--4.5%
Corporate Executive
Board Co. 257,900 23,164,578
- --------------------------------------------------------------------------------
Stericycle, Inc. 1 401,200 28,368,852
---------------
51,533,430
- --------------------------------------------------------------------------------
MACHINERY--3.0%
Donaldson Co., Inc. 515,700 19,364,535
- --------------------------------------------------------------------------------
Oshkosh Truck Corp. 327,000 14,783,670
---------------
34,148,205
- --------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS--2.0%
Fastenal Co. 558,800 22,486,112
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--23.9%
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--0.8%
Trimble Navigation
Ltd. 1 186,500 8,620,030
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
IT SERVICES--10.2%
Alliance Data Systems
Corp. 1 688,300 $ 41,793,576
- --------------------------------------------------------------------------------
Cognizant Technology
Solutions Corp. 1 345,800 26,031,824
- --------------------------------------------------------------------------------
Global Payments, Inc. 637,400 27,860,754
- --------------------------------------------------------------------------------
SRA International, Inc.,
Cl. A 1 282,100 9,041,305
- --------------------------------------------------------------------------------
VeriFone Holdings, Inc. 1 400,200 11,689,842
---------------
116,417,301
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT--3.0%
FormFactor, Inc. 1 278,500 10,633,130
- --------------------------------------------------------------------------------
Microchip Technology,
Inc. 728,300 23,982,919
---------------
34,616,049
- --------------------------------------------------------------------------------
SOFTWARE--9.9%
Adobe Systems, Inc. 1 578,200 22,116,150
- --------------------------------------------------------------------------------
Amdocs Ltd. 1 645,900 25,035,084
- --------------------------------------------------------------------------------
Citrix Systems, Inc. 1 424,900 12,547,297
- --------------------------------------------------------------------------------
FactSet Research
Systems, Inc. 459,950 23,411,455
- --------------------------------------------------------------------------------
Intuit, Inc. 1 868,000 30,640,400
---------------
113,750,386
- --------------------------------------------------------------------------------
MATERIALS--2.3%
- --------------------------------------------------------------------------------
CHEMICALS--2.3%
Ecolab, Inc. 592,400 26,865,340
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--0.6%
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--0.6%
NeuStar, Inc., Cl. A 1 230,800 6,743,975
---------------
Total Common Stocks
(Cost $893,795,670) 1,131,969,374
23 | OPPENHEIMER MIDCAP FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
MONEY MARKET FUND--1.3%
- --------------------------------------------------------------------------------
Oppenheimer
Institutional Money
Market Fund, Cl. E,
5.23% 2,3
(Cost $15,374,147) 15,374,147 $ 15,374,147
VALUE
SEE NOTE 1
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE
(COST $909,169,817) 100.2% $1,147,343,521
- --------------------------------------------------------------------------------
LIABILITIES
IN EXCESS OF
OTHER ASSETS (0.2) (2,718,917)
--------------------------------
NET ASSETS 100.0% $1,144,624,604
================================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. Rate shown is 7-day yield as of October 31, 2006.
3. Represents ownership of an affiliated fund, at or during the period ended
October 31, 2006. Transactions during the period in which the issuer was an
affiliate are as follows:
SHARES GROSS GROSS SHARES
OCT. 31, 2005 ADDITIONS REDUCTIONS OCT. 31, 2006
- -------------------------------------------------------------------------------------------
Oppenheimer Institutional
Money Market Fund, Cl. E, 5.23%* -- 30,615,328 15,241,181 15,374,147
VALUE DIVIDEND
SEE NOTE 1 INCOME
- -------------------------------------------------------------------------------------------
Oppenheimer Institutional
Money Market Fund, Cl. E, 5.23%* $ 15,374,147 $ 34,593
* The money market fund and the Fund are affiliated by having the same
investment advisor.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | OPPENHEIMER MIDCAP FUND
STATEMENT OF ASSETS AND LIABILITIES October 31, 2006
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $893,795,670) $ 1,131,969,374
Affiliated companies (cost $15,374,147) 15,374,147
----------------
1,147,343,521
- ------------------------------------------------------------------------------------
Cash 533,264
- ------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 2,519,846
Shares of beneficial interest sold 745,794
Dividends 126,243
Other 11,276
----------------
Total assets 1,151,279,944
- ------------------------------------------------------------------------------------
LIABILITIES
- ------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 2,934,625
Investments purchased 2,883,382
Transfer and shareholder servicing agent fees 274,302
Distribution and service plan fees 232,894
Shareholder communications 151,389
Trustees' compensation 148,628
Other 30,120
----------------
Total liabilities 6,655,340
- ------------------------------------------------------------------------------------
NET ASSETS $ 1,144,624,604
================
- ------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ------------------------------------------------------------------------------------
Paid-in capital $ 1,873,497,218
- ------------------------------------------------------------------------------------
Accumulated net investment loss (154,224)
- ------------------------------------------------------------------------------------
Accumulated net realized loss on investments (966,892,094)
- ------------------------------------------------------------------------------------
Net unrealized appreciation on investments 238,173,704
----------------
NET ASSETS $ 1,144,624,604
================
25 | OPPENHEIMER MIDCAP FUND
STATEMENT OF ASSETS AND LIABILITIES Continued
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- ----------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $687,642,201 and
36,837,366 shares of beneficial interest outstanding) $ 18.67
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $ 19.81
- ----------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $235,821,186 and 13,499,253 shares
of beneficial interest outstanding) $ 17.47
- ----------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $144,183,961 and 8,253,007 shares of
beneficial interest outstanding) $ 17.47
- ----------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $38,499,857 and 2,090,877 shares of
beneficial interest outstanding) $ 18.41
- ----------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $38,477,399 and 1,980,840 shares of beneficial interest outstanding) $ 19.42
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER MIDCAP FUND
STATEMENT OF OPERATIONS For the Year Ended October 31, 2006
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends:
Unaffiliated companies $ 6,897,089
Affiliated companies 34,593
- --------------------------------------------------------------------------------
Interest 920,344
- --------------------------------------------------------------------------------
Other income 92,728
----------------
Total investment income 7,944,754
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 8,098,963
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 1,702,012
Class B 2,832,364
Class C 1,492,125
Class N 192,901
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 2,548,076
Class B 1,037,170
Class C 538,571
Class N 159,135
Class Y 81,182
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 257,403
Class B 110,816
Class C 41,210
Class N 4,222
- --------------------------------------------------------------------------------
Trustees' compensation 29,044
- --------------------------------------------------------------------------------
Custodian fees and expenses 6,851
- --------------------------------------------------------------------------------
Administration service fees 1,500
- --------------------------------------------------------------------------------
Other 47,414
----------------
Total expenses 19,180,959
Less waivers and reimbursements of expenses (260,143)
----------------
Net expenses 18,920,816
- --------------------------------------------------------------------------------
NET INVESTMENT LOSS (10,976,062)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain on investments 98,157,780
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on investments (20,813,201)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 66,368,517
================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER MIDCAP FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 2006 2005
- ----------------------------------------------------------------------------------------------
OPERATIONS
- ----------------------------------------------------------------------------------------------
Net investment loss $ (10,976,062) $ (13,433,360)
- ----------------------------------------------------------------------------------------------
Net realized gain 98,157,780 61,662,046
- ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation (20,813,201) 111,575,281
---------------------------------
Net increase in net assets resulting from operations 66,368,517 159,803,967
- ----------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A 32,109,669 28,238,994
Class B (92,141,117) (48,950,188)
Class C (296,334) 9,175,002
Class N 1,542,223 8,099,224
Class Y (536,366) 8,312,490
- ----------------------------------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------------------------
Total increase 7,046,592 164,679,489
- ----------------------------------------------------------------------------------------------
Beginning of period 1,137,578,012 972,898,523
---------------------------------
End of period (including accumulated net investment loss
of $154,224 and $153,273, respectively) $1,144,624,604 $1,137,578,012
=================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | OPPENHEIMER MIDCAP FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.56 $ 15.04 $ 13.97 $ 11.43 $ 14.42
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.12) 1 (.15) 1 (.17) (.12) (.13)
Net realized and unrealized gain (loss) 1.23 2.67 1.24 2.66 (2.86)
-------------------------------------------------------------------------------
Total from investment operations 1.11 2.52 1.07 2.54 (2.99)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 18.67 $ 17.56 $ 15.04 $ 13.97 $ 11.43
===============================================================================
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 6.32% 16.76% 7.66% 22.22% (20.74)%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 687,642 $ 618,270 $ 504,292 $ 430,514 $ 351,983
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 696,033 $ 570,513 $ 457,926 $ 366,050 $ 460,797
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.65)% (0.94)% (1.05)% (1.01)% (1.06)%
Total expenses 1.32% 4 1.39% 1.42% 1.61% 1.68%
Expenses after payments and waivers and
reduction to custodian expenses 1.30% 1.35% 1.33% 1.32% 1.47%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 63% 39% 114% 76% 51%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the 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. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended October 31, 2006 1.32%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER MIDCAP FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS B YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 16.56 $ 14.29 $ 13.37 $ 11.02 $ 14.02
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.25) 1 (.27) 1 (.30) (.23) (.30)
Net realized and unrealized gain (loss) 1.16 2.54 1.22 2.58 (2.70)
-------------------------------------------------------------------------------
Total from investment operations .91 2.27 .92 2.35 (3.00)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 17.47 $ 16.56 $ 14.29 $ 13.37 $ 11.02
===============================================================================
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 5.49% 15.89% 6.88% 21.33% (21.40)%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 235,821 $ 310,352 $ 312,315 $ 327,880 $ 291,397
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 283,459 $ 319,953 $ 316,748 $ 291,209 $ 385,917
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (1.40)% (1.71)% (1.83)% (1.75)% (1.85)%
Total expenses 2.08% 4 2.26% 2.30% 2.51% 2.48%
Expenses after payments and waivers and
reduction to custodian expenses 2.07% 2.14% 2.12% 2.06% 2.27%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 63% 39% 114% 76% 51%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the 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. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended October 31, 2006 2.08%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30 | OPPENHEIMER MIDCAP FUND
CLASS C YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 16.56 $ 14.29 $ 13.37 $ 11.02 $ 14.02
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.24) 1 (.26) 1 (.25) (.20) (.30)
Net realized and unrealized gain (loss) 1.15 2.53 1.17 2.55 (2.70)
-------------------------------------------------------------------------------
Total from investment operations .91 2.27 .92 2.35 (3.00)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 17.47 $ 16.56 $ 14.29 $ 13.37 $ 11.02
===============================================================================
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 5.49% 15.89% 6.88% 21.33% (21.40)%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 144,184 $ 137,308 $ 110,018 $ 103,271 $ 83,351
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 149,438 $ 126,925 $ 105,285 $ 87,528 $ 112,436
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (1.39)% (1.68)% (1.81)% (1.77)% (1.84)%
Total expenses 2.06% 4 2.17% 2.26% 2.49% 2.47%
Expenses after payments and waivers and
reduction to custodian expenses 2.04% 2.10% 2.10% 2.08% 2.26%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 63% 39% 114% 76% 51%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the 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. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended October 31, 2006 2.06%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31 | OPPENHEIMER MIDCAP FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS N YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.36 $ 14.90 $ 13.87 $ 11.38 $ 14.40
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.16) 1 (.19) 1 (.18) (.17) (.14)
Net realized and unrealized gain (loss) 1.21 2.65 1.21 2.66 (2.88)
-------------------------------------------------------------------------------
Total from investment operations 1.05 2.46 1.03 2.49 (3.02)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 18.41 $ 17.36 $ 14.90 $ 13.87 $ 11.38
===============================================================================
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 6.05% 16.51% 7.43% 21.88% (20.97)%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 38,500 $ 34,879 $ 22,488 $ 16,606 $ 8,846
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 38,644 $ 29,445 $ 18,969 $ 11,846 $ 6,576
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.89)% (1.15)% (1.28)% (1.34)% (1.28)%
Total expenses 1.60% 4 1.67% 1.80% 1.86% 1.87%
Expenses after payments and waivers and
reduction to custodian expenses 1.53% 1.55% 1.57% 1.64% 1.66%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 63% 39% 114% 76% 51%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the 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. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended October 31, 2006 1.60%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32 | OPPENHEIMER MIDCAP FUND
CLASS Y YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.19 $ 15.51 $ 14.35 $ 11.71 $ 14.69
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.04) 1 (.08) 1 (.13) (.19) (.08)
Net realized and unrealized gain (loss) 1.27 2.76 1.29 2.83 (2.90)
----------------------------------------------------------------------------------
Total from investment operations 1.23 2.68 1.16 2.64 (2.98)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 19.42 $ 18.19 $ 15.51 $ 14.35 $ 11.71
==================================================================================
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 6.76% 17.28% 8.08% 22.55% (20.29)%
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 38,478 $ 36,769 $ 23,785 $ 17,171 $ 7,419
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 42,277 $ 31,030 $ 19,540 $ 11,928 $ 6,449
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.21)% (0.49)% (0.69)% (0.80)% (0.39)%
Total expenses 0.86% 4,5 0.89% 6 0.98% 6 1.11% 6,7 0.83% 6
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 63% 39% 114% 76% 51%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the 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. Returns do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
3. Annualized for periods of less than one full year.
4. Expenses including indirect expenses from affiliated fund were as follows:
Year Ended October 31, 2006 0.86%
5. Voluntary waiver of management fees less than 0.005%.
6. Reduction to custodian expenses less than 0.005%.
7. Voluntary waiver of transfer agent fees less than 0.005%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33 | OPPENHEIMER MIDCAP FUND
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, Class N and Class Y shares.
Class A shares are sold at their offering price, which is normally net asset
value plus a front-end sales charge. Class B, Class C and Class N shares are
sold without a front-end sales charge but may be subject to a contingent
deferred sales charge (CDSC). Class N shares are sold only through retirement
plans. Retirement plans that offer Class N shares may impose charges on those
accounts. Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC, however, the institutional investor
may impose charges on those accounts. All classes of shares have identical
rights and voting privileges with respect to the Fund in general and exclusive
voting rights on matters that affect that class alone. Earnings, net assets and
net asset value per share may differ due to each class having its own expenses,
such as transfer and shareholder servicing agent fees and shareholder
communications, directly attributable to that class. Class A, B, C and N have
separate distribution and/or service plans. No such plan has been adopted for
Class Y shares. Class B shares will automatically convert to Class A shares six
years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of the New York Stock Exchange (the "Exchange"), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. Securities listed or traded on National
Stock Exchanges or other domestic exchanges are valued based on the last sale
price of the security traded on that exchange prior to the time when the Fund's
assets are valued. Securities traded on NASDAQ(R) are valued based on the
closing price provided by NASDAQ prior to the time when the Fund's assets are
valued. In the absence of a sale, the security is valued at the last sale price
on the prior trading day, if it is within the spread of the closing "bid" and
"asked" prices, and if not, at the closing bid price. Securities traded on
foreign exchanges are valued based on the last sale price on the principal
exch-ange on which the security is traded, as identified by the portfolio
pricing service, prior to the time when the Fund's assets are valued. In the
absence of a sale, the security is valued at the official closing price on the
principal exchange. Corporate, government and municipal debt instruments having
a remaining maturity in excess of sixty days and all mortgage-backed securities
will be valued at the mean between the "bid" and "asked" prices. Futures
contracts traded on a commodities or futures exchange will be valued at the
final settlement price or official closing price on the principal exchange as
reported by such principal exchange at its trading session ending at, or most
recently prior to, the time when the Fund's
34 | OPPENHEIMER MIDCAP FUND
assets are valued. Securities (including restricted securities) for which market
quotations are not readily available are valued at their fair value. Foreign and
domestic securities whose values have been materially affected by what the
Manager identifies as a significant event occurring before the Fund's assets are
valued but after the close of their respective exchanges will be fair valued.
Fair value is determined in good faith using consistently applied procedures
under the supervision of the Board of Trustees. Investments in open-end
registered investment companies are valued at that fund's net asset value.
Short-term "money market type" debt securities with remaining maturities of
sixty days or less are valued at amortized cost (which approximates market
value).
- --------------------------------------------------------------------------------
AFFILIATED FUNDS. The Fund is permitted to invest daily available cash balances
in affiliated money market funds. Each day, the Fund invests the available cash
in Oppenheimer Institutional Money Market Fund ("IMMF") which seeks current
income and stability of principal. The Manager is also the investment advisor of
IMMF. The Fund's investment in IMMF is included in the Statement of Investments.
Included in the net earnings received from IMMF is a 0.10% management fee paid
to the Manager by IMMF. The Manager will waive fees and/or reimburse Fund
expenses in an amount equal to the indirect management fees incurred through the
Fund's investment in IMMF.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3 TAX PURPOSES
--------------------------------------------------------------------------
$-- $-- $966,835,868 $238,117,477
1. As of October 31, 2006, the Fund had $966,835,868 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of October 31, 2006,
details of the capital loss carryforwards were as follows:
35 | OPPENHEIMER MIDCAP FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
EXPIRING
--------------------------
2009 $661,307,473
2010 237,892,098
2011 67,636,297
------------
TOTAL $966,835,868
============
2. During the fiscal year ended October 31, 2006, the Fund utilized $98,062,815
of capital loss carryforward to offset capital gains realized in that fiscal
year. a
a. Includes $260,660 of capital loss carryforwards acquired in the
September 4, 2003 merger of Oppenheimer Select Managers-Gartmore
Millennium Growth Fund II.
3. During the fiscal year ended October 31, 2005, the Fund utilized $61,371,387
of capital loss carryforward to offset capital gains realized in that fiscal
year. a
a. Includes $521,320 of capital loss carryforwards acquired in the
September 4, 2003 merger of Oppenheimer Select Managers-Gartmore
Millennium Growth Fund II.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for October 31, 2006. Net assets of the
Fund were unaffected by the reclassifications.
REDUCTION TO INCREASE TO
ACCUMULATED ACCUMULATED NET
REDUCTION TO NET INVESTMENT REALIZED LOSS
PAID-IN CAPITAL LOSS ON INVESTMENTS
------------------------------------------------------
$10,714,451 $10,975,111 $260,660
No distributions were paid during the years ended October 31, 2006 and October
31, 2005.
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of October 31, 2006 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
Federal tax cost of securities $ 909,226,044
==============
Gross unrealized appreciation $ 251,895,562
Gross unrealized depreciation (13,778,085)
--------------
Net unrealized appreciation $ 238,117,477
==============
36 | OPPENHEIMER MIDCAP FUND
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the
Fund's independent trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service. During the year ended October
31, 2006, the Fund's projected benefit obligations were increased by $6,211 and
payments of $6,772 were made to retired trustees, resulting in an accumulated
liability of $144,751 as of October 31, 2006.
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 the annual compensation they are entitled to receive from the Fund.
For purposes of determining the amount owed to the Trustee under the plan,
deferred amounts are treated as though equal dollar amounts had been invested in
shares of the Fund or in other Oppenheimer funds selected by the Trustee. The
Fund purchases shares of the funds selected for defer-ral by the Trustee in
amounts equal to his or her deemed investment, resulting in a Fund asset equal
to the deferred compensation liability. Such assets are included as a component
of "Other" within the asset section of the Statement of Assets and Liabilities.
Deferral of trustees' fees under the plan will not affect the net assets of the
Fund, and will not mat-erially affect the Fund's assets, liabilities or net
investment in-come per share. Amounts will be deferred until distributed in
accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio sec-urities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash over-drafts, to the extent they are not
offset by positive cash balances maintained by the Fund, at a rate equal to the
Federal Funds Rate plus 0.50%. The "Reduction to custodian expenses" line item,
if applicable, represents earnings on cash balances maintained by the Fund
during the period. Such interest expense and other custodian fees may be paid
with these earnings.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
37 | OPPENHEIMER MIDCAP FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
INDEMNIFICATIONS. The Fund's organizational documents provide current and former
trustees and officers with a limited indemnification against liabilities arising
in connection with the performance of their duties to the Fund. In the normal
course of business, the Fund may also enter into contracts that provide general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown as this would be dependent on future claims that may be made against the
Fund. The risk of material loss from such claims is considered remote.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
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:
YEAR ENDED OCTOBER 31, 2006 YEAR ENDED OCTOBER 31, 2005
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------
CLASS A
Sold 12,456,104 $232,902,655 11,360,512 $ 187,484,134
Redeemed (10,828,490) (200,792,986) (9,680,275) (159,245,140)
------------------------------------------------------------
Net increase 1,627,614 $32,109,669 1,680,237 $ 28,238,994
============================================================
- --------------------------------------------------------------------------------------
CLASS B
Sold 2,421,700 $ 42,440,670 2,895,842 $ 44,967,755
Redeemed (7,667,035) (134,581,787) (6,005,026) (93,917,943)
------------------------------------------------------------
Net decrease (5,245,335) $(92,141,117) (3,109,184) $ (48,950,188)
============================================================
- --------------------------------------------------------------------------------------
CLASS C
Sold 2,268,226 $ 39,902,362 2,529,971 $ 39,392,766
Redeemed (2,308,632) (40,198,696) (1,937,019) (30,217,764)
------------------------------------------------------------
Net increase (decrease) (40,406) $ (296,334) 592,952 $ 9,175,002
============================================================
- --------------------------------------------------------------------------------------
CLASS N
Sold 1,048,416 $ 19,390,271 1,165,948 $ 18,962,715
Redeemed (966,459) (17,848,048) (666,117) (10,863,491)
------------------------------------------------------------
Net increase 81,957 $ 1,542,223 499,831 $ 8,099,224
============================================================
- --------------------------------------------------------------------------------------
CLASS Y
Sold 715,427 $ 13,998,045 908,834 $ 15,524,588
Redeemed (755,584) (14,534,411) (421,042) (7,212,098)
------------------------------------------------------------
Net increase (decrease) (40,157) $ (536,366) 487,792 $ 8,312,490
============================================================
38 | OPPENHEIMER MIDCAP FUND
- --------------------------------------------------------------------------------
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, 2006, were as
follows:
PURCHASES SALES
- -------------------------------------------------------------
Investment securities $754,091,661 $814,175,845
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
annual rate of average net assets as shown in the following table:
FEE SCHEDULE
------------------------------------
Up to $200 million 0.75%
Next $200 million 0.72
Next $200 million 0.69
Next $200 million 0.66
Next $700 million 0.60
Next $1.0 billion 0.58
Over $2.5 billion 0.56
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICE FEES. The Fund pays the Manager a fee of $1,500 per year
for preparing and filing the Fund's tax returns.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended October 31, 2006, the Fund paid
$4,128,488 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $10,000 per
annum for assets of $10 million or more. The Class Y shares are subject to the
minimum fees in the event that the per account fee does not equal or exceed the
applicable minimum fees. OFS may voluntarily waive the minimum fees.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
periodically at an annual rate of up to 0.25% of the average annual net assets
of Class A shares of the Fund. The Distributor currently uses all of those fees
to pay dealers, brokers, banks and other financial institutions periodically for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
periods. Fees incurred by the Fund under the plan are detailed in the Statement
of Operations.
39 | OPPENHEIMER MIDCAP FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% on Class B and
Class C shares and 0.25% on Class N shares. The Distributor also receives a
service fee of up to 0.25% per year under each plan. If either the Class B,
Class C or Class N plan is terminated by the Fund or by the shareholders of a
class, the Board of Trustees and its independent trustees must determine whether
the Distributor shall be entitled to payment from the Fund of all or a portion
of the service fee and/or asset-based sales charge in respect to shares sold
prior to the effective date of such termination. The Distributor determines its
uncompensated expenses under the plan at calendar quarter ends. The
Distributor's aggregate uncompensated expenses under the plan at September 30,
2006 for Class B, Class C and Class N shares were $16,589,015, $4,731,847 and
$663,583, respectively. Fees incurred by the Fund under the plans are detailed
in the Statement of Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the following table for the period
indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ---------------------------------------------------------------------------------------------
October 31, 2005 $505,953 $5,366 $536,876 $22,847 $10,609
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit
transfer and shareholder servicing agent fees for all classes to 0.35% of
average annual net assets per class. During the year ended October 31, 2006, OFS
waived $166,476, $40,307, $27,350 and $25,294 for Class A, Class B, Class C and
Class N shares, respectively. This undertaking may be amended or withdrawn at
any time.
The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's investment in
IMMF. During the year ended October 31, 2006, the Manager waived $716 for IMMF
management fees.
40 | OPPENHEIMER MIDCAP FUND
- --------------------------------------------------------------------------------
5. RECENT ACCOUNTING PRONOUNCEMENTS
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accoun-ting for uncertainty in income taxes recognized in
an enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Fund's tax returns to determine whether it
is "more-likely-than-not" that tax positions taken in the Fund's tax return will
be ultimately sustained. A tax liability and expense must be recorded in respect
of any tax position that, in Management's judgment, will not be fully realized.
FIN 48 is effective for fiscal years beginning after December 15, 2006. As of
October 31, 2006, the Manager is evaluating the implications of FIN 48. Its
impact in the Fund's financial statements has not yet been determined.
In September 2006, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 157, FAIR VALUE
MEASUREMENTS. This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and expands
disclosures about fair value measurements. SFAS No. 157 applies to fair value
measurements already required or permitted by existing standards. SFAS No. 157
is effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. As of October
31, 2006, the Manager does not believe the adoption of SFAS No. 157 will
materially impact the financial statement amounts; however, additional
disclosures may be required about the inputs used to develop the measurements
and the effect of certain of the measurements on changes in net assets for the
period.
- --------------------------------------------------------------------------------
6. LITIGATION
A consolidated amended complaint was filed as a putative class action against
the Manager and the Transfer Agent and other defendants (including 51 of the
Oppenheimer funds including the Fund) in the U.S. District Court for the
Southern District of New York on January 10, 2005 and was amended on March 4,
2005. The complaint alleged, among other things, that the Manager charged
excessive fees for distribution and other costs, and that by permitting and/or
participating in those actions, the Directors/Trustees and the Officers of the
funds breached their fiduciary duties to fund shareholders under the Investment
Company Act of 1940 and at common law. The plaintiffs sought unspecified
damages, an accounting of all fees paid, and an award of attorneys' fees and
litigation expenses.
In response to the defendants' motions to dismiss the suit, seven of the
eight counts in the complaint, including the claims against certain of the
Oppenheimer funds, as nominal defendants, and against certain present and former
Directors, Trustees and Officers of the funds, and the Distributor, as
defendants, were dismissed with prejudice, by court order dated March 10, 2006,
and the remaining count against the Manager and the Transfer Agent was dismissed
with prejudice by court order dated April 5, 2006. The plaintiffs filed an
appeal of those dismissals on May 11, 2006.
41 | OPPENHEIMER MIDCAP FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. LITIGATION Continued
The Manager believes that the allegations contained in the complaint are
without merit and that there are substantial grounds to sustain the district
court's rulings. The Manager also believes that it is premature to render any
opinion as to the likelihood of an outcome unfavorable to it, the funds, the
Directors/Trustees or the Officers on the appeal of the decisions of the
district court, and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss.
42 | OPPENHEIMER MIDCAP FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER MIDCAP FUND:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer MidCap Fund, including the statement of investments, as of October
31, 2006, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two-year period
then ended, and the financial highlights for each of the years in the five-year
period then 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
audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). 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, 2006, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. 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
audits provide 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, 2006, the results of its operations
for the year then ended, the changes in its net assets for each of the years in
the two-year period then ended, and the financial highlights for each of the
years in the five-year period then ended, in conformity with U.S. generally
accepted accounting principles.
KPMG LLP
Denver, Colorado
December 12, 2006
43 | OPPENHEIMER MIDCAP FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2007, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2006. 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.
44 | OPPENHEIMER MIDCAP FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to
file Form N-PX, with its complete proxy voting record for the 12 months ended
June 30th, no later than August 31st of each year. The Fund's voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at
www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
45 | OPPENHEIMER MIDCAP FUND
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS
FUND, LENGTH OF SERVICE, AGE HELD; NUMBER OF PORTFOLIOS IN THE FUND COMPLEX CURRENTLY OVERSEEN
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S.TUCSON WAY, CENTENNIAL,
TRUSTEES COLORADO 80112-3924. EACH TRUSTEE SERVES FOR A INDEFINITE TERM, OR UNTIL HIS OR HER
RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
THOMAS W. COURTNEY, Principal of Courtney Associates, Inc. (venture capital firm) (since 1982);
Chairman of the Board General Partner of Trivest Venture Fund (private venture capital fund); President
of Trustees (since 2001), of Investment Counseling Federated Investors, Inc. (1973-1982); Trustee of the
Trustee (since 1997) following open-end investment companies: Cash Assets Trust (1984), Premier VIT
Age: 73 (formerly PIMCO Advisors VIT), Tax Free Trust of Arizona (since 1984) and four
funds for the Hawaiian Tax Free Trust. Oversees 10 portfolios in the
OppenheimerFunds complex.
DAVID K. DOWNES, President, Chief Executive Officer and Board Member of CRAFund Advisors, Inc.
Trustee (since 2005) (investment management company) (since January 2004); President of The Community
Age: 66 Reinvestment Act Qualified Investment Fund (investment management company) (since
January 2004); Independent Chairman of the Board of Trustees of Quaker Investment
Trust (registered investment company) (since January 2004); Director of Internet
Capital Group (information technology company) (since October 2003); Chief
Operating Officer and Chief Financial Officer of Lincoln National Investment
Companies, Inc. (subsidiary of Lincoln National Corporation, a publicly traded
company) and Delaware Investments U.S., Inc. (investment management subsidiary of
Lincoln National Corporation) (1995-2003); President, Chief Executive Officer and
Trustee of Delaware Investment Family of Funds (1995-2003); President and Board
Member of Lincoln National Convertible Securities Funds, Inc. and the Lincoln
National Income Funds, TDC (1995-2003); Chairman and Chief Executive Officer of
Retirement Financial Services, Inc. (registered transfer agent and investment
adviser and subsidiary of Delaware Investments U.S., Inc.) (1995-2003); President
and Chief Executive Officer of Delaware Service Company, Inc. (1995-2003); Chief
Administrative Officer, Chief Financial Officer, Vice Chairman and Director of
Equitable Capital Management Corporation (investment subsidiary of Equitable Life
Assurance Society) (1985-1992); Corporate Controller of Merrill Lynch & Company
(financial services holding company) (1977-1985); held the following positions at
the Colonial Penn Group, Inc. (insurance company): Corporate Budget Director
(1974-1977), Assistant Treasurer (1972-1974) and Director of Corporate Taxes
(1969-1972); held the following positions at Price Waterhouse & Company (financial
services firm): Tax Manager (1967-1969), Tax Senior (1965-1967) and Staff
Accountant (1963-1965); United States Marine Corps (1957-1959). Oversees 10
portfolios in the OppenheimerFunds complex.
ROBERT G. GALLI, A director or trustee of other Oppenheimer funds. Oversees 55 portfolios in the
Trustee (since 1998) OppenheimerFunds complex.
Age: 73
LACY B. HERRMANN, Founder and Chairman Emeritus of Aquila Group of Funds (open-end investment
Trustee (since 1997) company) (since December 2004); Chairman of Aquila Management Corporation and
Age: 77 Aquila Investment Management LLC (since August 1984); Chief Executive Officer and
President of Aquila Management Corporation (August 1984-December 1994); Vice
President, Director and Secretary of Aquila Distributors, Inc. (distributor of
Aquila Management Corporation); Treasurer of Aquila Distributors, Inc.; President
and Chairman of the Board of Trustees of Capital Cash Management Trust ("CCMT");
President and Director of STCM Management Company, Inc. (sponsor and adviser to
CCMT); Chair-
46 | OPPENHEIMER MIDCAP FUND
LACY B. HERRMANN, man, President and Director of InCap Management Corporation; Sub-Advisor
Continued and Administrator of Prime Cash Fund & Short Term Asset Reserves; Director of OCC
Cash Reserves, Inc. (open-end investment company) (June 2003-December 2004);
Trustee of Premier VIT (formerly PIMCO Advisors VIT) (investment company) (since
1994); Trustee of OCC Accumulation Trust (open-end investment company) (until
December 2004); Trustee Emeritus of Brown University (since June 1983). Oversees 10
portfolios in the OppenheimerFunds complex.
BRIAN F. WRUBLE, General Partner of Odyssey Partners, L.P. (hedge fund) (since September 1995);
Trustee (since 2001) Director of Special Value Opportunities Fund, LLC (registered investment company)
Age: 63 (since September 2004); Member, Zurich Financial Investment Advisory Board
(insurance) (affiliate of the Manager's parent company) (since October 2004); Board
of Governing Trustees of The Jackson Laboratory (non-profit) (since August 1990);
Trustee of the Institute for Advanced Study (non-profit educational institute)
(since May 1992); Special Limited Partner of Odyssey Investment Partners, LLC
(private equity investment) (January 1999-September 2004); Trustee of Research
Foundation of AIMR (2000-2002) (investment research, non-profit); Governor, Jerome
Levy Economics Institute of Bard College (August 1990-September 2001) (economics
research); Director of Ray & Berendtson, Inc. (May 2000-April 2002) (executive
search firm); President and Chief Executive Officer of the Delaware Group of Mutual
Funds (1992-1995); Chairman, President and Chief Executive Officer of Equitable
Capital Management Corporation (1985-1992); Vice President, Senior Vice President,
Executive Vice President and Chief Investment Officer at The Equitable Life
Assurance Society of the U.S. (1979-1992); Vice President and Co-manager of
Fundamental Equities Research at Smith Barney, Harris Upham and Company
(1970-1979); Engineer, Sperry Gyroscope Company (1966-1970); former governor of the
Association for Investment Management and Research; former chairman of the
Institute of Chartered Financial Analysts; Chartered Financial Analyst. Oversees 55
portfolios in the OppenheimerFunds complex.
- ---------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE MR. MURPHY IS AN "INTERESTED TRUSTEE" BECAUSE HE IS AFFILIATED WITH THE MANAGER
AND OFFICER BY VIRTUE OF HIS POSITIONS AS AN OFFICER AND DIRECTOR OF THE MANAGER, AND AS A
SHARE-HOLDER OF ITS PARENT COMPANY. THE ADDRESS OF MR. MURPHY IS TWO WORLD
FINANCIAL CENTER, 225 LIBERTY STREET, 11TH FLOOR, NEW YORK, NEW YORK 10281-1008.
MR. MURPHY SERVES AS A TRUSTEE FOR AN INDEFINITE TERM, OR UNTIL HIS RESIGNATION,
RETIREMENT, DEATH OR REMOVAL AND AS AN OFFICER FOR AN INDEFINITE TERM, OR UNTIL HIS
RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
JOHN V. MURPHY, Chairman, Chief Executive Officer and Director (since June 2001) and President
Trustee (since 2005) and (since September 2000) of the Manager; President and director or trustee of other
President and Principal Oppenheimer funds; President and Director of Oppenheimer Acquisition Corp. ("OAC")
Executive Officer (the Manager's parent holding company) and of Oppenheimer Partnership Holdings,
(since 2001) Inc. (holding company subsidiary of the Manager) (since July 2001); Director of
Age: 57 OppenheimerFunds Distributor, Inc. (subsidiary of the Manager) (since November
2001); Chairman and Director of Shareholder Services, Inc. and of Shareholder
Financial Services, Inc. (transfer agent subsidiaries of the Manager) (since July
2001); President and Director of OppenheimerFunds Legacy Program (charitable trust
program established by the Manager) (since July 2001); Director of the following
investment advisory subsidiaries of the Manager: OFI Institutional Asset
Management, Inc., Centennial Asset Management Corporation, Trinity Investment
Management Corporation and Tremont Capital Management, Inc. (since November 2001),
HarbourView Asset Management Corporation and OFI Private Investments,Inc. (since
July 2001); President (since November 1, 2001) and Director (since July 2001) of
Oppenheimer Real Asset Management, Inc.; Executive Vice President of Massachusetts
Mutual Life Insurance Company
47 | OPPENHEIMER MIDCAP FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
JOHN V. MURPHY, (OAC's parent company) (since February 1997); Director of DLB Acquisition
Continued Corporation (holding company parent of Babson Capital Management LLC) (since
June 1995); Member of the Investment Company Institute's Board of Governors (since
October 3, 2003); Chief Operating Officer of the Manager (September 2000-June
2001); President and Trustee of MML Series Investment Fund and MassMutual Select
Funds (open-end investment companies) (November 1999-November 2001); Director of
C.M. Life Insurance Company (September 1999-August 2000); President, Chief
Executive Officer and Director of MML Bay State Life Insurance Company (September
1999-August 2000); Director of Emerald Isle Bancorp and Hibernia Savings Bank
(wholly-owned subsidiary of Emerald Isle Bancorp) (June 1989-June 1998). Oversees
92 portfolios in the OppenheimerFunds complex.
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OTHER OFFICERS THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR MESSRS.
OF THE FUND O'HARE, ZACK, GILLESPIE AND MS. BLOOMBERG, TWO WORLD FINANCIAL CENTER, 225 LIBERTY
STREET, NEW YORK, NEW YORK 10281-1008, FOR MESSRS. VANDEHEY, WIXTED, PETERSEN,
SZILAGYI AND MS. IVES, 6803 S. TUCSON WAY, CENTENNIAL, COLORADO 80112-3924. EACH
OFFICER SERVES FOR AN INDEFINITE TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT,
DEATH OR REMOVAL.
JOHN O'HARE, Vice President of the Manager (since September 2003); Executive Vice President
Vice President and Portfolio and Portfolio Manager (June 2000-August 2003) and Portfolio Manager and Senior Vice
Manager (since 2003) President (August 1997-June 2000) at Geneva Capital Management, Ltd. (an investment
Age: 48 advisor). Mr. O'Hare holds a BBA in Finance and Economics from the University of
Wisconsin and is a Chartered Financial Analyst. An officer of 2 portfolios in the
OppenheimerFunds complex.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since
Vice President and March 2004); Vice President of OppenheimerFunds Distributor, Inc., Centennial
Chief Compliance Officer Asset Management Corporation and Shareholder Services, Inc. (since June 1983).
(since 2004) Former Vice President and Director of Internal Audit of the Manager (1997-
Age: 56 February 2004). An officer of 92 portfolios in the OppenheimerFunds complex.
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer of
Treasurer and Principal the following: HarbourView Asset Management Corporation, Shareholder Financial
Financial and Accounting Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management
Officer (since 1999) Corporation, and Oppenheimer Partnership Holdings, Inc. (since March 1999), OFI
Age: 47 Private Investments, Inc. (since March 2000), OppenheimerFunds International Ltd.
(since May 2000), OppenheimerFunds plc (since May 2000), OFI Institutional Asset
Management, Inc. (since November 2000), and OppenheimerFunds Legacy Program
(charitable trust program established by the Manager) (since June 2003); Treasurer
and Chief Financial Officer of OFI Trust Company (trust company subsidiary of the
Manager) (since May 2000); Assistant Treasurer of the following: OAC (since March
1999), Centennial Asset Management Corporation (March 1999-October 2003) and
OppenheimerFunds Legacy Program (April 2000-June 2003); Principal and Chief
Operating Officer of Bankers Trust Company-Mutual Fund Services Division (March
1995-March 1999). An officer of 92 portfolios in the OppenheimerFunds complex.
BRIAN S. PETERSEN, Assistant Vice President of the Manager (since August 2002); Manager/Financial
Assistant Treasurer Product Accounting of the Manager (November 1998-July 2002). An officer of
(since 2004) 92 portfolios in the OppenheimerFunds complex.
Age: 36
48 | OPPENHEIMER MIDCAP FUND
BRIAN C. SZILAGYI, Assistant Vice President of the Manager (since July 2004); Director of Financial
Assistant Treasurer Reporting and Compliance of First Data Corporation (April 2003-July 2004); Manager
(since 2005) of Compliance of Berger Financial Group LLC (May 2001-March 2003); Director of
Age: 36 Mutual Fund Operations at American Data Services, Inc. (September 2000-May 2001).
An officer of 92 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since March
Secretary (since 2001) 2002) of the Manager; General Counsel and Director of the Distributor (since
Age: 58 December 2001); General Counsel of Centennial Asset Management Corporation (since
December 2001); Senior Vice President and General Counsel of Harbour-View Asset
Management Corporation (since December 2001); Secretary and General Counsel of OAC
(since November 2001); Assistant Secretary (since September 1997) and Director
(since November 2001) of OppenheimerFunds International Ltd. and OppenheimerFunds
plc; Vice President and Director of Oppenheimer Partnership Holdings, Inc. (since
December 2002); Director of Oppenheimer Real Asset Management, Inc. (since November
2001); Senior Vice President, General Counsel and Director of Shareholder Financial
Services, Inc. and Shareholder Services, Inc. (since December 2001); Senior Vice
President, General Counsel and Director of OFI Private Investments, Inc. and OFI
Trust Company (since November 2001); Vice President of OppenheimerFunds Legacy
Program (since June 2003); Senior Vice President and General Counsel of OFI
Institutional Asset Management, Inc. (since November 2001); Director of
OppenheimerFunds (Asia) Limited (since December 2003); Senior Vice President (May
1985-December 2003), Acting General Counsel (November 2001-February 2002) and
Associate General Counsel (May 1981-October 2001) of the Manager; Assistant
Secretary of the following: Shareholder Services, Inc. (May 1985-November 2001),
Shareholder Financial Services, Inc. (November 1989-November 2001), and
OppenheimerFunds International Ltd. (September 1997-November 2001). An officer of
92 portfolios in the OppenheimerFunds complex.
KATHLEEN T. IVES, Vice President (since June 1998) and Senior Counsel and Assistant Secretary
Assistant Secretary (since October 2003) of the Manager; Vice President (since 1999) and Assistant
(since 2001) Secretary (since October 2003) of the Distributor; Assistant Secretary of
Age: 41 Centennial Asset Management Corporation (since October 2003); Vice President and
Assistant Secretary of Shareholder Services, Inc. (since 1999); Assistant Secretary
of OppenheimerFunds Legacy Program and Shareholder Financial Services, Inc. (since
December 2001); Assistant Counsel of the Manager (August 1994-October 2003). An
officer of 92 portfolios in the OppenheimerFunds complex.
LISA I. BLOOMBERG, Vice President and Associate Counsel of the Manager (since May 2004); First
Assistant Secretary Vice President (April 2001-April 2004), Associate General Counsel (December
(since 2004) 2000-April 2004), Corporate Vice President (May 1999-April 2001) and Assistant
Age: 38 General Counsel (May 1999-December 2000) of UBS Financial Services Inc. (formerly,
PaineWebber Incorporated). An officer of 92 portfolios in the OppenheimerFunds
complex.
PHILLIP S. GILLESPIE, Senior Vice President and Deputy General Counsel of the Manager (since
Assistant Secretary September 2004); First Vice President (2001-September 2004); Director (2000-
(since 2004) September 2004) and Vice President (1998-2000) of Merrill Lynch Investment
Age: 42 Management. An officer of 92 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND OFFICERS AND IS AVAILABLE WITHOUT CHARGE UPON
REQUEST, BY CALLING 1.800.525.7048.
49 | OPPENHEIMER MIDCAP FUND
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees of the registrant has determined that David Downes, a
member of the Board's Audit Committee, is an audit committee financial expert
and that Mr. Downes is "independent" for purposes of this Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $17,000 in fiscal 2006 and $17,000 in fiscal 2005.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed $195,954 in fiscal 2006 and $156,805 in fiscal 2005 to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
Such services include: internal control reviews.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees to the registrant during the last two fiscal
years.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees in fiscal 2006 and $6,536 in fiscal 2005 to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
Such services include: Preparation of form 5500
(d) All Other Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
(e) (1) During its regularly scheduled periodic meetings, the registrant's
audit committee will pre-approve all audit, audit-related, tax and other
services to be provided by the principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its Chairman
for any subsequent new engagements that arise between regularly scheduled
meeting dates provided that any fees such pre-approved are presented to
the audit committee at its next regularly scheduled meeting.
Under applicable laws, pre-approval of non-audit services maybe waived
provided that: 1) the aggregate amount of all such services provided
constitutes no more than five percent of the total amount of fees paid by
the registrant to it principal accountant during the fiscal year in which
services are provided 2) such services were not recognized by the
registrant at the time of engagement as non-audit services and 3) such
services are promptly brought to the attention of the audit committee of
the registrant and approved prior to the completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed $195,954 in fiscal 2006 and $163,341 in fiscal
2005 to the registrant and the registrant's investment adviser or any
entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant related to
non-audit fees. Those billings did not include any prohibited non-audit
services as defined by the Securities Exchange Act of 1934.
(h) No such services were rendered.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUND'S AUDIT COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's Audit Committee (the "Committee") will evaluate potential Board
candidates to assess their qualifications. The Committee shall have the
authority, upon approval of the Board, to retain an executive search firm
to assist in this effort. The Committee may consider recommendations by
business and personal contacts of current Board members and by executive
search firms which the Committee may engage from time to time and may also
consider shareholder recommendations. The Committee may consider the
advice and recommendation of the Funds' investment manager and its
affiliates in making the selection.
2. The Committee shall screen candidates for Board membership. The Committee
has not established specific qualifications that it believes must be met
by a trustee nominee. In evaluating trustee nominees, the Committee
considers, among other things, an individual's background, skills, and
experience; whether the individual is an "interested person" as defined in
the Investment Company Act of 1940; and whether the individual would be
deemed an "audit committee financial expert" within the meaning of
applicable SEC rules. The Committee also considers whether the
individual's background, skills, and experience will complement the
background, skills, and experience of other nominees and will contribute
to the Board. There are no differences in the manner in which the
Committee evaluates nominees for trustees based on whether the nominee is
recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the Board at
such times as the Committee meets to consider new nominees for the Board.
The Committee shall have the sole discretion to determine the candidates
to present to the Board and, in such cases where required, to
shareholders. Recommendations for trustee nominees should, at a minimum,
be accompanied by the following:
o the name, address, and business, educational, and/or other pertinent
background of the person being recommended;
o a statement concerning whether the person is an "interested person" as
defined in the Investment Company Act of 1940;
o any other information that the Funds would be required to include in a
proxy statement concerning the person if he or she was nominated; and
o the name and address of the person submitting the recommendation and,
if that person is a shareholder, the period for which that person held
Fund shares.
The recommendation also can include any additional information which the
person submitting it believes would assist the Committee in evaluating the
recommendation.
4. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company (the parent company of the
Funds' investment adviser) would be deemed an "interested person" under
the Investment Company Act of 1940. In addition, certain other
relationships with Massachusetts Mutual Life Insurance Company or its
subsidiaries, with registered broker-dealers, or with the Funds' outside
legal counsel may cause a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a trustee,
Committee members and other directors customarily interview the individual
in person. In addition, the individual customarily is asked to complete a
detailed questionnaire which is designed to elicit information which must
be disclosed under SEC and stock exchange rules and to determine whether
the individual is subject to any statutory disqualification from serving
as a trustee of a registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the registrant's disclosure controls and procedures
(as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR
270.30a-3(c)) as of October 31, 2006, the registrant's principal executive
officer and principal financial officer found the registrant's disclosure
controls and procedures to provide reasonable assurances that information
required to be disclosed by the registrant in the reports that it files under
the Securities Exchange Act of 1934 (a) is accumulated and communicated to
registrant's management, including its principal executive officer and principal
financial officer, to allow timely decisions regarding required disclosure, and
(b) is recorded, processed, summarized and reported, within the time periods
specified in the rules and forms adopted by the U.S. Securities and Exchange
Commission.
There have been no changes in the registrant's internal controls over financial
reporting that occurred during the registrant's second fiscal quarter of the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a) (1) Exhibit attached hereto.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Exhibit attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Oppenheimer MidCap Fund
By: /s/ John V. Murphy
___________________________
John V. Murphy
Principal Executive Officer
Date: December 12, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John V. Murphy
____________________________
John V. Murphy
Principal Executive Officer
Date: December 12, 2006
By: /s/ Brian W. Wixted
____________________________
Brian W. Wixted
Principal Financial Officer
Date: December 12, 2006