N-Q 1 d260290dnq.htm OPPENHEIMER EQUITY INCOME FUND Oppenheimer Equity Income Fund

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

(Exact name of registrant as specified in charter)

6803 South Tucson Way, Centennial, Colorado 80112-3924

(Address of principal executive offices) (Zip code)

Cynthia Lo Bessette

OFI Global Asset Management, Inc.

225 Liberty Street, 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: 1/31/2017

Item 1. Schedule of Investments.

STATEMENT OF INVESTMENTS January 31, 2017 Unaudited

 

 

     Shares      Value  
Common Stocks—89.3%                

Consumer Discretionary—7.6%

                  

Automobiles—1.1%

                  

Ford Motor Co.

      3,792,500      $ 46,875,300  

General Motors Co.

      10,000        366,100  
               

 

 47,241,400

 

  

 

Hotels, Restaurants & Leisure—1.1%

                  

Extended Stay America, Inc.

 

     

 

 2,840,000

 

  

 

     

 

 46,036,400

 

  

 

Household Durables—2.0%

                  

CalAtlantic Group, Inc.

      1,742,500        60,760,975  

PulteGroup, Inc.

      990,000        21,294,900  
               

 

 82,055,875

 

  

 

Media—1.4%

                  

Comcast Corp., Cl. A

      255,000        19,232,100  

Time Warner, Inc.

      380,000        36,803,000  
               

 

 56,035,100

 

  

 

Multiline Retail—1.2%

                  

Kohl’s Corp.

      365,000        14,537,950  

Macy’s, Inc.

      1,111,600        32,836,664  

Target Corp.

      41,250                  2,659,800  
               

 

 50,034,414

 

  

 

Specialty Retail—0.8%

                  

Signet Jewelers Ltd.

      212,500        16,504,875  

Staples, Inc.

      1,890,000        17,388,000  
               

 

 33,892,875

 

  

 

Consumer Staples—7.3%

                  

Beverages—1.2%

                  

Coca-Cola Co. (The)

      620,000        25,773,400  

Molson Coors Brewing Co., Cl. B

      230,000        22,199,600  
               

 

 47,973,000

 

  

 

Food & Staples Retailing—2.2%

                  

CVS Health Corp.

      60,000        4,728,600  

Walgreens Boots Alliance, Inc.

      687,500        56,333,750  

Wal-Mart Stores, Inc.

      486,750        32,485,695  
               

 

 93,548,045

 

  

 

Food Products—2.1%

                  

B&G Foods, Inc.

      63,000        2,794,050  

Kraft Heinz Co. (The)

      537,500        47,993,375  

Post Holdings, Inc.1

      450,000        37,656,000  
       

 

 88,443,425

 

  

 

 

1        OPPENHEIMER EQUITY INCOME FUND

STATEMENT OF INVESTMENTS Unaudited / Continued

 

 

      Shares      Value  

Household Products—0.7%

                  

Procter & Gamble Co. (The)

 

     

 

 330,000

 

  

 

    $

 

 28,908,000

 

  

 

Tobacco—1.1%

                  

Philip Morris International, Inc.

 

     

 

 477,500

 

  

 

     

 

 45,902,075

 

  

 

Energy—11.0%

                  

Oil, Gas & Consumable Fuels—11.0%

                  

BP plc, Sponsored ADR

      1,702,500        61,255,950  

Chevron Corp.

      987,500        109,958,125  

Exxon Mobil Corp.

      950,000        79,695,500  

Kinder Morgan, Inc.

      1,475,000        32,951,500  

Marathon Oil Corp.

      2,800,000        46,900,000  

Royal Dutch Shell plc, Cl. A, Sponsored ADR

      1,782,500        96,950,175  

Williams Cos., Inc. (The)

      1,017,500        29,344,700  
               

 

 457,055,950

 

  

 

Financials—28.9%

                  

Capital Markets—5.1%

                  

Goldman Sachs Group, Inc. (The)

      257,500        59,049,900  

KKR & Co. LP2

      4,050,000        70,308,000  

Morgan Stanley

      1,917,500        81,474,575  
               

 

 210,832,475

 

  

 

Commercial Banks—11.0%

                  

Bank of America Corp.

      530,000        11,999,200  

CIT Group, Inc.

      7,500                     308,925  

Citigroup, Inc.3

      3,880,000        216,620,400  

JPMorgan Chase & Co.3

      1,297,400        109,798,962  

Wells Fargo & Co.

      2,070,000        116,603,100  
               

 

 455,330,587

 

  

 

Insurance—4.6%

                  

American International Group, Inc.

      1,000,000        64,260,000  

Assured Guaranty Ltd.

      2,360,000        91,827,600  

MetLife, Inc.

      675,000        36,726,750  
               

 

 192,814,350

 

  

 

Real Estate Investment Trusts (REITs)—5.3%

                  

Blackstone Mortgage Trust, Inc., Cl. A

      952,500        29,041,725  

Colony NorthStar, Inc., Cl. A

      6,228,833        86,705,355  

Communications Sales & Leasing, Inc.

      1,475,000        38,763,000  

Starwood Property Trust, Inc.

      1,772,500        39,455,850  

Two Harbors Investment Corp.

      2,950,000        25,871,500  
               

 

 219,837,430

 

  

 

Real Estate Management & Development—0.6%

                  

Realogy Holdings Corp.

      990,250        25,657,378  

 

 

2        OPPENHEIMER EQUITY INCOME FUND

 

 

      Shares      Value  

Thrifts & Mortgage Finance—2.3%

                  

MGIC Investment Corp.1

      4,575,000      $ 48,723,750  

Radian Group, Inc.

      2,537,500        46,690,000  
               

 

 95,413,750

 

  

 

Health Care—9.7%

                  

Biotechnology—2.1%

                  

AbbVie, Inc.

      700,000        42,777,000  

Gilead Sciences, Inc.

      615,000        44,556,750  
               

 

 87,333,750

 

  

 

Health Care Equipment & Supplies—2.3%

                  

Abbott Laboratories

      1,407,500        58,791,275  

Medtronic plc

      500,000        38,010,000  
               

 

 96,801,275

 

  

 

Pharmaceuticals—5.3%

                  

Bristol-Myers Squibb Co.

      90,000                  4,424,400  

Johnson & Johnson

      344,750        39,042,937  

Merck & Co., Inc.

      1,300,200        80,599,398  

Pfizer, Inc.3

      3,047,500        96,697,175  
               

 

 220,763,910

 

  

 

Industrials—5.4%

                  

Aerospace & Defense—1.2%

                  

General Dynamics Corp.

      140,750        25,487,010  

United Technologies Corp.

      240,000        26,320,800  
               

 

 51,807,810

 

  

 

Airlines—1.3%

                  

United Continental Holdings, Inc.1

 

     

 

 740,000

 

  

 

     

 

 52,147,800

 

  

 

Commercial Services & Supplies—0.2%

                  

RR Donnelley & Sons Co.

 

     

 

 582,500

 

  

 

     

 

 9,989,875

 

  

 

Electrical Equipment—0.9%

                  

Eaton Corp. plc

      350,000        24,773,000  

General Cable Corp.

      602,500        12,230,750  
               

 

 37,003,750

 

  

 

Industrial Conglomerates—1.7%

                  

General Electric Co.

 

     

 

 2,332,500

 

  

 

     

 

 69,275,250

 

  

 

Road & Rail—0.1%

                  

CSX Corp.

 

     

 

 78,200

 

  

 

     

 

 3,627,698

 

  

 

Information Technology—10.8%

                  

Communications Equipment—1.5%

                  

Cisco Systems, Inc.

      2,085,000        64,051,200  

 

3        OPPENHEIMER EQUITY INCOME FUND

STATEMENT OF INVESTMENTS Unaudited / Continued

 

 

      Shares      Value  

Internet Software & Services—0.5%

                  

Alphabet, Inc., Cl. C1

 

     

 

 25,500

 

  

 

    $

 

 20,318,145

 

  

 

IT Services—0.7%

                  

International Business Machines Corp.

 

     

 

 162,500

 

  

 

     

 

 28,359,500

 

  

 

Semiconductors & Semiconductor Equipment—2.5%

                  

Intel Corp.

      967,500        35,623,350  

Micron Technology, Inc.1

      1,525,000        36,767,750  

QUALCOMM, Inc.

      545,000        29,119,350  
               

 

 101,510,450

 

  

 

Software—2.6%

                  

Microsoft Corp.

      925,000        59,801,250  

Oracle Corp.

      1,200,000        48,132,000  
               

 

 107,933,250

 

  

 

Technology Hardware, Storage & Peripherals—3.0%

                  

Apple, Inc.

      937,750        113,795,963  

HP, Inc.

      762,500        11,475,625  
               

 

 125,271,588

 

  

 

Materials—2.0%

                  

Chemicals—1.0%

                  

Dow Chemical Co. (The)

      340,000        20,274,200  

LyondellBasell Industries NV, Cl. A

      237,500        22,151,625  
               

 

 42,425,825

 

  

 

Containers & Packaging—0.6%

                  

International Paper Co.

 

     

 

 392,500

 

  

 

     

 

 22,215,500

 

  

 

Paper & Forest Products—0.4%

                  

Domtar Corp.

 

     

 

 389,000

 

  

 

     

 

 16,995,410

 

  

 

Telecommunication Services—3.3%

                  

Diversified Telecommunication Services—3.3%

                  

AT&T, Inc.

      2,550,000        107,508,000  

CenturyLink, Inc.

      175,000                  4,525,500  

Frontier Communications Corp.

      2,875,000        10,033,750  

Level 3 Communications, Inc.1

      245,000        14,567,700  
               

 

 136,634,950

 

  

 

Utilities—3.3%

                  

Electric Utilities—2.5%

                  

American Electric Power Co., Inc.

      765,000        49,005,900  

Exelon Corp.

      300,000        10,764,000  

PPL Corp.

      1,250,000        43,550,000  
       

 

 103,319,900

 

  

 

 

4        OPPENHEIMER EQUITY INCOME FUND

 

 

      Shares      Value  

Independent Power and Renewable Electricity Producers—0.8%

                  

NRG Energy, Inc.

      2,093,300      $ 34,623,182  

Total Common Stocks (Cost $2,918,137,604)

 

              

 

 3,709,422,547

 

  

 

Preferred Stocks—8.2%                

Allergan plc, 5.50% Cv., Series A

      107,741        85,275,924  

Dominion Resources, Inc., 6.375% Cv.

      299,500        15,163,685  

Exelon Corp., 6.50% Cv.

      769,875        38,162,704  

Frontier Communications Corp., 11.125% Cv., Series A, Non-Vtg.

      1,000,000        73,110,000  

iStar, Inc., 4.50% Cv., Non-Vtg.

      1,239,705        61,278,618  

Post Holdings, Inc., 5.25% Cv.

      88,000        12,826,000  

Teva Pharmaceutical Industries Ltd., 7% Cv., Non-Vtg.

      92,500        57,035,500  

Total Preferred Stocks (Cost $414,895,785)

 

        

 

 342,852,431

 

  

 

      Principal Amount          
Mortgage-Backed Obligations—0.0%                

Banc of America Funding Trust, Series 2007-C, Cl. 1A4, 3.135%, 5/20/364

    $ 66,972                     60,851  

Federal Home Loan Mortgage Corp. Gold Pool:

      

9.00%, 8/1/22

      192        195  

9.00%, 8/1/22

      9        9  

9.00%, 3/1/24

      149        160  

9.00%, 3/1/24

      48        48  

9.00%, 1/1/25

      274        315  

9.00%, 5/1/25

      54        60  
Federal Home Loan Mortgage Corp., Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates, Series 151, Cl. F, 9%, 5/15/21      2,413        2,602  

Federal National Mortgage Assn. Pool, 8.50%, 7/1/32

      4,334        4,703  
Federal National Mortgage Assn., Real Estate Mtg. Investment Conduit Multiclass Pass-Through Certificates, Interest-Only Stripped Mtg.-Backed Security:  

Series 2001-63, Cl. SD, 35.981%, 12/18/315

      1,941        392  

Series 2001-68, Cl. SC, 23.006%, 11/25/315

      1,298        272  

Series 2002-7, Cl. SK, 12.876%, 1/25/325

      2,095        420  

Series 2002-90, Cl. SY, 11.046%, 9/25/325

      1,896        369  

Government National Mortgage Assn. I Pool:

      

8.00%, 5/15/17

      81        81  

8.50%, 8/15/17

      10        10  

8.50%, 11/15/17

      8        8  

8.50%, 12/15/17

      6        6  

8.50%, 12/15/17

      42        43  

Government National Mortgage Assn. II Pool, 2%, 3/20/264

      6,099        6,305  

RALI Trust, Series 2006-QS13, Cl. 1A8, 6%, 9/25/36

      20,847        17,574  

Wells Fargo Mortgage-Backed Securities Trust, Series 2006-AR14, Cl. 1A2,

      

3.066%, 10/25/364

      124,862        117,406  

Total Mortgage-Backed Obligations (Cost $218,193)

              

 

 211,829

 

  

 

Non-Convertible Corporate Bond and Note—0.0%                

Reynolds American, Inc., 7% Sr. Unsec. Nts., 8/4/416 (Cost $359,008)

 

     

 

 354,000

 

  

 

     

 

 422,604

 

  

 

Convertible Corporate Bonds and Notes—1.5%                

MGIC Investment Corp., 9% Cv. Jr. Sub. Nts., 4/1/636

      17,245,000        22,321,497  

 

5        OPPENHEIMER EQUITY INCOME FUND

STATEMENT OF INVESTMENTS Unaudited / Continued

 

 

                          Principal Amount      Value  
Convertible Corporate Bonds and Notes (Continued)                                                

Navistar International Corp., 4.75% Cv. Sr. Sub. Nts., 4/15/19

               $                  40,500,000      $ 40,170,937  

Total Convertible Corporate Bonds and Notes (Cost $55,943,200)

                    

 

 62,492,434

 

  

 

                                 Shares         
Structured Securities—1.3%                                                
Barclays Bank plc, Alcoa, Inc. Equity Linked Nts., 10/4/17                 248,452        8,219,673  
Barclays Bank plc, Alphabet, Inc., Cl. C Yield Enhanced Equity Debt Securities, 3/20/17                 12,496        9,987,068  
Citigroup Global Markets Holdings, Inc., Alphabet, Inc. Equity Linked Nts., 3/2/176                 13,207        10,572,823  
Credit Suisse AG (London Branch), Alphabet, Inc. Equity Linked Nts., 2/23/176                 13,212        10,586,204  

Credit Suisse AG (London Branch), Alphabet, Inc. Equity Linked Nts., 3/3/176

 

         16,427        13,154,014  

Total Structured Securities (Cost $51,851,077)

                    

 

 52,519,782

 

  

 

            Exercise
Price		      Expiration
Date		             Contracts         
Exchange-Traded Options Purchased—0.0%                                                

Abbott Laboratories Put1

      USD        36.000        2/17/17        USD              10,000        40,000  

Abbott Laboratories Put1

      USD        37.000        3/17/17        USD        2,000        42,000  

Bank of America Corp. Put1

      USD        21.000        2/17/17        USD        1,000        7,000  

Bristol-Myers Squibb Co. Put1

      USD        45.000        3/17/17        USD        11,000        594,000  

Cisco Systems, Inc. Put1

      USD        28.000        2/17/17        USD        1,500        9,000  

CSX Corp. Put1

      USD        35.000        2/17/17        USD        1,000        3,000  

CVS Health Corp. Put1

      USD        76.500        2/17/17        USD        1,500        150,000  

General Electric Co. Put1

      USD        29.000        2/17/17        USD        3,750        60,000  

Johnson & Johnson Put1

      USD        108.000        2/17/17        USD        1,500        33,000  

Johnson & Johnson Put1

      USD        110.000        2/17/17        USD        3,000        102,000  

Marathon Oil Corp. Put1

      USD        16.000        3/17/17        USD        1,000        66,000  

Merck & Co., Inc. Put1

      USD        60.000        2/17/17        USD        500        23,500  

Micron Technology, Inc. Put1

      USD        21.500        2/17/17        USD        500        6,500  

Microsoft Corp. Put1

      USD        60.000        3/17/17        USD        1,000        36,000  

Wells Fargo & Co. Put1

      USD        50.000        2/17/17        USD        3,000        15,000  

Wells Fargo & Co. Put1

      USD        50.000        3/17/17        USD        1,500        37,500  

Total Exchange-Traded Options Purchased (Cost $1,735,929)

 

                    

 

 1,224,500

 

  

 

Total Investments, at Value (Cost $3,443,140,796)

 

               100.3%              4,169,146,127  

Net Other Assets (Liabilities)

                  (0.3)                 (14,248,509 ) 

Net Assets

                  100.0%            $   4,154,897,618  
                             

Footnotes to Statement of Investments

1. Non-income producing security.

2. Security is a Master Limited Partnership.

3. All or a portion of the security position is held in segregated accounts and pledged to cover margin requirements with respect to outstanding written options. The aggregate market value of such securities is $260,102,804. See Note 6 of the accompanying Notes.

4. Represents the current interest rate for a variable or increasing rate security.

 

6        OPPENHEIMER EQUITY INCOME FUND

 

 

Footnotes to Statement of Investments (Continued)

5. Interest-Only Strips represent the right to receive the monthly interest payments on an underlying pool of mortgage loans. These securities typically decline in price as interest rates decline. Most other fixed income securities increase in price when interest rates decline. The principal amount of the underlying pool represents the notional amount on which current interest is calculated. The price of these securities is typically more sensitive to changes in prepayment rates than traditional mortgage-backed securities (for example, GNMA pass-throughs). Interest rates disclosed represent current yields based upon the current cost basis and estimated timing and amount of future cash flows. These securities amount to $1,453 or less than 0.005% of the Fund’s net assets at period end.

6. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $57,057,142 or 1.37% of the Fund’s net assets at period end.

The following issuer is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the reporting period, 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. There were no affiliate securities held by the Fund at period end. Transactions during the period in which the issuer was an affiliate are as follows:

 

 

    Shares
October 31,
2016		              Gross
Additions		              Gross
Reductions		      Shares
January 31, 2017		  
Oppenheimer Institutional Government Money Market Fund, Cl. E      —           201,580,079           201,580,079        —  

 

                                            Income  
Oppenheimer Institutional Government Money Market Fund, Cl. E                   $ 19,020       
                 

 

Exchange-Traded Options Written at January 31, 2017                            
Description            Exercise
Price		      Expiration
Date		              Number
of Contracts		             Premiums
Received		                      Value  

Abbott Laboratories Put

      USD          40.000        2/17/17        USD          (11,000 )    $     1,020,913      $ (165,000 ) 

Apple, Inc. Call

      USD          125.000        2/17/17        USD          (750 )      68,693        (71,250 ) 

Assured Guaranty Ltd. Call

      USD          39.000        2/17/17        USD          (2,625 )      272,403        (181,125 ) 

Assured Guaranty Ltd. Call

      USD          40.000        2/17/17        USD          (2,350 )      149,656        (70,500 ) 

Bank of America Corp. Call

      USD          22.000        2/17/17        USD          (1,000 )      91,913        (89,000 ) 

Bank of America Corp. Put

      USD          23.000        2/17/17        USD          (1,000 )      69,958        (67,000 ) 

Bank of America Corp. Call

      USD          23.000        2/17/17        USD          (1,225 )      54,714        (39,200 ) 

Bristol-Myers Squibb Co. Put

      USD          50.000        2/17/17        USD          (7,500 )      1,279,704          (1,275,000 ) 

CenturyLink, Inc. Call

      USD          26.000        2/17/17        USD          (500 )      33,229        (30,000 ) 

CenturyLink, Inc. Call

      USD          25.000        2/17/17        USD          (50 )      5,022        (5,450 ) 

Chevron Corp. Call

      USD          115.000        2/17/17        USD          (1,250 )      348,692        (30,000 ) 

Cisco Systems, Inc. Put

      USD          30.000        2/17/17        USD          (1,000 )      67,958        (34,000 ) 

Coca-Cola Co. (The) Call

      USD          42.000        2/17/17        USD          (500 )      14,069        (16,000 ) 

Comcast Corp. Call

      USD          76.500        2/17/17        USD          (500 )      17,379        (29,500 ) 

CSX Corp. Call

      USD          46.000        3/17/17        USD          (535 )      158,870        (128,400 ) 

CSX Corp. Call

      USD          37.000        2/17/17        USD          (95 )      10,586        (92,150 ) 

CSX Corp. Call

      USD          36.000        2/17/17        USD          (150 )      21,143        (156,375 ) 

CVS Caremark Corp. Put

      USD          80.000        2/17/17        USD          (1,000 )      150,206        (244,000 ) 

 

7        OPPENHEIMER EQUITY INCOME FUND

STATEMENT OF INVESTMENTS Unaudited / Continued

 

 

Exchange-Traded Options Written (Continued )                            
Description            Exercise
Price		      Expiration
Date		              Number
of Contracts		             Premiums
Received		                      Value  
Dow Chemical Co. (The) Call      USD          57.500        2/17/17        USD          (50 )    $ 8,419      $ (12,400 ) 
Eaton Corp. plc Call      USD          72.500        2/17/17        USD          (500 )      29,479        (49,000 ) 
Eaton Corp. plc Call      USD          67.500        2/17/17        USD          (100 )      22,940        (40,000 ) 
Ford Motor Co. Call      USD          13.000        2/17/17        USD          (2,000 )      73,917        (10,000 ) 
Ford Motor Co. Put      USD          12.500        2/17/17        USD          (250 )      5,990        (8,250 ) 
Ford Motor Co. Put      USD          13.000        2/17/17        USD          (3,450 )          248,255        (231,150 ) 
Frontier Communications Corp. Call      USD          3.500        2/17/17        USD          (250 )      2,990        (2,500 ) 
General Cable Corp. Call      USD          21.000        2/17/17        USD          (625 )      46,303        (46,875 ) 
General Dynamics Corp. Call      USD          180.000        2/17/17        USD          (300 )      81,586        (96,900 ) 
General Dynamics Corp. Call      USD          175.000        2/17/17        USD          (325 )      167,588        (218,400 ) 
General Electric Co. Put      USD          31.000        2/17/17        USD          (1,000 )      67,958        (151,000 ) 
General Electric Co. Put      USD          29.500        2/17/17        USD          (1,000 )      34,999        (31,000 ) 
General Electric Co. Put      USD          30.000        2/17/17        USD          (1,250 )      52,963        (71,250 ) 
General Motors Co. Call      USD          37.000        2/17/17        USD          (100 )      10,896        (8,100 ) 
HP, Inc. Call      USD          15.000        2/17/17        USD          (125 )      4,995        (4,375 ) 
International Business Machines Corp. Call      USD          180.000        2/17/17        USD          (250 )      32,389        (9,500 ) 
International Business Machines Corp. Call      USD          185.000        3/17/17        USD          (325 )      20,624        (15,925 ) 
International Paper Co. Call      USD          55.000        2/17/17        USD          (750 )      70,181        (165,750 ) 
Johnson & Johnson Put      USD          115.000        2/17/17        USD          (5,750 )      1,174,964          (1,391,500 ) 
JPMorgan Chase & Co. Call      USD          85.000        2/17/17        USD          (824 )      87,309        (94,760 ) 
Kinder Morgan, Inc. Call      USD          23.000        2/17/17        USD          (1,750 )      66,038        (29,750 ) 
Kraft Heinz Co. (The) Call      USD          92.500        2/17/17        USD          (500 )      23,674        (27,500 ) 
Kroger Co. (The) Put      USD          35.000        2/17/17        USD          (750 )      91,468        (103,125 ) 
Marathon Oil Corp. Put      USD          18.000        2/17/17        USD          (1,000 )      81,958        (150,000 ) 
Marathon Oil Corp. Call      USD          18.000        2/17/17        USD          (750 )      30,719        (13,500 ) 
Marathon Oil Corp. Call      USD          17.000        2/17/17        USD          (1,000 )      85,957        (48,000 ) 
Merck & Co., Inc. Put      USD          61.500        2/17/17        USD          (327 )      30,024        (30,738 ) 
Merck & Co., Inc. Put      USD          62.500        2/17/17        USD          (173 )      21,618        (23,528 ) 
Micron Technology, Inc. Call      USD          22.000        2/17/17        USD          (1,675 )      169,540        (381,900 ) 
Micron Technology, Inc. Put      USD          23.000        2/17/17        USD          (500 )      56,478        (18,000 ) 
Micron Technology, Inc. Call      USD          21.000        2/17/17        USD          (3,000 )      452,411        (960,000 ) 
Microsoft Corp. Call      USD          65.000        2/17/17        USD          (1,000 )      110,467        (59,000 ) 
Microsoft Corp. Put      USD          62.500        2/17/17        USD          (1,000 )      144,957        (34,000 ) 
Molson Coors Brewing Co. Call      USD          100.000        2/17/17        USD          (50 )      8,345        (4,000 ) 
Morgan Stanley Call      USD          43.000        2/17/17        USD          (1,700 )      167,370        (113,900 ) 
NRG Energy, Inc. Call      USD          13.000        2/17/17        USD          (33 )      2,127        (11,352 ) 
Philip Morris International, Inc. Call      USD          92.500        2/17/17        USD          (25 )      2,913        (10,250 ) 
Post Holdings, Inc. Call      USD          85.000        2/17/17        USD          (300 )      105,886        (69,000 ) 
PPL Corp. Call      USD          34.000        3/17/17        USD          (2,075 )      167,099        (249,000 ) 
Procter & Gamble Co. (The) Call      USD          88.500        2/17/17        USD          (500 )      11,625        (25,000 ) 
Radian Group, Inc. Call      USD          19.000        2/17/17        USD          (625 )      20,762        (12,500 ) 
Time Warner, Inc. Call      USD          95.000        2/17/17        USD          (175 )      41,457        (43,750 ) 
Time Warner, Inc. Call      USD          97.500        2/17/17        USD          (27 )      1,848        (3,240 ) 

 

8        OPPENHEIMER EQUITY INCOME FUND

 

 

Exchange-Traded Options Written (Continued )                            
Description            Exercise
Price		      Expiration
Date		              Number
of Contracts		             Premiums
Received		                      Value  
United Continental Holdings, Inc. Call      USD        75.000        2/17/17        USD        (2,000 )    $ 440,909      $ (120,000 ) 
United Technologies Corp. Call      USD        110.000        2/17/17        USD        (350 )      87,396        (40,600 ) 
United Technologies Corp. Call      USD        115.000        2/17/17        USD        (250 )      16,490        (1,500 ) 
United Technologies Corp. Call      USD        111.000        2/17/17        USD        (25 )      2,486        (1,675 ) 
Wells Fargo & Co. Put      USD        55.000        2/17/17        USD        (4,000 )      551,254        (252,000 ) 

Williams Cos., Inc. Call

      USD        30.000        2/17/17        USD        (50 )      1,609        (1,450 ) 

Total of Exchange-Traded Options Written

                  $     9,074,738      $     (8,220,843 ) 
                               

 

9        OPPENHEIMER EQUITY INCOME FUND

NOTES TO STATEMENT OF INVESTMENTS January 31, 2017 Unaudited

 

 

 

1. Organization

Oppenheimer Equity Income Fund (the “Fund”) is a diversified open-end management investment company registered under the Investment Company Act of 1940 (“1940 Act”), as amended. The Fund’s investment objective is to seek total return. The Fund’s investment adviser is OFI Global Asset Management, Inc. (“OFI Global” or the “Manager”), a wholly-owned subsidiary of OppenheimerFunds, Inc. (“OFI” or the “Sub-Adviser”). The Manager has entered into a sub-advisory agreement with OFI.

 

 

2. Significant Accounting Policies

Security Valuation. All investments in securities are recorded at their estimated fair value, as described in Note 3.

Foreign Currency Translation. The books and records of the Fund are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:

(1) Market value of investment securities, other assets and liabilities — at the exchange rates prevailing at Market Close as described in Note 3.

(2) Purchases and sales of investment securities, income and expenses — at the rates of exchange prevailing on the respective dates of such transactions.

 

 

3. Securities Valuation

The Fund calculates the net asset value of its shares as of 4:00 P.M. Eastern time, on each day the New York Stock Exchange (the “Exchange”) is open for trading, except in the case of a scheduled early closing of the Exchange, in which case the Fund will calculate net asset value of the shares as of the scheduled early closing time of the Exchange.

The Fund’s Board has adopted procedures for the valuation of the Fund’s securities and has delegated the day-to-day responsibility for valuation determinations under those procedures to the Manager. The Manager has established a Valuation Committee which is responsible for determining a “fair valuation” for any security for which market quotations are not “readily available.” The Valuation Committee’s fair valuation determinations are subject to review, approval and ratification by the Fund’s Board at its next regularly scheduled meeting covering the calendar quarter in which the fair valuation was determined.

Valuation Methods and Inputs

Securities are valued using unadjusted quoted market prices, when available, as supplied primarily by third party pricing services or dealers.

The following methodologies are used to determine the market value or the fair value of the types of securities described below:

Equity securities traded on a securities exchange (including exchange-traded derivatives other than futures and futures options) are valued based on the official closing price on the principal exchange on which the security is traded, as identified by the Manager, prior to the time when the Fund’s assets are valued. If the official closing price is unavailable, the security is valued at the last sale price on the principal exchange on which it is traded. If the official

 

10        OPPENHEIMER EQUITY INCOME FUND

 

 

 

3. Securities Valuation (Continued)

closing price or last sales price for a foreign security is not available, the security is valued at the mean between the bid and asked price per the exchange or, if not available from the exchange, obtained from two dealers. If bid and asked prices are not available from either the exchange or two dealers, the security is valued by using one of the following methodologies (listed in order of priority): (1) a bid from the exchange, (2) the mean between the bid and asked price as provided by a single dealer, or (3) a bid from a single dealer.

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.

Corporate and government debt securities (of U.S. or foreign issuers) and municipal debt securities, event-linked bonds, loans, mortgage-backed securities, collateralized mortgage obligations, and asset-backed securities are valued at the mean between the “bid” and “asked” prices utilizing evaluated prices obtained from third party pricing services or broker-dealers who may use matrix pricing methods to determine the evaluated prices.

Short-term money market type debt securities are valued at the mean between the “bid” and “asked” prices utilizing evaluated prices obtained from third party pricing services or broker-dealers.

Structured securities, swaps, swaptions, and other over-the-counter derivatives are valued utilizing evaluated prices obtained from third party pricing services or broker-dealers.

A description of the standard inputs that may generally be considered by the third party pricing vendors in determining their evaluated prices is provided below.

 

Security Type    Standard inputs generally considered by third-party pricing vendors
Corporate debt, government debt, municipal, mortgage- backed and asset-backed securities    Reported trade data, broker-dealer price quotations, benchmark yields, issuer spreads on comparable securities, the credit quality, yield, maturity, and other appropriate factors.
Loans    Information obtained from market participants regarding reported trade data and broker-dealer price quotations.
Event-linked bonds    Information obtained from market participants regarding reported trade data and broker-dealer price quotations.
Structured securities    Relevant market information such as the price of underlying financial instruments, stock market indices, foreign currencies, interest rate spreads, commodities, or the occurrence of other specific events.
Swaps    Relevant market information, including underlying reference assets such as credit spreads, credit event probabilities, index values, individual security values, forward interest rates, variable interest rates, volatility measures, and forward currency rates.

If a market value or price cannot be determined for a security using the methodologies described above, or if, in the “good faith” opinion of the Manager, the market value or price obtained does not constitute a “readily available market quotation,” or a significant event has occurred that would materially affect the value of the security, the security is fair valued either (i) by a standardized fair valuation methodology applicable to the security type or the significant event as previously approved by the Valuation Committee and the Fund’s Board or (ii) as determined in good faith by the Manager’s Valuation Committee.

 

11        OPPENHEIMER EQUITY INCOME FUND

NOTES TO STATEMENT OF INVESTMENTS Unaudited / Continued

 

 

 

3. Securities Valuation (Continued)

The Valuation Committee considers all relevant facts that are reasonably available, through either public information or information available to the Manager, when determining the fair value of a security. Fair value determinations by the Manager are subject to review, approval and ratification by the Fund’s Board at its next regularly scheduled meeting covering the calendar quarter in which the fair valuation was determined. Those fair valuation standardized methodologies include, but are not limited to, valuing securities at the last sale price or 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 further adjusted for any discounts related to security-specific 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 nor can it be assured that the Fund can obtain the fair value assigned to a security if it were to sell the security.

To assess the continuing appropriateness of security valuations, the Manager, or its third party service provider who is subject to oversight by the Manager, regularly compares prior day prices, prices on comparable securities, and sale prices to the current day prices and challenges those prices exceeding certain tolerance levels with the third party pricing service or broker source. For those securities valued by fair valuations, whether through a standardized fair valuation methodology or a fair valuation determination, the Valuation Committee reviews and affirms the reasonableness of the valuations based on such methodologies and fair valuation determinations on a regular basis after considering all relevant information that is reasonably available.

Classifications

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. 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 inputs used for valuing securities are not necessarily an indication of the risks associated with investing in those securities.

The table below categorizes amounts at period end based on valuation input level:

 

12        OPPENHEIMER EQUITY INCOME FUND

 

 

 

3. Securities Valuation (Continued)

 

      Level 1—
Unadjusted
Quoted Prices		    

Level 2—

Other Significant
Observable Inputs

      Level 3—
Significant
Unobservable
Inputs		      Value  

Assets Table

           

Investments, at Value:

           

Common Stocks

           

Consumer Discretionary

    $ 315,296,064     $ —      $                     —      $ 315,296,064  

Consumer Staples

      304,774,545       —        —        304,774,545  

Energy

      457,055,950       —        —        457,055,950  

Financials

      1,199,885,970       —        —        1,199,885,970  

Health Care

      404,898,935       —        —        404,898,935  

Industrials

      223,852,183       —        —        223,852,183  

Information Technology

      447,444,133       —        —        447,444,133  

Materials

      81,636,735       —        —        81,636,735  

Telecommunication Services

      136,634,950       —        —        136,634,950  

Utilities

      137,943,082       —        —        137,943,082  

Preferred Stocks

      342,852,431       —        —        342,852,431  

Mortgage-Backed Obligations

      —       211,829        —        211,829  

Non-Convertible Corporate Bond and Note

      —       422,604        —        422,604  

Convertible Corporate Bonds and Notes

      —       62,492,434        —        62,492,434  

Structured Securities

      —               52,519,782        —        52,519,782  

Exchange-Traded Options Purchased

      1,224,500       —        —        1,224,500  
  

 

 

  

Total Assets

    $     4,053,499,478     $ 115,646,649      $ —      $     4,169,146,127  
  

 

 

  

Liabilities Table

           

Other Financial Instruments:

           

Options written, at value

    $ (8,220,843 )    $ —      $ —      $ (8,220,843)  
  

 

 

  

Total Liabilities

    $ (8,220,843 )    $ —      $ —      $ (8,220,843)  
  

 

 

  

Forward currency exchange contracts and futures contracts, if any, are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. All additional assets and liabilities included in the above table are reported at their market value at measurement date.

 

 

4. Investments and Risks

Investments in Affiliated Funds. The Fund is permitted to invest in other mutual funds advised by the Manager (“Affiliated Funds”). Affiliated Funds are open-end management investment companies registered under the 1940 Act, as amended. The Manager is the investment adviser of, and the Sub-Adviser provides investment and related advisory services to, the Affiliated Funds. When applicable, the Fund’s investments in Affiliated Funds are included in the Statement of Investments. Shares of Affiliated Funds are valued at their net asset value per share. As a shareholder, the Fund is subject to its proportional share of the Affiliated Funds’ expenses, including their 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 the Affiliated Funds.

 

13        OPPENHEIMER EQUITY INCOME FUND

NOTES TO STATEMENT OF INVESTMENTS Unaudited / Continued

 

 

 

4. Investments and Risks (Continued)

Each of the Affiliated Funds in which the Fund invests has its own investment risks, and those risks can affect the value of the Fund’s investments and therefore the value of the Fund’s shares. To the extent that the Fund invests more of its assets in one Affiliated Fund than in another, the Fund will have greater exposure to the risks of that Affiliated Fund.

Investments in Money Market Instruments. The Fund is permitted to invest its free cash balances in money market instruments to provide liquidity or for defensive purposes. The Fund may invest in money market instruments by investing in Class E shares of Oppenheimer Institutional Government Money Market Fund (“IGMMF”), formerly known as Oppenheimer Institutional Money Market Fund, which is an Affiliated Fund. IGMMF is regulated as a money market fund under the 1940 Act, as amended. The Fund may also invest in money market instruments directly or in other affiliated or unaffiliated money market funds. At period end, the Fund had no holdings in IGMMF.

Master Limited Partnerships (“MLPs”). MLPs issue common units that represent an equity ownership interest in a partnership and provide limited voting rights. MLP common units are registered with the Securities and Exchange Commission (“SEC”), and are freely tradable on securities exchanges such as the NYSE and the NASDAQ Stock Market (“NASDAQ”), or in the over-the-counter (“OTC”) market. An MLP consists of one or more general partners, who conduct the business, and one or more limited partners, who contribute capital. MLP common unit holders have a limited role in the partnership’s operations and management. The Fund, as a limited partner, normally would not be liable for the debts of the MLP beyond the amounts the Fund has contributed, but would not be shielded to the same extent that a shareholder of a corporation would be. In certain circumstances creditors of an MLP would have the right to seek return of capital distributed to a limited partner. This right of an MLP’s creditors would continue after the Fund sold its investment in the MLP.

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.

Equity Security Risk. Stocks and other equity securities fluctuate in price. The value of the Fund’s portfolio may be affected by changes in the equity markets generally. Equity markets may experience significant short-term volatility and may fall sharply at times. Different markets may behave differently from each other and U.S. equity markets may move in the opposite direction from one or more foreign stock markets. Adverse events in any part of the equity or

 

14        OPPENHEIMER EQUITY INCOME FUND

 

 

 

4. Investments and Risks (Continued)

fixed-income markets may have unexpected negative effects on other market segments.

The prices of individual equity securities generally do not all move in the same direction at the same time and a variety of factors can affect the price of a particular company’s securities. These factors may include, but are not limited to, poor earnings reports, a loss of customers, litigation against the company, general unfavorable performance of the company’s sector or industry, or changes in government regulations affecting the company or its industry.

 

 

5. Market Risk Factors

The Fund’s investments in securities and/or financial derivatives may expose the Fund to various 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.

Credit Risk. Credit risk relates to the ability of the issuer of debt to meet interest and principal payments, or both, as they come due. In general, lower-grade, higher-yield debt securities are subject to credit risk to a greater extent than lower-yield, higher-quality securities.

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.

 

 

6. Use of Derivatives

The Fund’s investment objective not only permits the Fund to purchase investment securities, it also allows the Fund to enter into various types of derivatives contracts, including, but

 

15        OPPENHEIMER EQUITY INCOME FUND

NOTES TO STATEMENT OF INVESTMENTS Unaudited / Continued

 

 

 

6. Use of Derivatives (Continued)

not limited to, futures contracts, forward currency exchange contracts, credit default swaps, interest rate swaps, total return swaps, variance 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. These instruments 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. Such contracts may be entered into through a bilateral over-the-counter (“OTC”) transaction, or through a securities or futures exchange and cleared through a clearinghouse.

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 due to unanticipated changes in the market risk factors and the overall market. 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. 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. Some derivatives have the potential for unlimited loss, regardless of the size of the Fund’s initial investment.

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.

The Fund’s actual exposures to these market risk factors and associated risks during the period are discussed in further detail, by derivative type, below.

Option Activity

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, currency or other underlying financial instrument at a fixed price, upon exercise of the option.

Options can be traded through an exchange or through a privately negotiated arrangement with a dealer in an OTC transaction. Options traded through an exchange are generally cleared through a clearinghouse (such as The Options Clearing Corporation). 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 Operations in the annual and semiannual reports.

 

16        OPPENHEIMER EQUITY INCOME FUND

 

 

 

6. Use of Derivatives (Continued)

The Fund has purchased put options on individual equity securities and/or equity indexes to decrease exposure to equity risk. A purchased put option becomes more valuable as the price of the underlying financial instrument depreciates relative to the strike price.

During the reporting period, the Fund had an ending monthly average market value of $965,561 on purchased put options.

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 collateral 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 market price of the security increases and if the option is exercised, the Fund must either purchase the security at a higher price for delivery or, if the Fund owns the underlying security, give up the opportunity for profit. 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 call option becomes more valuable as the price of the underlying financial instrument depreciates relative to the strike price.

During the reporting period, the Fund had an ending monthly average market value of $6,192,517 and $3,902,260 on written call options and written put options, respectively.

Additional associated risks to the Fund include counterparty credit risk and liquidity risk.

Written option activity for the reporting period was as follows:

 

      Number of
Contracts		      Amount of
Premiums		  

Options outstanding as of

      

October 31, 2016

      129,632       $             7,155,512    

Options written

      468,005         52,262,155    

Options closed or expired

      (264,840 )       (22,249,197)   

Options exercised

      (254,933 )       (28,093,732)   
  

 

 

  

Options outstanding as of

January 31, 2017

                          77,864       $ 9,074,738    
  

 

 

  

Counterparty Credit Risk. Derivative positions are subject to the risk that the counterparty will not fulfill its obligation to the Fund. The Fund intends to enter into derivative transactions with counterparties that the Manager believes to be creditworthy at the time of the transaction.

For financial reporting purposes, the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the Statement of Assets and Liabilities in the annual and semiannual reports. Bankruptcy or insolvency laws of a particular jurisdiction

 

17        OPPENHEIMER EQUITY INCOME FUND

NOTES TO STATEMENT OF INVESTMENTS Unaudited / Continued

 

 

 

 

6. Use of Derivatives (Continued)

may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency or other events.

The Fund’s risk of loss from counterparty credit risk on exchange-traded derivatives cleared through a clearinghouse and for centrally cleared swaps is generally considered lower than as compared to OTC derivatives. However, counterparty credit risk exists with respect to initial and variation margin deposited/paid by the Fund that is held in futures commission merchant, broker and/or clearinghouse accounts for such exchange-traded derivatives and for centrally cleared swaps.

With respect to centrally cleared swaps, such transactions will be submitted for clearing, and if cleared, will be held in accounts at futures commission merchants or brokers that are members of clearinghouses. While brokers, futures commission merchants and clearinghouses are required to segregate customer margin from their own assets, in the event that a broker, futures commission merchant or clearinghouse becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the broker, futures commission merchant or clearinghouse for all its customers, U.S. bankruptcy laws will typically allocate that shortfall on a pro-rata basis across all the broker’s, futures commission merchant’s or clearinghouse’s customers, potentially resulting in losses to the Fund.

There is the risk that a broker, futures commission merchant or clearinghouse will decline to clear a transaction on the Fund’s behalf, and the Fund may be required to pay a termination fee to the executing broker with whom the Fund initially enters into the transaction. Clearinghouses may also be permitted to terminate centrally cleared swaps at any time. The Fund is also subject to the risk that the broker or futures commission merchant will improperly use the Fund’s assets deposited/paid as initial or variation margin to satisfy payment obligations of another customer. In the event of a default by another customer of the broker or futures commission merchant, the Fund might not receive its variation margin payments from the clearinghouse, due to the manner in which variation margin payments are aggregated for all customers of the broker/futures commission merchant.

Collateral and margin requirements differ by type of derivative. Margin requirements are established by the broker, futures commission merchant or clearinghouse for exchange-traded and cleared derivatives, including centrally cleared swaps. Brokers, futures commission merchants and clearinghouses can ask for margin in excess of the regulatory minimum, or increase the margin amount, in certain circumstances.

For financial reporting purposes, cash collateral that has been pledged to cover obligations of the Fund, if any, is reported separately on the Statement of Assets and Liabilities in the annual and semiannual reports as cash pledged as collateral. Non-cash collateral pledged by the Fund, if any, is noted in the Statement of Investments. Generally, the amount of collateral due from or to a party must exceed a minimum transfer amount threshold (e.g. $250,000) before a transfer has to be made. To the extent amounts due to the Fund from its counterparties are not fully collateralized, contractually or otherwise, the Fund bears the risk of loss from counterparty nonperformance.

 

18        OPPENHEIMER EQUITY INCOME FUND

 

 

 

7. 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 at period end 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

      $  3,499,925,420    

Federal tax cost of other investments

      (9,074,738)   
  

 

 

  

Total federal tax cost

      $  3,490,850,682    
  

 

 

  

Gross unrealized appreciation

      $ 814,389,451    

Gross unrealized depreciation

      (144,314,849)   
  

 

 

  

Net unrealized appreciation

      $ 670,074,602    
  

 

 

  

 

19        OPPENHEIMER EQUITY INCOME FUND

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 1/31/2017, 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

 

By:  

/s/ Arthur P. Steinmetz

  Arthur P. Steinmetz
  Principal Executive Officer
Date:   3/17/2017

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/ Arthur P. Steinmetz

  Arthur P. Steinmetz
  Principal Executive Officer
Date:   3/17/2017

 

By:  

/s/ Brian S. Petersen

  Brian S. Petersen
  Principal Financial Officer
Date:   3/17/2017