UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-490
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
Date of fiscal year end: DECEMBER 31
Date of reporting period: DECEMBER 31, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN COMMON STOCK INDUSTRIES
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Software 10.5%
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Oil & Gas 7.1
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Media 5.5
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Diversified Financial Services 5.3
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Insurance 5.3
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Commercial Banks 5.1
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Computers & Peripherals 4.9
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Communications Equipment 4.7
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Biotechnology 3.9
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Aerospace & Defense 3.6
Portfolio holdings and strategies are subject to change. Percentages are as of
December 31, 2005, and are based on net assets. For up-to-date Top 10 Fund
holdings, please visit www.oppenheimerfunds.com
TOP TEN COMMON STOCK HOLDINGS
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Microsoft Corp. 4.5%
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UBS AG 2.6
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United Technologies Corp. 2.5
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Altria Group, Inc. 2.4
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Exxon Mobil Corp. 2.4
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Wells Fargo & Co. 2.4
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BP plc, ADR 2.1
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Take-Two Interactive Software, Inc. 1.8
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Wachovia Corp. 1.7
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JPMorgan Chase & Co. 1.7
Portfolio holdings and strategies are subject to change. Percentages are as of
December 31, 2005 and are based on net assets. For up-to-date Top 10 Fund
holdings, please visit www.oppenheimerfunds.com
7 | OPPENHEIMER EQUITY FUND, INC.
TOP HOLDINGS AND ALLOCATIONS
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SECTOR ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Information Technology 26.4%
Software 10.7
Computers & Peripherals 4.9
Communications Equipment 4.8
Internet Software & Services 2.7
Semiconductors & Semiconductor Equipment 2.4
IT Services 0.9
Financials 19.8
Consumer Discretionary 14.5
Health Care 10.2
Energy 9.6
Industrials 6.3
Consumer Staples 5.1
Utilities 3.4
Materials 2.7
Telecommunication Services 2.0
Portfolio holdings and strategies are subject to change. Percentages are as of
December 31, 2005 and are based on the total market value of common stocks.
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8 | OPPENHEIMER EQUITY FUND, INC.
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED DECEMBER 31, 2005, FOLLOWED
BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE
BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. Oppenheimer Equity Fund, Inc.
produced attractive total returns and outperformed a majority of its peers
during a volatile period for equities. The Fund benefited from strong stock
selection in the financials, information technology and consumer discretionary
sectors, while holdings in the industrials and telecommunication services
sectors detracted from performance.
The Fund delivered significantly positive returns in most areas it
invested in during the reporting period. Compared to the benchmark, the S&P 500
Index, the Fund's performance proved especially strong in the following sectors:
financials, information technology and consumer discretionary.
In the financials sector, strong stock selection drove the Fund's
outperformance. Top contributors included Genworth Financial, Inc., Lehman
Brothers, Legg Mason and Franklin Resources. Genworth Financial, Inc., a spin
off from General Electric, generated solid earnings and performed well during
the period. The stock of brokerage firm Lehman Brothers was inexpensive
(compared to other broker/dealers) when we purchased it, even though its
profitability was among the best in the industry and its franchises and returns
were improving. Since then, the market has taken note and the stock has climbed
higher. Asset managers Legg Mason and Franklin Resources benefited from robust
mutual fund inflows that helped to boost earnings and, as a result, their stock
price. Legg Mason also benefited from an innovative deal to acquire Citigroup's
asset management business.
Although the Fund maintains a significant overweight in the information
technology sector, it was successful stock selection that drove the Fund's
strong performance. During the period we were finding many tech companies with
strong cash flows benefiting from customers' increased capital investment
activity, yet many companies in this space were not yet seeing their valuations
rise in line with these fundamental improvements. We increased the Fund's
weighting to this area because we believed many stocks could eventually benefit
against this backdrop. In terms of performance for the period, top contributors
included Apple Computer, Inc., Broadcom, Google, Inc., Novell, Inc. and Corning,
Inc.
Hardware company, Apple Computer, Inc.'s stock soared from strong sales of
its iPod digital music player. Broadcom, a semiconductor company, performed well
as the inventory correction the semiconductor sector experienced in 2004 ended
and product demand increased for their significant array of new products.
Internet search leader, Google, Inc. gained as the company's advertising
revenues grew rapidly and investors came to recognize the underlying strength of
Google's business. Novell, Inc., a software company, gained due to successful
expense control in addition to investor optimism over the company's Linux
strategy. Lastly, Corning, Inc., a diversified technology products maker,
benefited from stronger-than-expected demand for liquid crystal display (LCD)
TV's and Monitors.
9 | OPPENHEIMER EQUITY FUND, INC.
FUND PERFORMANCE DISCUSSION
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The Fund's consumer discretionary securities also outperformed those
within the benchmark. In particular, the Fund's retail stocks performed quite
well. Strong contributors included clothing retailers Chico's FAS and Polo Ralph
Lauren Corporation. Chico's extremely strong same-store sales growth drove the
stock's price up. Polo Ralph Lauren Corporation benefited from improved quality
control and a successful distribution expansion.
Areas that detracted from performance included the industrials and
telecommunication services sectors. The negative performance from the Fund's
industrials area can be attributed primarily to weak stock selection, as well as
a modest overweight during a time the sector underperformed. The two most
significant detractors from performance were Tyco International Ltd. and Cendant
Corporation. Although Tyco, a manufacturing conglomerate, had successfully
recovered from its previous difficulties, several of its businesses
underperformed. Cendant, a leading provider of travel and residential real
estate services, also experienced weak performance during the period.
Also detracting from results were telecommunication services due
principally to underperfor-mance from the Fund's holding in IDT Corp., Cl. B as
recent regulation changes have increased the risk of cost pressures in the
"CLEC" (Competitive Local Exchange Carrier) part of their business.
Lastly, we continue to maintain our overweighting in technology stocks
with strong balance sheets and cash-flow-generation potential. In the current
economic environment, we continue to identify what we believe are a number of
attractive investment opportunities from both a growth and a value perspective.
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the
performance of a hypothetical $10,000 investment in each class of shares of the
Fund held until December 31, 2005. In the case of Class A, Class B, Class C and
Class Y shares, performance is measured over a ten-fiscal-year period. In the
case of Class N shares, performance is measured from inception of the Class on
March 1, 2001. The Fund's performance reflects the deduction of the maximum
initial sales charge on Class A shares, the applicable contingent deferred sales
charge on Class B, Class C, and Class N shares, and reinvestments of all
dividends and capital gains distributions. Past performance cannot guarantee
future results.
The Fund's performance is compared to the performance of the S&P 500
Index. The S&P 500 Index is a broad-based index of equity securities widely
regarded as a general measurement of the performance of the U.S. equity
securities market. Index performance reflects the reinvestment of income but
does not consider the effect of transaction costs, and none of the data in the
graphs shows the effect of taxes. The Fund's performance reflects the effects of
the Fund's business and operating expenses. While index comparisons may be
useful to provide a benchmark for the Fund's performance, it must be noted that
the Fund's investments are not limited to the investments in the index.
10 | OPPENHEIMER EQUITY FUND, INC.
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Equity Fund, Inc. (Class A)
S&P 500 Index
Oppenheimer Equity Fund,
Inc. (Class A) S&P 500 Index
12/31/1995 9,425 10,000
03/31/1996 9,969 10,537
06/30/1996 10,375 11,009
09/30/1996 10,671 11,349
12/31/1996 11,284 12,295
03/31/1997 11,328 12,625
06/30/1997 12,779 14,827
09/30/1997 14,002 15,937
12/31/1997 14,375 16,395
03/31/1998 15,904 18,680
06/30/1998 16,508 19,300
09/30/1998 14,721 17,385
12/31/1998 17,416 21,084
03/31/1999 17,985 22,134
06/30/1999 19,116 23,691
09/30/1999 18,156 22,215
12/31/1999 20,610 25,518
03/31/2000 22,278 26,103
06/30/2000 21,545 25,409
09/30/2000 22,152 25,163
12/31/2000 19,452 23,196
03/31/2001 17,669 20,447
06/30/2001 18,329 21,643
09/30/2001 15,786 18,468
12/31/2001 17,422 20,441
03/31/2002 17,171 20,497
06/30/2002 15,596 17,753
09/30/2002 13,804 14,687
12/31/2002 14,322 15,925
03/31/2003 13,885 15,423
06/30/2003 15,799 17,796
09/30/2003 16,370 18,267
12/31/2003 18,083 20,490
03/31/2004 18,418 20,837
06/30/2004 18,536 21,195
09/30/2004 18,099 20,799
12/31/2004 20,023 22,718
03/31/2005 19,543 22,230
06/30/2005 20,226 22,535
09/30/2005 21,316 23,347
12/31/2005 21,657 23,833
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
12/31/05
1-Year 1.94% 5-Year 0.97% 10-Year 8.03%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, 10-YEAR RETURNS FOR CLASS B SHARES USES
CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 16 FOR FURTHER
INFORMATION.
11 | OPPENHEIMER EQUITY FUND, INC.
FUND PERFORMANCE DISCUSSION
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CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Equity Fund, Inc. (Class B)
S&P 500 Index
Oppenheimer Equity Fund,
Inc. (Class B) S&P 500 Index
12/31/1995 10,000 10,000
03/31/1996 10,550 10,537
06/30/1996 10,950 11,009
09/30/1996 11,243 11,349
12/31/1996 11,878 12,295
03/31/1997 11,890 12,625
06/30/1997 13,387 14,827
09/30/1997 14,629 15,937
12/31/1997 14,986 16,395
03/31/1998 16,566 18,680
06/30/1998 17,153 19,300
09/30/1998 15,261 17,385
12/31/1998 18,022 21,084
03/31/1999 18,582 22,134
06/30/1999 19,705 23,691
09/30/1999 18,665 22,215
12/31/1999 21,152 25,518
03/31/2000 22,833 26,103
06/30/2000 22,027 25,409
09/30/2000 22,592 25,163
12/31/2000 19,806 23,196
03/31/2001 17,953 20,447
06/30/2001 18,599 21,643
09/30/2001 15,980 18,468
12/31/2001 17,606 20,441
03/31/2002 17,353 20,497
06/30/2002 15,761 17,753
09/30/2002 13,950 14,687
12/31/2002 14,473 15,925
03/31/2003 14,032 15,423
06/30/2003 15,966 17,796
09/30/2003 16,543 18,267
12/31/2003 18,274 20,490
03/31/2004 18,613 20,837
06/30/2004 18,732 21,195
09/30/2004 18,291 20,799
12/31/2004 20,234 22,718
03/31/2005 19,749 22,230
06/30/2005 20,440 22,535
09/30/2005 21,541 23,347
12/31/2005 21,885 23,833
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND
AT 12/31/05
1-Year 2.36% 5-Year 0.95% 10-Year 8.15%
12 | OPPENHEIMER EQUITY FUND, INC.
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Equity Fund, Inc. (Class C)
S&P 500 Index
Oppenheimer Equity Fund,
Inc. (Class C) S&P 500 Index
12/31/1995 10,000 10,000
03/31/1996 10,542 10,537
06/30/1996 10,944 11,009
09/30/1996 11,242 11,349
12/31/1996 11,867 12,295
03/31/1997 11,881 12,625
06/30/1997 13,385 14,827
09/30/1997 14,624 15,937
12/31/1997 14,980 16,395
03/31/1998 16,541 18,680
06/30/1998 17,139 19,300
09/30/1998 15,254 17,385
12/31/1998 18,006 21,084
03/31/1999 18,551 22,134
06/30/1999 19,688 23,691
09/30/1999 18,652 22,215
12/31/1999 21,134 25,518
03/31/2000 22,800 26,103
06/30/2000 22,003 25,409
09/30/2000 22,572 25,163
12/31/2000 19,796 23,196
03/31/2001 17,947 20,447
06/30/2001 18,574 21,643
09/30/2001 15,962 18,468
12/31/2001 17,571 20,441
03/31/2002 17,298 20,497
06/30/2002 15,678 17,753
09/30/2002 13,852 14,687
12/31/2002 14,330 15,925
03/31/2003 13,869 15,423
06/30/2003 15,746 17,796
09/30/2003 16,258 18,267
12/31/2003 17,929 20,490
03/31/2004 18,219 20,837
06/30/2004 18,288 21,195
09/30/2004 17,827 20,799
12/31/2004 19,668 22,718
03/31/2005 19,144 22,230
06/30/2005 19,762 22,535
09/30/2005 20,791 23,347
12/31/2005 21,075 23,833
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND
AT 12/31/05
1-Year 6.20% 5-Year 1.26% 10-Year 7.74%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, 10-YEAR RETURNS FOR CLASS B SHARES USES
CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 16 FOR FURTHER
INFORMATION.
13 | OPPENHEIMER EQUITY FUND, INC.
FUND PERFORMANCE DISCUSSION
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CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Equity Fund, Inc. (Class N)
S&P 500 Index
Oppenheimer Equity Fund,
Inc. (Class N) S&P 500 Index
03/01/2001 10,000 10,000
03/31/2001 9,402 9,367
06/30/2001 9,745 9,915
09/30/2001 8,392 8,460
12/31/2001 9,246 9,364
03/31/2002 9,103 9,390
06/30/2002 8,264 8,132
09/30/2002 7,318 6,728
12/31/2002 7,568 7,295
03/31/2003 7,336 7,065
06/30/2003 8,345 8,153
09/30/2003 8,630 8,368
12/31/2003 9,532 9,387
03/31/2004 9,692 9,545
06/30/2004 9,746 9,710
09/30/2004 9,505 9,528
12/31/2004 10,503 10,407
03/31/2005 10,239 10,184
06/30/2005 10,581 10,323
09/30/2005 11,139 10,695
12/31/2005 11,314 10,918
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND
AT 12/31/05
1-Year 6.76% 5-Year N/A Since Inception (3/1/01) 2.59%
14 | OPPENHEIMER EQUITY FUND, INC.
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Equity Fund, Inc. (Class Y)
S&P 500 Index
Oppenheimer Equity Fund,
Inc. (Class Y) S&P 500 Index
12/31/1995 10,000 10,000
03/31/1996 10,569 10,537
06/30/1996 11,003 11,009
09/30/1996 11,331 11,349
12/31/1996 11,988 12,295
03/31/1997 12,039 12,625
06/30/1997 13,584 14,827
09/30/1997 14,886 15,937
12/31/1997 15,288 16,395
03/31/1998 16,933 18,680
06/30/1998 17,580 19,300
09/30/1998 15,688 17,385
12/31/1998 18,550 21,084
03/31/1999 19,158 22,134
06/30/1999 20,376 23,691
09/30/1999 19,346 22,215
12/31/1999 21,986 25,518
03/31/2000 23,766 26,103
06/30/2000 22,989 25,409
09/30/2000 23,654 25,163
12/31/2000 20,768 23,196
03/31/2001 18,881 20,447
06/30/2001 19,586 21,643
09/30/2001 16,889 18,468
12/31/2001 18,630 20,441
03/31/2002 18,361 20,497
06/30/2002 16,677 17,753
09/30/2002 14,779 14,687
12/31/2002 15,315 15,925
03/31/2003 14,866 15,423
06/30/2003 16,915 17,796
09/30/2003 17,526 18,267
12/31/2003 19,377 20,490
03/31/2004 19,737 20,837
06/30/2004 19,863 21,195
09/30/2004 19,413 20,799
12/31/2004 21,484 22,718
03/31/2005 20,969 22,230
06/30/2005 21,682 22,535
09/30/2005 22,870 23,347
12/31/2005 23,246 23,833
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT
12/31/05
1-Year 8.20% 5-Year 2.28% 10-Year 8.80%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE 1% CONTINGENT DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO
CLASS A SHARES 72 MONTHS AFTER PURCHASE, 10-YEAR RETURNS FOR CLASS B SHARES USES
CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 16 FOR FURTHER
INFORMATION.
15 | OPPENHEIMER EQUITY FUND, INC.
NOTES
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Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares.
INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER
CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS
THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR
FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT
WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
CLASS A shares of the Fund were first publicly offered on 10/2/47. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 5.75%. The Fund's maximum sales charge for Class A shares was higher
prior to 4/1/91, so actual performance may have been lower.
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). Because Class B shares convert to
Class A shares 72 months after purchase, the "10-year" return for Class B uses
Class A performance for the period after conversion. Class B shares are subject
to an annual 0.75% asset-based sales charge.
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.
16 | OPPENHEIMER EQUITY FUND, INC.
CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
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 agreements
with the Distributor.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
17 | OPPENHEIMER EQUITY FUND, INC.
FUND EXPENSES
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FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended December 31, 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
18 | OPPENHEIMER EQUITY FUND, INC.
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
(7/1/05) (12/31/05) DECEMBER 31, 2005
- --------------------------------------------------------------------------------
Class A Actual $1,000.00 $1,070.70 $4.60
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,020.77 4.49
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,066.50 9.31
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,016.23 9.09
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,066.50 9.31
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,016.23 9.09
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,069.30 6.80
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,018.65 6.64
- --------------------------------------------------------------------------------
Class Y Actual 1,000.00 1,072.10 3.87
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,021.48 3.78
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 184/365
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended December 31, 2005 are as follows:
CLASS EXPENSE RATIOS
- --------------------------
Class A 0.88%
- --------------------------
Class B 1.78
- --------------------------
Class C 1.78
- --------------------------
Class N 1.30
- --------------------------
Class Y 0.74
- --------------------------------------------------------------------------------
19 | OPPENHEIMER EQUITY FUND, INC.
STATEMENT OF INVESTMENTS December 31, 2005
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--99.2%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--14.4%
- --------------------------------------------------------------------------------
AUTO COMPONENTS--0.6%
Autoliv, Inc. 369,100 $ 16,764,522
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--1.2%
Carnival Corp. 254,600 13,613,462
- --------------------------------------------------------------------------------
Starbucks Corp. 1 578,900 17,372,789
-----------------
30,986,251
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES--0.5%
Harman International
Industries, Inc. 138,700 13,571,795
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--1.1%
eBay, Inc. 1 672,700 29,094,275
- --------------------------------------------------------------------------------
MEDIA--5.5%
Comcast Corp., Cl. A 1 618,700 16,061,452
- --------------------------------------------------------------------------------
Comcast Corp., Cl. A
Special, Non-Vtg. 1 978,700 25,142,803
- --------------------------------------------------------------------------------
Liberty Global, Inc.,
Series A 1,268,537 28,542,083
- --------------------------------------------------------------------------------
Liberty Global, Inc.,
Series C 1 1,919,637 40,696,304
- --------------------------------------------------------------------------------
News Corp., Inc.,
Cl. A 1,343,400 20,889,870
- --------------------------------------------------------------------------------
Univision
Communications, Inc.,
Cl. A 1 161,000 4,731,790
- --------------------------------------------------------------------------------
Walt Disney Co. (The) 422,100 10,117,737
-----------------
146,182,039
- --------------------------------------------------------------------------------
MULTILINE RETAIL--1.4%
Kohl's Corp. 1 324,900 15,790,140
- --------------------------------------------------------------------------------
Target Corp. 400,000 21,988,000
-----------------
37,778,140
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--2.9%
Best Buy Co., Inc. 290,700 12,639,636
- --------------------------------------------------------------------------------
Chico's FAS, Inc. 1 311,100 13,666,623
- --------------------------------------------------------------------------------
Staples, Inc. 1,456,800 33,083,928
- --------------------------------------------------------------------------------
Urban Outfitters, Inc. 1 117,800 2,981,518
- --------------------------------------------------------------------------------
Williams-Sonoma, Inc. 1 352,200 15,197,430
-----------------
77,569,135
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--1.2%
Nike, Inc., Cl. B 159,500 $ 13,843,005
- --------------------------------------------------------------------------------
Polo Ralph
Lauren Corp. 293,200 16,460,248
-----------------
30,303,253
- --------------------------------------------------------------------------------
CONSUMER STAPLES--5.1%
- --------------------------------------------------------------------------------
BEVERAGES--1.1%
Diageo plc,
Sponsored ADR 113,100 6,593,730
- --------------------------------------------------------------------------------
PepsiCo, Inc. 372,800 22,025,024
-----------------
28,618,754
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--0.5%
Wal-Mart Stores, Inc. 275,700 12,902,760
- --------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--1.1%
Colgate-Palmolive Co. 227,100 12,456,435
- --------------------------------------------------------------------------------
Procter & Gamble Co.
(The) 281,595 16,298,719
-----------------
28,755,154
- --------------------------------------------------------------------------------
TOBACCO--2.4%
Altria Group, Inc. 863,600 64,528,192
- --------------------------------------------------------------------------------
ENERGY--9.5%
- --------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--2.4%
Halliburton Co. 519,100 32,163,436
- --------------------------------------------------------------------------------
National Oilwell
Varco, Inc. 1 240,700 15,091,890
- --------------------------------------------------------------------------------
Transocean, Inc. 1 244,700 17,053,143
-----------------
64,308,469
- --------------------------------------------------------------------------------
OIL & GAS--7.1%
Amerada Hess Corp. 106,300 13,480,966
- --------------------------------------------------------------------------------
Apache Corp. 189,000 12,950,280
- --------------------------------------------------------------------------------
BP plc, ADR 883,500 56,738,370
- --------------------------------------------------------------------------------
EOG Resources, Inc. 73,200 5,370,684
- --------------------------------------------------------------------------------
Exxon Mobil Corp. 1,143,700 64,241,629
- --------------------------------------------------------------------------------
TotalFinaElf SA,
Sponsored ADR 183,600 23,207,040
- --------------------------------------------------------------------------------
XTO Energy, Inc. 293,700 12,905,178
-----------------
188,894,147
20 | OPPENHEIMER EQUITY FUND, INC.
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
FINANCIALS--19.7%
- --------------------------------------------------------------------------------
CAPITAL MARKETS--2.6%
UBS AG 736,100 $ 70,039,915
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--5.1%
Bank of America Corp. 567,592 26,194,371
- --------------------------------------------------------------------------------
Wachovia Corp. 872,000 46,093,920
- --------------------------------------------------------------------------------
Wells Fargo & Co. 1,020,500 64,118,015
-----------------
136,406,306
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--5.3%
Ameritrade
Holding Corp. 199,100 4,778,400
- --------------------------------------------------------------------------------
Capital One
Financial Corp. 403,200 34,836,480
- --------------------------------------------------------------------------------
Chicago Mercantile
Exchange (The) 7,900 2,903,171
- --------------------------------------------------------------------------------
Citigroup, Inc. 287,766 13,965,284
- --------------------------------------------------------------------------------
Goldman Sachs
Group, Inc. (The) 114,000 14,558,940
- --------------------------------------------------------------------------------
JPMorgan Chase & Co. 1,156,100 45,885,609
- --------------------------------------------------------------------------------
Legg Mason, Inc. 156,900 18,779,361
- --------------------------------------------------------------------------------
Lehman Brothers
Holdings, Inc. 41,900 5,370,323
-----------------
141,077,568
- --------------------------------------------------------------------------------
INSURANCE--5.3%
AFLAC, Inc. 279,800 12,988,316
- --------------------------------------------------------------------------------
American International
Group, Inc. 653,500 44,588,305
- --------------------------------------------------------------------------------
Everest Re Group Ltd. 140,400 14,089,140
- --------------------------------------------------------------------------------
Genworth Financial, Inc.,
Cl.A 952,200 32,927,076
- --------------------------------------------------------------------------------
Marsh & McLennan
Cos., Inc. 450,300 14,301,528
- --------------------------------------------------------------------------------
Platinum Underwriters
Holdings Ltd. 678,400 21,077,888
-----------------
139,972,253
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--1.4%
Countrywide Financial Corp. 573,100 19,594,289
- --------------------------------------------------------------------------------
Freddie Mac 254,400 16,625,040
-----------------
36,219,329
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HEALTH CARE--10.1%
- --------------------------------------------------------------------------------
BIOTECHNOLOGY--3.9%
Amgen, Inc. 1 257,900 $ 20,337,994
- --------------------------------------------------------------------------------
Genentech, Inc. 1 341,600 31,598,000
- --------------------------------------------------------------------------------
Genzyme Corp.
(General Division) 1 236,200 16,718,236
- --------------------------------------------------------------------------------
Gilead Sciences, Inc. 1 216,800 11,410,184
- --------------------------------------------------------------------------------
MedImmune, Inc. 1 318,600 11,157,372
- --------------------------------------------------------------------------------
Wyeth 283,300 13,051,631
-----------------
104,273,417
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--3.4%
Alcon, Inc. 108,600 14,074,560
- --------------------------------------------------------------------------------
Bard (C.R.), Inc. 80,500 5,306,560
- --------------------------------------------------------------------------------
Gen-Probe, Inc. 1 207,500 10,123,925
- --------------------------------------------------------------------------------
Kinetic Concepts, Inc. 1 173,300 6,890,408
- --------------------------------------------------------------------------------
Medtronic, Inc. 257,200 14,807,004
- --------------------------------------------------------------------------------
Varian Medical
Systems, Inc. 1 782,300 39,380,982
-----------------
90,583,439
- --------------------------------------------------------------------------------
PHARMACEUTICALS--2.8%
Novartis AG, ADR 418,200 21,947,136
- --------------------------------------------------------------------------------
Pfizer, Inc. 847,100 19,754,372
- --------------------------------------------------------------------------------
Sanofi-Aventis SA, ADR 726,900 31,910,910
-----------------
73,612,418
- --------------------------------------------------------------------------------
INDUSTRIALS--6.3%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--3.6%
General Dynamics Corp. 90,000 10,264,500
- --------------------------------------------------------------------------------
Honeywell International, Inc. 360,700 13,436,075
- --------------------------------------------------------------------------------
Raytheon Co. 140,000 5,621,000
- --------------------------------------------------------------------------------
United Technologies Corp. 1,197,600 66,957,816
-----------------
96,279,391
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--1.4%
Cendant Corp. 2,218,400 38,267,400
21 | OPPENHEIMER EQUITY FUND, INC.
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.3%
Rockwell Automation, Inc. 115,600 $ 6,838,896
- --------------------------------------------------------------------------------
MACHINERY--0.5%
Oshkosh Truck Corp. 276,400 12,324,676
- --------------------------------------------------------------------------------
MARINE--0.5%
UTI Worldwide, Inc. 145,000 13,461,800
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--26.1%
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--4.7%
Cisco Systems, Inc. 1 2,404,000 41,156,480
- --------------------------------------------------------------------------------
Corning, Inc. 1 1,750,000 34,405,000
- --------------------------------------------------------------------------------
F5 Networks, Inc. 1 195,000 11,152,050
- --------------------------------------------------------------------------------
Motorola, Inc. 870,500 19,664,595
- --------------------------------------------------------------------------------
QUALCOMM, Inc. 456,500 19,666,020
-----------------
126,044,145
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--4.9%
Apple Computer, Inc. 1 457,000 32,853,730
- --------------------------------------------------------------------------------
EMC Corp. 1 3,239,900 44,127,438
- --------------------------------------------------------------------------------
Hutchinson
Technology, Inc. 1 530,000 15,078,500
- --------------------------------------------------------------------------------
International Business
Machines Corp. 330,100 27,134,220
- --------------------------------------------------------------------------------
Network Appliance, Inc. 1 357,200 9,644,400
-----------------
128,838,288
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--2.7%
Google, Inc., Cl. A 1 94,100 39,038,326
- --------------------------------------------------------------------------------
VeriSign, Inc. 1 511,900 11,220,848
- --------------------------------------------------------------------------------
Yahoo!, Inc. 1 541,500 21,215,970
-----------------
71,475,144
- --------------------------------------------------------------------------------
IT SERVICES--0.9%
Cognizant Technology
Solutions Corp. 1 291,300 14,666,955
- --------------------------------------------------------------------------------
NAVTEQ Corp. 1 232,700 10,208,549
-----------------
24,875,504
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--2.4%
Applied Materials, Inc. 767,800 13,774,332
- --------------------------------------------------------------------------------
Broadcom Corp., Cl. A 1 544,600 25,677,890
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT Continued
International Rectifier Corp. 1 342,300 $ 10,919,370
- --------------------------------------------------------------------------------
Maxim Integrated Products, Inc. 358,600 12,995,664
-----------------
63,367,256
- --------------------------------------------------------------------------------
SOFTWARE--10.5%
Adobe Systems, Inc. 463,054 17,114,476
- --------------------------------------------------------------------------------
Amdocs Ltd. 1 355,900 9,787,250
- --------------------------------------------------------------------------------
Autodesk, Inc. 387,600 16,647,420
- --------------------------------------------------------------------------------
Microsoft Corp. 4,572,300 119,565,645
- --------------------------------------------------------------------------------
Novell, Inc. 1 1,929,415 17,036,734
- --------------------------------------------------------------------------------
SAP AG, Sponsored ADR 370,800 16,711,956
- --------------------------------------------------------------------------------
Synopsys, Inc. 1 1,799,500 36,097,970
- --------------------------------------------------------------------------------
Take-Two Interactive Software, Inc. 1 2,656,854 47,026,316
-----------------
279,987,767
- --------------------------------------------------------------------------------
MATERIALS--2.7%
- --------------------------------------------------------------------------------
CHEMICALS--2.1%
Monsanto Co. 290,300 22,506,959
- --------------------------------------------------------------------------------
Praxair, Inc. 613,000 32,464,480
-----------------
54,971,439
- --------------------------------------------------------------------------------
METALS & MINING--0.6%
Phelps Dodge Corp. 120,800 17,379,496
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--1.9%
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.9%
IDT Corp., Cl. B 1 1,367,837 16,003,693
- --------------------------------------------------------------------------------
NeuStar, Inc., Cl. A 1 356,700 10,875,783
- --------------------------------------------------------------------------------
Sprint Nextel Corp. 1,089,500 25,450,720
-----------------
52,330,196
- --------------------------------------------------------------------------------
UTILITIES--3.4%
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.9%
AES Corp. (The) 1 2,320,000 36,725,600
- --------------------------------------------------------------------------------
CMS Energy Corp. 1 1,099,900 15,959,549
- --------------------------------------------------------------------------------
PG&E Corp. 256,000 9,502,720
- --------------------------------------------------------------------------------
Reliant Energy, Inc. 1 1,460,400 15,071,328
-----------------
77,259,197
22 | OPPENHEIMER EQUITY FUND, INC.
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
GAS UTILITIES--0.5%
Sempra Energy 275,300 $ 12,344,451
-----------------
Total Common Stocks
(Cost $2,221,905,722) 2,638,486,577
DATE STRIKE CONTRACTS
- --------------------------------------------------------------------------------
OPTIONS PURCHASED--0.2%
- --------------------------------------------------------------------------------
Apple
Computer, Inc. Put 1 4/24/06 $ 75 942 744,180
- --------------------------------------------------------------------------------
Corning, Inc. Put 1 5/22/06 20 14,007 2,661,330
- --------------------------------------------------------------------------------
Genentech, Inc. Put 1 3/20/06 95 2,400 1,536,000
- --------------------------------------------------------------------------------
Varian Medical Systems,
Inc. Put 1 5/22/06
50 169 49,010
----------------
Total Options Purchased
(Cost $4,311,589) 4,990,520
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.8%
- --------------------------------------------------------------------------------
Undivided interest of 1.70% in joint
repurchase agreement (Principal Amount/
Value $1,203,488,000, with a maturity value of
$1,204,036,256) with UBS Warburg LLC,
4.10%, dated 12/30/05, to be repurchased
at $20,456,315 on 1/3/06, collateralized by
Federal Home Loan Mortgage Corp.,
5%--5.50%, 1/1/35--11/1/35, with a value
of $565,118,538 and Federal National
Mortgage Assn., 5.50%--6%,
11/1/34--1/1/36, with a
value of $676,946,908
(Cost $20,447,000) $20,447,000 $ 20,447,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE
(COST $2,246,664,311) 100.2% 2,663,924,097
- --------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF
OTHER ASSETS (0.2) (5,391,347)
-------------------------------
NET ASSETS 100.0% $ 2,658,532,750
===============================
FOOTNOTE TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | OPPENHEIMER EQUITY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES December 31, 2005
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------
Investments, at value (cost $2,246,664,311)--see accompanying statement
of investments $2,663,924,097
- -------------------------------------------------------------------------------------------
Cash 1,509,855
- -------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 33,942,545
Shares of capital stock sold 2,545,790
Interest and dividends 1,876,274
Other 72,269
--------------
Total assets 2,703,870,830
- -------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 40,760,411
Shares of capital stock redeemed 2,530,362
Distribution and service plan fees 1,417,224
Transfer and shareholder servicing agent fees 318,087
Shareholder communications 201,371
Directors' compensation 52,313
Other 58,312
--------------
Total liabilities 45,338,080
- -------------------------------------------------------------------------------------------
NET ASSETS $2,658,532,750
==============
- -------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- -------------------------------------------------------------------------------------------
Par value of shares of capital stock $ 25,409,163
- -------------------------------------------------------------------------------------------
Additional paid-in capital 2,190,993,665
- -------------------------------------------------------------------------------------------
Accumulated net investment income 1,062,287
- -------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 23,807,849
- -------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 417,259,786
--------------
NET ASSETS $2,658,532,750
==============
24 | OPPENHEIMER EQUITY FUND, INC.
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- ----------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $2,297,160,668
and 218,561,604 shares of capital stock outstanding) $10.51
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $11.15
- ----------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $206,957,066 and 20,515,389 shares
of capital stock outstanding) $10.09
- ----------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $76,678,956 and 7,596,849 shares
of capital stock outstanding) $10.09
- ----------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $18,813,696 and 1,813,111 shares
of capital stock outstanding) $10.38
- ----------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets of
$58,922,364 and 5,604,679 shares of capital stock outstanding) $10.51
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER EQUITY FUND, INC.
STATEMENT OF OPERATIONS For the Year Ended December 31, 2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $307,764) $ 32,252,463
- --------------------------------------------------------------------------------
Interest 826,562
- --------------------------------------------------------------------------------
Other income 72,937
--------------
Total investment income 33,151,962
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 13,796,095
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 4,623,893
Class B 2,247,375
Class C 750,560
Class N 81,217
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 2,750,468
Class B 474,502
Class C 168,133
Class N 38,972
Class Y 117,651
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 393,707
Class B 100,208
Class C 20,624
Class N 1,882
- --------------------------------------------------------------------------------
Directors' compensation 43,658
- --------------------------------------------------------------------------------
Custodian fees and expenses 25,912
- --------------------------------------------------------------------------------
Administration service fees 1,500
- --------------------------------------------------------------------------------
Other 209,714
-------------
Total expenses 25,846,071
Less reduction to custodian expenses (1,403)
--------------
Net expenses 25,844,668
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 7,307,294
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
- --------------------------------------------------------------------------------
Net realized gain on investments 253,224,426
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on investments (59,842,214)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 200,689,506
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER EQUITY FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2005 2004
- --------------------------------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------------------------------
Net investment income $ 7,307,294 $ 12,852,271
- --------------------------------------------------------------------------------------------------------
Net realized gain 253,224,426 275,451,300
- --------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (59,842,214) (20,377,609)
-----------------------------------
Net increase in net assets resulting from operations 200,689,506 267,925,962
- --------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (8,377,228) (12,499,114)
Class B -- --
Class C -- --
Class N (9,984) (24,732)
Class Y (291,835) (391,988)
- --------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (235,402,558) (193,031,939)
Class B (21,960,062) (23,068,440)
Class C (8,113,958) (6,799,567)
Class N (1,928,967) (1,346,939)
Class Y (5,988,136) (4,861,644)
- --------------------------------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS
- --------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from capital stock
transactions:
Class A 94,842,730 (36,291,319)
Class B (48,827,246) (65,902,307)
Class C 2,158,473 1,729,988
Class N 4,151,479 2,094,158
Class Y 3,850,529 500,196
- --------------------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------------
Total decrease (25,207,257) (71,967,685)
- --------------------------------------------------------------------------------------------------------
Beginning of period 2,683,740,007 2,755,707,692
-----------------------------------
End of period (including accumulated net investment income of
$1,062,287 and $2,024,745, respectively) $ 2,658,532,750 $ 2,683,740,007
===================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER EQUITY FUND, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED DECEMBER 31, 2005 2004 2003 2002 2001
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.84 $ 10.77 $ 8.53 $ 10.40 $ 11.78
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income .04 1 .07 1 .02 .03 .08
Net realized and unrealized gain (loss) .86 1.07 2.22 (1.88) (1.31)
-----------------------------------------------------------------------------------
Total from investment operations .90 1.14 2.24 (1.85) (1.23)
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment (.04) (.07) -- (.02) (.11)
income
Distributions from net realized gain (1.19) (1.00) -- -- (.04)
-----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.23) (1.07) -- (.02) (.15)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.51 $ 10.84 $ 10.77 $ 8.53 $ 10.40
===================================================================================
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 8.16% 10.73% 3 26.26% (17.80)% (10.43)%
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $2,297,161 $2,270,477 $2,283,036 $1,933,397 $2,665,614
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $2,238,135 $2,248,969 $2,035,816 $2,255,746 $2,847,999
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.38% 0.61% 0.19% 0.29% 0.66%
Total expenses 0.89% 5 0.89% 5 0.90% 5,6 0.96% 5 0.90% 5
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 75% 91% 108% 95% 116%
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.
28 | OPPENHEIMER EQUITY FUND, INC.
CLASS B YEAR ENDED DECEMBER 31, 2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.51 $ 10.51 $ 8.39 $ 10.30 $ 11.65
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.05) 1 (.04) 1 (.08) (.05) (.01)
Net realized and unrealized gain (loss) .82 1.04 2.20 (1.86) (1.29)
----------------------------------------------------------------------------
Total from investment operations .77 1.00 2.12 (1.91) (1.30)
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- -- -- -- (.01)
Distributions from net realized gain (1.19) (1.00) -- -- (.04)
----------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.19) (1.00) -- -- (.05)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.09 $ 10.51 $ 10.51 $ 8.39 $ 10.30
============================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.16% 9.70% 3 25.27% (18.54)% (11.15)%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 206,957 $ 263,376 $ 327,809 $ 334,345 $ 570,715
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 224,966 $ 283,662 $ 315,065 $ 430,844 $ 658,336
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (0.52)% (0.35)% (0.73)% (0.55)% (0.13)%
Total expenses 1.79% 5 1.81% 5,6 1.83% 5,6 1.80% 5 1.69% 5
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 75% 91% 108% 95% 116%
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. 0.11% 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%.
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.
29 | OPPENHEIMER EQUITY FUND, INC.
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS C YEAR ENDED DECEMBER 31, 2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.51 $ 10.51 $ 8.40 $ 10.30 $ 11.67
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.05) 1 (.03) 1 (.07) (.06) (.01)
Net realized and unrealized gain (loss) .82 1.03 2.18 (1.84) (1.30)
----------------------------------------------------------------------------
Total from investment operations .77 1.00 2.11 (1.90) (1.31)
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- -- -- -- (.02)
Distributions from net realized gain (1.19) (1.00) -- -- (.04)
----------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.19) (1.00) -- -- (.06)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.09 $ 10.51 $ 10.51 $ 8.40 $ 10.30
============================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.16% 9.70% 3 25.12% (18.45)% (11.24)%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 76,679 $ 77,438 $ 75,620 $ 62,561 $ 90,440
- ----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 75,144 $ 74,618 $ 66,739 $ 74,785 $ 98,104
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (0.52)% (0.31)% (0.74)% (0.56)% (0.13)%
Total expenses 1.79% 5 1.80% 5 1.84% 5,6 1.81% 5 1.69% 5
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 75% 91% 108% 95% 116%
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.
30 | OPPENHEIMER EQUITY FUND, INC.
CLASS N YEAR ENDED DECEMBER 31, 2005 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 (loss) -- 2,3 .02 2 -- 3 .07 .02
Net realized and unrealized gain (loss) .85 1.05 2.20 (1.95) (.88)
----------------------------------------------------------------------------
Total from investment operations .85 1.07 2.20 (1.88) (.86)
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.01) (.02) -- -- (.12)
Distributions from net realized gain (1.19) (1.00) -- -- (.04)
----------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.20) (1.02) -- -- (.16)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.38 $ 10.73 $ 10.68 $ 8.48 $ 10.36
============================================================================
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4 7.72% 10.19% 5 25.94% (18.15)% (7.54)%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 18,814 $ 15,347 $ 13,145 $ 4,278 $ 1,368
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 16,262 $ 14,488 $ 9,062 $ 3,519 $ 593
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 6
Net investment income (loss) (0.02)% 0.16% (0.20)% (0.10)% 0.20%
Total expenses 1.29% 7 1.35% 7 1.33% 7,8 1.30% 7 1.23% 7
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 75% 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.
31 | OPPENHEIMER EQUITY FUND, INC.
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS Y YEAR ENDED DECEMBER 31, 2005 2004 2003 2002 2001
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.85 $ 10.78 $ 8.52 $ 10.40 $ 11.78
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .06 1 .08 1 .03 .03 .09
Net realized and unrealized gain (loss) .85 1.07 2.23 (1.88) (1.31)
----------------------------------------------------------------------------
Total from investment operations .91 1.15 2.26 (1.85) (1.22)
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.06) (.08) -- (.03) (.12)
Distributions from net realized gain (1.19) (1.00) -- -- (.04)
----------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.25) (1.08) -- (.03) (.16)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.51 $ 10.85 $ 10.78 $ 8.52 $ 10.40
============================================================================
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 8.20% 10.87% 3 26.53% (17.79)% (10.29)%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 58,922 $ 57,103 $ 56,098 $ 43,016 $ 49,223
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 54,643 $ 54,905 $ 48,017 $ 45,669 $ 50,147
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.51% 0.74% 0.27% 0.36% 0.80%
Total expenses 0.75% 0.76% 0.84% 0.97% 0.80%
Expenses after payments and waivers and
reduction to custodian expenses 0.75% 0.76% 0.84% 0.88% 0.76%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 75% 91% 108% 95% 116%
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.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32 | OPPENHEIMER EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Directors. Securities listed or traded on National
Stock Exchanges or other domestic exchanges are valued based on the last sale
price of the security traded on that exchange prior to the time when the Fund's
assets are valued. Securities traded on NASDAQ are valued based on the closing
price provided by NASDAQ prior to the time when the Fund's assets are valued. In
the absence of a sale, the security is valued at the last sale price on the
prior trading day, if it is within the spread of the closing "bid" and "asked"
prices, and if not, at the closing bid price. Securities traded on foreign
exchanges are valued based on the last sale price on the principal exchange on
which the security is traded, in the country that is identified by the portfolio
pricing service, prior to the time when the Fund's assets are valued. In the
absence of a sale, the security is valued at the official closing price on the
principal exchange. Corporate, government and municipal debt instruments having
a remaining maturity in excess of sixty days and all mortgage-backed securities
will be valued at the mean between the "bid" and "asked" prices. Futures
contracts traded on a commodities or futures exchange will be valued at the
final settlement price or official closing price on the principal exchange as
reported by
33 | OPPENHEIMER EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
such principal exchange at its trading session ending at, or most recently prior
to, the time when the Fund's assets are valued. Securities (including restricted
securities) for which market quotations are not readily available are valued at
their fair value. Foreign and domestic securities whose values have been
materially affected by what the Manager identifies as a significant event
occurring before the Fund's assets are valued but after the close of their
respective exchanges will be fair valued. Fair value is determined in good faith
using consistently applied procedures under the supervision of the Board of
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.
34 | OPPENHEIMER EQUITY FUND, INC.
Operating expenses directly attributable to a specific class are charged against
the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2 TAX PURPOSES
-----------------------------------------------------------------------
$7,718,835 $23,261,452 $-- $411,168,424
1. During the fiscal year ended December 31, 2005, the Fund did not utilize any
capital loss carryforward.
2. During the fiscal year ended December 31, 2004, the Fund did not utilize any
capital loss carryforward.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for December 31, 2005. Net assets of
the Fund were unaffected by the reclassifications.
REDUCTION
INCREASE TO ACCUMULATED NET
INCREASE TO ACCUMULATED NET REALIZED GAIN
TO PAID-IN CAPITAL INVESTMENT INCOME ON INVESTMENTS 3
-----------------------------------------------------------------------
$2,638,236 $409,295 $3,047,531
3. $2,638,236, including $2,054,072 of long-term capital gain, was distributed
in connection with Fund share redemptions.
The tax character of distributions paid during the years ended December 31, 2005
and December 31, 2004 was as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
-----------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 55,468,823 $ 47,446,573
Long-term capital gain 226,603,905 194,577,790
------------------ ------------------
Total $ 282,072,728 $ 242,024,363
================== ==================
35 | OPPENHEIMER EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of December 31, 2005 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
Federal tax cost of securities $2,252,755,673
==============
Gross unrealized appreciation $ 475,093,111
Gross unrealized depreciation (63,924,687)
--------------
Net unrealized appreciation $ 411,168,424
==============
- --------------------------------------------------------------------------------
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 shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts to the extent they are not
offset by positive cash balances maintained by the Fund. The Reduction to
Custodian Expenses line item, if applicable, represents earn-
36 | OPPENHEIMER EQUITY FUND, INC.
ings 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:
YEAR ENDED DECEMBER 31, 2005 YEAR ENDED DECEMBER 31, 2004
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------
CLASS A
Sold 19,117,161 $ 210,257,636 16,901,749 $ 185,192,613
Dividends and/or
distributions reinvested 21,344,622 227,960,561 18,039,458 192,300,622
Redeemed (31,315,542) (343,375,467) (37,463,254) (413,784,554)
-------------------------------------------------------------
Net increase (decrease) 9,146,241 $ 94,842,730 (2,522,047) $ (36,291,319)
=============================================================
- ----------------------------------------------------------------------------------------
CLASS B
Sold 2,073,392 $ 21,912,342 2,437,456 $ 25,911,712
Dividends and/or
distributions reinvested 2,061,271 21,148,674 2,123,242 21,954,332
Redeemed (8,682,017) (91,888,262) (10,696,846) (113,768,351)
-------------------------------------------------------------
Net decrease (4,547,354) $ (48,827,246) (6,136,148) $ (65,902,307)
=============================================================
- ----------------------------------------------------------------------------------------
CLASS C
Sold 1,101,782 $ 11,640,730 1,135,960 $ 12,073,146
Dividends and/or
distributions reinvested 748,437 7,678,961 615,613 6,365,440
Redeemed (1,619,832) (17,161,218) (1,580,226) (16,708,598)
-------------------------------------------------------------
Net increase 230,387 $ 2,158,473 171,347 $ 1,729,988
=============================================================
- ----------------------------------------------------------------------------------------
CLASS N
Sold 723,526 $ 7,879,430 450,447 $ 4,860,232
Dividends and/or
distributions reinvested 183,266 1,933,460 129,327 1,364,409
Redeemed (524,199) (5,661,411) (380,457) (4,130,483)
-------------------------------------------------------------
Net increase 382,593 $ 4,151,479 199,317 $ 2,094,158
=============================================================
37 | OPPENHEIMER EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS Continued
- -------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2005 YEAR ENDED DECEMBER 31, 2004
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------
CLASS Y
Sold 1,103,271 $ 12,277,652 918,917 $ 10,070,591
Dividends and/or
distributions
reinvested 588,012 6,279,970 492,374 5,253,631
Redeemed (1,351,687) (14,707,093) (1,352,243) (14,824,026)
-----------------------------------------------------------
Net increase 339,596 $ 3,850,529 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 year ended December 31, 2005, were as
follows:
PURCHASES SALES
-----------------------------------------------------------
Investment securities $1,935,231,962 $2,223,588,087
- --------------------------------------------------------------------------------
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 SERVICE FEES. The Fund pays the Manager a fee of $1,500 per year
for preparing and filing the Fund's tax returns.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended December 31, 2005, the Fund paid
$3,566,012 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $10,000 per
annum for assets of $10 million or more. The Class Y shares are subject to the
minimum fees in the event that the per account fee does not equal or exceed the
applicable minimum fees. OFS may voluntarily waive the minimum fees.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
periodically at an annual rate of up to 0.25% of the average annual net assets
of Class A shares of the Fund. The Distributor currently uses all of those fees
to pay dealers, brokers, banks and other financial institutions periodically for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor
38 | OPPENHEIMER EQUITY FUND, INC.
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% on Class B and
Class C shares and 0.25% on Class N shares. The Distributor also receives a
service fee of 0.25% per year under each plan. If either the Class B, Class C or
Class N plan is terminated by the Fund or by the shareholders of a class, the
Board of Directors and its independent directors must determine whether the
Distributor shall be entitled to payment from the Fund of all or a portion of
the service fee and/or asset-based sales charge in respect to shares sold prior
to the effective date of such termination. The Distributor's aggregate
uncompensated expenses under the plan at December 31, 2005 for Class C and Class
N shares were $2,045,745 and $283,054, 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
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- --------------------------------------------------------------------------------------------------------
December 31, 2005 $ 412,352 $ 1,076 $ 399,047 $ 11,012 $ 8,055
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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
39 | OPPENHEIMER EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS Continued
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- --------------------------------------------------------------------------------
5. LITIGATION Continued
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.
40 | OPPENHEIMER EQUITY FUND, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF OPPENHEIMER EQUITY FUND, INC.:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Equity Fund, Inc., including the statement of investments, as of
December 31, 2005, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the periods presented. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Fund is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audit includes consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of December 31, 2005, by correspondence with the
custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Equity Fund, Inc. as of December 31, 2005, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the periods presented, in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Denver, Colorado
February 13, 2006
41 | OPPENHEIMER EQUITY FUND, INC.
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2006, if applicable, shareholders of record received information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2005. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Capital gain distributions of $0.9878 per share were paid to Class A,
Class B, Class C, Class N and Class Y shareholders, respectively, on December
14, 2005. Whether received in stock or in cash, the capital gain distribution
should be treated by shareholders as a gain from the sale of the capital assets
held for more than one year (long-term capital gains).
Dividends, if any, paid by the Fund during the fiscal year ended December
31, 2005 which are not designated as capital gain distributions should be
multiplied by 51.96% to arrive at the amount eligible for the corporate
dividend-received deduction.
A portion, if any, of the dividends paid by the Fund during the fiscal
year ended December 31, 2005 which are not designated as capital gain
distributions are eligible for lower individual income tax rates to the extent
that the Fund has received qualified dividend income as stipulated by recent tax
legislation. $32,149,789 of the Fund's fiscal year taxable income may be
eligible for the lower individual income tax rates. In early 2006, shareholders
of record will receive information regarding the percentage of distributions
that are eligible for lower individual income tax rates.
Recent tax legislation allows a regulated investment company to designate
distributions not designated as capital gain distributions, as either interest
related dividends or short-term capital gain dividends, both of which are exempt
from the U.S. withholding tax applicable to non U.S. taxpayers. For the fiscal
year ended December 31, 2005, $190,349 or 2.19% of the ordinary distributions
paid by the Fund qualifies as an interest related dividend and $46,789,776 or
100% of the short-term capital gain distribution paid by the Fund qualifies as a
short-term capital gain dividend.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
42 | 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 the Form N-PX filing on the SEC's website at
www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
43 | 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
investment advisory agreement (the "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 Agreement. The Board employs an independent consultant to prepare a
report that provides information, including comparative information, that the
Board requests for that purpose. In addition, the Board receives information
throughout the year regarding Fund services, fees, expenses and performance.
The Manager and the independent consultant provided information to the
Board on the following factors: (i) the nature, quality and extent of the
Manager's services, (ii) the investment performance of the Fund and the Manager,
(iii) the fees and expenses of the Fund, including comparative expense
information, (iv) the profitability of the Manager, including an analysis of the
cost of providing services, (v) whether economies of scale are realized as the
Fund grows and whether fee levels reflect these economies of scale for Fund
investors and (vi) other benefits to the Manager from its relationship with the
Fund. Outlined below is a summary of the principal information considered by the
Board as well as the Board's conclusions.
NATURE, QUALITY, AND EXTENT OF SERVICES. The Board considered information
on the nature and extent of the services provided to the Fund and information
regarding the Manager's key personnel that provide such services. The Manager's
duties include providing the Fund with 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; securities trading
services; oversight of third party service providers; monitoring compliance with
applicable Fund policies and procedures and adherence to the Fund's investment
restrictions. The Manager is responsible for providing certain administrative
services to the Fund as well. Those services include providing and supervising
all administrative and clerical personnel that are necessary in order to provide
effective corporate administration for the Fund; compiling and maintaining
records with respect to the Fund's operations; preparing and filing reports
required by the Securities and Exchange Commission; preparing periodic reports
regarding the operations of the Fund for its shareholders; preparing proxy
materials for shareholder meetings; and preparing the registration statements
required by Federal and state securities laws for the sale of the Fund's shares.
The Manager also provides the Fund with office space, facilities and equipment.
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
took account of the fact
44 | OPPENHEIMER EQUITY FUND, INC.
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 has
received regarding the experience and professional qualifications of the
Manager's key personnel and the size and functions of its staff providing
investment management services to the Fund. The Board also considered compliance
reports from the Fund's Chief Compliance Officer. In its evaluation of the
quality of the portfolio management services provided, the Board considered the
experience of Chris Leavy and David Poiesz and the Manager's Value and Growth
investment teams and analysts. Messrs. Leavy and Poiesz have had over 13 and 26
years of experience, respectively, managing equity investments. The Board
members also considered the totality of their experiences with the Manager, as
directors or trustees of the Fund and other funds advised by the Manager. In
light of the foregoing, the Board concluded that the Fund benefits from the
services provided under the Agreement as a result of the Manager's experience,
reputation, personnel, operations, and resources.
INVESTMENT PERFORMANCE OF THE MANAGER AND THE FUND. During the year, the
Manager provided information on the performance of the Fund and the Manager at
each Board meeting, including comparative performance information. 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 noted that the Fund's one-year, three-year, five-year and ten-year
performance were all better than its peer group median.
COSTS OF SERVICES AND PROFITS REALIZED BY THE MANAGER. The Board
considered information regarding the Manager's costs in serving as the Fund's
investment adviser, including the costs associated with the personnel and
systems necessary to manage the Fund, and information regarding the Manager's
profitability from its relationship with the Fund. The Board reviewed the fees
paid to the Manager and the other expenses borne by the Fund. The Board also
evaluated the comparability of the fees charged and the services provided to the
Fund to the fees and services for other clients or accounts advised by the
Manager. 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 contractual and actual management fees and its total expenses are all
lower than its peer group average The Board also evaluated the comparability of
the fees charged and the services provided to the Fund to the fees and services
for other clients or accounts advised by the Manager. The Board noted
45 | OPPENHEIMER EQUITY FUND, INC.
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
that the Fund's contractual and actual management fees and total expenses are
all lower than its peer group median and average In light of this, the Board
concluded that the management fee was reasonable.
ECONOMIES OF SCALE. The Board considered whether the Manager may realize
economies of scale in managing and supporting the Fund, whether those economies
of scale benefit the Fund's shareholders and the current level of Fund assets in
relation to the Fund's management fee breakpoints, which are intended to share
with shareholders economies of scale that may exist as the Fund grows.
OTHER BENEFITS TO THE MANAGER. In addition to considering the profits
realized by the Manager, 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). The Board also considered the
nature and quality of services provided by affiliates of the Manager, which it
reviews at other times during the year in connection with the renewal of the
Fund's service agreements. 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.
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,
decided 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.
46 | OPPENHEIMER EQUITY FUND, INC.
DIRECTORS AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NAME, POSITION(S) HELD PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS;
WITH THE FUND, LENGTH OTHER TRUSTEESHIPS/DIRECTORSHIPS HELD; NUMBER OF
OF SERVICE, AGE PORTFOLIOS IN THE FUND COMPLEX CURRENTLY OVERSEEN
INDEPENDENT DIRECTORS THE ADDRESS OF EACH DIRECTOR IN THE CHART BELOW IS
6803 S. TUCSON WAY, CENTENNIAL, COLORADO 80112-3924.
EACH DIRECTOR SERVES FOR AN INDEFINITE TERM, OR
UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR
REMOVAL.
WILLIAM L. ARMSTRONG, Chairman of the following private mortgage banking
Chairman of the Board companies: Cherry Creek Mortgage Company (since
of Directors (since 2003) 1991), Centennial State Mortgage Company (since
and Director (since 1999) 1994), and The El Paso Mortgage Company (since
Age: 68 1993); Chairman of the following private
companies: Ambassador Media Corporation (since 1984)
and Broadway Ventures (since 1984); Director of the
following: Helmerich & Payne, Inc. (oil and gas
drilling/production company) (since 1992), Campus
Crusade for Christ (since 1991) and The Lynde and
Harry Bradley Foundation, Inc. (non-profit
organization) (since 2002); former Chairman of the
following: Transland Financial Services, Inc.
(private mortgage banking company) (1997-2003),
Great Frontier Insurance (insurance agency)
(1995-2000), Frontier Real Estate, Inc. (residential
real estate brokerage) (1994-2000) and Frontier
Title (title insurance agency) (1995-2000); former
Director of the following: UNUMProvident
(insurance company) (1991-2004), Storage Technology
Corporation (computer equipment company) (1991-2003)
and International Family Entertainment
(television channel) (1992-1997); U.S. Senator
(January 1979-January 1991). Oversees 38 portfolios
in the OppenheimerFunds complex.
ROBERT G. AVIS, Director and President of A.G. Edwards Capital, Inc.
Director (since 1993) (General Partner of private equity funds) (until
Age: 74 February 2001); Chairman, President and Chief
Executive Officer of A.G. Edwards Capital, Inc.
(until March 2000); Director of A.G. Edwards & Sons,
Inc. (brokerage company) (until 2000) and A.G.
Edwards Trust Company (investment adviser) (until
2000); Vice Chairman and Director of A.G. Edwards,
Inc. (until March 1999); Vice Chairman of A.G.
Edwards & Sons, Inc. (until March 1999); Chairman of
A.G. Edwards Trust Company (until March 1999) and
A.G.E. Asset Management (investment adviser) (until
March 1999). Oversees 38 portfolios in the
OppenheimerFunds complex.
GEORGE C. BOWEN, Assistant Secretary and Director of Centennial Asset
Director (since 1998) Management Corporation (December 1991-April 1999);
Age: 69 President, Treasurer and Director of Centennial
Capital Corporation (June 1989-April 1999); Chief
Executive Officer and Director of MultiSource
Services, Inc. (March 1996-April 1999); Mr. Bowen
held several positions with the Manager and with
subsidiary or affiliated companies of the Manager
(September 1987-April 1999). Oversees 38 portfolios
in the OppenheimerFunds complex.
EDWARD L. CAMERON, Member of The Life Guard of Mount Vernon (George
Director (since 1999) Washington historical site) (since June 2000);
Age: 67 Director of Genetic ID, Inc. (biotech company)
(March 2001-May 2002); Partner at
PricewaterhouseCoopers LLP (accounting firm) (July
1974-June 1999); Chairman of Price Waterhouse LLP
Global Investment Management Industry Services Group
(July 1994-June 1998). Oversees 38 portfolios in
the OppenheimerFunds complex.
JON S. FOSSEL, Director of UNUMProvident (insurance company) (since
Director (since 1990) June 2002); Director of Northwestern Energy Corp.
Age: 64 (public utility corporation) (since November 2004);
Director of P.R. Pharmaceuticals (October
1999-October 2003); Director of Rocky Mountain Elk
Foundation (non-profit organization) (February 1998-
February 2003); Chairman and Director (until October
1996) and President and Chief Executive Officer
(until October 1995) of the Manager; President,
Chief Executive Officer and Director of the
following: Oppenheimer Acquisition Corp.
47 | OPPENHEIMER EQUITY FUND, INC.
DIRECTORS AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
JON S. FOSSEL, ("OAC") (parent holding company of the Manager),
Continued Shareholders Services, Inc. and Shareholder
Financial Services, Inc. (until October 1995).
Oversees 38 portfolios in the OppenheimerFunds
complex.
SAM FREEDMAN, Director of Colorado Uplift (charitable
Director (since 1996) organization) (since September 1984). Mr. Freedman
Age: 65 held several positions with the Manager and with
subsidiary or affiliated companies of the Manager
(until October 1994). Oversees 38 portfolios in
the OppenheimerFunds complex.
BEVERLY L. HAMILTON, Trustee of Monterey Institute for International
Director (since 2002) Studies (educational organization) (since February
Age: 59 2000); Director of The California Endowment
(philanthropic organization) (since April 2002);
Director of Community Hospital of Monterey Peninsula
(since February 2002); Vice Chair of American Funds'
Emerging Markets Growth Fund, Inc. (mutual fund)
(since October 1991); President of ARCO Investment
Management Company (February 1991-April 2000);
Member of the investment committees of The
Rockefeller Foundation and The University of
Michigan; Advisor at Credit Suisse First Boston's
Sprout venture capital unit (venture capital fund)
(1994-January 2005); Trustee of MassMutual
Institutional Funds (investment company) (1996-June
2004); Trustee of MML Series Investment Fund
(investment company) (April 1989-June 2004); Member
of the investment committee of Hartford Hospital
(2000-2003); and Advisor to Unilever (Holland)
pension fund (2000-2003). Oversees 38 portfolios in
the OppenheimerFunds complex.
ROBERT J. MALONE, Director of Jones International University
Director (since 2002) (educational organization) (since August 2005);
Age: 61 Chairman, Chief Executive Officer and Director of
Steele Street State Bank (commercial banking) (since
August 2003); Director of Colorado UpLIFT
(charitable organization) (since 1986); Trustee of
the Gallagher Family Foundation (non-profit
organization) (since 2000); Former Chairman of U.S.
Bank-Colorado (subsidiary of U.S. Bancorp and
formerly Colorado National Bank) (July 1996-April
1999); Director of Commercial Assets, Inc. (real
estate investment trust) (1993-2000); Director of
Jones Knowledge, Inc. (2001-July 2004); and Director
of U.S. Exploration, Inc. (oil and gas exploration)
(1997-February 2004). Oversees 38 portfolios in the
OppenheimerFunds complex.
F. WILLIAM MARSHALL, JR., Trustee of MassMutual Select Funds (formerly
Director (since 2000) MassMutual Institutional Funds) (investment company)
Age: 63 (since 1996) and MML Series Investment Fund
(investment company) (since 1996), Trustee and
Chairman of the Investment Committee (since 1994) of
the Worcester Polytech Institute (private
university); President and Treasurer of the SIS
Funds (private charitable fund) (since January
1999); Chairman of SIS & Family Bank, F.S.B.
(formerly SIS Bank) (commercial bank) (January
1999-July 1999); Member of the Investment Committee
of the Community Foundation of Western Massachusetts
(1998-2003); and Executive Vice President of Peoples
Heritage Financial Group, Inc. (commercial bank)
(January 1999-July 1999). Oversees 40 portfolios in
the OppenheimerFunds complex.
48 | OPPENHEIMER EQUITY FUND, INC.
- --------------------------------------------------------------------------------
INTERESTED DIRECTOR THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL
AND OFFICER CENTER, 225 LIBERTY STREET, 11TH FLOOR, NEW YORK,
NEW YORK 10281-1008. MR. MURPHY SERVES AS A DIRECTOR
FOR AN INDEFINITE TERM, OR UNTIL HIS RESIGNATION,
RETIREMENT, DEATH OR REMOVAL AND AS AN OFFICER FOR
AN ANNUAL TERM, OR UNTIL HIS RESIGNATION,
RETIREMENT, DEATH OR REMOVAL. MR. MURPHY IS AN
INTERESTED DIRECTOR DUE TO HIS POSITIONS WITH
OPPENHEIMERFUNDS, INC. AND ITS AFFILIATES.
JOHN V. MURPHY, Chairman, Chief Executive Officer and Director
President and Director (since June 2001) and President (since September
(since 2001) 2000) of the Manager; President and Director or
Age: 56 Trustee of other Oppenheimer funds; President and
Director of OAC and of Oppenheimer Partnership
Holdings, Inc. (holding company subsidiary of the
Manager) (since July 2001); Director of
OppenheimerFunds Distributor, Inc. (subsidiary of
the Manager) (since November 2001); Chairman and
Director of Shareholder Services, Inc. and of
Shareholder Financial Services, Inc. (transfer agent
subsidiaries of the Manager) (since July 2001);
President and Director of OppenheimerFunds Legacy
Program (charitable trust program established by the
Manager) (since July 2001); Director of the
following investment advisory subsidiaries of the
Manager: OFI Institutional Asset Management, Inc.,
Centennial Asset Management Corporation, Trinity
Investment Management Corporation and Tremont
Capital Management, Inc. (since November 2001),
HarbourView Asset Management Corporation and OFI
Private Investments, Inc. (since July 2001);
President (since November 2001) and Director (since
July 2001) of Oppenheimer Real Asset Management,
Inc.; Executive Vice President of Massachusetts
Mutual Life Insurance Company (OAC's parent company)
(since February 1997); Director of DLB Acquisition
Corporation (holding company parent of Babson
Capital Management LLC) (since June 1995); Member of
the Investment Company Institute's Board of
Governors (since October 3, 2003); Chief Operating
Officer of the Manager (September 2000-June 2001);
President and Trustee of MML Series Investment Fund
and MassMutual Select Funds (open-end investment
companies) (November 1999-November 2001); Director
of C.M. Life Insurance Company (September
1999-August 2000); President, Chief Executive
Officer and Director of MML Bay State Life Insurance
Company (September 1999-August 2000); Director of
Emerald Isle Bancorp and Hibernia Savings Bank
(wholly-owned subsidiary of Emerald Isle Bancorp)
(June 1989-June 1998). Oversees 87 portfolios in the
OppenheimerFunds complex.
- --------------------------------------------------------------------------------
OTHER OFFICERS THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE
OF THE FUND AS FOLLOWS: FOR MESSRS. LEAVY, POIESZ AND ZACK, TWO
WORLD FINANCIAL CENTER, 225 LIBERTY STREET, NEW
YORK, NEW YORK 10281-1008, FOR MESSRS. VANDEHEY AND
WIXTED, 6803 S. TUCSON WAY, CENTENNIAL, COLORADO
80112-3924. EACH OFFICER SERVES FOR AN ANNUAL TERM
OR UNTIL HIS OR HER RESIGNATION, RETIREMENT DEATH OR
REMOVAL.
CHRISTOPHER LEAVY, Senior Vice President of the Manager since September
Vice President and 2000; portfolio manager of Morgan Stanley Dean
Portfolio Manager Witter Investment Management (1997-September 2000).
(since 2000) An officer of 8 portfolios in the OppenheimerFunds
Age: 34 complex.
DAVID POIESZ, Senior Vice President of the Manager since June
Vice President and 2004; senior portfolio manager at Merrill Lynch.
Portfolio Manager (October 2002-May 2004); founding partner of
(since 2004) RiverRock, a hedge fund product; (April 1999-July
Age: 47 2001); portfolio manager at Jennison Associates
(November 1992-March 1999). An officer of 2
portfolios in the OppenheimerFunds complex.
49 | OPPENHEIMER EQUITY FUND, INC.
DIRECTORS AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer
Vice President and of the Manager (since March 2004); Vice President of
Chief Compliance Officer OppenheimerFunds Distributor, Inc., Centennial Asset
(since 2004) Management Corporation and Shareholder Services,
Age: 55 Inc. (since June 1983); Vice President and Director
of Internal Audit of the Manager (1997-February
2004). An officer of 87 portfolios in the
OppenheimerFunds complex.
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager
Treasurer and Principal (since March 1999); Treasurer of the following:
Financial and Accounting HarbourView Asset Management Corporation,
Officer (since 1999) Shareholder Financial Services, Inc., Shareholder
Age: 46 Services, Inc., Oppenheimer Real Asset Management
Corporation, and Oppenheimer Partnership Holdings,
Inc. (since March 1999), OFI Private Investments,
Inc. (since March 2000), OppenheimerFunds
International Ltd. and OppenheimerFunds plc (since
May 2000), OFI Institutional Asset Management, Inc.
(since November 2000), and OppenheimerFunds Legacy
Program (since June 2003); Treasurer and Chief
Financial Officer of OFI Trust Company (trust
company subsidiary of the Manager) (since May 2000);
Assistant Treasurer of the following: OAC (since
March 1999), Centennial Asset Management Corporation
(March 1999-October 2003) and OppenheimerFunds
Legacy Program (April 2000-June 2003); Principal and
Chief Operating Officer of Bankers Trust
Company-Mutual Fund Services Division (March
1995-March 1999). An officer of 87 portfolios in the
OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and
Vice President and General Counsel (since March 2002) of the Manager;
Secretary (since 2001) General Counsel and Director of the Distributor
Age: 57 (since December 2001); General Counsel of Centennial
Asset Management Corporation (since December 2001);
Senior Vice President and General Counsel of
HarbourView Asset Management Corporation (since
December 2001); Secretary and General Counsel of OAC
(since November 2001); Assistant Secretary (since
September 1997) and Director (since November 2001)
of OppenheimerFunds International Ltd. and
OppenheimerFunds plc; Vice President and Director of
Oppenheimer Partnership Holdings, Inc. (since
December 2002); Director of Oppenheimer Real Asset
Management, Inc. (since November 2001); Senior Vice
President, General Counsel and Director of
Shareholder Financial Services, Inc. and Shareholder
Services, Inc. (since December 2001); Senior Vice
President, General Counsel and Director of OFI
Private Investments, Inc. and OFI Trust Company
(since November 2001); Vice President of
OppenheimerFunds Legacy Program (since June 2003);
Senior Vice President and General Counsel of OFI
Institutional Asset Management, Inc. (since November
2001); Director of OppenheimerFunds (Asia) Limited
(since December 2003); Senior Vice President (May
1985-December 2003), Acting General Counsel
(November 2001-February 2002) and Associate General
Counsel (May 1981-October 2001) of the Manager;
Assistant Secretary of the following: Shareholder
Services, Inc. (May 1985-November 2001), Shareholder
Financial Services, Inc. (November 1989-November
2001), and OppenheimerFunds International Ltd.
(September 1997-November 2001). An officer of 87
portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S DIRECTORS AND OFFICERS AND IS AVAILABLE WITHOUT CHARGE, UPON
REQUEST, BY CALLING 1.800.525.7048.
50 | OPPENHEIMER EQUITY FUND, INC.
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Directors of the registrant has determined that Edward L. Cameron,
the Chairman of the Board's Audit Committee, and George C. Bowen, a member of
the Board's Audit Committee, possess the technical attributes identified in
Instruction 2(b) of Item 3 to Form N-CSR to qualify as "audit committee
financial experts," and has designated Messrs. Cameron and
Bowen as the Audit Committee's financial experts. Messrs. Cameron and Bowen are
"independent" Directors pursuant to paragraph (a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $36,500 in fiscal 2005 and $35,500 in fiscal 2004.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed $5,000 in fiscal 2005 and no such fees in fiscal 2004 to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
Such services: seed money audit.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees to the registrant during the last two fiscal
years.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees to the registrant during the last two fiscal
years to the registrant's investment adviser or any entity controlling,
controlled by, or under common control with the adviser that provides ongoing
services to the registrant.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
(e) (1) During its regularly scheduled periodic meetings, the registrant's
audit committee will pre-approve all audit, audit-related, tax and other
services to be provided by the principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its Chairman
for any subsequent new engagements that arise between regularly scheduled
meeting dates provided that any fees such pre-approved are presented to
the audit committee at its next regularly scheduled meeting.
Under applicable laws, pre-approval of non-audit services maybe waived
provided that: 1) the aggregate amount of all such services provided
constitutes no more than five percent of the total amount of fees paid by
the registrant to it principal accountant during the fiscal year in which
services are provided 2) such services were not recognized by the
registrant at the time of engagement as non-audit services and 3) such
services are promptly brought to the attention of the audit committee of
the registrant and approved prior to the completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed $5,000 in fiscal 2005 and no such fees in
fiscal 2004 to the registrant and the registrant's investment adviser or
any entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant related to
non-audit fees. Those billings did not include any prohibited non-audit
services as defined by the Securities Exchange Act of 1934.
(h) The registrant's audit committee of the board of directors has considered
whether the provision of non-audit services that were rendered to the
registrant's investment adviser, and any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the registrant that were not pre-approved pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's 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 December 31, 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
have materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) (1) Exhibit attached hereto.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Exhibit attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Oppenheimer Equity Fund, Inc.
By: /s/ John V. Murphy
-------------------
John V. Murphy
Principal Executive Officer
Date: February 14, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John V. Murphy
-------------------
John V. Murphy
Principal Executive Officer
Date: February 14, 2006
By: /s/ Brian W. Wixted
-------------------
Brian W. Wixted
Principal Financial Officer
Date: February 14, 2006