UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-490
Oppenheimer Equity 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
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Date of fiscal year end: December 31
-----------
Date of reporting period: June 30, 2005
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ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN COMMON STOCK INDUSTRIES
- --------------------------------------------------------------------------------
Software 10.5%
- --------------------------------------------------------------------------------
Diversified Financial Services 9.4
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Oil & Gas 5.7
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Insurance 4.7
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Media 4.5
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Specialty Retail 4.5
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Aerospace & Defense 4.5
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Communications Equipment 4.4
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Biotechnology 4.0
- --------------------------------------------------------------------------------
Industrial Conglomerates 3.9
Portfolio holdings and allocations are subject to change. Percentages are as of
June 30, 2005, and are based on net assets.
TOP TEN COMMON STOCK HOLDINGS
- --------------------------------------------------------------------------------
Microsoft Corp. 4.5%
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Honeywell International, Inc. 2.7
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Liberty Global, Inc., Series A 2.7
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BP plc, ADR 2.7
- --------------------------------------------------------------------------------
Wells Fargo & Co. 2.6
- --------------------------------------------------------------------------------
Altria Group, Inc. 2.5
- --------------------------------------------------------------------------------
Citigroup, Inc. 2.5
- --------------------------------------------------------------------------------
Cendant Corp. 2.4
- --------------------------------------------------------------------------------
General Electric Co. 2.3
- --------------------------------------------------------------------------------
Halliburton Co. 1.9
Portfolio holdings and allocations are subject to change. Percentages are as of
June 30, 2005, and are based on net assets.
For up-to-date Top 10 Fund Holdings, please visit www.oppenheimerfunds.com.
9 | OPPENHEIMER EQUITY FUND, INC.
TOP HOLDINGS AND ALLOCATIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECTOR ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Information Technology 24.5%
Financials 19.1
Consumer Discretionary 13.7
Industrials 12.1
Energy 9.1
Health Care 9.0
Consumer Staples 4.4
Utilities 4.1
Telecommunication Services 2.4
Materials 1.6
- --------------------------------------------------------------------------------
Portfolio holdings and allocations are subject to change. Percentages are as of
June 30, 2005, and are based on total market value of common stocks.
10 | OPPENHEIMER EQUITY FUND, INC.
NOTES
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Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares.
INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER
CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS
THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR
FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT
WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
The Fund's investment strategy and focus can change over time. The mention of
specific Fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
CLASS A shares of the Fund were first publicly offered on 10/2/47. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 5.75%.
CLASS B shares of the Fund were first publicly offered on 5/3/93. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year) and 2% (5-year). Class B shares are subject to an
annual 0.75% asset-based sales charge. Because Class B shares convert to Class A
shares 72 months after purchase, the "10-year" return for Class B uses Class A
performance for the period after conversion.
CLASS C shares of the Fund were first publicly offered on 8/29/95. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for the 1-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.
CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
11 | OPPENHEIMER EQUITY FUND, INC.
NOTES
- --------------------------------------------------------------------------------
CLASS Y shares of the Fund were first publicly offered on 6/1/94. Class Y shares
are offered only to certain institutional investors under special agreement with
the Distributor.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
12 | OPPENHEIMER EQUITY FUND, INC.
FUND EXPENSES
- --------------------------------------------------------------------------------
FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended June 30, 2005.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), or a $12.00 fee imposed annually
on accounts valued at less than $500.00 (subject to exceptions described in
13 | OPPENHEIMER EQUITY FUND, INC.
FUND EXPENSES
- --------------------------------------------------------------------------------
the Statement of Additional Information). Therefore, the "hypothetical" lines of
the table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(1/1/05) (6/30/05) JUNE 30, 2005
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,010.20 $4.45
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,020.38 4.47
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,004.80 8.99
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,015.87 9.04
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,004.80 8.94
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,015.92 8.99
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,007.50 6.34
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,018.50 6.38
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 1,009.20 3.84
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,020.98 3.87
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 181/365
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended June 30, 2005 are as follows:
CLASS EXPENSE RATIOS
- -------------------------
Class A 0.89%
- -------------------------
Class B 1.80
- -------------------------
Class C 1.79
- -------------------------
Class N 1.27
- -------------------------
Class Y 0.77
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14 | OPPENHEIMER EQUITY FUND, INC.
STATEMENT OF INVESTMENTS June 30, 2005 / Unaudited
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--99.4%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--13.6%
- --------------------------------------------------------------------------------
AUTO COMPONENTS--0.5%
Autoliv, Inc. 324,900 $ 14,230,620
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--0.9%
Carnival Corp. 206,000 11,237,300
- --------------------------------------------------------------------------------
Starbucks Corp. 1 221,700 11,453,022
---------------
22,690,322
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--0.8%
eBay, Inc. 1 608,200 20,076,682
- --------------------------------------------------------------------------------
MEDIA--4.5%
Comcast Corp., Cl. A 1 564,500 17,330,150
- --------------------------------------------------------------------------------
Liberty Global, Inc.,
Series A 1 1,473,837 68,783,973
- --------------------------------------------------------------------------------
News Corp., Inc., Cl. A 1,005,800 16,273,844
- --------------------------------------------------------------------------------
Walt Disney Co. (The) 528,900 13,317,702
---------------
115,705,669
- --------------------------------------------------------------------------------
MULTILINE RETAIL--1.9%
Kohl's Corp. 1 345,000 19,288,950
- --------------------------------------------------------------------------------
Target Corp. 540,500 29,408,605
---------------
48,697,555
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--4.5%
Abercrombie &
Fitch Co., Cl. A 94,000 6,457,800
- --------------------------------------------------------------------------------
Best Buy Co., Inc. 190,000 13,024,500
- --------------------------------------------------------------------------------
Chico's FAS, Inc. 1 516,100 17,691,908
- --------------------------------------------------------------------------------
Home Depot, Inc. 773,600 30,093,040
- --------------------------------------------------------------------------------
Staples, Inc. 1,367,700 29,159,364
- --------------------------------------------------------------------------------
Urban Outfitters, Inc. 1 110,000 6,235,900
- --------------------------------------------------------------------------------
Williams-Sonoma, Inc. 1 325,000 12,860,250
---------------
115,522,762
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--0.5%
Polo Ralph Lauren
Corp. 318,100 13,713,291
- --------------------------------------------------------------------------------
CONSUMER STAPLES--4.4%
- --------------------------------------------------------------------------------
BEVERAGES--0.9%
PepsiCo, Inc. 417,000 22,488,810
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--0.9%
Colgate-Palmolive Co. 212,500 $ 10,605,875
- --------------------------------------------------------------------------------
Procter & Gamble
Co. (The) 260,800 13,757,200
---------------
24,363,075
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS--0.1%
Gillette Co. 24,200 1,225,246
- --------------------------------------------------------------------------------
TOBACCO--2.5%
Altria Group, Inc. 992,000 64,142,720
- --------------------------------------------------------------------------------
ENERGY--9.0%
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--3.3%
Halliburton Co. 999,500 47,796,090
- --------------------------------------------------------------------------------
Schlumberger Ltd. 335,000 25,439,900
- --------------------------------------------------------------------------------
Transocean, Inc. 1 249,300 13,454,721
---------------
86,690,711
- --------------------------------------------------------------------------------
OIL & GAS--5.7%
Amerada Hess Corp. 176,000 18,745,760
- --------------------------------------------------------------------------------
Apache Corp. 300,000 19,380,000
- --------------------------------------------------------------------------------
BP plc, ADR 1,101,200 68,692,856
- --------------------------------------------------------------------------------
Noble Energy, Inc. 236,000 17,853,400
- --------------------------------------------------------------------------------
Petroleo Brasileiro
SA, ADR 416,800 21,727,784
---------------
146,399,800
- --------------------------------------------------------------------------------
FINANCIALS--19.0%
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--3.6%
Bank of America Corp. 588,892 26,859,364
- --------------------------------------------------------------------------------
Wells Fargo & Co. 1,082,900 66,684,982
---------------
93,544,346
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--9.4%
Alliance Capital
Management
Holding LP 218,000 10,189,320
- --------------------------------------------------------------------------------
American Express Co. 333,900 17,773,497
- --------------------------------------------------------------------------------
Capital One Financial
Corp. 462,500 37,004,625
- --------------------------------------------------------------------------------
Citigroup, Inc. 1,380,466 63,818,943
- --------------------------------------------------------------------------------
Franklin Resources, Inc. 177,100 13,633,158
- --------------------------------------------------------------------------------
Goldman Sachs
Group, Inc. (The) 124,700 12,721,894
15 | OPPENHEIMER EQUITY FUND, INC.
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES Continued
JPMorgan Chase
& Co. 1,179,000 $ 41,642,280
- --------------------------------------------------------------------------------
Legg Mason, Inc. 156,300 16,272,393
- --------------------------------------------------------------------------------
Lehman Brothers
Holdings, Inc. 282,100 28,006,888
---------------
241,062,998
- --------------------------------------------------------------------------------
INSURANCE--4.7%
AFLAC, Inc. 273,100 11,819,768
- --------------------------------------------------------------------------------
AMBAC Financial
Group, Inc. 90,300 6,299,328
- --------------------------------------------------------------------------------
American International
Group, Inc. 502,000 29,166,200
- --------------------------------------------------------------------------------
Everest Re Group Ltd. 148,300 13,791,900
- --------------------------------------------------------------------------------
Genworth Financial,
Inc., Cl. A 1,313,400 39,704,082
- --------------------------------------------------------------------------------
Platinum Underwriters
Holdings Ltd. 678,400 21,586,688
---------------
122,367,966
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--1.3%
Countrywide
Financial Corp. 537,800 20,764,458
- --------------------------------------------------------------------------------
Freddie Mac 204,900 13,365,627
---------------
34,130,085
- --------------------------------------------------------------------------------
HEALTH CARE--8.9%
- --------------------------------------------------------------------------------
BIOTECHNOLOGY--4.0%
Amgen, Inc. 1 221,500 13,391,890
- --------------------------------------------------------------------------------
Genentech, Inc. 1 411,400 33,027,192
- --------------------------------------------------------------------------------
Genzyme Corp.
(General Division) 1 205,000 12,318,450
- --------------------------------------------------------------------------------
Gilead Sciences, Inc. 1 555,400 24,432,046
- --------------------------------------------------------------------------------
Wyeth 460,000 20,470,000
---------------
103,639,578
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--1.9%
Guidant Corp. 35,500 2,389,150
- --------------------------------------------------------------------------------
Kinetic Concepts, Inc. 1 206,300 12,378,000
- --------------------------------------------------------------------------------
Varian Medical
Systems, Inc. 1 881,600 32,910,128
---------------
47,677,278
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
PHARMACEUTICALS--3.0%
Abbott Laboratories 330,800 $ 16,212,508
- --------------------------------------------------------------------------------
Eli Lilly & Co. 230,000 12,813,300
- --------------------------------------------------------------------------------
Johnson & Johnson 247,600 16,094,000
- --------------------------------------------------------------------------------
Sanofi-Aventis SA, ADR 804,100 32,960,059
---------------
78,079,867
- --------------------------------------------------------------------------------
INDUSTRIALS--12.0%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--4.5%
Honeywell
International, Inc. 1,909,600 69,948,648
- --------------------------------------------------------------------------------
Raytheon Co. 1,151,000 45,027,120
---------------
114,975,768
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--0.4%
FedEx Corp. 136,400 11,049,764
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--2.8%
Apollo Group,
Inc., Cl. A 1 140,000 10,950,800
- --------------------------------------------------------------------------------
Cendant Corp. 2,789,100 62,392,167
---------------
73,342,967
- --------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--3.9%
3M Co. 185,000 13,375,500
- --------------------------------------------------------------------------------
General Electric Co. 1,680,400 58,225,860
- --------------------------------------------------------------------------------
Tyco International Ltd. 985,600 28,779,520
---------------
100,380,880
- --------------------------------------------------------------------------------
MARINE--0.4%
UTI Worldwide, Inc. 156,700 10,909,454
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--24.4%
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--4.4%
Avaya, Inc. 1 789,100 6,565,312
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 1 2,106,700 40,259,037
- --------------------------------------------------------------------------------
Comverse
Technology, Inc. 1 214,000 5,061,100
- --------------------------------------------------------------------------------
Corning, Inc. 1 1,620,000 26,924,400
- --------------------------------------------------------------------------------
Motorola, Inc. 830,000 15,155,800
- --------------------------------------------------------------------------------
Nokia Corp.,
Sponsored ADR 660,000 10,982,400
- --------------------------------------------------------------------------------
QUALCOMM, Inc. 291,800 9,632,318
---------------
114,580,367
16 | OPPENHEIMER EQUITY FUND, INC.
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--3.5%
Apple Computer, Inc. 1 506,600 $ 18,647,946
- --------------------------------------------------------------------------------
EMC Corp. 1 3,000,000 41,130,000
- --------------------------------------------------------------------------------
International Business
Machines Corp. 351,100 26,051,620
- --------------------------------------------------------------------------------
Sun Microsystems, Inc. 1 964,200 3,596,466
---------------
89,426,032
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--2.1%
Google, Inc., Cl. A 1 80,000 23,532,000
- --------------------------------------------------------------------------------
Opsware, Inc. 1 350,200 1,793,024
- --------------------------------------------------------------------------------
VeriSign, Inc. 1 472,800 13,597,728
- --------------------------------------------------------------------------------
Yahoo!, Inc. 1 461,300 15,984,045
---------------
54,906,797
- --------------------------------------------------------------------------------
IT SERVICES--0.8%
Cognizant Technology
Solutions Corp. 1 269,700 12,710,961
- --------------------------------------------------------------------------------
NAVTEQ Corp. 1 192,300 7,149,714
---------------
19,860,675
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--3.1%
Broadcom Corp., Cl. A 1 535,600 19,019,156
- --------------------------------------------------------------------------------
Intel Corp. 777,300 20,256,438
- --------------------------------------------------------------------------------
International
Rectifier Corp. 1 292,800 13,972,416
- --------------------------------------------------------------------------------
Maxim Integrated
Products, Inc. 319,000 12,188,990
- --------------------------------------------------------------------------------
Texas Instruments, Inc. 480,000 13,473,600
---------------
78,910,600
- --------------------------------------------------------------------------------
SOFTWARE--10.5%
Adobe Systems, Inc. 428,154 12,253,767
- --------------------------------------------------------------------------------
Amdocs Ltd. 1 357,900 9,459,297
- --------------------------------------------------------------------------------
Autodesk, Inc. 321,400 11,046,518
- --------------------------------------------------------------------------------
Compuware Corp. 1 954,529 6,863,064
- --------------------------------------------------------------------------------
Mercury Interactive
Corp. 1 430,700 16,521,652
- --------------------------------------------------------------------------------
Microsoft Corp. 4,675,000 116,127,000
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
SOFTWARE Continued
Novell, Inc. 1 2,227,415 $ 13,809,973
- --------------------------------------------------------------------------------
SAP AG,
Sponsored ADR 377,500 16,345,750
- --------------------------------------------------------------------------------
Synopsys, Inc. 1 2,427,100 40,459,757
- --------------------------------------------------------------------------------
Take-Two Interactive
Software, Inc. 1 1,097,954 27,942,929
---------------
270,829,707
- --------------------------------------------------------------------------------
MATERIALS--1.6%
- --------------------------------------------------------------------------------
CHEMICALS--1.1%
Praxair, Inc. 597,000 27,820,200
- --------------------------------------------------------------------------------
METALS & MINING--0.5%
Phelps Dodge Corp. 140,200 12,968,500
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--2.4%
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--2.4%
IDT Corp., Cl. B 1 1,861,737 24,500,459
- --------------------------------------------------------------------------------
NeuStar, Inc., Cl. A 1 219,200 5,611,520
- --------------------------------------------------------------------------------
Sprint Corp. 608,500 15,267,265
- --------------------------------------------------------------------------------
Verizon
Communications, Inc. 455,300 15,730,615
---------------
61,109,859
- --------------------------------------------------------------------------------
UTILITIES--4.1%
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES--3.6%
AES Corp. (The) 1 2,642,600 43,285,788
- --------------------------------------------------------------------------------
CMS Energy Corp. 1 1,033,800 15,569,028
- --------------------------------------------------------------------------------
NRG Energy, Inc. 1 90,600 3,406,560
- --------------------------------------------------------------------------------
PG&E Corp. 341,900 12,834,926
- --------------------------------------------------------------------------------
Reliant Energy, Inc. 1 1,340,900 16,600,342
---------------
91,696,644
- --------------------------------------------------------------------------------
GAS UTILITIES--0.5%
Sempra Energy 327,100 13,512,501
---------------
Total Common Stocks
(Cost $2,186,159,857) 2,562,730,096
17 | OPPENHEIMER EQUITY FUND, INC.
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.8%
- --------------------------------------------------------------------------------
Undivided interest of 2.01% in joint
repurchase agreement (Principal Amount/
Value $1,064,446,000, with a maturity value
of $1,064,540,617) with UBS Warburg LLC,
3.20%, dated 6/30/05, to be repurchased
at $21,389,901 on 7/1/05, collateralized
by Federal Home Loan Mortgage
Corp., 5.50%, 2/1/35, with a
value of $1,087,273,837
(Cost $21,388,000) $21,388,000 $ 21,388,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE
(COST $2,207,547,857) 100.2% 2,584,118,096
- --------------------------------------------------------------------------------
LIABILITIES
IN EXCESS OF
OTHER ASSETS (0.2) (5,213,455)
-------------------------------
NET ASSETS 100.0% $2,578,904,641
===============================
FOOTNOTE TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18 | OPPENHEIMER EQUITY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
June 30, 2005
- -------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------
Investments, at value (cost $2,207,547,857)--see accompanying statement
of investments $2,584,118,096
- -------------------------------------------------------------------------------------------
Cash 893,017
- -------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 26,621,299
Interest and dividends 1,953,848
Shares of capital stock sold 1,561,387
Other 97,674
--------------
Total assets 2,615,245,321
- -------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 31,063,018
Shares of capital stock redeemed 3,353,604
Distribution and service plan fees 1,347,583
Transfer and shareholder servicing agent fees 301,337
Shareholder communications 196,416
Directors' compensation 45,138
Other 33,584
--------------
Total liabilities 36,340,680
- -------------------------------------------------------------------------------------------
NET ASSETS $2,578,904,641
==============
- -------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- -------------------------------------------------------------------------------------------
Par value of shares of capital stock $ 23,662,060
- -------------------------------------------------------------------------------------------
Additional paid-in capital 2,008,649,612
- -------------------------------------------------------------------------------------------
Accumulated net investment income 6,449,646
- -------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 163,573,084
- -------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 376,570,239
--------------
NET ASSETS $2,578,904,641
==============
19 | OPPENHEIMER EQUITY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES Unaudited / Continued
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- ----------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $2,213,372,576
and 202,219,898 shares of capital stock outstanding) $10.95
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $11.62
- ----------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $222,913,476 and 21,112,091 shares
of capital stock outstanding) $10.56
- ----------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $74,299,807 and 7,033,026 shares
of capital stock outstanding) $10.56
- ----------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $15,584,367 and 1,441,789 shares
of capital stock outstanding) $10.81
- ----------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets of
$52,734,415 and 4,813,792 shares of capital stock outstanding) $10.95
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20 | OPPENHEIMER EQUITY FUND, INC.
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 2005
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $185,973) $ 16,676,194
- --------------------------------------------------------------------------------
Interest 418,114
--------------
Total investment income 17,094,308
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 6,741,299
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 2,242,112
Class B 1,166,023
Class C 368,304
Class N 37,144
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 1,329,060
Class B 243,181
Class C 82,437
Class N 16,803
Class Y 59,442
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 180,748
Class B 55,654
Class C 10,074
Class N 780
- --------------------------------------------------------------------------------
Directors' compensation 21,016
- --------------------------------------------------------------------------------
Custodian fees and expenses 15,050
- --------------------------------------------------------------------------------
Other 100,713
--------------
Total expenses 12,669,840
Less reduction to custodian expenses (433)
--------------
Net expenses 12,669,407
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 4,424,901
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
- --------------------------------------------------------------------------------
Net realized gain on investments 116,548,449
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on investments (100,531,761)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 20,441,589
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | OPPENHEIMER EQUITY FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 2005 DECEMBER 31,
(UNAUDITED) 2004
- ----------------------------------------------------------------------------------------------------
OPERATIONS
- ----------------------------------------------------------------------------------------------------
Net investment income $ 4,424,901 $ 12,852,271
- ----------------------------------------------------------------------------------------------------
Net realized gain 116,548,449 275,451,300
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (100,531,761) (20,377,609)
-------------------------------------
Net increase in net assets resulting from operations 20,441,589 267,925,962
- ----------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A -- (12,499,114)
Class B -- --
Class C -- --
Class N -- (24,732)
Class Y -- (391,988)
- ----------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A -- (193,031,939)
Class B -- (23,068,440)
Class C -- (6,799,567)
Class N -- (1,346,939)
Class Y -- (4,861,644)
- ----------------------------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
capital stock transactions:
Class A (76,369,068) (36,291,319)
Class B (40,762,015) (65,902,307)
Class C (3,464,095) 1,729,988
Class N 121,903 2,094,158
Class Y (4,803,680) 500,196
- ----------------------------------------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------------------------------
Total decrease (104,835,366) (71,967,685)
- ----------------------------------------------------------------------------------------------------
Beginning of period 2,683,740,007 2,755,707,692
-------------------------------------
End of period (including accumulated net investment income
of $6,449,646 and $2,024,745, respectively) $ 2,578,904,641 $ 2,683,740,007
=====================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | OPPENHEIMER EQUITY FUND, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 2005 DEC. 31,
CLASS A (UNAUDITED) 2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.84 $ 10.77 $ 8.53 $ 10.40 $ 11.78 $ 13.25
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .02 1 .07 1 .02 .03 .08 .15
Net realized and unrealized gain
(loss) .09 1.07 2.22 (1.88) (1.31) (.84)
------------------------------------------------------------------------------------------
Total from investment operations .11 1.14 2.24 (1.85) (1.23) (.69)
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- (.07) -- (.02) (.11) (.15)
Distributions from net realized gain -- (1.00) -- -- (.04) (.63)
------------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders -- (1.07) -- (.02) (.15) (.78)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.95 $ 10.84 $ 10.77 $ 8.53 $ 10.40 $ 11.78
==========================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 1.02% 10.73% 3 26.26% (17.80)% (10.43)% (5.62)%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in
thousands) $2,213,374 $2,270,477 $2,283,036 $1,933,397 $2,665,614 $3,161,399
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $2,190,536 $2,248,969 $2,035,816 $2,255,746 $2,847,999 $3,382,139
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.46% 0.61% 0.19% 0.29% 0.66% 1.17%
Total expenses 0.89% 5 0.89% 5 0.90% 5,6 0.96% 5 0.90% 5 0.87% 5
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 40% 91% 108% 95% 116% 61%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes a investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
3. Less than 0.01% of the Fund's return consists of a voluntary payment to the
Fund by the Manager.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | OPPENHEIMER EQUITY FUND, INC.
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 2005 DEC. 31,
CLASS B (UNAUDITED) 2004 2003 2002 2001 2000
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.51 $ 10.51 $ 8.39 $ 10.30 $ 11.65 $ 13.10
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) -- 1,2 (.04) 1 (.08) (.05) (.01) .05
Net realized and unrealized gain (loss) .05 1.04 2.20 (1.86) (1.29) (.84)
-----------------------------------------------------------------------------------
Total from investment operations .05 1.00 2.12 (1.91) (1.30) (.79)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- -- -- -- (.01) (.03)
Distributions from net realized gain -- (1.00) -- -- (.04) (.63)
-----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders -- (1.00) -- -- (.05) (.66)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.56 $ 10.51 $ 10.51 $ 8.39 $ 10.30 $ 11.65
===================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 0.48% 9.70% 4 25.27% (18.54)% (11.15)% (6.36)%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $222,913 $263,376 $327,809 $334,345 $570,715 $800,063
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $235,315 $283,662 $315,065 $430,844 $658,336 $964,967
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income (loss) (0.46)% (0.35)% (0.73)% (0.55)% (0.13)% 0.37%
Total expenses 1.80% 6 1.81% 6,7 1.83% 6,7 1.80% 6 1.69% 6 1.66% 6
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 40% 91% 108% 95% 116% 61%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Less than 0.005% per share.
3. Assumes a investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
4. 0.11% of the Fund's return consists of a voluntary payment to the Fund by the
Manager. Excluding this payment, total return would have been 9.59%.
5. Annualized for periods of less than one full year.
6. Reduction to custodian expenses less than 0.01%.
7. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | OPPENHEIMER EQUITY FUND, INC.
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 2005 DEC. 31,
CLASS C (UNAUDITED) 2004 2003 2002 2001 2000
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.51 $ 10.51 $ 8.40 $ 10.30 $ 11.67 $ 13.13
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.02) 1 (.03) 1 (.07) (.06) (.01) .04
Net realized and unrealized gain (loss) .07 1.03 2.18 (1.84) (1.30) (.82)
-----------------------------------------------------------------------------------
Total from investment operations .05 1.00 2.11 (1.90) (1.31) (.78)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- -- -- -- (.02) (.05)
Distributions from net realized gain -- (1.00) -- -- (.04) (.63)
-----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders -- (1.00) -- -- (.06) (.68)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.56 $ 10.51 $ 10.51 $ 8.40 $ 10.30 $ 11.67
===================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 0.48% 9.70% 3 25.12% (18.45)% (11.24)% (6.33)%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 74,300 $ 77,438 $ 75,620 $ 62,561 $ 90,440 $108,522
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 74,343 $ 74,618 $ 66,739 $ 74,785 $ 98,104 $ 97,172
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss) (0.45)% (0.31)% (0.74)% (0.56)% (0.13)% 0.37%
Total expenses 1.79% 5 1.80% 5 1.84% 5,6 1.81% 5 1.69% 5 1.67% 5
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 40% 91% 108% 95% 116% 61%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes a investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
3. Less than 0.01% of the Fund's return consists of a voluntary payment to the
Fund by the Manager.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER EQUITY FUND, INC.
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 2005 DEC. 31,
CLASS N (UNAUDITED) 2004 2003 2002 2001 1
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.73 $ 10.68 $ 8.48 $ 10.36 $ 11.38
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income -- 2,3 .02 2 -- 3 .07 .02
Net realized and unrealized gain (loss) .08 1.05 2.20 (1.95) (.88)
---------------------------------------------------------------------------
Total from investment operations .08 1.07 2.20 (1.88) (.86)
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.02) -- -- (.12)
Distributions from net realized gain -- (1.00) -- -- (.04)
---------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders -- (1.02) -- -- (.16)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.81 $ 10.73 $ 10.68 $ 8.48 $ 10.36
===========================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4 0.75% 10.19% 5 25.94% (18.15)% (7.54)%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 15,584 $ 15,347 $ 13,145 $ 4,278 $ 1,368
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 14,989 $ 14,488 $ 9,062 $ 3,519 $ 593
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 6
Net investment income (loss) 0.21% 0.16% (0.20)% (0.10)% 0.20%
Total expenses 1.27% 7 1.35% 7 1.33% 7,8 1.30% 7 1.23% 7
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 40% 91% 108% 95% 116%
1. For the period from March 1, 2001 (inception of offering) to December 31,
2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Less than $0.005 per share.
4. Assumes a investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
5. 0.10% of the Fund's return consists of a voluntary payment to the Fund by the
Manager. Excluding this payment, total return would have been 10.09%.
6. Annualized for periods of less than one full year.
7. Reduction to custodian expenses less than 0.01%.
8. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER EQUITY FUND, INC.
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 2005 DEC. 31,
CLASS Y (UNAUDITED) 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.85 $ 10.78 $ 8.52 $ 10.40 $ 11.78 $ 13.26
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .11 1 .08 1 .03 .03 .09 .17
Net realized and unrealized gain (loss) (.01) 1.07 2.23 (1.88) (1.31) (.84)
----------------------------------------------------------------------------------
Total from investment operations .10 1.15 2.26 (1.85) (1.22) (.67)
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- (.08) -- (.03) (.12) (.18)
Distributions from net realized gain -- (1.00) -- -- (.04) (.63)
----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders -- (1.08) -- (.03) (.16) (.81)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.95 $ 10.85 $ 10.78 $ 8.52 $ 10.40 $ 11.78
==================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 0.92% 10.87% 3 26.53% (17.79)% (10.29)% (5.54)%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 52,734 $ 57,103 $ 56,098 $ 43,016 $ 49,223 $ 55,685
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 53,103 $ 54,905 $ 48,017 $ 45,669 $ 50,147 $ 57,358
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.57% 0.74% 0.27% 0.36% 0.80% 1.29%
Total expenses 0.77% 0.76% 0.84% 0.97% 0.80% 0.75%
Expenses after payments and waivers and
reduction to custodian expenses N/A 5 N/A 5 N/A 5,6 0.88% 5 0.76% 5 N/A 5
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 40% 91% 108% 95% 116% 61%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Assumes a investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
3. 0.10% of the Fund's return consists of a voluntary payment to the Fund by the
Manager. Excluding this payment, total return would have been 10.77%.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Equity Fund, Inc. (the Fund), is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
The Fund's investment objective is to seek a high total return. The Fund's
investment advisor is OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B, Class C, Class N and Class Y shares.
Class A shares are sold at their offering price, which is normally net asset
value plus a front-end sales charge. Class B, Class C and Class N shares are
sold without a front-end sales charge but may be subject to a contingent
deferred sales charge (CDSC). Class N shares are sold only through retirement
plans. Retirement plans that offer Class N shares may impose charges on those
accounts. Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC, however, the institutional investor
may impose charges on those accounts. All classes of shares have identical
rights and voting privileges with respect to the Fund in general and exclusive
voting rights on matters that affect that class alone. Earnings, net assets and
net asset value per share may differ due to each class having its own expenses,
such as transfer and shareholder servicing agent fees and shareholder
communications, directly attributable to that class. Class A, B, C and N have
separate distribution and/or service plans. No such plan has been adopted for
Class Y shares. Class B shares will automatically convert to Class A shares six
years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities listed
or traded on National Stock Exchanges or other domestic or foreign exchanges are
valued based on the last sale price of the security traded on that exchange
prior to the time when the Fund's assets are valued. Securities traded on NASDAQ
are valued based on the closing price provided by NASDAQ prior to the time when
the Fund's assets are valued. In the absence of a sale, the security is valued
at the last sale price on the prior trading day, if it is within the spread of
the closing "bid" and "asked" prices, and if not, at the closing bid price.
Corporate, government and municipal debt instruments having a remaining maturity
in excess of sixty days and all mortgage-backed securities will be valued at the
mean between the "bid" and "asked" prices. Futures contracts traded on a
commodities or futures exchange will be valued at the final settlement price or
official closing price on the principal exchange as reported by such principal
exchange at its trading session ending at, or most recently prior to, the time
when the Fund's assets are valued. Securities may be valued primarily using
dealer-supplied valuations or a portfolio pricing service authorized by the
Board of Directors. Securities (including restricted securities) for which
market quotations are not readily available are valued at their fair value.
Foreign and domestic securities whose values have been materially affected by
what the Manager
28 | OPPENHEIMER EQUITY FUND, INC.
identifies as a significant event occurring before the Fund's assets are valued
but after the close of their respective exchanges will be fair valued. Fair
value is determined in good faith using consistently applied procedures under
the supervision of the Board of Directors. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income are translated into U.S. dollars as of the close of The New
York Stock Exchange (the Exchange), normally 4:00 P.M. Eastern time, on each day
the Exchange is open for business. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Directors.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. These balances are invested in one or more repurchase
agreements. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
29 | OPPENHEIMER EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund.
During the year ended December 31, 2004, the Fund did not utilize any
capital loss carryforward to offset capital gains realized in that fiscal year.
- --------------------------------------------------------------------------------
DIRECTORS' COMPENSATION. The Board of Directors has adopted a deferred
compensation plan for independent directors that enables directors to elect to
defer receipt of all or a portion of the annual compensation they are entitled
to receive from the Fund. For purposes of determining the amount owed to the
Director under the plan, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the Fund or in other Oppenheimer funds
selected by the Director. The Fund purchases shares of the funds selected for
deferral by the Director in amounts equal to his or her deemed investment,
resulting in a Fund asset equal to the deferred compensation liability. Such
assets are included as a component of "Other" within the asset section of the
Statement of Assets and Liabilities. Deferral of directors' fees under the plan
will not affect the net assets of the Fund, and will not materially affect the
Fund's assets, liabilities or net investment income per share. Amounts will be
deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated
30 | OPPENHEIMER EQUITY FUND, INC.
shareholder redemption activity. The Fund pays interest to its custodian on such
cash overdrafts at a rate equal to the Federal Funds Rate plus 0.50%. The
Reduction to Custodian Expenses line item, if applicable, represents earnings on
cash balances maintained by the Fund during the period. Such interest expense
and other custodian fees may be paid with these earnings.
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF CAPITAL STOCK
The Fund has authorized 860 million shares of $0.10 par value capital stock.
Transactions in shares of capital stock were as follows:
SIX MONTHS ENDED JUNE 30, 2005 YEAR ENDED DECEMBER 31, 2004
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------
CLASS A
Sold 9,875,541 $ 105,632,308 16,901,749 $ 185,192,613
Dividends and/or
distributions reinvested -- -- 18,039,458 192,300,622
Redeemed (17,071,006) (182,001,376) (37,463,254) (413,784,554)
----------------------------------------------------------------
Net decrease (7,195,465) $ (76,369,068) (2,522,047) $ (36,291,319)
================================================================
- --------------------------------------------------------------------------------------------
CLASS B
Sold 1,081,972 $ 11,130,902 2,437,456 $ 25,911,712
Dividends and/or
distributions reinvested -- -- 2,123,242 21,954,332
Redeemed (5,032,624) (51,892,916) (10,696,846) (113,768,351)
----------------------------------------------------------------
Net decrease (3,950,652) $ (40,762,015) (6,136,148) $ (65,902,307)
================================================================
- --------------------------------------------------------------------------------------------
CLASS C
Sold 574,970 $ 5,929,740 1,135,960 $ 12,073,146
Dividends and/or
distributions reinvested -- -- 615,613 6,365,440
Redeemed (908,406) (9,393,835) (1,580,226) (16,708,598)
----------------------------------------------------------------
Net increase (decrease) (333,436) $ (3,464,095) 171,347 $ 1,729,988
================================================================
31 | OPPENHEIMER EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. SHARES OF CAPITAL STOCK Continued
SIX MONTHS ENDED JUNE 30, 2005 YEAR ENDED DECEMBER 31, 2004
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------
CLASS N
Sold 327,671 $ 3,456,624 450,447 $ 4,860,232
Dividends and/or
distributions reinvested -- -- 129,327 1,364,409
Redeemed (316,400) (3,334,721) (380,457) (4,130,483)
----------------------------------------------------------------
Net increase 11,271 $ 121,903 199,317 $ 2,094,158
================================================================
- --------------------------------------------------------------------------------------------
CLASS Y
Sold 421,819 $ 4,505,976 918,917 $ 10,070,591
Dividends and/or
distributions reinvested -- -- 492,374 5,253,631
Redeemed (873,110) (9,309,656) (1,352,243) (14,824,026)
----------------------------------------------------------------
Net increase (decrease) (451,291) $ (4,803,680) 59,048 $ 500,196
================================================================
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the six months ended June 30, 2005, were
$1,020,032,480 and $1,107,440,913, respectively.
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
annual rate of 0.75% of the first $100 million of average annual net assets of
the Fund, 0.70% of the next $100 million, 0.65% of the next $100 million, 0.60%
of the next $100 million, 0.55% of the next $100 million and 0.50% of average
annual net assets in excess of $500 million.
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICES. The Fund pays the Manager a fee of $1,500 per year for
preparing and filing the Fund's tax returns.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the six months ended June 30, 2005, the Fund paid
$1,763,959 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $10,000 per
annum for assets of $10 million or more. The Class Y shares are subject to the
minimum fees in the event that the per account fee does not equal or exceed the
applicable minimum fees. OFS may voluntarily waive the minimum fees.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12B-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
32 | OPPENHEIMER EQUITY FUND, INC.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor currently uses all of those fees to
pay dealers, brokers, banks and other financial institutions quarterly for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years. Fees incurred by the Fund under the Plan are detailed in the Statement of
Operations.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% per year on
Class B and Class C shares and 0.25% per year on Class N shares. The Distributor
also receives a service fee of up to 0.25% per year under each plan. If either
the Class B, Class C or Class N plan is terminated by the Fund or by the
shareholders of a class, the Board of Directors and its independent directors
must determine whether the Distributor shall be entitled to payment from the
Fund of all or a portion of the service fee and/or asset-based sales charge in
respect to shares sold prior to the effective date of such termination. The
Distributor's aggregate uncompensated expenses under the plan at June 30, 2005
for Class C and Class N shares were $1,953,731 and $278,939, respectively. Fees
incurred by the Fund under the plans are detailed in the Statement of
Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ------------------------------------------------------------------------------------------------------------
June 30, 2005 $227,643 $1,078 $234,449 $7,904 $5,981
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit
transfer and shareholder servicing agent fees for all classes to 0.35% of
average annual net assets per class. This undertaking may be amended or
withdrawn at any time.
33 | OPPENHEIMER EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. LITIGATION
A consolidated amended complaint has been filed as putative derivative and class
actions against the Manager, OFS and the Distributor, as well as 51 of the
Oppenheimer funds (as "Nominal Defendants") including the Fund, 30 present and
former Directors or Trustees and 8 present and former officers of the funds.
This complaint, initially filed in the U.S. District Court for the Southern
District of New York on January 10, 2005, and amended on March 4, 2005,
consolidates into a single action and amends six individual previously filed
putative derivative and class action complaints. Like those prior complaints,
the complaint alleges that the Manager charged excessive fees for distribution
and other costs, improperly used assets of the funds in the form of directed
brokerage commissions and 12b-1 fees to pay brokers to promote sales of the
funds, and failed to properly disclose the use of assets of the funds to make
those payments in violation of the Investment Company Act of 1940 and the
Investment Advisers Act of 1940. Also, like those prior complaints, the
complaint further alleges that by permitting and/or participating in those
actions, the Directors/Trustees and the Officers breached their fiduciary duties
to shareholders of the funds under the Investment Company Act of 1940 and at
common law. The complaint seeks unspecified compensatory and punitive damages,
rescission of the funds' investment advisory agreements, an accounting of all
fees paid, and an award of attorneys' fees and litigation expenses.
The defendants believe that the allegations contained in the Complaints
are without merit and that they have meritorious defenses against the claims
asserted. The defendants intend to defend these lawsuits vigorously and to
contest any claimed liability. The defendants believe that it is premature to
render any opinion as to the likelihood of an outcome unfavorable to them and
that no estimate can yet be made with any degree of certainty as to the amount
or range of any potential loss.
34 | OPPENHEIMER EQUITY FUND, INC.
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF
INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to
file Form N-PX, with its complete proxy voting record for the 12 months ended
June 30th, no later than August 31st of each year. The Fund's voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in Form N-PX filing on the SEC's website at
www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
35 | OPPENHEIMER EQUITY FUND, INC.
BOARD APPROVAL OF THE FUND'S INVESTMENT ADVISORY AGREEMENT Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Each year, the Board of Directors (the "Board"), including a majority of the
independent Directors, is required to determine whether to renew the Fund's
advisory agreement. The Investment Company Act of 1940, as amended, requires
that the Board request and evaluate, and that the Manager provide, such
information as may be reasonably necessary to evaluate the terms of the advisory
agreement. The Board employs an independent consultant to prepare a report that
provides information, including comparative information, that the Board requests
for this purpose. In addition, the Board receives information throughout the
year regarding Fund services, fees, expenses and performance.
NATURE AND EXTENT OF SERVICES. In considering the renewal of the Fund's
advisory agreement for the current year, the Board evaluated the nature and
extent of the services provided by the Manager and its affiliates. The Manager
provides the Fund with office space, facilities and equipment; administrative,
accounting, clerical, legal and compliance personnel; securities trading
services; oversight of third party service providers and the services of the
portfolio managers and the Manager's investment team, who provide research,
analysis and other advisory services in regard to the Fund's investments.
QUALITY OF SERVICES. The Board also considered the quality of the services
provided and the quality of the Manager's resources that are available to the
Fund. The Board noted that the Manager has had over forty years of experience as
an investment adviser and that its assets under management rank it among the top
mutual fund managers in the United States. The Board evaluated the Manager's
administrative, accounting, legal and compliance services and information the
Board received regarding the experience and professional qualifications of the
Manager's personnel and the size and functions of its staff. The Board members
also considered their experiences as directors or trustees of the Fund and other
funds advised by the Manager. The Board received and reviewed information
regarding the quality of services provided by affiliates of the Manager, which
it also reviews at other times during the year in connection with the renewal of
the Fund's service agreements. The Board considered that the relatively low
redemption rate for funds advised by the Manager provided an indication of
shareholder satisfaction with the overall level of services provided by the
Manager. The Board was aware that there are alternatives to retaining the
Manager.
PORTFOLIO MANAGEMENT SERVICES AND PERFORMANCE. In its evaluation of the
quality of the portfolio management services provided, the Board considered the
experience of Christopher Leavy and David Poiesz and the Manager's value equity
investment team and analysts. The Fund's portfolio is managed by Christopher
Leavy and David Poiesz who are primarily responsible for the day-to-day
management of the Fund's investments. Mr. Leavy and Mr. Poiesz have been
portfolio managers of the Fund and Senior Vice
36 | OPPENHEIMER EQUITY FUND, INC.
Presidents of the Manager since October 2000 and June 2004, respectively. They
are each portfolio managers and officers of other portfolios in the
OppenheimerFunds complex. Mr. Leavy has had over twelve years of experience and
Mr. Poiesz has had over 25 years of experience managing equity investments.
The Board also reviewed information, prepared by the Manager and by the
independent consultant, comparing the Fund's historical performance to relevant
market indices and to the performance of other large-cap core funds (including
both funds advised by the Manager and funds advised by other investment
advisers). The Board also receives and reviews comparative performance
information regarding the Fund and other funds at each Board meeting. The Board
noted that the Fund's one-year, three-year, five-year and ten-year performance
were better than its peer group average.
MANAGEMENT FEES AND EXPENSES. The Board also reviewed information,
including comparative information, regarding the fees paid to the Manager and
its affiliates and the other expenses borne by the Fund. The independent
consultant provided comparative data in regard to the fees and expenses of the
Fund, other large-cap core funds and other funds with comparable asset levels
and distribution features. The Board noted that the Fund's management fees and
its total expenses are lower than its peer group average. In addition, the Board
evaluated the comparability of the fees charged and the services provided to the
Fund to the fees charged and services provided to other types of entities
advised by the Manager.
PROFITABILITY OF THE MANAGER AND AFFILIATES. The Board also reviewed
information regarding the cost of services provided by the Manager and its
affiliates and the Manager's profitability. The Board considered that the
Manager must be able to pay and retain experienced professional personnel at
competitive rates to provide services to the Fund and that maintaining the
financial viability of the Manager is important in order for the Manager to
continue to provide significant services to the Fund and its shareholders. In
addition the Board considered information that was provided regarding the direct
and indirect benefits the Manager receives as a result of its relationship with
the Fund, including compensation paid to the Manager's affiliates and research
provided to the Manager in connection with permissible brokerage arrangements
(soft dollar arrangements).
ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may
realize economies of scale in managing and supporting the Fund and the current
level of Fund assets in relation to the Fund's breakpoint schedule for its
management fees. The Board considered that the Fund has not experienced recent
asset growth and that, based on current asset levels, the Fund has passed its
last management fee breakpoint.
37 | OPPENHEIMER EQUITY FUND, INC.
BOARD APPROVAL OF THE FUND'S INVESTMENT ADVISORY AGREEMENT
Unaudited / Continued
- --------------------------------------------------------------------------------
CONCLUSIONS. These factors were also considered by the independent
Directors meeting separately from the full Board, assisted by experienced
counsel to the Fund and to the independent Directors. Fund counsel and the
independent Directors' counsel are both independent of the Manager within the
meaning and intent of the Securities and Exchange Commission Rules.
Based on its review of the information it received and its evaluations
described above, the Board, including a majority of the independent Directors,
concluded that the nature, extent and quality of the services provided to the
Fund by the Manager are a benefit to the Fund and in the best interest of the
Fund's shareholders and that the amount and structure of the compensation
received by the Manager and its affiliates are reasonable in relation to the
services provided. Accordingly, the Board elected to continue the advisory
agreement for another year. In arriving at this decision, the Board did not
single out any factor or factors as being more important than others, but
considered all of the factors together. The Board judged the terms and
conditions of the advisory agreement, including the management fee, in light of
all of the surrounding circumstances.
38 | OPPENHEIMER EQUITY FUND, INC.
ITEM 2. CODE OF ETHICS.
Not applicable to semiannual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to semiannual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to semiannual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to semiannual reports.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUNDS' GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Funds' Governance Committee (the "Committee") will evaluate
potential Board candidates to assess their qualifications. The
Committee shall have the authority, upon approval of the Board, to
retain an executive search firm to assist in this effort. The
Committee may consider recommendations by business and personal
contacts of current Board members and by executive search firms
which the Committee may engage from time to time and may also
consider shareholder recommendations. The Committee may consider
the advice and recommendation of the Funds' investment manager and
its affiliates in making the selection.
2. The Committee shall screen candidates for Board membership. The
Committee has not established specific qualifications that it
believes must be met by a trustee nominee. In evaluating trustee
nominees, the
Committee considers, among other things, an individual's
background, skills, and experience; whether the individual is an
"interested person" as defined in the Investment Company Act of
1940; and whether the individual would be deemed an "audit
committee financial expert" within the meaning of applicable SEC
rules. The Committee also considers whether the individual's
background, skills, and experience will complement the background,
skills, and experience of other nominees and will contribute to the
Board. There are no differences in the manner in which the
Committee evaluates nominees for trustees based on whether the
nominee is recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the
Board at such times as the Committee meets to consider new nominees
for the Board. The Committee shall have the sole discretion to
determine the candidates to present to the Board and, in such cases
where required, to shareholders. Recommendations for trustee
nominees should, at a minimum, be accompanied by the following:
o the name, address, and business, educational, and/or
other pertinent background of the person being
recommended;
o a statement concerning whether the person is an
"interested person" as defined in the Investment
Company Act of 1940;
o any other information that the Funds would be required
to include in a proxy statement concerning the person
if he or she was nominated; and
o the name and address of the person submitting the
recommendation and, if that person is a shareholder,
the period for which that person held Fund shares.
The recommendation also can include any additional information
which the person submitting it believes would assist the Committee
in evaluating the recommendation.
4. Shareholders should note that a person who owns securities issued
by Massachusetts Mutual Life Insurance Company (the parent company
of the Funds' investment adviser) would be deemed an "interested
person" under the Investment Company Act of 1940. In addition,
certain other relationships with Massachusetts Mutual Life
Insurance Company or its subsidiaries, with registered
broker-dealers, or with the Funds' outside legal counsel may cause
a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a
trustee, Committee members and other directors customarily
interview the
individual in person. In addition, the individual customarily is
asked to complete a detailed questionnaire which is designed to
elicit information which must be disclosed under SEC and stock
exchange rules and to determine whether the individual is subject
to any statutory disqualification from serving as a trustee of a
registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the registrant's disclosure controls and
procedures (as defined in rule 30a-3(c) under the Investment Company Act of
1940 (17 CFR 270.30a-3(c)) as of June 30, 2005 the registrant's principal
executive officer and principal financial officer found the registrant's
disclosure controls and procedures to provide reasonable assurances that
information required to be disclosed by the registrant in the reports that it
files under the Securities Exchange Act of 1934 (a) is accumulated and
communicated to registrant's management, including its principal executive
officer and principal financial officer, to allow timely decisions regarding
required disclosure, and (b) is recorded, processed, summarized and reported,
within the time periods specified in the rules and forms adopted by the U.S.
Securities and Exchange Commission.
There have been no changes in the registrant's internal controls over financial
reporting that occurred during the registrant's second fiscal quarter of the
period covered by this report that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a) (1) Not applicable to semiannual reports.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Not applicable.
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 Fund, Inc.
By: /s/John V. Murphy
-----------------
John V. Murphy
Principal Executive Officer
Date: August 10, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/John V. Murphy
-----------------
John V. Murphy
Principal Executive Officer
Date: August 10, 2005
By: /s/Brian W. Wixted
-----------------
Brian W. Wixted
Principal Financial Officer
Date: August 10, 2005