-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GH2M/apcZk/3zvRxXl3EKiFqTyaPANdQtdXdBdKnYXoefA9/CwXLyDDQHGBfIKRH rZxcg/BzYm9spOctWpsB6A== 0000935069-08-001498.txt : 20080620 0000935069-08-001498.hdr.sgml : 20080620 20080620132442 ACCESSION NUMBER: 0000935069-08-001498 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20080430 FILED AS OF DATE: 20080620 DATE AS OF CHANGE: 20080620 EFFECTIVENESS DATE: 20080620 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER EQUITY INCOME FUND INC CENTRAL INDEX KEY: 0000799029 IRS NUMBER: 132527171 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-04797 FILM NUMBER: 08909704 BUSINESS ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY STREET 2: N/A CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 BUSINESS PHONE: 303-768-3200 MAIL ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY STREET 2: N/A CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 FORMER COMPANY: FORMER CONFORMED NAME: OPPENHEIMER QUEST CAPITAL VALUE FUND INC DATE OF NAME CHANGE: 19970303 FORMER COMPANY: FORMER CONFORMED NAME: QUEST FOR VALUE DUAL PURPOSE FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: QFV DUAL PURPOSE FUND INC DATE OF NAME CHANGE: 19870111 0000799029 S000008498 OPPENHEIMER QUEST CAPITAL VALUE FUND INC C000023330 A C000023331 B C000031353 C C000031354 N N-CSRS 1 rs835_46763ncsrs.txt RS835_46763NCSRS.TXT 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 811-04797 --------- Oppenheimer Equity Income Fund, Inc. -------------------------------------------------- (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: 04/30/2008 ---------- ================================================================================ ITEM 1. REPORTS TO STOCKHOLDERS. APRIL 30, 2008 - -------------------------------------------------------------------------------- Oppenheimer Management Equity Income Commentaries Fund, Inc.* and Semiannual Report - -------------------------------------------------------------------------------- MANAGEMENT COMMENTARIES An Interview with Your Fund's Manager Listing of Top Holdings SEMIANNUAL REPORT Listing of Investments Financial Statements *PRIOR TO AUGUST 1, 2007, THE FUND'S NAME WAS OPPENHEIMER QUEST CAPITAL VALUE FUND, INC. SM [OPPENHEIMERFUNDS LOGO] TOP HOLDINGS AND ALLOCATIONS - -------------------------------------------------------------------------------- TOP TEN COMMON STOCK INDUSTRIES - -------------------------------------------------------------------------- Oil, Gas & Consumable Fuels 18.5% - -------------------------------------------------------------------------- Diversified Telecommunication Services 9.6 - -------------------------------------------------------------------------- Tobacco 9.2 - -------------------------------------------------------------------------- Insurance 7.7 - -------------------------------------------------------------------------- Pharmaceuticals 6.7 - -------------------------------------------------------------------------- Diversified Financial Services 6.1 - -------------------------------------------------------------------------- Industrial Conglomerates 4.1 - -------------------------------------------------------------------------- Aerospace & Defense 4.1 - -------------------------------------------------------------------------- Electric Utilities 3.3 - -------------------------------------------------------------------------- Capital Markets 3.2
Portfolio holdings and allocations are subject to change. Percentages are as of April 30, 2008, and are based on net assets. TOP TEN COMMON STOCK HOLDINGS - -------------------------------------------------------------------------- Kinder Morgan Management LLC 5.0% - -------------------------------------------------------------------------- Everest Re Group Ltd. 4.2 - -------------------------------------------------------------------------- Loews Corp./Carolina Group 4.1 - -------------------------------------------------------------------------- ConocoPhillips 3.7 - -------------------------------------------------------------------------- Philip Morris International, Inc. 3.7 - -------------------------------------------------------------------------- General Electric Co. 3.0 - -------------------------------------------------------------------------- BP plc, ADR 3.0 - -------------------------------------------------------------------------- AT&T, Inc. 3.0 - -------------------------------------------------------------------------- UBS AG 2.8 - -------------------------------------------------------------------------- Citigroup, Inc. 2.5
Portfolio holdings and allocations are subject to change. Percentages are as of April 30, 2008, and are based on net assets. For up-to-date Top 10 Fund holdings, please visit www.oppenheimerfunds.com 10 | OPPENHEIMER EQUITY INCOME FUND, INC. SECTOR ALLOCATION [PIE CHART] Energy 21.3% Financials 20.7 Consumer Staples 13.1 Industrials 10.9 Telecommunication Services 9.9 Health Care 7.0 Information Technology 6.0 Utilities 5.4 Consumer Discretionary 3.7 Materials 2.0
Portfolio holdings and allocations are subject to change. Percentages are as of April 30, 2008, and are based on the total market value of common stocks. 11 | OPPENHEIMER EQUITY INCOME FUND, INC. NOTES - -------------------------------------------------------------------------------- Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Cumulative total returns are not annualized. 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, VISITING OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM OR BY CALLING US AT 1.800.525.7048. 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 2/13/87. Unless otherwise noted, average annual total returns for Class A shares includes the current 5.75% maximum initial sales charge. Class A shares are subject to a maximum annual 0.25% asset-based sales charge currently. The asset-based sales charge is subject to a voluntary waiver of a portion or all of the charge as described in the Prospectus, and the Board of Directors has set the rate at zero. CLASS B shares of the Fund were first publicly offered on 3/3/97. Unless otherwise noted, Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to Class A shares 72 months after purchase, the 10-year return for Class B uses Class A performance for the period after conversion. Class B shares are subject to a maximum annual 0.75% asset-based sales charge. CLASS C shares of the Fund were first publicly offered on 3/3/97. 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. 12 | OPPENHEIMER EQUITY INCOME FUND, INC. 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. An explanation of the calculation of performance is in the Fund's Statement of Additional Information. 13 | OPPENHEIMER EQUITY INCOME FUND, INC. FUND EXPENSES - -------------------------------------------------------------------------------- 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 applicable); 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 April 30, 2008. ACTUAL EXPENSES. The first section of the table provides information about actual account values and actual expenses. You may use the information in this section 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 first section 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 second section of the table provides 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 for each class before expenses, which is not the 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 14 | OPPENHEIMER EQUITY INCOME FUND, INC. the Statement of Additional Information). Therefore, the "hypothetical" section of the table is 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 ACTUAL NOVEMBER 1, 2007 APRIL 30, 2008 APRIL 30, 2008 - -------------------------------------------------------------------------------------------- Class A $1,000.00 $ 897.60 $ 5.77 - -------------------------------------------------------------------------------------------- Class B 1,000.00 893.80 9.90 - -------------------------------------------------------------------------------------------- Class C 1,000.00 893.70 9.75 - -------------------------------------------------------------------------------------------- Class N 1,000.00 895.80 7.62 HYPOTHETICAL (5% return before expenses) - -------------------------------------------------------------------------------------------- Class A 1,000.00 1,018.80 6.14 - -------------------------------------------------------------------------------------------- Class B 1,000.00 1,014.47 10.52 - -------------------------------------------------------------------------------------------- Class C 1,000.00 1,014.62 10.37 - -------------------------------------------------------------------------------------------- Class N 1,000.00 1,016.86 8.11
Expenses are equal to the Fund's annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Those annualized expense ratios, excluding indirect expenses from affiliated fund, based on the 6-month period ended April 30, 2008 are as follows:
CLASS EXPENSE RATIOS - ------------------------------- Class A 1.22% - ------------------------------- Class B 2.09 - ------------------------------- Class C 2.06 - ------------------------------- Class N 1.61
The expense ratios reflect reduction to custodian expenses and 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 and reduction to custodian expenses, if applicable. 15 | OPPENHEIMER EQUITY INCOME FUND, INC. STATEMENT OF INVESTMENTS April 30, 2008 / Unaudited - --------------------------------------------------------------------------------
SHARES VALUE - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- COMMON STOCKS--97.0% - ---------------------------------------------------------------------------- CONSUMER DISCRETIONARY--3.6% - ---------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE--0.2% Carnival Corp. 1 23,750 $ 954,038 - ---------------------------------------------------------------------------- MEDIA--2.5% Cinemark Holdings, Inc. 2 285,000 4,220,850 - ---------------------------------------------------------------------------- Comcast Corp., Cl. A Special, Non-Vtg. 3 32,500 657,800 - ---------------------------------------------------------------------------- Time Warner, Inc. 350,000 5,197,500 -------------- 10,076,150 - ---------------------------------------------------------------------------- SPECIALTY RETAIL--0.9% OfficeMax, Inc. 185,000 3,379,950 - ---------------------------------------------------------------------------- CONSUMER STAPLES--12.7% - ---------------------------------------------------------------------------- BEVERAGES--0.5% Coca-Cola Co. (The) 35,000 2,060,450 - ---------------------------------------------------------------------------- FOOD & STAPLES RETAILING--1.7% SUPERVALU, Inc. 82,500 2,730,750 - ---------------------------------------------------------------------------- Wal-Mart Stores, Inc. 1 72,500 4,203,550 -------------- 6,934,300 - ---------------------------------------------------------------------------- FOOD PRODUCTS--1.3% B&G Foods, Inc. 326,250 5,171,063 - ---------------------------------------------------------------------------- B&G Foods, Inc., Cl. A 6,600 53,328 -------------- 5,224,391 - ---------------------------------------------------------------------------- TOBACCO--9.2% Altria Group, Inc. 290,000 5,800,000 - ---------------------------------------------------------------------------- Loews Corp./Carolina Group 250,000 16,417,500 - ---------------------------------------------------------------------------- Philip Morris International, Inc. 4 290,000 14,798,700 -------------- 37,016,200 - ---------------------------------------------------------------------------- ENERGY--20.7% - ---------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES--2.2% Diamond Offshore Drilling, Inc. 1 10,250 1,285,453 - ---------------------------------------------------------------------------- Halliburton Co. 80,000 3,672,800 - ---------------------------------------------------------------------------- Transocean, Inc. 1 26,000 3,833,960 -------------- 8,792,213 - ---------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS--18.5% BP plc, ADR 2 167,500 12,192,325 - ---------------------------------------------------------------------------- Capital Product Partners LP 125,800 2,516,000 - ---------------------------------------------------------------------------- Chevron Corp. 100,000 9,615,000 - ---------------------------------------------------------------------------- ConocoPhillips 175,000 15,076,250 - ---------------------------------------------------------------------------- El Paso Corp. 120,000 2,056,800 - ---------------------------------------------------------------------------- Kinder Morgan Management LLC 2, 4 371,460 20,244,570 - ---------------------------------------------------------------------------- Marathon Oil Corp. 200,000 9,114,000 - ---------------------------------------------------------------------------- Petroleo Brasileiro SA, ADR 1 10,000 1,214,200 - ---------------------------------------------------------------------------- Tortoise Energy Capital Corp. 2 23,800 602,140 - ---------------------------------------------------------------------------- Williams Cos., Inc. (The) 57,500 2,041,250 -------------- 74,672,535 - ---------------------------------------------------------------------------- FINANCIALS--20.1% - ---------------------------------------------------------------------------- CAPITAL MARKETS--3.2% Goldman Sachs Group, Inc. (The) 8,250 1,578,803 - ---------------------------------------------------------------------------- UBS AG 1, 4 341,250 11,462,588 -------------- 13,041,391 - ---------------------------------------------------------------------------- COMMERCIAL BANKS--0.7% Wachovia Corp. 1 100,000 2,915,000 - ---------------------------------------------------------------------------- CONSUMER FINANCE--0.9% American Express Co. 1 75,000 3,601,500 - ---------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES--6.1% Bank of America Corp. 1 212,500 7,977,250 - ---------------------------------------------------------------------------- Citigroup, Inc. 1 400,000 10,108,000 - ---------------------------------------------------------------------------- KKR Financial Holdings LLC 500,000 6,350,000 -------------- 24,435,250 - ---------------------------------------------------------------------------- INSURANCE--7.7% ACE Ltd. 100,000 6,029,000 - ---------------------------------------------------------------------------- Everest Re Group Ltd. 188,700 17,049,045 - ---------------------------------------------------------------------------- Fidelity National Title Group, Inc., Cl. A 95,000 1,519,050
16 | OPPENHEIMER EQUITY INCOME FUND, INC.
SHARES VALUE - ---------------------------------------------------------------------------- INSURANCE Continued Hartford Financial Services Group, Inc. (The) 60,000 $ 4,276,200 - ---------------------------------------------------------------------------- XL Capital Ltd., Cl. A 57,500 2,006,175 -------------- 30,879,470 - ---------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS--1.5% Anthracite Capital, Inc. 2 200,000 1,560,000 - ---------------------------------------------------------------------------- Crystal River Capital, Inc. 2 175,000 1,443,750 - ---------------------------------------------------------------------------- iStar Financial, Inc. 2 165,000 3,176,250 -------------- 6,180,000 - ---------------------------------------------------------------------------- HEALTH CARE--6.7% - ---------------------------------------------------------------------------- PHARMACEUTICALS--6.7% Abbott Laboratories 62,500 3,296,875 - ---------------------------------------------------------------------------- Bristol-Myers Squibb Co. 167,500 3,679,975 - ---------------------------------------------------------------------------- Merck & Co., Inc. 40,000 1,521,600 - ---------------------------------------------------------------------------- Novartis AG, ADR 1 82,500 4,152,225 - ---------------------------------------------------------------------------- Pfizer, Inc. 450,000 9,049,500 - ---------------------------------------------------------------------------- Schering-Plough Corp. 1 300,000 5,523,000 -------------- 27,223,175 - ---------------------------------------------------------------------------- INDUSTRIALS--10.6% - ---------------------------------------------------------------------------- AEROSPACE & DEFENSE--4.1% Lockheed Martin Corp. 44,000 4,665,760 - ---------------------------------------------------------------------------- Raytheon Co. 82,500 5,277,525 - ---------------------------------------------------------------------------- United Technologies Corp. 90,000 6,522,300 -------------- 16,465,585 - ---------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES--0.1% Waste Management, Inc. 7,500 270,750 - ---------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES--4.1% General Electric Co. 1 375,000 12,262,500 - ---------------------------------------------------------------------------- Siemens AG, Sponsored ADR 38,000 4,501,100 -------------- 16,763,600 - ---------------------------------------------------------------------------- MACHINERY--0.9% Joy Global, Inc. 1 50,000 3,712,500 - ---------------------------------------------------------------------------- MARINE--1.0% Eagle Bulk Shipping, Inc. 2 100,000 2,943,000 - ---------------------------------------------------------------------------- Seaspan Corp. 2 40,000 1,063,200 -------------- 4,006,200 - ---------------------------------------------------------------------------- TRADING COMPANIES & DISTRIBUTORS--0.4% Aircastle Ltd. 2 112,500 1,572,750 - ---------------------------------------------------------------------------- INFORMATION TECHNOLOGY--5.8% - ---------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT--1.2% Corning, Inc. 1 177,500 4,741,025 - ---------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--2.7% Applied Materials, Inc. 62,500 1,166,250 - ---------------------------------------------------------------------------- Intel Corp. 1 65,000 1,446,900 - ---------------------------------------------------------------------------- KLA-Tencor Corp. 1 42,500 1,856,400 - ---------------------------------------------------------------------------- Taiwan Semiconductor Manufacturing Co. Ltd., ADR 2 465,000 5,226,600 - ---------------------------------------------------------------------------- Texas Instruments, Inc. 1 42,500 1,239,300 -------------- 10,935,450 - ---------------------------------------------------------------------------- SOFTWARE--1.9% Microsoft Corp. 275,000 7,843,000 - ---------------------------------------------------------------------------- MATERIALS--1.9% - ---------------------------------------------------------------------------- CHEMICALS--1.9% BASF SE, Sponsored ADR 24,000 3,432,000 - ---------------------------------------------------------------------------- Eastman Chemical Co. 1 23,500 1,727,250 - ---------------------------------------------------------------------------- PPG Industries, Inc. 40,000 2,454,800 -------------- 7,614,050 - ---------------------------------------------------------------------------- TELECOMMUNICATION SERVICES--9.6% - ---------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES--9.6% AT&T, Inc. 307,500 11,903,325 - ---------------------------------------------------------------------------- Citizens Communications Co. 540,000 5,788,800 - ---------------------------------------------------------------------------- Consolidated Communications Holdings, Inc. 385,000 5,505,500
17 | OPPENHEIMER EQUITY INCOME FUND, INC. STATEMENT OF INVESTMENTS Unaudited / Continued - --------------------------------------------------------------------------------
SHARES VALUE - ---------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES Continued FairPoint Communications, Inc. 2 550,000 $ 5,065,500 - ---------------------------------------------------------------------------- Qwest Communications International, Inc. 2 37,500 193,500 - ---------------------------------------------------------------------------- Verizon Communications, Inc. 100,750 3,876,860 - ---------------------------------------------------------------------------- Windstream Corp. 535,000 6,280,900 -------------- 38,614,385 - ---------------------------------------------------------------------------- UTILITIES--5.3% - ---------------------------------------------------------------------------- ELECTRIC UTILITIES--3.3% Cleco Corp. 240,000 5,762,400 - ---------------------------------------------------------------------------- FirstEnergy Corp. 100,000 7,564,000 -------------- 13,326,400 - ---------------------------------------------------------------------------- ENERGY TRADERS--0.6% Constellation Energy Group, Inc. 28,750 2,433,688 - ---------------------------------------------------------------------------- GAS UTILITIES--0.7% Southern Union Co. 107,500 2,754,150 - ---------------------------------------------------------------------------- MULTI-UTILITIES--0.7% CenterPoint Energy, Inc. 177,500 2,701,550 -------------- Total Common Stocks (Cost $420,913,889) 391,141,096 - ---------------------------------------------------------------------------- PREFERRED STOCKS--2.2% - ---------------------------------------------------------------------------- Emmis Communications Corp., 6.25% Cum. Cv., Series A, Non-Vtg. 37,500 984,000 - ---------------------------------------------------------------------------- Freeport-McMoRan Copper & Gold, Inc., 6.75% Cv., Non-Vtg. 7,625 1,242,418 - ---------------------------------------------------------------------------- Huntington Bancshares, Inc., 8.50% Cv., Series A 4 1,520 1,489,600 - ---------------------------------------------------------------------------- NRG Energy, Inc., 5.75% Cv. 12,250 4,606,000 - ---------------------------------------------------------------------------- Platinum Underwriters Holdings Ltd., 6% Cv., Series A 20,000 634,800 -------------- Total Preferred Stocks (Cost $8,388,072) 8,956,818
PRINCIPAL AMOUNT VALUE - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- U.S. GOVERNMENT OBLIGATIONS--0.5% - ------------------------------------------------------------------------------- U.S. Treasury Nts., 3.25%, 1/15/09 (Cost $2,017,487) $ 2,000,000 $ 2,022,814 - ------------------------------------------------------------------------------- CONVERTIBLE CORPORATE BONDS AND NOTES--0.9% - ------------------------------------------------------------------------------- Liberty Media Corp., 3.125% Cv. Sr. Unsec. Unsub. Debs., 3/30/23 (Cost $3,560,733) 3,500,000 3,565,622
SHARES - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- INVESTMENT COMPANY--0.1% - ------------------------------------------------------------------------------- Oppenheimer Institutional Money Market Fund, Cl. E, 2.90% 5,6 (Cost $524,754) 524,754 524,754 - ------------------------------------------------------------------------------- Total Investments, at Value (excluding Investments Purchased with Cash Collateral from Securities Loaned) (Cost $435,404,935) 406,211,104
PRINCIPAL AMOUNT - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--7.6% 7 - ------------------------------------------------------------------------------- Undivided interest of 0.24% in joint repurchase agreement (Principal Amount/Value $4,100,000,000 with a maturity value of $4,100,300,382) with Barclays Capital, 2.6375%, dated 4/30/08, to be repurchased at $10,000,733 on 5/1/08, collateralized by Private Label CMOs, 0%-6.53%, 5/15/11-11/20/56, with a value of $4,305,000,000 $10,000,000 10,000,000 - ------------------------------------------------------------------------------- Undivided interest of 0.30% in joint repurchase agreement (Principal Amount/Value $7,000,000,000 with a maturity value of $7,000,388,889) with Barclays Capital, 2%, dated 4/30/08, to be repurchased at $20,812,237 on 5/1/08, collateralized by U.S. Agency Mortgages, 0%-7%, 6/4/12-4/25/38, with a value of $7,140,000,000 20,811,081 20,811,081
18 | OPPENHEIMER EQUITY INCOME FUND, INC.
VALUE - ----------------------------------------------------------------------- Total Investments Purchased with Cash Collateral from Securities Loaned (Cost $30,811,081) $ 30,811,081 - ----------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $466,216,016) 108.3% 437,022,185 - ----------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (8.3)% $(33,618,047) ----------------------- NET ASSETS 100.0% $403,404,138 =======================
FOOTNOTES TO STATEMENT OF INVESTMENTS 1. A sufficient amount of liquid assets has been designated to cover outstanding written call options. 2. Partial or fully-loaned security. See Note 7 of accompanying Notes. 3. A sufficient amount of liquid assets has been designated to cover outstanding written put options. 4. Non-income producing security. 5. Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended April 30, 2008, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:
SHARES SHARES OCTOBER 31, GROSS GROSS APRIL 30, 2007 ADDITIONS REDUCTIONS 2008 - --------------------------------------------------------------------------------------------------------- Oppenheimer Institutional Money Market Fund, Cl. E 3,483,696 62,186,948 65,145,890 524,754
DIVIDEND VALUE INCOME - --------------------------------------------------------------------------------------------------------- Oppenheimer Institutional Money Market Fund, Cl. E $ 524,754 $ 224,836
6. Rate shown is the 7-day yield as of April 30, 2008. 7. The security/securities have been segregated to satisfy the forward commitment to return the cash collateral received in securities lending transactions upon the borrower's return of the securities loaned. See Note 7 of accompanying Notes. - -------------------------------------------------------------------------------- WRITTEN OPTIONS AS OF APRIL 30, 2008 ARE AS FOLLOWS: - --------------------------------------------------------------------------------
NUMBER OF EXERCISE EXPIRATION PREMIUMS DESCRIPTION TYPE CONTRACTS PRICE DATE RECEIVED VALUE - --------------------------------------------------------------------------------------------------------- American Express Co. Call 750 $ 45.00 5/19/08 $ 230,249 $ 255,000 Bank of America Corp. Call 2,125 37.50 5/19/08 262,374 210,375 Carnival Corp. Call 200 42.50 5/19/08 27,400 5,000 Citigroup, Inc. Call 4,000 25.00 5/19/08 610,997 352,000 Comcast Corp. Put 1,000 20.00 1/19/09 223,998 200,000 Corning, Inc. Call 1,775 25.00 5/19/08 292,105 328,375 Diamond Offshore Drilling, Inc. Call 100 135.00 5/19/08 50,200 10,500 Eastman Chemical Co. Call 235 70.00 5/19/08 54,520 91,650 General Electric Co. Call 3,250 33.00 5/19/08 277,656 126,750 General Electric Co. Call 500 35.00 5/19/08 16,000 3,000 Intel Corp. Call 575 23.00 5/19/08 25,875 12,650 Joy Global, Inc. Call 500 75.00 5/19/08 167,319 122,500 KLA-Tencor Corp. Call 425 45.00 6/23/08 108,850 72,250 Novartis AG, ADR Call 400 55.00 5/19/08 16,644 -- Petroleo Brasileiro SA, ADR Call 100 115.00 5/19/08 135,199 90,000 Schering-Plough Corp. Call 125 17.50 5/19/08 6,750 15,625 Schering-Plough Corp. Call 2,000 30.00 5/19/08 146,438 -- Texas Instruments, Inc. Call 425 30.00 5/19/08 22,844 11,900 Transocean, Inc. Call 125 155.00 5/19/08 62,125 25,000 UBS AG Call 235 30.00 5/19/08 108,569 130,778 UBS AG Call 3,015 35.00 5/19/08 561,472 490,691 Wachovia Corp. Call 1,000 27.50 5/19/08 77,000 210,000 Wal-Mart Stores, Inc. Call 725 55.00 5/19/08 81,990 293,625 ------------------------- $3,566,574 $3,057,669 =========================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 19 | OPPENHEIMER EQUITY INCOME FUND, INC. STATEMENT OF ASSETS AND LIABILITIES Unaudited - --------------------------------------------------------------------------------
April 30, 2008 - ------------------------------------------------------------------------------------------------------- ASSETS - ------------------------------------------------------------------------------------------------------- Investments, at value--see accompanying statement of investments: Unaffiliated companies (cost $465,691,262) $ 436,497,431 Affiliated companies (cost $524,754) 524,754 ---------------- 437,022,185 - ------------------------------------------------------------------------------------------------------- Cash 183,097 - ------------------------------------------------------------------------------------------------------- Receivables and other assets: Investments sold 1,960,409 Dividends 681,913 Shares of capital stock sold 401,548 Other 79,974 ---------------- Total assets 440,329,126 - ------------------------------------------------------------------------------------------------------- LIABILITIES - ------------------------------------------------------------------------------------------------------- Options written, at value (premiums received $3,566,574)--see accompanying statement of investments 3,057,669 - ------------------------------------------------------------------------------------------------------- Return of collateral for securities loaned 30,811,081 - ------------------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased 2,138,276 Shares of capital stock redeemed 697,817 Distribution and service plan fees 78,694 Transfer and shareholder servicing agent fees 68,921 Directors' compensation 51,447 Shareholder communications 5,143 Other 15,940 ---------------- Total liabilities 36,924,988 - ------------------------------------------------------------------------------------------------------- NET ASSETS $ 403,404,138 ================ - ------------------------------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS - ------------------------------------------------------------------------------------------------------- Par value of shares of capital stock $ 1,835 - ------------------------------------------------------------------------------------------------------- Additional paid-in capital 419,630,358 - ------------------------------------------------------------------------------------------------------- Accumulated net investment income 2,467,273 - ------------------------------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions 9,981,743 - ------------------------------------------------------------------------------------------------------- Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies (28,677,071) ---------------- NET ASSETS $ 403,404,138 ================
20 | OPPENHEIMER EQUITY INCOME FUND, INC. - ---------------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE - ---------------------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net assets of $299,412,877 and 13,188,667 shares of capital stock outstanding) $ 22.70 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $ 24.08 - ---------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $43,015,119 and 2,171,375 shares of capital stock outstanding) $ 19.81 - ---------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $45,119,001 and 2,271,668 shares of capital stock outstanding) $ 19.86 - ---------------------------------------------------------------------------------------------- Class N Shares: Net asset value,redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $15,857,141 and 717,426 shares of capital stock outstanding) $ 22.10
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 21 | OPPENHEIMER EQUITY INCOME FUND, INC. STATEMENT OF OPERATIONS Unaudited - --------------------------------------------------------------------------------
For the Six Months Ended April 30, 2008 - -------------------------------------------------------------------------------------- INVESTMENT INCOME - -------------------------------------------------------------------------------------- Dividends: Unaffiliated companies (net of foreign withholding taxes of $52,508) $ 7,718,214 Affiliated companies 224,836 - -------------------------------------------------------------------------------------- Portfolio lending fees 45,396 - -------------------------------------------------------------------------------------- Interest 19,844 -------------- Total investment income 8,008,290 - -------------------------------------------------------------------------------------- EXPENSES - -------------------------------------------------------------------------------------- Management fees 1,500,872 - -------------------------------------------------------------------------------------- Distribution and service plan fees: Class A 383,978 Class B 242,887 Class C 238,983 Class N 42,214 - -------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 307,497 Class B 72,687 Class C 68,685 Class N 45,382 - -------------------------------------------------------------------------------------- Shareholder communications: Class A 58,225 Class B 12,768 Class C 7,677 Class N 1,384 - -------------------------------------------------------------------------------------- Directors' compensation 24,269 - -------------------------------------------------------------------------------------- Custodian fees and expenses 2,034 - -------------------------------------------------------------------------------------- Administration service fees 750 - -------------------------------------------------------------------------------------- Other 64,173 -------------- Total expenses 3,074,465 Less reduction to custodian expenses (2,034) Less waivers and reimbursements of expenses (20,639) -------------- Net expenses 3,051,792 - -------------------------------------------------------------------------------------- NET INVESTMENT INCOME 4,956,498
22 | OPPENHEIMER EQUITY INCOME FUND, INC. - ------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - ------------------------------------------------------------------------------- Net realized gain on: Investments from unaffiliated companies $ 11,675,328 Closing and expiration of option contracts written 1,126,519 Foreign currency transactions 3,422 ------------------- Net realized gain 12,805,269 - ------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on: Investments (69,398,026) Translation of assets and liabilities denominated in foreign currencies 2,273 Option contracts written 508,905 ------------------- Net change in unrealized depreciation (68,886,848) - ------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (51,125,081) ===================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 23 | OPPENHEIMER EQUITY INCOME FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED ENDED APRIL 30, 2008 OCTOBER 31, (UNAUDITED) 2007 - ------------------------------------------------------------------------------------------------------- OPERATIONS - ------------------------------------------------------------------------------------------------------- Net investment income $ 4,956,498 $ 2,340,384 - ------------------------------------------------------------------------------------------------------- Net realized gain 12,805,269 75,488,564 - ------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) (68,886,848) (27,697,375) ---------------------------------- Net increase (decrease) in net assets resulting from operations (51,125,081) 50,131,573 - ------------------------------------------------------------------------------------------------------- DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------- Dividends from net investment income: Class A (4,196,331) (455,828) Class B (220,243) -- Class C (225,957) -- Class N (134,331) -- ---------------------------------- (4,776,862) (455,828) - ------------------------------------------------------------------------------------------------------- Distributions from net realized gain: Class A (47,858,302) (27,989,679) Class B (8,551,158) (6,130,440) Class C (8,193,676) (4,420,958) Class N (2,596,878) (1,429,839) ---------------------------------- (67,200,014) (39,970,916) - ------------------------------------------------------------------------------------------------------- CAPITAL STOCK TRANSACTIONS - ------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from capital stock transactions: Class A 25,822,026 (27,860,279) Class B (2,160,264) (16,994,059) Class C 3,237,359 488,589 Class N 1,290,579 (101,286) ---------------------------------- 28,189,700 (44,467,035) - ------------------------------------------------------------------------------------------------------- NET ASSETS - ------------------------------------------------------------------------------------------------------- Total decrease (94,912,257) (34,762,206) - ------------------------------------------------------------------------------------------------------- Beginning of period 498,316,395 533,078,601 ---------------------------------- End of period (including accumulated net investment income of $2,467,273 and $2,287,637, respectively) $ 403,404,138 $ 498,316,395 ==================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 24 | OPPENHEIMER EQUITY INCOME FUND, INC. FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2008 YEAR ENDED OCTOBER 31, CLASS A (UNAUDITED) 2007 2006 2005 2004 2003 - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 29.86 $ 29.15 $ 27.34 $ 26.89 $ 23.71 $ 19.07 - ------------------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income (loss) .30 1 .20 1 .09 1 (.05) 1 (.10) (.09) Net realized and unrealized gain (loss) (3.14) 2.67 4.61 2.58 3.45 4.73 ----------------------------------------------------------------------------------- Total from investment operations (2.84) 2.87 4.70 2.53 3.35 4.64 - ------------------------------------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income (.34) (.03) -- -- -- -- Distributions from net realized gain (3.98) (2.13) (2.89) (2.08) (.17) -- ----------------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (4.32) (2.16) (2.89) (2.08) (.17) -- - ------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 22.70 $ 29.86 $ 29.15 $ 27.34 $ 26.89 $ 23.71 =================================================================================== - ------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN, AT NET ASSET VALUE 2 (10.24)% 10.43% 18.43% 9.80% 14.22% 24.33% - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $ 299,413 $ 362,740 $ 382,512 $ 339,703 $ 252,661 $ 193,955 - ------------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $ 317,172 $ 370,916 $ 369,074 $ 309,617 $ 225,711 $ 165,906 - ------------------------------------------------------------------------------------------------------------------------ Ratios to average net assets: 3 Net investment income (loss) 2.52% 0.68% 0.32% (0.19)% (0.37)% (0.43)% Total expenses 1.22% 4 1.28% 4 1.29% 1.34% 1.40% 1.56% Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses 1.22% 1.28% 1.28% 1.34% 1.40% 1.56% - ------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate 39% 124% 56% 89% 61% 74%
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 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 less than one full year. 4. Total expenses including indirect expenses from affiliated fund were as follows: Six Months Ended April 30, 2008 1.22% Year Ended October 31, 2007 1.28%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 25 | OPPENHEIMER EQUITY INCOME FUND, INC. FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2008 YEAR ENDED OCTOBER 31, CLASS B (UNAUDITED) 2007 2006 2005 2004 2003 - ------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 26.48 $ 26.27 $ 25.11 $ 25.07 $ 22.31 $ 18.09 - ------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) .17 1 (.05) 1 (.14) 1 (.28) 1 (.29) (.22) Net realized and unrealized gain (loss) (2.76) 2.39 4.19 2.40 3.22 4.44 -------------------------------------------------------------------------------- Total from investment operations (2.59) 2.34 4.05 2.12 2.93 4.22 - ------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.10) -- -- -- -- -- Distributions from net realized gain (3.98) (2.13) (2.89) (2.08) (.17) -- -------------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (4.08) (2.13) (2.89) (2.08) (.17) -- - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 19.81 $ 26.48 $ 26.27 $ 25.11 $ 25.07 $ 22.31 ================================================================================ - ------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 (10.62)% 9.46% 17.37% 8.81% 13.22% 23.33% - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 43,015 $ 60,106 $ 76,583 $ 74,004 $ 64,069 $ 55,449 - ------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 48,858 $ 72,568 $ 76,606 $ 73,417 $ 60,460 $ 46,785 - ------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income (loss) 1.66% (0.21)% (0.58)% (1.10)% (1.26)% (1.23)% Total expenses 2.09% 4 2.16% 4 2.19% 2.25% 2.30% 2.43% Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses 2.09% 2.16% 2.19% 2.25% 2.30% 2.36% - ------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 39% 124% 56% 89% 61% 74%
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 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 less than one full year. 4. Total expenses including indirect expenses from affiliated fund were as follows: Six Months Ended April 30, 2008 2.09% Year Ended October 31, 2007 2.16%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 26 | OPPENHEIMER EQUITY INCOME FUND, INC.
SIX MONTHS ENDED APRIL 30, 2008 YEAR ENDED OCTOBER 31, CLASS C (UNAUDITED) 2007 2006 2005 2004 2003 - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 26.54 $ 26.31 $ 25.14 $ 25.10 $ 22.34 $ 18.11 - -------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) .18 1 (.04) 1 (.14) 1 (.27) 1 (.29) (.14) Net realized and unrealized gain (loss) (2.78) 2.40 4.20 2.39 3.22 4.37 ----------------------------------------------------------------------------- Total from investment operations (2.60) 2.36 4.06 2.12 2.93 4.23 - -------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.10) -- -- -- -- -- Distributions from net realized gain (3.98) (2.13) (2.89) (2.08) (.17) -- ----------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (4.08) (2.13) (2.89) (2.08) (.17) -- - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 19.86 $ 26.54 $ 26.31 $ 25.14 $ 25.10 $ 22.34 ============================================================================== - -------------------------------------------------------------------------------------------------------------------------------- Total Return, at Net Asset Value 2 (10.63)% 9.53% 17.39% 8.80% 13.20% 23.36% - -------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Ratios/Supplemental Data - -------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 45,119 $ 56,130 $ 54,971 $ 46,560 $ 34,414 $ 30,510 - -------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 48,172 $ 56,496 $ 51,822 $ 42,635 $ 32,051 $ 20,901 - -------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income (loss) 1.68% (0.17)% (0.57)% (1.09)% (1.26)% (1.24)% Total expenses 2.06% 4 2.13% 4 2.17% 2.24% 2.31% 2.43% Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses 2.06% 2.13% 2.17% 2.24% 2.31% 2.36% - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 39% 124% 56% 89% 61% 74%
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 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 less than one full year. 4. Total expenses including indirect expenses from affiliated fund were as follows: Six Months Ended April 30, 2008 2.06% Year Ended October 31, 2007 2.13%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 27 | OPPENHEIMER EQUITY INCOME FUND, INC. FINANCIAL HIGHLIGHTS Continued - -------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 2008 YEAR ENDED OCTOBER 31, CLASS N (UNAUDITED) 2007 2006 2005 2004 2003 - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 29.09 $ 28.52 $ 26.91 $ 26.61 $ 23.56 $ 19.00 - ------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) .25 1 .08 1 (.03) 1 (.16) 1 (.19) (.15) Net realized and unrealized gain (loss) (3.06) 2.62 4.53 2.54 3.41 4.71 ---------------------------------------------------------------------------- Total from investment operations (2.81) 2.70 4.50 2.38 3.22 4.56 - ------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.20) -- -- -- -- -- Distributions from net realized gain (3.98) (2.13) (2.89) (2.08) (.17) -- ---------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (4.18) (2.13) (2.89) (2.08) (.17) -- - ------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 22.10 $ 29.09 $ 28.52 $ 26.91 $ 26.61 $ 23.56 ============================================================================ - ------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 (10.42)% 10.02% 17.93% 9.31% 13.75% 24.00% - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 15,857 $ 19,340 $ 19,013 $ 16,451 $ 10,554 $ 6,408 - ------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 16,963 $ 19,387 $ 17,985 $ 13,849 $ 8,724 $ 4,218 - ------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income (loss) 2.13% 0.29% (0.12)% (0.61)% (0.78)% (0.75)% Total expenses 1.80% 4 1.91% 4 1.90% 2.08% 2.20% 1.97% Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses 1.61% 1.67% 1.72% 1.76% 1.81% 1.87% - ------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 39% 124% 56% 89% 61% 74%
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 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 less than one full year. 4. Total expenses including indirect expenses from affiliated fund were as follows:
Six Months Ended April 30, 2008 1.80% Year Ended October 31, 2007 1.91%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 28 | OPPENHEIMER EQUITY INCOME FUND, INC. NOTES TO FINANCIAL STATEMENTS UNAUDITED - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1.SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Equity Income Fund, Inc. (the "Fund"), formerly known as Oppenheimer Quest Capital Value Fund, Inc., 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 total return. The Fund's investment adviser is OppenheimerFunds, Inc. (the "Manager"). The Fund offers Class A, Class B, Class C and Class N 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. 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. Class B shares will automatically convert to Class A shares 72 months 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 trading. Securities may be valued primarily using dealer-supplied valuations or a portfolio pricing service authorized by the Board of Directors. Securities traded on a registered U.S. securities exchange 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 whose principal exchange is NASDAQ(R) are valued based on the closing price reported 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 exchange 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, collateralized mortgage obligations and other asset-backed securities will be valued at the mean between the "bid" and "asked" prices. Securities for which market quotations are not readily available are valued at their fair value. 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 29 | OPPENHEIMER EQUITY INCOME FUND, INC. NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued determined in good faith using consistently applied procedures under the supervision of the Board of Directors. Shares of a registered investment company that are not traded on an exchange are valued at the acquired investment company's net asset value per share. "Money market-type" debt instruments with remaining maturities of sixty days or less are valued at cost adjusted by the amortization of discount or premium to maturity (amortized cost), which approximates market value. - -------------------------------------------------------------------------------- FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in U.S. dollars. The values of securities denominated in foreign currencies and amounts related to the purchase and sale of foreign securities and foreign investment income are translated into U.S. dollars as of the close of the Exchange, normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading. Foreign exchange rates may be valued primarily using a reliable bank, dealer or service authorized by the Board of Directors. Reported net realized gains and losses from foreign currency transactions arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, exchange rate fluctuations between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized appreciation and depreciation on the translation of assets and liabilities denominated in foreign currencies arise from changes in the values of assets and liabilities, including investments in securities at fiscal period end, resulting from changes in exchange rates. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. - -------------------------------------------------------------------------------- INVESTMENTS IN OPPENHEIMER INSTITUTIONAL MONEY MARKET FUND. The Fund is permitted to invest daily available cash balances in an affiliated money market fund. The Fund may invest the available cash in Class E shares of Oppenheimer Institutional Money Market Fund ("IMMF") to seek current income while preserving liquidity. IMMF is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, as amended. The Manager is also the investment adviser of IMMF. The Fund's investment in IMMF is included in the Statement of Investments. As a shareholder, the Fund is subject to its proportional share of IMMF's Class E expenses, including its management fee. 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. 30 | OPPENHEIMER EQUITY INCOME FUND, INC. - -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other affiliated funds advised by the Manager, may transfer uninvested cash balances into joint trading accounts on a daily basis. These balances are invested in one or more repurchase agreements. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited. - -------------------------------------------------------------------------------- INVESTMENTS WITH OFF-BALANCE SHEET RISK. The Fund enters into financial instrument transactions (such as swaps, futures, options and other derivatives) that may have off-balance sheet market risk. Off-balance sheet market risk exists when the maximum potential loss on a particular financial instrument is greater than the value of such financial instrument, as reflected in the Fund's Statement of Assets and Liabilities. - -------------------------------------------------------------------------------- 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 Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund's tax return filings generally remain open for the three preceding fiscal reporting period ends. 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. 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 April 30, 2008 are noted in the following table. 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. 31 | OPPENHEIMER EQUITY INCOME FUND, INC. NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued Federal tax cost of securities $ 466,216,016 Federal tax cost of other investments 3,566,574 ---------------- Total federal tax cost $ 469,782,590 ================ Gross unrealized appreciation $ 20,253,652 Gross unrealized depreciation (53,638,037) ---------------- Net unrealized depreciation $ (33,384,385) ================
- -------------------------------------------------------------------------------- DIRECTORS' COMPENSATION. On November 19, 2007, the Fund's Board of Directors voted to freeze participation in the retirement plan for the Board's independent directors by not adding new participants to the plan after December 31, 2007. Active independent directors who have accrued benefits under the plan prior to the freeze date will elect a distribution method with respect to their benefits. Benefits already accrued under the plan for Directors who were participants prior to that freeze date are not affected. During the six months ended April 30, 2008, the Fund's projected benefit obligations, payments to retired directors and accumulated liability were as follows: Projected Benefit Obligations Increased $ 17,401 Payments Made to Retired Directors 42,830 Accumulated Liability as of April 30, 2008 43,351
The Board of Directors has adopted a compensation deferral plan for independent directors that enables directors 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 Director 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 Director. The Fund purchases shares of the funds selected for deferral by the Director 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 directors' fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund's assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the compensation deferral plan. - -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually or at other times as deemed necessary by the Manager. - -------------------------------------------------------------------------------- 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 32 | OPPENHEIMER EQUITY INCOME FUND, INC. recorded at the fair market value of the securities received. Interest income is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily. - -------------------------------------------------------------------------------- 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 securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts, 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. - -------------------------------------------------------------------------------- INDEMNIFICATIONS. The Fund's organizational documents provide current and former directors 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 accounting principles generally accepted in the United States of America 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 increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. - -------------------------------------------------------------------------------- 2. SHARES OF CAPITAL STOCK The Fund has authorized one billion shares of $0.0001 par value capital stock in aggregate to be apportioned among each class of shares. Transactions in shares of capital stock were as follows:
SIX MONTHS ENDED APRIL 30, 2008 YEAR ENDED OCTOBER 31, 2007 SHARES AMOUNT SHARES AMOUNT - ---------------------------------------------------------------------------------------------- CLASS A Sold 1,135,824 $ 27,164,515 2,387,473 $ 69,105,829 Dividends and/or distributions reinvested 1,960,040 47,069,673 936,594 25,924,915 Redeemed (2,054,953) (48,412,162) (4,299,832) (122,891,023) ---------------------------------------------------------------- Net increase (decrease) 1,040,911 $ 25,822,026 (975,765) $ (27,860,279) ================================================================
33 | OPPENHEIMER EQUITY INCOME FUND, INC. NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2. SHARES OF CAPITAL STOCK Continued
SIX MONTHS ENDED APRIL 30, 2008 YEAR ENDED OCTOBER 31, 2007 SHARES AMOUNT SHARES AMOUNT - ---------------------------------------------------------------------------------------------- CLASS B Sold 144,993 $ 2,999,871 378,962 $ 9,748,673 Dividends and/or distributions reinvested 401,827 8,444,550 236,460 5,850,009 Redeemed (644,938) (13,604,685) (1,261,269) (32,592,741) ---------------------------------------------------------------- Net decrease (98,118) $ (2,160,264) (645,847) $(16,994,059) ================================================================ - ---------------------------------------------------------------------------------------------- CLASS C Sold 242,918 $ 5,122,078 415,826 $ 10,744,598 Dividends and/or distributions reinvested 361,669 7,620,063 159,042 3,941,060 Redeemed (448,100) (9,504,782) (549,261) (14,197,069) ---------------------------------------------------------------- Net increase 156,487 $ 3,237,359 25,607 $ 488,589 ================================================================ - ---------------------------------------------------------------------------------------------- CLASS N Sold 116,141 $ 2,754,805 176,220 $ 4,961,134 Dividends and/or distributions reinvested 109,403 2,559,955 50,259 1,360,013 Redeemed (172,952) (4,024,181) (228,310) (6,422,433) ---------------------------------------------------------------- Net increase (decrease) 52,592 $ 1,290,579 (1,831) $ (101,286) ================================================================
- -------------------------------------------------------------------------------- 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in IMMF, for the six months ended April 30, 2008, were as follows:
PURCHASES SALES - ---------------------------------------------------------- Investment securities $ 166,517,921 $ 197,888,059
- -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEES. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:
FEE SCHEDULE - ---------------------------------------- Up to $400 million 0.70% Next $400 million 0.68 Next $400 million 0.65 Next $400 million 0.60 Next $400 million 0.55 Over $2.0 billion 0.50
34 | OPPENHEIMER EQUITY INCOME FUND, INC. - -------------------------------------------------------------------------------- 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 six months ended April 30, 2008, the Fund paid $494,844 to OFS for services to the Fund. - -------------------------------------------------------------------------------- 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. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Distribution and Service Plan for Class A shares. Under the plan, the Fund pays a service fee to the Distributor of 0.25% of the average annual net assets of Class A shares. 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. Under the plan, the Fund may also pay an asset-based sales charge to the Distributor. Beginning January 1, 2003, the Board of Directors set the annual asset-based sales charge rate at zero. Fees incurred by the Fund under the plan are detailed in the Statement of Operations. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund has adopted Distribution and Service Plans (the "Plans") for Class B, Class C and Class N shares under Rule 12b-1 of the Investment Company Act of 1940 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 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 Directors and its independent directors 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's aggregate uncompensated expenses under the Plans at March 31, 2008 for Class B, Class C and Class N shares were $64,743, $730,482 and $290,203, 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. 35 | OPPENHEIMER EQUITY INCOME FUND, INC. NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
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 SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR - ----------------------------------------------------------------------------------------------------- April 30, 2008 $ 67,479 $ 75 $ 47,166 $ 1,883 $ 737
- -------------------------------------------------------------------------------- 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 six months ended April 30, 2008, OFS waived $15,733 for Class N shares. 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 six months ended April 30, 2008, the Manager waived $4,906 for IMMF management fees. - -------------------------------------------------------------------------------- 5. FOREIGN CURRENCY EXCHANGE CONTRACTS The Fund may enter into foreign currency exchange contracts ("forward contracts") for the purchase or sale of a foreign currency at a negotiated rate at a future date. Forward contracts are reported on a schedule following the Statement of Investments. Forward contracts will be valued daily based upon the closing prices of the forward currency rates determined at the close of the Exchange as provided by a bank, dealer or pricing service. The resulting unrealized appreciation (depreciation) is reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations within the change in unrealized appreciation (depreciation). At contract close, the difference between the original cost of the contract and the value at the close date is recorded as a realized gain (loss) in the Statement of Operations. Risks to the Fund include both market and credit risk. Market risk is the risk that the value of the forward contract will depreciate due to unfavorable changes in the exchange rates. Credit risk arises from the possibility that the counterparty will default. If the counterparty defaults, the Fund's loss will consist of the net amount of contractual payments that the Fund has not yet received. As of April 30, 2008, the Fund had no outstanding forward contracts. - -------------------------------------------------------------------------------- 6. OPTION ACTIVITY The Fund may buy and sell put and call options, or write put and covered call options. When an option is written, the Fund receives a premium and becomes obligated to sell or purchase the underlying security at a fixed price, upon exercise of the option. Options are valued daily based upon the last sale price on the principal exchange on which the option is traded. The difference between the premium received or paid, and market value of the option, is recorded as unrealized appreciation or depreciation. The 36 | OPPENHEIMER EQUITY INCOME FUND, INC. net change in unrealized appreciation or depreciation is reported in the Statement of Operations. When an option is exercised, the cost of the security purchased or the proceeds of the security sale are adjusted by the amount of premium received or paid. Upon the expiration or closing of the option transaction, a gain or loss is reported in the Statement of Operations. Securities designated to cover outstanding call or put options are noted in the Statement of Investments where applicable. Options written are reported in a schedule following the Statement of Investments and as a liability in the Statement of Assets and Liabilities. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk that there may be an illiquid market where the Fund is unable to close the contract. Written option activity for the six months ended April 30, 2008 was as follows:
CALL OPTIONS PUT OPTIONS ------------------------- ------------------------- NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF CONTRACTS PREMIUMS CONTRACTS PREMIUMS - -------------------------------------------------------------------------------------- Options outstanding as of October 31, 2007 -- $ -- -- $ -- Options written 65,595 6,205,560 1,000 223,998 Options closed or expired (43,010) (2,862,984) -- -- ----------------------------------------------------- Options outstanding as of April 30, 2008 22,585 $ 3,342,576 1,000 $ 223,998 =====================================================
- -------------------------------------------------------------------------------- 7. SECURITIES LENDING The Fund lends portfolio securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The loans are secured by collateral (either securities, letters of credit, or cash) in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund could experience delays and cost in recovering the securities loaned or in gaining access to the collateral. The Fund continues to receive the economic benefit of interest or dividends paid on the securities loaned in the form of a substitute payment received from the borrower and recognizes the gain or loss in the fair value of the securities loaned that may occur during the term of the loan. The Fund has the right under the lending agreement to recover the securities from the borrower on demand. As of April 30, 2008, the Fund had on loan securities valued at $29,871,370. Collateral of $30,811,081 was received for the loans, of which all was received in cash and subsequently invested in approved instruments. 37 | OPPENHEIMER EQUITY INCOME FUND, INC. NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 8. RECENT ACCOUNTING PRONOUNCEMENT In September 2006, Financial Accounting Standards Board ("FASB") 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 April 30, 2008, 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. 38 | OPPENHEIMER EQUITY INCOME FUND, INC. 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. 39 | OPPENHEIMER EQUITY INCOME FUND, INC. ITEM 2. CODE OF ETHICS. Not applicable to semiannual reports. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable to semiannual reports. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable to semiannual reports. 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: - the name, address, and business, educational, and/or other pertinent background of the person being recommended; - a statement concerning whether the person is an "interested person" as defined in the Investment Company Act of 1940; - 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 - 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 04/30/2008, 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) Not applicable to semiannual reports. (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 Equity Income Fund, Inc. By: /s/ John V. Murphy -------------------------------- John V. Murphy Principal Executive Officer Date: 06/10/2008 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: 06/10/2008 By: /s/ Brian W. Wixted -------------------------------- Brian W. Wixted Principal Financial Officer Date: 06/10/2008 EX-99.CERT 2 rs835_46763cert302.txt RS835_46763CERT302.TXT Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, John V. Murphy, certify that: 1. I have reviewed this report on Form N-CSR of Oppenheimer Equity Income Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of Directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 06/10/2008 /s/ John V. Murphy - ----------------------------------- John V. Murphy Principal Executive Officer Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, Brian W. Wixted, certify that: 1. I have reviewed this report on Form N-CSR of Oppenheimer Equity Income Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of Directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 06/10/2008 /s/ Brian W. Wixted - ----------------------------------- Brian W. Wixted Principal Financial Officer EX-99.906CERT 3 rs835_46763cert906.txt RS835_46763CERT906.TXT EX-99.906CERT Section 906 Certifications CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 John V. Murphy, Principal Executive Officer, and Brian W. Wixted, Principal Financial Officer, of Oppenheimer Equity Income Fund, Inc. (the "Registrant"), each certify to the best of his knowledge that: 1. The Registrant's periodic report on Form N-CSR for the period ended 04/30/2008 (the "Form N-CSR") fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Form N-CSR filed with the Commission. Principal Executive Officer Principal Financial Officer Oppenheimer Equity Income Oppenheimer Equity Income Fund, Inc. Fund, Inc. /s/ John V. Murphy /s/ Brian W. Wixted - ------------------------------- --------------------------------- John V. Murphy Brian W. Wixted Date: 06/10/2008 Date: 06/10/2008 -----END PRIVACY-ENHANCED MESSAGE-----