0000950123-11-028287.txt : 20110323 0000950123-11-028287.hdr.sgml : 20110323 20110323165107 ACCESSION NUMBER: 0000950123-11-028287 CONFORMED SUBMISSION TYPE: N-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20110131 FILED AS OF DATE: 20110323 DATE AS OF CHANGE: 20110323 EFFECTIVENESS DATE: 20110323 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-Q SEC ACT: 1940 Act SEC FILE NUMBER: 811-04797 FILM NUMBER: 11706972 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 C000098424 Y N-Q 1 g58072nvq.txt FORM N-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY 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: 01/31/2011 ITEM 1. SCHEDULE OF INVESTMENTS. Oppenheimer Equity Income Fund, Inc. STATEMENT OF INVESTMENTS January 31, 2011 (Unaudited)
Shares Value --------------- --------------- COMMON STOCKS--73.3% CONSUMER DISCRETIONARY--7.4% HOTELS, RESTAURANTS & LEISURE--0.6% Brinker International, Inc.(1) 50,000 $ 1,176,500 Wyndham Worldwide Corp. 292,500 8,228,023 --------------- 9,404,523 HOUSEHOLD DURABLES--0.6% MDC Holdings, Inc.(1) 310,000 9,582,100 LEISURE EQUIPMENT & PRODUCTS--0.2% Mattel, Inc. 150,000 3,552,000 MEDIA--2.3% Cinemark Holdings, Inc.(1) 665,000 11,271,750 Comcast Corp., Cl. A Special, Non-Vtg. 675,000 14,472,000 Time Warner Cable, Inc. 210,000 14,244,300 --------------- 39,988,050 MULTILINE RETAIL--1.7% Kohl's Corp.(1,2) 575,000 29,198,500 SPECIALTY RETAIL--2.0% Foot Locker, Inc.(1) 1,300,000 23,218,000 Lowe's Cos., Inc.(1) 445,000 11,036,000 --------------- 34,254,000 CONSUMER STAPLES--7.0% FOOD & STAPLES RETAILING--2.8% Kroger Co. (The) 1,000,000 21,400,000 Wal-Mart Stores, Inc.(1) 77,500 4,345,425 Walgreen Co. 550,000 22,242,000 --------------- 47,987,425 FOOD PRODUCTS--2.0% Archer-Daniels-Midland Co.(1) 425,000 13,884,750 Kellogg Co. 86,500 4,350,950 Kraft Foods, Inc., Cl. A(1) 500,000 15,285,000 --------------- 33,520,700 HOUSEHOLD PRODUCTS--0.1% Procter & Gamble Co. (The)(1) 37,500 2,367,375 TOBACCO--2.1% Lorillard, Inc.(1) 240,000 18,057,600 Philip Morris International, Inc.(1) 300,000 17,172,000 --------------- 35,229,600 ENERGY--10.1% ENERGY EQUIPMENT & SERVICES--1.9% Ensco plc, Sponsored ADR 225,000 12,226,500 Halliburton Co.(1) 450,000 20,250,000 --------------- 32,476,500 OIL, GAS & CONSUMABLE FUELS--8.2% Chevron Corp.(1) 372,500 35,361,425 CONSOL Energy, Inc.(1) 438,800 21,808,360
1 | Oppenheimer Equity Income Fund, Inc. Oppenheimer Equity Income Fund, Inc. STATEMENT OF INVESTMENTS January 31, 2011 (Unaudited)
Shares Value --------------- --------------- OIL, GAS & CONSUMABLE FUELS CONTINUED Exxon Mobil Corp. 353,500 $ 28,520,380 Kinder Morgan Management LLC(2) 1 35 Marathon Oil Corp.(1) 400,000 18,280,000 Royal Dutch Shell plc, ADR 372,500 26,443,775 Targa Resources Corp.(2) 322,500 9,910,425 --------------- 140,324,400 FINANCIALS--19.4% CAPITAL MARKETS--2.4% Goldman Sachs Group, Inc. (The) 91,250 14,930,325 Morgan Stanley 900,000 26,460,000 --------------- 41,390,325 COMMERCIAL BANKS--2.2% U.S. Bancorp(1) 605,000 16,335,000 Wells Fargo & Co. 642,500 20,829,850 --------------- 37,164,850 DIVERSIFIED FINANCIAL SERVICES--5.7% Bank of America Corp. 1,000,000 13,730,000 JPMorgan Chase & Co.(1) 1,350,000 60,669,000 KKR Financial Holdings LLC 2,325,000 22,459,500 --------------- 96,858,500 INSURANCE--7.5% Assurant, Inc. 275,000 10,788,250 Everest Re Group Ltd. 440,000 37,083,200 Genworth Financial, Inc., Cl. A 542,500 7,361,725 MetLife, Inc. 812,500 37,188,125 Old Republic International Corp. 1,000,000 12,230,000 XL Group plc 1,000,000 22,920,000 --------------- 127,571,300 REAL ESTATE INVESTMENT TRUSTS--1.6% Apollo Commercial Real Estate Finance, Inc.(1) 700,000 11,501,000 Starwood Property Trust, Inc. 730,000 16,432,300 --------------- 27,933,300 THRIFTS & MORTGAGE FINANCE--0.0% PMI Group, Inc. (The)(2) 100,000 291,000 HEALTH CARE--8.0% BIOTECHNOLOGY--0.0% PDL BioPharma, Inc. 100,000 494,000 HEALTH CARE PROVIDERS & SERVICES--0.3% UnitedHealth Group, Inc.(1) 105,000 4,310,250 PHARMACEUTICALS--7.7% Abbott Laboratories(1) 425,000 19,193,000 GlaxoSmithKline plc, ADR 482,500 17,529,225 Johnson & Johnson 92,500 5,528,725 Merck & Co., Inc.(1) 1,050,000 34,828,500 Pfizer, Inc. 2,850,000 51,927,000
2 | Oppenheimer Equity Income Fund, Inc. Oppenheimer Equity Income Fund, Inc. STATEMENT OF INVESTMENTS January 31, 2011 (Unaudited)
Shares Value --------------- --------------- PHARMACEUTICALS CONTINUED Teva Pharmaceutical Industries Ltd., Sponsored ADR 50,000 $ 2,732,500 --------------- 131,738,950 INDUSTRIALS--5.0% AEROSPACE & DEFENSE--2.1% General Dynamics Corp. 272,500 20,546,500 Lockheed Martin Corp.(1) 185,000 14,726,000 --------------- 35,272,500 COMMERCIAL SERVICES & SUPPLIES--0.4% Pitney Bowes, Inc. 59,250 1,438,590 Waste Management, Inc.(1) 146,250 5,538,488 --------------- 6,977,078 ELECTRICAL EQUIPMENT--0.1% Cooper Industries plc 27,500 1,684,650 INDUSTRIAL CONGLOMERATES--1.2% General Electric Co. 220,000 4,430,800 Tyco International Ltd. 360,000 16,138,800 --------------- 20,569,600 MARINE--0.4% Costamare, Inc. 485,000 7,420,500 ROAD & RAIL--0.2% Norfolk Southern Corp. 50,000 3,059,500 TRADING COMPANIES & DISTRIBUTORS--0.6% Aircastle Ltd. 1,000,000 10,620,000 INFORMATION TECHNOLOGY--6.2% COMMUNICATIONS EQUIPMENT--1.3% Harris Corp. 110,000 5,119,400 QUALCOMM, Inc.(1) 312,500 16,915,625 --------------- 22,035,025 ELECTRONIC EQUIPMENT & INSTRUMENTS--0.5% Corning, Inc.(1) 425,000 9,439,250 OFFICE ELECTRONICS--0.3% Xerox Corp. 425,000 4,513,500 SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--1.7% Applied Materials, Inc. 425,000 6,668,250 Intel Corp.(1) 725,000 15,558,500 Intersil Corp., Cl. A(1) 415,000 6,274,800 --------------- 28,501,550 SOFTWARE--2.4% Microsoft Corp.(1) 1,500,000 41,587,500 MATERIALS--0.8% METALS & MINING--0.4% Xstrata plc, Unsponsored ADR 1,500,000 6,600,000 PAPER & FOREST PRODUCTS--0.4% International Paper Co. 225,000 6,498,000 TELECOMMUNICATION SERVICES--4.6% DIVERSIFIED TELECOMMUNICATION SERVICES--4.6% AT&T, Inc.(1) 1,500,000 41,280,000
3 | Oppenheimer Equity Income Fund, Inc. Oppenheimer Equity Income Fund, Inc. STATEMENT OF INVESTMENTS January 31, 2011 (Unaudited)
Shares Value --------------- --------------- DIVERSIFIED TELECOMMUNICATION SERVICES CONTINUED Consolidated Communications Holdings, Inc.(1) 700,000 $ 12,425,000 Frontier Communications Corp. 825,000 7,565,250 Qwest Communications International, Inc.(1) 2,500,000 17,825,000 --------------- 79,095,250 UTILITIES--4.8% ELECTRIC UTILITIES--4.1% Allegheny Energy, Inc. 800,000 20,624,000 American Electric Power Co., Inc. 217,500 7,760,400 Edison International, Inc.(1) 492,500 17,867,900 Entergy Corp.(1) 258,250 18,637,903 PPL Corp. 178,500 4,603,515 --------------- 69,493,718 MULTI-UTILITIES--0.7% National Grid plc, Sponsored ADR 262,750 11,834,260 --------------- Total Common Stocks (Cost $1,101,159,836) 1,250,839,529 PREFERRED STOCKS--5.6% Apache Corp., 6% Cv., Series D, Non-Vtg. 130,000 8,507,200 Citigroup, Inc., 7.50% Cv. 162,500 22,363,250 General Motors Co., 4.75% Cv., Series B, Non-Vtg.(2) 700,000 38,017,000 Hartford Financial Services Group, Inc., 7.25% Cv., Series F, Non-Vtg. 347,500 9,156,625 Lucent Technologies Capital Trust I, 7.75% Cum. Cv., Non-Vtg. 8,000 7,270,000 Synovus Financial Corp., 8.25% Cv. 395,000 9,760,450 --------------- Total Preferred Stocks (Cost $83,578,127) 95,074,525 Principal Amount --------------- CONVERTIBLE CORPORATE BONDS AND NOTES--9.8% AMR Corp., 6.25% Cv. Sr. Unsec. Nts., 10/15/14 $ 20,000,000 22,275,000 CNO Financial Group, Inc.: 7% Cv. Sr. Unsec. Unsub. Nts., 12/30/16 12,316,000 17,280,580 7% Cv. Sr. Unsec. Unsub. Nts., 12/30/16(3) 3,907,000 5,533,289 Conseco, Inc., 7% Cv. Sr. Unsec. Unsub. Nts., Series 2, 12/30/16(3) 608,000 861,080 Continental Airlines, Inc., 4.50% Cv. Sr. Unsec. Unsub. Nts., 1/15/15 9,500,000 14,784,375 Forest City Enterprises, Inc., 5% Cv. Sr. Unsec. Nts., 10/15/16 4,750,000 7,035,890 General Cable Corp., 4.50% Cv. Unsec. Sub. Nts., 11/15/29(4) 17,500,000 21,918,750 MGIC Investment Corp., 9% Cv. Jr. Unsec. Sub. Bonds, 4/1/63(3) 25,000,000 25,875,000 Navistar International Corp., 3% Cv. Sr. Sub. Nts., 10/15/14 9,500,000 13,881,875 PMI Group, Inc. (The), 4.50% Cv. Sr. Nts., 4/15/20 15,000,000 12,262,500 Radian Group, Inc., 3% Cv. Sr. Unsec. Unsub. Nts., 11/15/17 4,000,000 3,800,000 Rite Aid Corp., 8.50% Cv. Sr. Unsec. Unsub. Nts., 5/15/15 21,704,000 21,269,920 --------------- Total Convertible Corporate Bonds and Notes (Cost $151,184,608) 166,778,259 STRUCTURED SECURITIES--4.4% Barclays Bank plc: Celanese Corp. Yield Enhanced Equity Linked Debt Securities 181,029 7,494,601
4 | Oppenheimer Equity Income Fund, Inc. Oppenheimer Equity Income Fund, Inc. STATEMENT OF INVESTMENTS January 31, 2011 (Unaudited)
Principal Amount Value --------------- --------------- Lear Corp. Yield Enhanced Equity Linked Debt Securities $ 112,867 $ 11,458,258 Barclays Bank plc, Allegheny Technologies, Inc., Yield Enhanced Equity Linked Debt Securities 132,956 8,136,907 Citigroup Funding, Inc., The Mosaic Co. Equity Linked Nts. 5,000,000 5,805,860 Credit Suisse AG, Sprint Nextel Corp. Equity Linked Nts. 2,285,000 10,419,600 Deutsche Bank AG, London: Lear Corp. Equity Linked Nts.(5) 102,000 10,757,940 Lear Corp. Equity Linked Nts.(5) 117,700 11,683,491 Morgan Stanley, Kohls Corp. Equity Linked Nts.(3) 194,750 9,907,906 --------------- Total Structured Securities (Cost $70,014,602) 75,664,563
Shares --------------- INVESTMENT COMPANY--8.0% Oppenheimer Institutional Money Market Fund, Cl. E, 0.20% (6,7) (Cost $136,411,432) 136,411,432 136,411,432 TOTAL INVESTMENTS, AT VALUE (COST $1,542,348,605) 101.1% 1,724,768,308 Liabilities in Excess of Other Assets (1.1) (18,788,827) --------------- --------------- Net Assets 100.0% $ 1,705,979,481 =============== ===============
Footnotes to Statement of Investments (1.) All or a portion of the security position is held in collateralized accounts to cover potential obligations with respect to outstanding written options. See accompanying Notes. (2.) Non-income producing security. (3.) Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Directors. These securities amount to $42,177,275 or 2.47% of the Fund's net assets as of January 31, 2011. (4.) Represents the current interest rate for a variable or increasing rate security. (5.) Restricted security. The aggregate value of restricted securities as of January 31, 2011 was $22,441,431, which represents 1.32% of the Fund's net assets. See accompanying Notes. Information concerning restricted securities is as follows:
ACQUISITION UNREALIZED SECURITY DATE COST VALUE APPRECIATION -------- ----------- ----------- ----------- ------------ Deutsche Bank AG, London, Lear Corp. Equity Linked Nts. 12/20/10 $10,001,100 $10,757,940 $ 756,840 Deutsche Bank AG, London, Lear Corp. Equity Linked Nts. 10/21/10 10,004,500 11,683,491 1,678,991 ----------- ----------- ---------- $20,005,600 $22,441,431 $2,435,831 =========== =========== ==========
(6.) Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended January 31, 2011, 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 GROSS GROSS JANUARY 29, 2010(a) ADDITIONS REDUCTIONS 31, 2011 ----------- ----------- ----------- ----------- Oppenheimer Institutional Money Market Fund, Cl. E 53,169,685 187,288,080 104,046,333 136,411,432
VALUE INCOME ------------ ------- Oppenheimer Institutional Money Market Fund, Cl. E $136,411,432 $43,124
(a.) October 29, 2010 represents the last business day of the Fund's 2010 fiscal year. (7.) Rate shown is the 7-day yield as of January 31, 2011. 5 | Oppenheimer Equity Income Fund, Inc. Oppenheimer Equity Income Fund, Inc. STATEMENT OF INVESTMENTS January 31, 2011 (Unaudited) VALUATION INPUTS Various data inputs are used in determining the value of each of the Fund's investments as of the reporting period end. These data inputs are categorized in the following hierarchy under applicable financial accounting standards: 1) Level 1-unadjusted quoted prices in active markets for identical assets or liabilities (including securities actively traded on a securities exchange) 2) Level 2-inputs other than unadjusted quoted prices that are observable for the asset or liability (such as unadjusted quoted prices for similar assets and market corroborated inputs such as interest rates, prepayment speeds, credit risks, etc.) 3) Level 3-significant unobservable inputs (including the Manager's own judgments about assumptions that market participants would use in pricing the asset or liability). The table below categorizes amounts as of January 31, 2011 based on valuation input level:
LEVEL 2-- LEVEL 1-- OTHER LEVEL 3-- UNADJUSTED SIGNIFICANT SIGNIFICANT QUOTED OBSERVABLE UNOBSERVABLE PRICES INPUTS INPUTS VALUE --------------- ------------ ------------ --------------- ASSETS TABLE INVESTMENTS, AT VALUE: Common Stocks Consumer Discretionary $ 125,979,173 $ -- $-- $ 125,979,173 Consumer Staples 119,105,100 -- -- 119,105,100 Energy 172,800,900 -- -- 172,800,900 Financials 331,209,275 -- -- 331,209,275 Health Care 136,543,200 -- -- 136,543,200 Industrials 85,603,828 -- -- 85,603,828 Information Technology 106,076,825 -- -- 106,076,825 Materials 13,098,000 -- -- 13,098,000 Telecommunication Services 79,095,250 -- -- 79,095,250 Utilities 81,327,978 -- -- 81,327,978 Preferred Stocks 18,267,650 76,806,875 -- 95,074,525 Convertible Corporate Bonds and Notes -- 166,778,259 -- 166,778,259 Structured Securities -- 75,664,563 -- 75,664,563 Investment Company 136,411,432 -- -- 136,411,432 -------------- ------------ --- -------------- Total Assets $1,405,518,611 $319,249,697 $-- $1,724,768,308 -------------- ------------ --- -------------- LIABILITIES TABLE OTHER FINANCIAL INSTRUMENTS: Appreciated options written, at value $ (1,910,593) $ -- $-- $ (1,910,593) Depreciated options written, at value (5,095,500) -- -- (5,095,500) -------------- ------------ --- -------------- Total Liabilities $ (7,006,093) $ -- $-- $ (7,006,093) -------------- ------------ --- --------------
Currency contracts and forwards, if any, are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract's value from trade date. Futures, if any, are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. All additional assets and liabilities included in the above table are reported at their market value at measurement date. SEE THE ACCOMPANYING NOTES FOR FURTHER DISCUSSION OF THE METHODS USED IN DETERMINING VALUE OF THE FUND'S INVESTMENTS, AND A SUMMARY OF CHANGES TO THE VALUATION METHODOLOGIES, IF ANY, DURING THE REPORTING PERIOD. 6 | Oppenheimer Equity Income Fund, Inc. Oppenheimer Equity Income Fund, Inc. STATEMENT OF INVESTMENTS January 31, 2011 (Unaudited) WRITTEN OPTIONS AS OF JANUARY 31, 2011 ARE AS FOLLOWS:
UNREALIZED NUMBER OF EXERCISE EXPIRATION PREMIUMS APPRECIATION/ DESCRIPTION TYPE CONTRACTS PRICE DATE RECEIVED VALUE (DEPRECIATION) ----------- ---- --------- -------- ---------- ---------- ----------- -------------- Abbott Laboratories Put 1,250 $ 47.00 2/21/11 $ 116,785 $ (241,250) $(124,465) Archer-Daniels-Midland Co. Call 750 35.00 2/21/11 30,459 (13,500) 16,959 AT&T, Inc. Call 3,750 29.00 2/21/11 142,975 (18,750) 124,225 AT&T, Inc. Call 500 28.00 2/21/11 7,993 (10,000) (2,007) AT&T, Inc. Call 250 28.00 3/21/11 11,996 (10,000) 1,996 AT&T, Inc. Put 4,500 28.00 2/21/11 223,993 (306,000) (82,007) Bank of America Corp. Put 1,000 14.00 2/21/11 42,985 (53,000) (10,015) Brinker International, Inc. Call 500 20.00 2/21/11 87,241 (170,000) (82,759) Chevron Corp. Call 50 90.00 2/21/11 18,349 (26,000) (7,651) Ciena Corp. Put 1,000 20.00 3/21/11 66,985 (66,000) 985 Cinemark Holdings, Inc. Call 4,000 20.00 3/21/11 225,942 (20,000) 205,942 CONSOL Energy, Inc. Call 638 47.00 2/21/11 286,448 (230,318) 56,130 Corning, Inc. Call 500 22.00 2/21/11 25,493 (32,500) (7,007) Edison International, Inc. Call 325 37.50 2/21/11 15,670 (3,250) 12,420 Everest Re Group Ltd. Call 75 90.00 2/21/11 5,924 (1,125) 4,799 Everest Re Group Ltd. Call 50 85.00 2/21/11 8,699 (7,750) 949 Foot Locker, Inc. Call 250 20.00 2/21/11 3,496 -- 3,496 Foot Locker, Inc. Put 4,250 17.50 3/21/11 347,094 (318,750) 28,344 Foot Locker, Inc. Put 3,500 17.50 2/21/11 112,039 (140,000) (27,961) Ford Motor Co. Put 4,000 16.00 2/21/11 67,943 (224,000) (156,057) Ford Motor Co. Put 2,500 16.00 3/21/11 168,487 (215,000) (46,513) Genworth Financial, Inc., Cl. A Put 2,500 13.00 2/21/11 100,018 (102,500) (2,482) Genworth Financial, Inc., Cl. A Put 1,000 14.00 2/21/11 47,985 (88,000) (40,015) Halliburton Co. Call 1,750 41.00 2/21/11 257,497 (735,000) (477,503) Halliburton Co. Call 1,250 42.00 3/21/11 521,222 (506,250) 14,972 Halliburton Co. Call 1,000 40.00 2/21/11 127,463 (513,000) (385,537) Halliburton Co. Put 5,000 38.00 3/21/11 235,500 (190,000) 45,500 Harris Corp. Put 500 45.00 2/21/11 74,742 (20,000) 54,742 Intel Corp. Call 250 22.00 2/21/11 2,246 (2,750) (504) Intersil Corp., Cl. A Call 2,000 15.00 2/21/11 103,540 (90,000) 13,540 Kellogg Co. Put 500 50.00 3/21/11 61,992 (62,500) (508) Kohl's Corp. Call 250 55.00 2/21/11 9,746 (2,500) 7,246 Kraft Foods, Inc., Cl. A Call 100 32.00 2/21/11 2,124 (500) 1,624 Kraft Foods, Inc., Cl. A Put 1,000 30.00 3/21/11 49,455 (47,000) 2,455 Linear Technology Corp. Put 1,000 35.00 2/21/11 116,914 (100,000) 16,914 Lockheed Martin Corp. Call 1,250 75.00 2/21/11 293,942 (600,000) (306,058) Lorillard, Inc. Call 100 72.50 2/21/11 24,018 (40,500) (16,482) Lowe's Cos., Inc. Call 1,250 26.00 2/21/11 36,432 (20,000) 16,432 Marathon Oil Corp. Call 750 42.00 2/21/11 108,800 (288,750) (179,950) Marathon Oil Corp. Call 500 43.00 2/21/11 36,992 (148,000) (111,008) Marathon Oil Corp. Call 250 44.00 2/21/11 53,260 (55,250) (1,990) Mattel, Inc. Put 5,000 24.00 2/21/11 453,512 (500,000) (46,488) MDC Holdings, Inc. Call 1,000 31.00 2/21/11 133,753 (80,000) 53,753 MDC Holdings, Inc. Put 500 27.00 2/21/11 56,992 (5,000) 51,992 Merck & Co., Inc. Call 750 35.00 2/21/11 25,244 (6,750) 18,494 Merck & Co., Inc. Put 1,250 33.00 2/21/11 64,731 (68,750) (4,019)
7 | Oppenheimer Equity Income Fund, Inc. Oppenheimer Equity Income Fund, Inc. STATEMENT OF INVESTMENTS January 31, 2011 (Unaudited) Microsoft Corp. Call 1,750 28.00 2/21/11 145,723 (61,250) 84,473 Morgan Stanley Put 1,000 27.00 2/21/11 106,195 (14,000) 92,195 Pfizer, Inc. Put 2,500 17.00 2/21/11 158,214 (25,000) 133,214 Philip Morris International, Inc. Call 100 60.00 2/21/11 5,499 (1,100) 4,399 PMI Group, Inc. (The) Put 1,000 4.00 2/21/11 28,985 (115,000) (86,015) Potash Corp. of Saskatchewan, Inc. Put 750 155.00 2/21/11 214,740 (27,000) 187,740 Procter & Gamble Co. (The) Call 200 65.00 2/21/11 20,372 (3,200) 17,172 QUALCOMM, Inc. Call 1,100 57.50 2/21/11 44,944 (17,600) 27,344 Sprint Nextel Corp. Put 1,000 4.00 2/21/11 10,986 (4,000) 6,986 Teradyne, Inc. Put 4,000 12.00 2/21/11 78,443 -- 78,443 Tyco International Ltd. Call 600 45.00 2/21/11 22,083 (42,600) (20,517) Wal-Mart Stores, Inc. Call 150 57.50 2/21/11 3,131 (3,150) (19) Waste Management, Inc. Call 1,300 36.00 4/18/11 232,677 (312,000) (79,323) ---------- ----------- --------- $6,087,108 $(7,006,093) $(918,985) ========== =========== =========
NOTES TO STATEMENT OF INVESTMENTS 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. Each investment asset or liability of the Fund is assigned a level at measurement date based on the significance and source of the inputs to its valuation. Unadjusted quoted prices in active markets for identical securities are classified as "Level 1," inputs other than unadjusted quoted prices for an asset that are observable are classified as "Level 2" and significant unobservable inputs, including the Manager's judgment about the assumptions that a market participant would use in pricing an asset or liability, are classified as "Level 3." The inputs used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. A table summarizing the Fund's investments under these levels of classification is included following the Statement of Investments. Securities are valued using unadjusted quoted market prices, when available, as supplied primarily by portfolio pricing services approved by the Board of Directors or dealers. Securities traded on a registered U.S. securities exchange are valued based on the last sale price of the security reported on the principal exchange on which it is traded, prior to the time when the Fund's assets are valued. Securities whose principal exchange is NASDAQ(R) are valued based on the official closing prices 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 current day's closing "bid" and "asked" prices, and if not, at the current day's closing bid price. A foreign security traded on a foreign exchange is valued based on the last sale price on the principal exchange on which the security is traded, as identified by the portfolio pricing service used by the Manager, prior to the time when the Fund's assets are valued. In the absence of a sale, the security is valued at the most recent official closing price on the principal exchange on which it is traded. Shares of a registered investment company that are not traded on an exchange are valued at that investment company's net asset value per share. U.S. domestic and international debt instruments (including corporate, government, municipal, mortgage-backed, collateralized mortgage obligations and asset-backed securities) and "money market-type" debt instruments with a remaining maturity in excess of sixty days are valued at the mean between the "bid" and "asked" prices utilizing price quotations obtained from independent pricing services or broker-dealers. Such prices are typically determined based upon information obtained from market participants including reported trade data, broker-dealer price quotations and inputs such as benchmark yields and issuer spreads from identical or similar securities. 8 | Oppenheimer Equity Income Fund, Inc. Oppenheimer Equity Income Fund, Inc. STATEMENT OF INVESTMENTS January 31, 2011 (Unaudited) Structured securities are valued utilizing price quotations obtained from broker-dealers or independent pricing services. Values are determined based upon market inputs which typically include the price of underlying financial instruments, stock market indices, foreign currencies, interest rate spreads, commodities, or the occurrence of other specific events. "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. In the absence of a readily available unadjusted quoted market price, including for 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 the securities' respective exchanges, the Manager, acting through its internal valuation committee, in good faith determines the fair valuation of that asset using consistently applied procedures under the supervision of the Board of Directors (which reviews those fair valuations by the Manager). Those procedures include certain standardized methodologies to fair value securities. Such methodologies include, but are not limited to, pricing securities initially at cost and subsequently adjusting the value based on: changes in company specific fundamentals, changes in an appropriate securities index, or changes in the value of similar securities which may be adjusted for any discounts related to resale restrictions. When possible, such methodologies use observable market inputs such as unadjusted quoted prices of similar securities, observable interest rates, currency rates and yield curves. The methodologies used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. There have been no significant changes to the fair valuation methodologies of the Fund during the period. STRUCTURED SECURITIES. The Fund invests in structured securities whose market values, interest rates and/or redemption prices are linked to the performance of underlying foreign currencies, interest rate spreads, stock market indices, prices of individual securities, commodities or other financial instruments or the occurrence of other specific events. The structured securities are often leveraged, increasing the volatility of each note's market value relative to the change in the underlying linked financial element or event. Fluctuations in value of these securities are recorded as unrealized gains and losses in the accompanying Statement of Operations in the annual and semiannual reports. The Fund records a realized gain or loss when a structured security is sold or matures. INVESTMENT 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. When applicable, the Fund's investment in IMMF is included in the Statement of Investments. Shares of IMMF are valued at their net asset value per share. 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. RISK EXPOSURES AND THE USE OF DERIVATIVE INSTRUMENTS The Fund's investment objectives not only permit the Fund to purchase investment securities, they also allow the Fund to enter into various types of derivatives contracts, including, but not limited to, futures contracts, forward foreign currency exchange contracts, credit default swaps, interest rate swaps, total return swaps, and purchased and written options. In doing so, the Fund will employ strategies in differing combinations to permit it to increase, decrease, or change the level or types of exposure to market risk factors. Central to those strategies are features inherent to derivatives that make them more attractive for this purpose than equity and debt securities: they require little or no initial cash investment, they can focus exposure on only certain selected risk factors, and they may not require the ultimate receipt or delivery of the underlying security (or securities) to the contract. This may allow the Fund to pursue its objectives more quickly and efficiently than if it were to make direct purchases or sales of securities capable of effecting a similar response to market factors. MARKET RISK FACTORS. In accordance with its investment objectives, the Fund may use derivatives to increase or decrease its exposure to one or more of the following market risk factors: COMMODITY RISK. Commodity risk relates to the change in value of commodities or commodity indexes as they relate to increases or decreases in the commodities market. Commodities are physical assets that have tangible properties. Examples of these types of assets are crude oil, heating oil, metals, livestock, and agricultural products. 9 | Oppenheimer Equity Income Fund, Inc. Oppenheimer Equity Income Fund, Inc. STATEMENT OF INVESTMENTS January 31, 2011 (Unaudited) CREDIT RISK. Credit risk relates to the ability of the issuer to meet interest and principal payments, or both, as they come due. In general, lower-grade, higher-yield bonds are subject to credit risk to a greater extent than lower-yield, higher-quality bonds. EQUITY RISK. Equity risk relates to the change in value of equity securities as they relate to increases or decreases in the general market. FOREIGN EXCHANGE RATE RISK. Foreign exchange rate risk relates to the change in the U.S. dollar value of a security held that is denominated in a foreign currency. The U.S. dollar value of a foreign currency denominated security will decrease as the dollar appreciates against the currency, while the U.S. dollar value will increase as the dollar depreciates against the currency. INTEREST RATE RISK. Interest rate risk refers to the fluctuations in value of fixed-income securities resulting from the inverse relationship between price and yield. For example, an increase in general interest rates will tend to reduce the market value of already issued fixed-income investments, and a decline in general interest rates will tend to increase their value. In addition, debt securities with longer maturities, which tend to have higher yields, are subject to potentially greater fluctuations in value from changes in interest rates than obligations with shorter maturities. VOLATILITY RISK. Volatility risk refers to the magnitude of the movement, but not the direction of the movement, in a financial instrument's price over a defined time period. Large increases or decreases in a financial instrument's price over a relative time period typically indicate greater volatility risk, while small increases or decreases in its price typically indicate lower volatility risk. The Fund's actual exposures to these market risk factors during the period are discussed in further detail, by derivative type, below. RISKS OF INVESTING IN DERIVATIVES. The Fund's use of derivatives can result in losses due to unanticipated changes in the market risk factors and the overall market. In instances where the Fund is using derivatives to decrease, or hedge, exposures to market risk factors for securities held by the Fund, there are also risks that those derivatives may not perform as expected resulting in losses for the combined or hedged positions. Derivatives may have little or no initial cash investment relative to their market value exposure and therefore can produce significant gains or losses in excess of their cost. This use of embedded leverage allows the Fund to increase its market value exposure relative to its net assets and can substantially increase the volatility of the Fund's performance. Additional associated risks from investing in derivatives also exist and potentially could have significant effects on the valuation of the derivative and the Fund. Typically, the associated risks are not the risks that the Fund is attempting to increase or decrease exposure to, per its investment objectives, but are the additional risks from investing in derivatives. Examples of these associated risks are liquidity risk, which is the risk that the Fund will not be able to sell the derivative in the open market in a timely manner, and counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. Associated risks can be different for each type of derivative and are discussed by each derivative type in the notes that follow. COUNTERPARTY CREDIT RISK. Certain derivative positions are subject to counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. The Fund's derivative counterparties are financial institutions who are subject to market conditions that may weaken their financial position. The Fund intends to enter into financial transactions with counterparties that the Manager believes to be creditworthy at the time of the transaction. CREDIT RELATED CONTINGENT FEATURES. The Fund's agreements with derivative counterparties have several credit related contingent features that if triggered would allow its derivatives counterparties to close out and demand payment or additional collateral to cover their exposure from the Fund. Credit related contingent features are established between the Fund and its derivatives counterparties to reduce the risk that the Fund will not fulfill its payment obligations to its counterparties. These triggering features include, but are not limited to, a percentage decrease in the Fund's net assets and or a percentage decrease in the Fund's Net Asset Value or NAV. The contingent features are established within the Fund's International Swap and Derivatives Association, Inc. master agreements which govern certain positions in swaps, over-the-counter options and swaptions, and forward currency exchange contracts for each individual counterparty. OPTION ACTIVITY 10 | Oppenheimer Equity Income Fund, Inc. Oppenheimer Equity Income Fund, Inc. STATEMENT OF INVESTMENTS January 31, 2011 (Unaudited) The Fund may buy and sell put and call options, or write put and 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 net change in unrealized appreciation or depreciation is reported in the Statement of Operations in the annual and semiannual reports. 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 Operation s in the annual and semiannual reports. Options written, if any, are reported in a schedule following the Statement of Investments and as a liability in the Statement of Assets and Liabilities in the annual and semiannual reports. Securities held in collateralized accounts to cover potential obligations with respect to outstanding written options are noted in the Statement of Investments. 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. The Fund has written put options on individual equity securities and, or, equity indexes to increase exposure to equity risk. A written put option becomes more valuable as the price of the underlying financial instrument appreciates relative to the strike price. The Fund has written call options on individual equity securities and, or, equity indexes to decrease exposure to equity risk. A written covered call option becomes more valuable as the price of the underlying financial instrument depreciates relative to the strike price. During the period ended January 31, 2011, the Fund had an average market value of $2,802,025 and $3,341,075 on written call options and written put options, respectively. Additional associated risks to the Fund include counterparty credit risk for over-the-counter options and liquidity risk. Written option activity for the period ended January 31, 2011 was as follows:
CALL OPTIONS PUT OPTIONS ----------------------- ----------------------- NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF CONTRACTS PREMIUMS CONTRACTS PREMIUMS --------- ----------- --------- ----------- Options outstanding as of October 29, 2010(1) 40,055 $ 2,848,012 25,925 $ 3,559,055 Options written 72,157 8,089,986 122,150 9,345,865 Options closed or expired (72,062) (6,452,163) (91,150) (8,298,250) Options exercised (10,862) (1,404,439) (6,425) (1,600,958) ------- ----------- -------- ----------- Options outstanding as of January 31, 2011 29,288 $ 3,081,396 50,500 $ 3,005,712 ======= =========== ======== ===========
(1.) October 29, 2010 represents the last business day of the Fund's 2010 fiscal year. RESTRICTED SECURITIES As of January 31, 2011, investments in securities included issues that are restricted. A restricted security may have a contractual restriction on its resale and is valued under methods approved by the Board of Directors as reflecting fair value. Securities that are restricted are marked with an applicable footnote on the Statement of Investments. Restricted securities are reported on a schedule following the Statement of Investments. 11 | Oppenheimer Equity Income Fund, Inc. Oppenheimer Equity Income Fund, Inc. STATEMENT OF INVESTMENTS January 31, 2011 (Unaudited) FEDERAL TAXES. The approximate 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 January 31, 2011 are noted below. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses. Federal tax cost of securities $1,547,509,547 Federal tax cost of other investments (6,087,108) -------------- Total federal tax cost $1,541,422,439 ============== Gross unrealized appreciation $ 190,268,291 Gross unrealized depreciation (13,928,515) -------------- Net unrealized appreciation $ 176,339,776 ==============
12 | Oppenheimer Equity Income Fund, Inc. ITEM 2. CONTROLS AND PROCEDURES. (a) 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 01/31/2011, 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 the 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. (b) There have been no significant changes in the registrant's internal controls over financial reporting that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 3. EXHIBITS. Exhibits 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/ William F. Glavin, Jr. --------------------------------- William F. Glavin, Jr. Principal Executive Officer Date: March 1, 2011 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/ William F. Glavin, Jr. --------------------------------- William F. Glavin, Jr. Principal Executive Officer Date: March 1, 2011 By: /s/ Brian W. Wixted --------------------------------- Brian W. Wixted Principal Financial Officer Date: March 1, 2011 EX-99.CERT 2 g58072exv99wcert.txt EX-99.CERT Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, William F. Glavin, Jr., certify that: 1. I have reviewed this report on Form N-Q 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 schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed; 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 registrant's most recent fiscal quarter 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 Trustees (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. /s/ William F. Glavin, Jr. ------------------------------------- William F. Glavin, Jr. Principal Executive Officer Date: 03/07/2011 Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, Brian W. Wixted, certify that: 1. I have reviewed this report on Form N-Q 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 schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed; 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 registrant's most recent fiscal quarter 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 Trustees (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. /s/ Brian W. Wixted ------------------------------------- Brian W. Wixted Principal Financial Officer Date: 03/07/2011