[FRONT COVER]
Oppenheimer Main Street Income & Growth Fund
Annual Report June 30, 1996
[PICTURE OF GARDENING COUPLE]
"We want
high
long-term
growth and
current income,
too."
[LOGO] OppenheimerFunds(R)
<PAGE>
News
Outstanding Total Return
Cumulative Total Return for the
5-Year Period Ended 6/30/96:
Oppenheimer Main Street
Income & Growth Fund
Class A (at net asset value)(1)
246.60%
Lipper Growth & Income Funds Average(3)
95.64%
The Fund's Class A shares
are ranked *****
among 1,583 equity funds as
of 6/30/96 by Morningstar
Mutual Funds.(4)
This Fund is for people who are looking for high total return, from both the
potential for capital appreciation and current income.
How Your Fund Is Managed
Oppenheimer Main Street Income & Growth Fund offers long-term investors the
opportunity for high total return. This strategy offers the potential for
long-term growth plus the added advantage of income by investing in the stocks
of fast-growing companies as well as income-producing stocks and bonds.
This disciplined approach helps to reduce risk through diversification and
enables the Fund to take advantage of a wide variety of market conditions.
Performance
Total return at net asset value for the twelve months ended 6/30/96 was 22.26%
for Class A shares, 21.34% for Class B shares and 21.35% for Class C shares.(1)
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1- and 5-year periods ended 6/30/96 and since inception
of the Class on 2/3/88 were 15.23%, 26.52% and 20.86%, respectively. For Class B
shares, average annual total returns for the 1-year period and since inception
of the Class on 10/1/94 were 16.34% and 17.88%. For Class C shares, average
annual total returns for the 1-year period and since inception of the Class on
12/1/93 were 20.35% and 14.89%, respectively.(2)
Outlook
"With enough flexibility to do well in almost any market environment, we believe
the outlook for the Fund is good. Over the past year, we have positioned the
portfolio to capture worldwide economic growth while providing shareholders with
current income."
Robert Milnamow, Portfolio Manager
June 30, 1996
Total returns include change in share price and reinvestment of dividends and
capital gains distributions. Past performance does not guarantee future results.
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 the original cost. For more complete information, please review the
prospectus carefully before you invest.
1. Based on the change in net asset value per share for the period shown,
without deducting any sales charges. Such performance would have been lower if
sales charges were taken into account.
2. Class A returns show results of hypothetical investments on 6/30/95, 6/30/91
and 2/3/88 (inception of class), after deducting the current maximum initial
sales charge of 5.75%. Class B returns show results of hypothetical investments
on 6/30/95 and 10/1/94 (inception of class), and with the deduction of the
applicable contingent deferred sales charge of 5% (1-year) and 4% (since
inception). Class C returns show results of hypothetical investments on 6/30/95
and 12/1/93 (inception of class), with the 1% contingent deferred sales charge
deducted for the 1-year result. An explanation of the different performance
calculations is in the Fund's prospectus.
3. Source: Lipper Analytical Services. The Lipper total return average for the
5-year period was for 207 growth and income funds. The average is shown for
comparative purposes only. Oppenheimer Main Street Income & Growth Fund is
characterized by Lipper as a growth and income fund. Lipper performance does not
take sales charges into consideration.
4. Source: Morningstar Mutual Funds, 6/30/96. Morningstar, Inc., an independent
mutual fund monitoring service, produces proprietary monthly rankings of funds
in broad investment categories (equity, taxable bond, tax-exempt bond, or
"hybrid") based on risk-adjusted investment returns, after considering sales
charges and expenses. Investment return measures a fund's (or class's) 3-, 5-,
and 10-year (depending on the inception of the class or fund) average annual
total returns in excess of 90-day U.S. Treasury bill returns. Risk measures a
fund's (or class's) performance below 90-day U.S. Treasury bill returns. Risk
and returns are combined to produce star rankings, reflecting performance
relative to the average fund in a fund's category. Five stars is the "highest"
ranking (top 10%), 4 stars is "above average" and 1 star is the "lowest" (bottom
10%). The 5-star current ranking is a weighted average of the 3- and 5-year
rankings for the class, which were 4 and 5 stars, weighted 40% and 60%,
respectively. There were 1,583 and 997 funds ranked in those respective periods.
Rankings are subject to change. The Fund's Class A, B and C shares have the same
portfolio.
2 Oppenheimer Main Street Income & Growth Fund
<PAGE>
[PHOTO-JAMES C. SWAIN]
James C. Swain
Chairman
Oppenheimer
Main Street Income
& Growth Fund
[PHOTO-BRIDGET A. MACASKILL]
Bridget A. Macaskill
President
Oppenheimer
Main Street Income
& Growth Fund
Dear Shareholder,
Against all odds, the stock market showed remarkable strength during the first
five months of 1996. However, in the few months that followed, the market
experienced significant volatility that resulted in a decline in the Dow of
about 7 percent.
Many experts said the stock market, having advanced to record heights in
1995 and void of any real market correction since 1990, was due for a downturn.
This was, after all, the longest bull market of the post-World War II era.
Thanks to the 10% rise in blue chip stocks during the first half of 1996 and the
early success of small stocks, the decline that occurred recently was somewhat
cushioned. While it's impossible to tell what will happen next, we are
optimistic that this turn was a correction within a bull market rather than the
onset of a bear market.
What made the market perform so well during the first part of the year? It
was another surprise: corporate profits. Between 1992 and 1995, corporate
profits of U.S. companies advanced at a double-digit rate. Investors widely
expected this year's profit tallies to be flat compared to 1995. After all, the
economy had been sluggish--growing at an annual rate of just 2.3% in the first
quarter of 1996. But corporate America continued to perform.
The reason corporate profits were so strong is that many U.S. companies
continued to successfully reduce costs. Often when a company achieves a small
increase in sales, the benefit goes straight to the bottom line. Indeed, the
U.S. Commerce Department reports indicated that corporate profits rose 15% for
the four quarters ended March 1996, while the economy grew only marginally.
Still, profits are not what they were in the early 1990s. That's why
investors are seeking out companies that can grow earnings regardless of the
fortunes of the economy. Which is just what many small companies in such fields
as technology, healthcare and specialty retailing have been doing, growing
earnings at double-digit--and even triple-digit rates. So it's not surprising
that the stocks of many of these small fast-growing companies have been such
strong performers.
The early strength of the stock market is all the more remarkable when you
consider that during the same period, interest rates moved up sharply. The yield
on the benchmark 30-year U.S. Treasury bond rose from about 6% in January to
over 7% today. Interest rates have been rising partly because investors are
concerned that the economy is growing fast enough to generate higher inflation.
However, we are watching this very closely, and would become very cautious
regarding the stock market's performance if inflation were to flare up.
As always, remember stock investments are generally meant for long-term
growth objectives, and often involve short-term volatility. So, it's critical
for investors to keep their focus on long-term goals and to put near-term
setbacks in proper prospective.
Your portfolio managers discuss the outlook for your Fund in light of
these broad issues on the following pages. Thank you for your confidence in
OppenheimerFunds. We look forward to helping you reach your investment goals in
the future.
/s/ James C. Swain /s/ Bridget A. Macaskill
James C. Swain Bridget A. Macaskill
July 22, 1996
3 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Q + A
An interview with your Fund's managers.
Q: What
is your
outlook
for the Fund?
How did the Fund perform over the past year?
The Fund did well over the full year. Having experienced dramatic growth in
assets, we have positioned our holdings in the stocks of companies representing
five strategic areas of the market. These areas include emerging industries and
improving industries; large growth companies that define their industries;
smaller companies with niche businesses; companies undergoing restructuring; and
fundamentally strong companies selling at extremely low valuations. Picking
specific stocks from these broad areas has worked well during the period and
positions the Fund for continued growth.
What investments benefited performance?
We've been extremely fortunate in that most of our investment categories
performed well. In emerging industries, we were pleased particularly with our
investments in telecommunications equipment manufacturers, small long distance
telephone companies and Internet-related companies. With small stocks having
recently outperformed their larger counterparts due to investor demand for a
superior growth rate, our smaller growth companies did well as a group. After
their excellent performance in 1995, large cap stock prices started the year at
fairly high valuations. Even so, we did well with worldwide computer firms as
well as our energy service companies. We also did well with selected chemical
stocks and with financial services companies that had undergone restructuring.
Finally, three undervalued areas that performed well for us were retail, gaming
companies and selected Japanese stocks.1
1. The Fund's portfolio is subject to change.
4 Oppenheimer Main Street Income & Growth Fund
<PAGE>
[VARIOUS PHOTOS]
Facing page
Top left: Robert Milnamow,
Portfolio Manager
Top right: Michael Levine, Member
of Equity Investments Team
Bottom: Robert Doll, Executive VP,
Director of Equity Investments
This page
Top: Robert Milnamow
Bottom: Diane Sobin and Bruce
Bartlett, Members of Equity
Investments Team
A: The
portfolio is
flexible enough
to do well
in almost
any market
environment.
Did any investments not perform as expected?
Although our performance overall was very good, we had some disappointments in
the healthcare stocks during the second half of this period. After having done
well in 1995, healthcare stocks were subject to profit taking in the first half
of 1996. In addition, early in 1996, investor interest moved away from steady
growth industries like healthcare to more economically sensitive industries,
based on reports of strong economic growth.
What areas of the market are you currently targeting?
Our asset mix has remained relatively constant for the
year, and we don't intend to change it dramatically over the near term.
Currently, 76% of our holdings are in common stocks, roughly 9% in convertibles
and preferred stock, and about 2% in short-term Treasuries, with the remainder
in cash and cash equivalents. Looking ahead, we plan to keep focused on finding
companies that fall within our targeted market segments. As always, we will
continue to look for value and growth potential across all our investments.
What is your outlook for the Fund?
With enough flexibility to do well in almost any market environment, we believe
the outlook for the Fund is good. Over the past year, we have positioned the
portfolio to capture worldwide economic growth while providing shareholders with
current income. As the positive domestic market becomes more volatile, however,
we also expect our income focus to provide some shelter from risk exposure and
price fluctuations. [solid box]
5 Oppenheimer Main Street Income & Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Statement of Investments June 30, 1996
Face Market Value
Amount See Note 1
<S> <C> <C>
===================================================================================================================================
Short-Term Notes--11.0%
- -----------------------------------------------------------------------------------------------------------------------------------
American Express Credit Corp., 5.45%, 7/2/96 $ 40,000,000 $ 39,993,944
---------------------------------------------------------------------------------------------------------------
Associates Corp. of North America, 5.39%, 7/22/96 40,000,000 39,874,233
---------------------------------------------------------------------------------------------------------------
Associates Corp. of North America, 5.60%, 7/1/96 50,000,000 50,000,000
---------------------------------------------------------------------------------------------------------------
Countrywide Home Loan, 5.32%, 7/25/96 50,000,000 49,819,333
---------------------------------------------------------------------------------------------------------------
Countrywide Home Loan, 5.40%, 7/16/96 51,000,000 50,885,250
---------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 5.36%, 7/11/96 50,000,000 49,925,556
---------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 5.38%, 7/19/96 50,000,000 49,865,500
---------------------------------------------------------------------------------------------------------------
General Electric Capital Corp., 5.27%, 7/10/96 50,000,000 49,932,875
---------------------------------------------------------------------------------------------------------------
Hertz Corp. (The) 5.38%, 7/18/96 45,000,000 44,885,675
---------------------------------------------------------------------------------------------------------------
Hertz Corp. (The) 5.39%, 7/23/96 25,000,000 24,917,653
---------------------------------------------------------------------------------------------------------------
Hertz Corp. (The) 5.39%, 7/24/96 25,000,000 24,913,910
---------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 5.35%, 7/9/96 50,000,000 49,940,556
---------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 5.36%, 7/8/96 50,000,000 49,947,986
---------------------------------------------------------------------------------------------------------------
New Center Asset Trust, 5.32%, 7/2/96 50,000,000 49,992,611
--------------
Total Short-Term Notes (Cost $624,895,082) 624,895,082
===================================================================================================================================
U.S. Government Obligations--1.7%
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 5%, 1/31/98 50,000,000 49,218,750
---------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 5.50%, 11/15/98 50,000,000 49,234,344
--------------
Total U.S. Government Obligations (Cost $100,431,526) 98,453,094
===================================================================================================================================
Non-Convertible Corporate Bonds and Notes--0.2%
- -----------------------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc.,
Zero Coupon Sr. Sec. Disc. Nts., Series B, 14%, 11/15/99(1) 12,000,000 7,920,000
---------------------------------------------------------------------------------------------------------------
United International Holdings, Inc.,
Zero Coupon Sr. Sec. Disc. Nts., 12.45%, 11/15/99(1) 3,000,000 1,980,000
--------------
Total Non-Convertible Corporate Bonds and Notes (Cost $9,599,488) 9,900,000
===================================================================================================================================
Convertible Corporate Bonds and Notes--3.2%
- -----------------------------------------------------------------------------------------------------------------------------------
ADT Operations, Inc., Zero Coupon Cv. Sub. Nts., 6.26%, 7/6/10(1) 15,000,000 8,231,250
---------------------------------------------------------------------------------------------------------------
Altera Corp., 5.75% Cv. Sub. Nts., 6/15/02(2) 5,250,000 5,302,500
---------------------------------------------------------------------------------------------------------------
ALZA Corp., 5% Cv. Sub. Debs., 5/1/06 12,800,000 12,448,000
---------------------------------------------------------------------------------------------------------------
Conner Peripherals, Inc., 6.50% Cv. Debs., 3/1/02 6,000,000 6,270,000
---------------------------------------------------------------------------------------------------------------
Continental Airlines, Inc., 6.75% Cv. Sub. Nts., 4/15/06(2) 15,000,000 18,000,000
---------------------------------------------------------------------------------------------------------------
Corporate Express, Inc., 4.50% Cv. Nts., 7/1/00(2)(3) 20,000,000 19,900,000
---------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc., 5% Cv. Sub. Nts., 10/1/03 5,000,000 5,825,000
---------------------------------------------------------------------------------------------------------------
First Financial Management Corp., 5% Cv. Debs., 12/15/99 5,000,000 9,451,600
---------------------------------------------------------------------------------------------------------------
Healthsource, Inc., 5% Cv. Sub. Nts., 3/1/03(2) 20,000,000 15,850,000
---------------------------------------------------------------------------------------------------------------
NovaCare, Inc., 5.50% Cv. Sub. Debs., 1/15/00 5,500,000 4,853,750
---------------------------------------------------------------------------------------------------------------
PHP Healthcare Corp., 6.50% Cv. Sub. Debs., 12/15/02(2) 3,000,000 3,933,750
---------------------------------------------------------------------------------------------------------------
Physicians Clinical Laboratory, Inc., 7.50% Cv. Sub. Debs., 8/15/00(3)(4) 1,000,000 100,000
---------------------------------------------------------------------------------------------------------------
Roche Holdings, Inc., Zero Coupon Cv. Nts., 7%, 4/20/10(1)(2) 48,000,000 20,700,000
---------------------------------------------------------------------------------------------------------------
Sports & Recreation, Inc., 4.25% Cv. Sub. Nts., 11/1/00 7,500,000 5,381,250
</TABLE>
6 Oppenheimer Main Street Income & Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Convertible Corporate
Bonds and Notes
(continued)
Staples, Inc., 4.50% Cv. Nts., 10/1/00(2) $ 13,000,000 $ 14,121,250
---------------------------------------------------------------------------------------------------------------
Tele-Communications International, Inc., 4.50% Cv. Sub. Debs., 2/15/06 5,400,000 4,644,000
---------------------------------------------------------------------------------------------------------------
Theratx, Inc., 8% Cv. Sub. Debs., 2/1/02 6,000,000 5,917,500
---------------------------------------------------------------------------------------------------------------
Time Warner, Inc., Zero Coupon Cv. Sr. Sub. Nts., 5.08%, 6/22/13(1) 20,000,000 8,225,000
---------------------------------------------------------------------------------------------------------------
U.S. Cellular Corp., Zero Coupon Cv. Liquid Yield Option Nts., 5.98%, 6/15/15(1) 16,250,000 5,443,750
---------------------------------------------------------------------------------------------------------------
WorldCom, Inc., 5% Cv. Sub. Nts., 8/15/03 4,000,000 5,770,000
--------------
Total Convertible Corporate Bonds and Notes (Cost $170,144,816) 180,368,600
Shares
===================================================================================================================================
Common Stocks--75.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Basic Materials--3.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Chemicals--3.1%
IMC Global, Inc. 1,425,000 53,615,625
---------------------------------------------------------------------------------------------------------------
Monsanto Co. 3,854,000 125,255,000
--------------
178,870,625
- -----------------------------------------------------------------------------------------------------------------------------------
Gold--0.5%
Newmont Mining Corp. 600,000 29,625,000
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--18.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Autos & Housing--1.2%
ITI Technologies, Inc.(5) 250,000 8,250,000
---------------------------------------------------------------------------------------------------------------
Oakwood Homes Corp. 607,800 12,535,875
---------------------------------------------------------------------------------------------------------------
Toyota Motor Corp. 1,900,000 47,464,709
--------------
68,250,584
- -----------------------------------------------------------------------------------------------------------------------------------
Leisure & Entertainment--8.6%
Atlantic Southeast Airlines, Inc. 640,000 18,080,000
---------------------------------------------------------------------------------------------------------------
Continental Airlines, Inc., Cl. B(5) 430,000 26,552,500
---------------------------------------------------------------------------------------------------------------
Disney (Walt) Co. 1,875,000 117,890,625
---------------------------------------------------------------------------------------------------------------
Eastman Kodak Co. 750,000 58,312,500
---------------------------------------------------------------------------------------------------------------
Gaylord Entertainment Co., Cl. A 1,603,035 45,285,739
---------------------------------------------------------------------------------------------------------------
Harrah's Entertainment, Inc. 1,300,000 36,725,000
---------------------------------------------------------------------------------------------------------------
ITT Corp. (New)(5) 1,220,000 80,825,000
---------------------------------------------------------------------------------------------------------------
McDonald's Corp. 2,242,300 104,827,525
---------------------------------------------------------------------------------------------------------------
Primadonna Resorts, Inc.(5) 70,000 1,610,000
--------------
490,108,889
- -----------------------------------------------------------------------------------------------------------------------------------
Media--2.8%
Cox Communications, Inc., Cl. A(5) 600,000 12,975,000
---------------------------------------------------------------------------------------------------------------
Evergreen Media Corp., Cl. A(5) 550,000 23,512,500
---------------------------------------------------------------------------------------------------------------
Infinity Broadcasting Corp., Cl. A(5) 1,150,000 34,500,000
---------------------------------------------------------------------------------------------------------------
Omnicom Group, Inc. 1,227,900 57,097,350
---------------------------------------------------------------------------------------------------------------
Viacom, Inc., Cl. B(5) 750,000 29,156,250
--------------
157,241,100
- -----------------------------------------------------------------------------------------------------------------------------------
Retail: General--1.9%
Dillard Department Stores, Inc., Cl. A 600,000 21,900,000
---------------------------------------------------------------------------------------------------------------
Eckerd Corp.(5) 1,200,000 27,150,000
---------------------------------------------------------------------------------------------------------------
Kohl's Corp.(5) 463,000 16,957,375
---------------------------------------------------------------------------------------------------------------
May Department Stores Co. 529,400 23,161,250
---------------------------------------------------------------------------------------------------------------
Nordstrom, Inc. 415,000 18,467,500
--------------
107,636,125
</TABLE>
7 Oppenheimer Main Street Income & Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Statement of Investments (Continued)
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Retail: Specialty--3.5%
Alco Standard Corp. 700,000 $ 31,675,000
---------------------------------------------------------------------------------------------------------------
Circuit City Stores, Inc. 1,742,000 62,929,750
---------------------------------------------------------------------------------------------------------------
Nine West Group, Inc.(5) 525,000 26,840,625
---------------------------------------------------------------------------------------------------------------
Office Depot, Inc.(5) 1,500,000 30,562,500
---------------------------------------------------------------------------------------------------------------
Talbots, Inc. (The) 702,200 22,733,725
---------------------------------------------------------------------------------------------------------------
The Sports Authority, Inc.(5) 750,000 24,562,500
--------------
199,304,100
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--16.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Beverages--0.2%
Anheuser-Busch Cos., Inc. 112,500 8,437,500
---------------------------------------------------------------------------------------------------------------
LVMH Moet Hennessy Louis Vuitton 20,900 4,956,966
--------------
13,394,466
- -----------------------------------------------------------------------------------------------------------------------------------
Food--1.7%
Campbell Soup Co. 860,000 60,630,000
---------------------------------------------------------------------------------------------------------------
Ralston-Ralston Purina Group 547,700 35,121,262
--------------
95,751,262
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare/Drugs--7.1%
American Home Products Corp. 1,100,000 66,137,500
---------------------------------------------------------------------------------------------------------------
Amgen, Inc.(5) 900,000 48,600,000
---------------------------------------------------------------------------------------------------------------
Astra AB Free, Series A 1,000,000 44,156,604
---------------------------------------------------------------------------------------------------------------
Merck & Co., Inc. 1,750,000 113,093,750
---------------------------------------------------------------------------------------------------------------
Schering-Plough Corp. 1,372,400 86,118,100
---------------------------------------------------------------------------------------------------------------
Warner-Lambert Co. 800,000 44,000,000
--------------
402,105,954
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare/Supplies &
Services--5.2%
Baxter International, Inc. 1,426,000 67,378,500
---------------------------------------------------------------------------------------------------------------
Boston Scientific Corp.(5) 1,330,050 59,852,250
---------------------------------------------------------------------------------------------------------------
Guidant Corp. 500,000 24,625,000
---------------------------------------------------------------------------------------------------------------
HEALTHSOUTH Corp.(5) 850,000 30,600,000
---------------------------------------------------------------------------------------------------------------
Manor Care, Inc. 339,000 13,348,125
---------------------------------------------------------------------------------------------------------------
St. Jude Medical, Inc.(5) 600,000 20,100,000
---------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp.(5) 1,500,000 32,062,500
---------------------------------------------------------------------------------------------------------------
United Healthcare Corp. 973,100 49,141,550
--------------
297,107,925
- -----------------------------------------------------------------------------------------------------------------------------------
Household Goods--0.9%
Colgate-Palmolive Co. 431,900 36,603,525
---------------------------------------------------------------------------------------------------------------
Kao Corp. 1,225,000 16,529,680
--------------
53,133,205
- -----------------------------------------------------------------------------------------------------------------------------------
Tobacco--1.8%
Philip Morris Cos., Inc. 975,000 101,400,000
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--4.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Energy Services &
Producers--2.2%
Apache Corp. 750,000 24,656,250
---------------------------------------------------------------------------------------------------------------
BJ Services Co. 600,000 21,075,000
---------------------------------------------------------------------------------------------------------------
Schlumberger Ltd. 450,000 37,912,500
---------------------------------------------------------------------------------------------------------------
Tidewater, Inc. 600,000 26,325,000
---------------------------------------------------------------------------------------------------------------
Weatherford Enterra, Inc.(5) 600,000 18,000,000
--------------
127,968,750
</TABLE>
8 Oppenheimer Main Street Income & Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Oil-Integrated--2.6%
Ashland, Inc. 475,000 $ 18,821,875
---------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co. 325,000 38,512,500
---------------------------------------------------------------------------------------------------------------
Royal Dutch Petroleum Co. 185,000 28,443,750
---------------------------------------------------------------------------------------------------------------
Texaco, Inc. 375,000 31,453,125
---------------------------------------------------------------------------------------------------------------
Unocal Corp. 825,000 27,843,750
--------------
145,075,000
- -----------------------------------------------------------------------------------------------------------------------------------
Financial--8.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Banks--2.1%
Coast Savings Financial, Inc.(5) 325,000 10,643,750
---------------------------------------------------------------------------------------------------------------
Commercial Federal Corp. 400,000 15,300,000
---------------------------------------------------------------------------------------------------------------
First Bank System, Inc. 500,000 29,000,000
---------------------------------------------------------------------------------------------------------------
Summit Bancorp 645,000 22,655,625
---------------------------------------------------------------------------------------------------------------
Wells Fargo & Co. 183,333 43,793,670
--------------
121,393,045
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Financial--5.6%
American Express Co. 2,122,900 94,734,412
---------------------------------------------------------------------------------------------------------------
Associates First Capital Corp., Cl. A(5) 751,500 28,275,188
---------------------------------------------------------------------------------------------------------------
Dean Witter, Discover & Co. 898,100 51,416,225
---------------------------------------------------------------------------------------------------------------
Nomura Securities Co. Ltd. 1,700,000 33,168,769
---------------------------------------------------------------------------------------------------------------
PMI Group, Inc. (The) 175,000 7,437,500
---------------------------------------------------------------------------------------------------------------
Travelers Group, Inc. 2,277,200 103,897,250
--------------
318,929,344
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance--1.2%
Allstate Corp. 500,000 22,812,500
---------------------------------------------------------------------------------------------------------------
Amerin Corp.(5) 385,000 10,298,750
---------------------------------------------------------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 1,000,000 25,875,000
---------------------------------------------------------------------------------------------------------------
MGIC Investment Corp. 130,300 7,313,088
--------------
66,299,338
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial--5.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Electrical Equipment--1.8%
General Electric Co. 225,000 19,462,500
---------------------------------------------------------------------------------------------------------------
Honeywell, Inc. 901,900 49,153,550
---------------------------------------------------------------------------------------------------------------
Raychem Corp. 450,000 32,343,750
--------------
100,959,800
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial Materials--0.5%
Avery-Dennison Corp. 482,000 26,449,750
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial Services--0.5%
Millipore Corp. 700,000 29,312,500
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing--1.5%
American Standard Cos., Inc.(5) 1,000,000 33,000,000
---------------------------------------------------------------------------------------------------------------
Mitsubishi Heavy Industries Ltd. 4,200,000 36,492,939
---------------------------------------------------------------------------------------------------------------
Olin Corp. 150,100 13,396,425
--------------
82,889,364
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation--0.7%
Conrail, Inc. 638,000 42,347,250
- -----------------------------------------------------------------------------------------------------------------------------------
Technology--17.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--1.0%
Boeing Co. 300,000 26,137,500
---------------------------------------------------------------------------------------------------------------
Rockwell International Corp. 500,000 28,625,000
--------------
54,762,500
</TABLE>
9 Oppenheimer Main Street Income & Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Statement of Investments (Continued)
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Hardware--2.1%
Adaptec, Inc.(5) 445,000 $ 21,081,875
---------------------------------------------------------------------------------------------------------------
Compaq Computer Corp.(5) 300,000 14,775,000
---------------------------------------------------------------------------------------------------------------
International Business Machines Corp. 350,000 34,650,000
---------------------------------------------------------------------------------------------------------------
QUALCOMM, Inc. 300,000 15,937,500
---------------------------------------------------------------------------------------------------------------
Seagate Technology, Inc.(5) 762,300 34,303,500
--------------
120,747,875
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Software--5.8%
Adobe Systems, Inc. 600,000 21,525,000
---------------------------------------------------------------------------------------------------------------
BMC Software, Inc.(5) 675,000 40,331,250
---------------------------------------------------------------------------------------------------------------
Computer Associates International, Inc. 200,000 14,250,000
---------------------------------------------------------------------------------------------------------------
Electronic Data Systems Corp. 800,000 43,000,000
---------------------------------------------------------------------------------------------------------------
First Data Corp. 776,800 61,852,700
---------------------------------------------------------------------------------------------------------------
Informix Corp.(5) 1,070,000 24,075,000
---------------------------------------------------------------------------------------------------------------
Nintendo Co. Ltd. 1,115,000 82,952,920
---------------------------------------------------------------------------------------------------------------
PLATINUM Technology, Inc.(5) 1,000,000 15,125,000
---------------------------------------------------------------------------------------------------------------
Sungard Data Systems, Inc.(5) 600,000 24,075,000
--------------
327,186,870
- -----------------------------------------------------------------------------------------------------------------------------------
Electronics--4.1%
General Instrument Corp.(5) 600,000 17,325,000
---------------------------------------------------------------------------------------------------------------
General Motors Corp., Cl. H 775,000 46,596,875
---------------------------------------------------------------------------------------------------------------
Hewlett-Packard Co. 740,000 73,722,500
---------------------------------------------------------------------------------------------------------------
Intel Corp. 800,000 58,750,000
---------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd.(5) 500,000 6,812,500
---------------------------------------------------------------------------------------------------------------
Thermo Electron Corp. 637,500 26,535,938
---------------------------------------------------------------------------------------------------------------
VeriFone, Inc.(5) 135,500 5,724,875
--------------
235,467,688
- -----------------------------------------------------------------------------------------------------------------------------------
Telecommunications-
Technology--4.7%
ADC Telecommunications, Inc.(5) 575,000 25,875,000
---------------------------------------------------------------------------------------------------------------
Cisco Systems, Inc.(5) 1,000,000 56,625,000
---------------------------------------------------------------------------------------------------------------
LCI International, Inc.(5) 513,500 16,111,063
---------------------------------------------------------------------------------------------------------------
Millicom International Cellular SA(5) 750,000 35,718,750
---------------------------------------------------------------------------------------------------------------
Millicom, Inc.(5) 75,000 --
---------------------------------------------------------------------------------------------------------------
Newbridge Networks Corp.(5) 425,000 27,837,500
---------------------------------------------------------------------------------------------------------------
Tellabs, Inc.(5) 350,000 23,406,250
---------------------------------------------------------------------------------------------------------------
WorldCom, Inc.(5) 1,500,000 83,062,500
--------------
268,636,063
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities--0.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Gas Utilities--0.8%
Sonat, Inc. 950,000 42,750,000
--------------
Total Common Stocks (Cost $3,717,127,694) 4,305,104,372
</TABLE>
10 Oppenheimer Main Street Income & Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
===================================================================================================================================
Preferred Stocks--2.4%
AK Steel Holding Corp., 7% Cv. Stock Appreciation Income Linked Securities 325,000 $ 11,943,750
---------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 8.50% Cum. Cv., Series I 439,000 11,414,000
---------------------------------------------------------------------------------------------------------------
Delta Air Lines, Inc., $3.50 Cv. Depositary Shares, Series C 425,000 26,775,000
---------------------------------------------------------------------------------------------------------------
Freeport-McMoRan Copper & Gold, Inc., Depositary Shares
each representing 0.05 Shares of Step-Up Cv. Preferred Stock 919,000 25,042,750
---------------------------------------------------------------------------------------------------------------
Globalstar Telecommunications Ltd.,
6.50% Cv. Preferred Equivalent Obligations due 3/1/06(2)(3) 360,000 15,120,000
---------------------------------------------------------------------------------------------------------------
LCI International, Inc., 5% Cum. Cv. Exchangeable Preferred Stock 250,000 20,625,000
---------------------------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., 6.50% Cv. Preferred(2) 105,000 5,486,250
---------------------------------------------------------------------------------------------------------------
SunAmerica, Inc., $3.10 Depositary Shares (each
representing one-fiftieth of a share of series E Mandatory
Conversion Premium Dividend Preferred Stock) 199,500 14,912,625
---------------------------------------------------------------------------------------------------------------
WHX Corp., $3.75 Cv., Series B 175,000 7,415,625
--------------
Total Preferred Stocks (Cost $117,715,644) 138,735,000
===================================================================================================================================
Other Securities--3.2%
Atlantic Richfield Co., 9% Exchangeable Notes for
Common Stock of Lyondell Petrochemical Co., 9/15/97 425,000 10,359,375
---------------------------------------------------------------------------------------------------------------
Compania de Inversiones en Telecomunicaciones SA,
Provisionally Redeemable Income Debt Exchangeable for Stock, 7%, 3/3/98(2) 225,000 13,190,625
---------------------------------------------------------------------------------------------------------------
Continental Airlines Finance Trust,
8.50% Cv. Trust Originated Preferred Securities(2) 400,000 29,400,000
---------------------------------------------------------------------------------------------------------------
Cooper Industries, Inc., Debt Exchangeable for Commmon Stock,
6% Exchangeable Nts., 1/1/99 845,000 14,153,750
---------------------------------------------------------------------------------------------------------------
Elsag Bailey Financing Trust, 5.50% Cv. Trust Originated Preferred Securities(2) 224,500 11,112,750
---------------------------------------------------------------------------------------------------------------
James River Corp. of Virginia, Depositary Shares each
representing a one-hundredth interest in a share of Series P,
9% Cum. Cv. Preferred Stock, Dividend Enhanced Convertible Stock 500,000 12,625,000
---------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., 7.25% Structured Yield Product Exchangeable for Stock 321,000 18,176,625
---------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6% Cv. Preferred,
Structured Yield Product Exchangeable for
Cox Communications, Inc., Common Stock 235,000 5,199,375
---------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.50% Cv. Structured Yield
Enhanced Product Exchangeable for Stock due 8/15/98 200,000 10,800,000
---------------------------------------------------------------------------------------------------------------
MFS Communications Co., Inc., 8% Depositary Cv
Shares Representing 1 Share of Dividend Enhanced Convertible Stock 515,000 32,702,500
---------------------------------------------------------------------------------------------------------------
Westinghouse Electric Corp., Participating Equity
Preferred Shares, $1.30 Cv., Series C(2) 1,300,000 22,912,500
--------------
Total Other Securities (Cost $148,630,464) 180,632,500
</TABLE>
11 Oppenheimer Main Street Income & Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Statement of Investments (Continued)
Market Value
Units See Note 1
<S> <C> <C>
===================================================================================================================================
Rights, Warrants and Certificates--0.0%
- -----------------------------------------------------------------------------------------------------------------------------------
American Satellite Network, Inc. Wts., Exp. 6/99 (Cost $0) 18,750 $ --
Face
Amount
===================================================================================================================================
Repurchase Agreements--1.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Canadian Imperial Bank of Commerce,
5.45%, dated 6/28/96, to be repurchased at $103,146,825 on 7/1/96,
collateralized by U.S. Treasury Bonds, 9.125%--11.25%, 2/15/15--5/11/18,
with a value of $36,444,598, and U.S. Treasury Nts., 5.25%--8.50%,
1/11/97--11/15/04, with a value of $68,875,428 (Cost $103,100,000) $ 103,100,000 103,100,000
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $4,991,644,714) 99.2% 5,641,188,648
- -----------------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.8 48,066,047
-------------- --------------
Net Assets 100.0% $5,689,254,695
============== ==============
1. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
2. Represents a security sold under Rule 144A, which is exempt from registration
under the Securities Act of 1933, as amended. This security has been determined
to be liquid under guidelines established by the Board of Directors. These
securities amount to $195,029,625 or 3.43% of the Fund's net assets, at June 30,
1996.
3. Identifies issues considered to be illiquid--See Note 7 of Notes to Financial
Statements.
4. Non-income producing--issuer is in default of interest payment.
5. Non-income producing security.
Affiliated company. Represents ownership of at least 5% of the voting securities
of the issuer and is or was an affiliate, as defined in the Investment Company
Act of 1940, at or during the period ended June 30, 1996. There were no
affiliate securities held as of June 30, 1996. Transactions during the period in
which the issuer was an affiliate are as follows:
<CAPTION>
Balance June 30, 1995 Gross Additions Gross Reductions Balance June 30, 1996
--------------------- --------------------- --------------------- ---------------------
Shares Cost Shares Cost Shares Cost Shares Cost
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Duckwall-ALCO Stores, Inc. 300,000 $ 2,710,938 -- $ -- 300,000 $ 2,710,938 -- $ --
- -----------------------------------------------------------------------------------------------------------------------------------
Globalstar Telecommunications Ltd. 500,000 9,968,750 -- -- 500,000 9,968,750 -- --
----------- ----------- ----------- -----------
$12,679,688 $ -- $12,679,688 $ --
=========== =========== =========== ===========
See accompanying Notes to Financial Statements.
</TABLE>
12 Oppenheimer Main Street Income & Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities June 30, 1996
<S> <C>
===================================================================================================================================
Assets Investments, at value (cost $4,991,644,714)--see accompanying statement $5,641,188,648
---------------------------------------------------------------------------------------------------------------
Cash 1,015,309
---------------------------------------------------------------------------------------------------------------
Unrealized appreciation on forward foreign currency exchange contracts--Note 5 3,192,586
---------------------------------------------------------------------------------------------------------------
Receivables:
Investments sold 64,516,681
Shares of capital stock sold 30,987,536
Interest and dividends 8,079,968
---------------------------------------------------------------------------------------------------------------
Other 45,146
--------------
Total assets 5,749,025,874
--------------
===================================================================================================================================
Liabilities Payables and other liabilities:
Investments purchased 44,588,991
Shares of capital stock redeemed 9,895,130
Distribution and service plan fees 3,288,407
Transfer and shareholder servicing agent fees 438,638
Shareholder reports 221,356
Dividends 76,258
Directors' fees 3,365
Other 1,259,034
--------------
Total liabilities 59,771,179
--------------
Net Assets $5,689,254,695
==============
===================================================================================================================================
Composition of Par value of shares of capital stock $ 1,973,000
Net Assets ---------------------------------------------------------------------------------------------------------------
Additional paid-in capital 4,668,562,298
---------------------------------------------------------------------------------------------------------------
Undistributed net investment income 1,372,571
---------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 364,610,273
---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and
liabilities denominated in foreign currencies 652,736,553
--------------
Net assets $5,689,254,695
==============
===================================================================================================================================
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets
of $3,147,462,876 and 108,930,060 shares of capital stock outstanding) $ 28.89
Maximum offering price per share (net asset value plus sales
charge of 5.75% of offering price) $ 30.65
---------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $1,800,428,587 and 62,581,931 shares of capital stock outstanding) $ 28.77
---------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $741,363,232 and 25,788,010 shares of capital stock outstanding) $ 28.75
</TABLE>
See accompanying Notes to Financial Statements
13 Oppenheimer Main Street Income & Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations For the Year Ended June 30, 1996
<S> <C>
===================================================================================================================================
Investment Income Dividends (net of withholding taxes of $547,215) $ 57,282,711
---------------------------------------------------------------------------------------------------------------
Interest 50,532,908
------------
Total income 107,815,619
===================================================================================================================================
Expenses Distribution and service plan fees--Note 4:
Class A 6,090,603
Class B 11,543,736
Class C 5,863,969
---------------------------------------------------------------------------------------------------------------
Management fees--Note 4 19,932,096
---------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 8,422,999
---------------------------------------------------------------------------------------------------------------
Shareholder reports 1,640,660
---------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 616,042
Class B 374,111
Class C 89,426
---------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 152,300
---------------------------------------------------------------------------------------------------------------
Legal and auditing fees 78,251
---------------------------------------------------------------------------------------------------------------
Directors' fees and expenses--Note 1 57,304
---------------------------------------------------------------------------------------------------------------
Insurance expenses 48,598
---------------------------------------------------------------------------------------------------------------
Other 578,835
------------
Total expenses 55,488,930
===================================================================================================================================
Net Investment Income 52,326,689
------------
===================================================================================================================================
Realized and Net realized gain (loss) on investments:
Unrealized Unaffiliated companies (including premiums on options exercised) 383,597,624
Gain (Loss) Affiliated companies (2,265,938)
Foreign currency transactions 2,544,567
Closing and expiration of options written--Note 6 356,939
------------
Net realized gain 384,233,192
---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 365,193,559
Translation of assets and liabilities denominated in foreign currencies (12,824,005)
------------
Net change 352,369,554
------------
Net realized and unrealized gain 736,602,746
------------
===================================================================================================================================
Net Increase in Net Assets Resulting From Operations $788,929,435
============
</TABLE>
See accompanying Notes to Financial Statements.
14 Oppenheimer Main Street Income & Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
Year Ended June 30,
1996 1995
<S> <C> <C>
===================================================================================================================================
Operations Net investment income $ 52,326,689 $ 37,933,945
---------------------------------------------------------------------------------------------------------------
Net realized gain 384,233,192 13,180,181
---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 352,369,554 329,165,454
-------------- --------------
Net increase in net assets resulting from operations 788,929,435 380,279,580
===================================================================================================================================
Dividends and Dividends from net investment income:
Distributions to Class A (40,531,298) (29,280,412)
Shareholders Class B (11,334,670) (3,312,668)
Class C (5,305,754) (4,868,193)
---------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (7,115,385) (140,642)
Class B (3,165,821) (10,803)
Class C (1,650,409) (35,755)
===================================================================================================================================
Capital Stock Net increase in net assets resulting from capital stock
Transactions transactions--Note 2:
Class A 790,272,185 947,214,116
Class B 986,624,829 580,665,761
Class C 178,504,196 233,648,051
===================================================================================================================================
Net Assets Total increase 2,675,227,308 2,104,159,035
---------------------------------------------------------------------------------------------------------------
Beginning of period 3,014,027,387 909,868,352
-------------- --------------
End of period (including undistributed net investment
income of $1,372,571 and $1,145,174, respectively) $5,689,254,695 $3,014,027,387
============== ==============
</TABLE>
See accompanying Notes to Financial Statements
15 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------
Year Ended June 30,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
==========================================================================================================================
Per Share Operating Data:
Net asset value, beginning of period $ 24.07 $ 20.40 $ 19.88 $ 15.46 $ 13.22
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .40 .47 .37 .16 .25
Net realized and unrealized gain (loss) 4.93 3.66 2.50 6.65 4.72
---------- ---------- ---------- ---------- ----------
Total income (loss) from investment
operations 5.33 4.13 2.87 6.81 4.97
- --------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.43) (.46) (.36) (.19) (.22)
Distributions from net realized gain (.08) --(3) -- (2.20) (2.51)
Distributions in excess of gains -- -- (1.99) -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions
to shareholders (.51) (.46) (2.35) (2.39) (2.73)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 28.89 $ 24.07 $ 20.40 $ 19.88 $ 15.46
========== ========== ========== ========== ==========
==========================================================================================================================
Total Return, at Net Asset Value(4) 22.26% 20.52% 14.34% 46.38% 39.48%
==========================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $3,147,463 $1,923,951 $ 739,552 $ 58,230 $ 26,926
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $2,515,880 $1,319,271 $ 270,417 $ 38,974 $ 23,018
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.55% 2.31% 2.46% 1.02% 1.63%
Expenses 0.99% 1.07% 1.28% 1.46% 1.66%
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 92.6% 101.3% 199.4% 283.0% 290.1%
Average brokerage commission rate(7) $ 0.0571 -- -- -- --
<CAPTION>
Class B Class C
------------------------------------------- -------------------------
Year Ended June 30, Year Ended June 30,
1996 1995(2) 1996 1995 1994(1)
<S> <C> <C> <C> <C> <C>
========================================================================================================================
Per Share Operating Data:
Net asset value, beginning of period $ 24.00 $ 21.49 $ 23.97 $ 20.33 $ 20.76
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .23 .25 .21 .33 .13
Net realized and unrealized gain (loss) 4.87 2.54 4.88 3.62 (.42)
---------- ---------- ---------- ---------- ----------
Total income (loss) from investment
operations 5.10 2.79 5.09 3.95 (.29)
- ------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.25) (.28) (.23) (.31) (.14)
Distributions from net realized gain (.08) --(3) (.08) --(3) --
Distributions in excess of gains -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions
to shareholders (.33) (.28) (.31) (.31) (.14)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 28.77 $ 24.00 $ 28.75 $ 23.97 $ 20.33
========== ========== ========== ========== ==========
========================================================================================================================
Total Return, at Net Asset Value(4) 21.34% 13.15% 21.35% 19.63% (0.97)%
========================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $1,800,429 $ 628,499 $ 741,363 $ 461,578 $ 170,316
- ------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,155,253 $ 248,775 $ 588,109 $ 325,025 $ 71,924
- ------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.74% 1.25%(5) 0.80% 1.57% 1.86%(5)
Expenses 1.76% 1.89%(5) 1.74% 1.82% 2.11%(5)
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 92.6% 101.3% 92.6% 101.3% 199.4%
Average brokerage commission rate(7) $ 0.0571 -- $ 0.0571 -- --
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to June 30,
1994.
2. For the period from October 1, 1994 (inception of offering) to June 30, 1995.
3. Less than $0.005 per share.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), 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 of less than one full year.
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended June 30, 1996 were $5,027,520,491 and $3,462,781,241, respectively.
7. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
16 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Notes to Financial Statements
================================================================================
1. Significant
Accounting Policies
Oppenheimer Main Street Income & Growth Fund (the Fund) is a separate series of
Oppenheimer Main Street Funds, Inc., an open-end management investment company
registered under the Investment Company Act of 1940, as amended. The Fund's
investment objective is to seek high total return (which includes current income
and capital appreciation in the value of its shares) from equity and debt
securities. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). The Fund offers Class A, Class B and Class C shares. Class B and Class
C shares may be subject to a contingent deferred sales charge. All classes of
shares have identical rights to earnings, assets and voting privileges, except
that each class has its own distribution and/or service plan, expenses directly
attributable to a particular class and exclusive voting rights with respect to
matters affecting a single class. 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.
- --------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
asked price or the last sale price on the prior trading day. Long-term and
short-term "non-money market" debt securities are valued by a portfolio pricing
service approved by the Board of Directors. Such securities which cannot be
valued by the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect current market
value, or are valued under consistently applied procedures established by the
Board of Directors to determine fair value in good faith. Short-term "money
market type" debt securities having a remaining maturity of 60 days or less are
valued at cost (or last determined market value) adjusted for amortization to
maturity of any premium or discount. Forward foreign currency exchange contracts
are valued based on the closing prices of the forward currency contract rates in
the London foreign exchange markets on a daily basis as provided by a reliable
bank or dealer. Options are valued based upon the last sale price on the
principal exchange on which the option is traded or, in the absence of any
transactions that day, the value is based upon the last sale price on the prior
trading date if it is within the spread between the closing bid and asked
prices. If the last sale price is outside the spread, the closing bid or asked
price closest to the last reported sale price is used.
- --------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of securities and investment income are translated at
the rates of exchange prevailing on the respective dates of such transactions.
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.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
- --------------------------------------------------------------------------------
Distributions to Shareholders. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
17 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Notes to Financial Statements (Continued)
================================================================================
1. Significant
Accounting Policies
(continued)
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of the distributions
made during the 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 dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gain (loss) was
recorded by the Fund.
During the year ended June 30, 1996, the Fund changed the classification of
distributions to shareholders to better disclose the differences between
financial statement amounts and distributions determined in accordance with
income tax regulations. Accordingly, during the year ended June 30, 1996,
amounts have been reclassified to reflect an increase in undistributed net
investment income of $5,072,430 and a decrease in accumulated net realized gain
on investments of $5,072,430.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the life of
the respective securities, in accordance with federal income tax requirements.
Realized gains and losses on investments and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the same basis
used for federal income tax purposes.
The preparation of financial statements in conformity with 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. Capital Stock
The Fund has authorized 350,000,000 shares of $.01 par value capital stock
(200,000,000 for Class A, 100,000,000 for Class B, and 50,000,000 for Class C).
Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
Year Ended June 30, 1996 Year Ended June 30, 1995(1)
------------------------------------ ------------------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Class A:
Sold 45,286,889 $ 1,228,619,819 55,373,867 $ 1,208,049,807
Dividends and distributions reinvested 1,659,231 45,287,552 1,265,292 27,814,867
Redeemed (17,949,894) (483,635,186) (12,955,862) (288,650,558)
--------------- --------------- --------------- ---------------
Net increase 28,996,226 $ 790,272,185 43,683,297 $ 947,214,116
=============== =============== =============== ===============
- -----------------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 40,869,800 $ 1,108,078,820 27,077,516 $ 600,973,013
Dividends and distributions reinvested 503,255 13,692,209 136,393 3,097,456
Redeemed (4,980,225) (135,146,200) (1,024,808) (23,404,708)
--------------- --------------- --------------- ---------------
Net increase 36,392,830 $ 986,624,829 26,189,101 $ 580,665,761
=============== =============== =============== ===============
- -----------------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 10,384,545 $ 281,240,862 13,345,163 $ 288,841,445
Dividends and distributions reinvested 238,379 6,449,836 208,621 4,536,885
Redeemed (4,094,549) (109,186,502) (2,671,307) (59,730,279)
--------------- --------------- --------------- ---------------
Net increase 6,528,375 $ 178,504,196 10,882,477 $ 233,648,051
=============== =============== =============== ===============
</TABLE>
1. For the year ended June 30, 1995 for Class A and Class C shares and for the
period from October 1, 1994 (inception of offering) to June 30, 1995 for Class B
shares.
================================================================================
3. Unrealized Gains and
Losses on Investments
At June 30, 1996, net unrealized appreciation on investments and options written
of $649,543,934 was composed of gross appreciation of $703,620,168, and gross
depreciation of $54,076,234.
18 Oppenheimer Main Street Income & Growth Fund
<PAGE>
================================================================================
4. Management Fees
And Other Transactions
With Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 0.65% on the first
$200 million of average annual net assets with a reduction of 0.05% on each $150
million thereafter to $500 million and 0.45% on net assets in excess of $500
million. The Manager has agreed to reimburse the Fund if aggregate expenses
(with specified exceptions) exceed the most stringent applicable regulatory
limit on Fund expenses.
For the year ended June 30, 1996, commissions (sales charges paid by
investors) on sales of Class A shares totaled $34,680,166, of which $8,833,275
was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and
Class C shares totaled $40,377,013 and $2,598,706, respectively, of which
$852,802 and $40,623 was paid to an affiliated broker/dealer. During the year
ended June 30, 1996, OFDI received contingent deferred sales charges of
$2,198,614 and $204,629 upon redemption of Class B and Class C shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer
and shareholder servicing agent for the Fund, and for other registered
investment companies. OFS's total costs of providing such services are allocated
ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to reimburse OFDI
for a portion of its costs incurred in connection with the personal service and
maintenance of accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate that may not exceed 0.25% of the average annual net
assets of Class A shares of the Fund. OFDI uses the service fee to reimburse
brokers, dealers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that hold Class
A shares. During the year ended June 30, 1996, OFDI paid $248,262 to an
affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
The Fund has adopted reimbursement type Distribution and Service Plans for
Class B and Class C shares to reimburse OFDI for its services and costs in
distributing Class B and Class C shares and servicing accounts. Under the Plans,
the Fund pays OFDI an annual asset-based sales charge of 0.75% per year on Class
B shares that are outstanding for 6 years or less and on Class C shares, as
reimbursement for sales commissions paid from its own resources at the time of
sale and associated financing costs. If the Plans are terminated by the Fund,
the Board of Directors may allow the Fund to continue payments of the
asset-based sales charge to OFDI for certain expenses it incurred before the
Plans were terminated. OFDI also receives a service fee of 0.25% per year as
reimbursement for costs incurred in connection with the personal service and
maintenance of accounts that hold shares of the Fund, including amounts paid to
brokers, dealers, banks and other financial institutions. Both fees are computed
on the average annual net assets of Class B and Class C shares, determined as of
the close of each regular business day. During the year ended June 30, 1996,
OFDI paid $13,009 and $82,364, respectively, to an affiliated broker/dealer as
reimbursement for Class B and Class C personal service and maintenance expenses
and retained $10,854,702 and $2,651,935, respectively, as reimbursement for
Class B and Class C sales commissions and service fee advances, as well as
financing costs. At June 30, 1996, OFDI had incurred unreimbursed expenses of
$66,935,637 for Class B and $6,883,061 for Class C.
================================================================================
5. Forward Contracts
A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future date, at a negotiated rate.
The Fund uses forward contracts to seek to manage foreign currency risks.
They may also be used to tactically shift portfolio currency risk. The Fund
generally enters into forward contracts as a hedge upon the purchase or sale of
a security denominated in a foreign currency. In addition, the Fund may enter
into such contracts as a hedge against changes in foreign currency exchange
rates on portfolio positions.
Forward contracts are valued based on the closing prices of the forward
currency contract rates in the London foreign exchange markets on a daily basis
as provided by a reliable bank or dealer. The Fund will realize a gain or loss
upon the closing or settlement of the forward transaction.
Securities held in segregated accounts to cover net exposure on outstanding
forward contracts are noted in the Statement of Investments where applicable.
Unrealized appreciation or depreciation on forward contracts is reported in the
Statement of Assets and Liabilities. Realized gains and losses are reported with
all other foreign currency gains and losses in the Fund's Statement of
Operations.
19 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Notes to Financial Statements (Continued)
================================================================================
5. Forward Contracts
(continued)
Risks include the potential inability of the counterparty to meet the terms of
the contract and unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
At June 30, 1996, the Fund had outstanding forward contracts to sell foreign
currencies as follows:
<TABLE>
<CAPTION>
Contract Valuation as of Unrealized
Contracts to Sell Exchange Date Amount (000s) June 30, 1996 Appreciation
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Japanese Yen (JPY) 7/11/96 $15,591,750 JPY $142,456,643 $ 3,192,586
</TABLE>
================================================================================
6. Option Activity
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a
footnote to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the opportunity
for profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Fund may incur a loss if
the market price of the security decreases and the option is exercised. The risk
in buying an option is that the Fund pays a premium whether or not the option is
exercised. The Fund also has the additional risk of not being able to enter into
a closing transaction if a liquid secondary market does not exist.
Written option activity for the year ended June 30, 1996 was as follows:
Call Options
----------------------------
Number of Amount of
Options Premiums
- --------------------------------------------------------------------------------
Options outstanding at June 30, 1995 400 $ 38,799
- --------------------------------------------------------------------------------
Options written 11,750 3,315,011
- --------------------------------------------------------------------------------
Options closed or expired (10,650) (2,608,335)
- --------------------------------------------------------------------------------
Options exercised (1,500) (745,475)
----------- -----------
Options outstanding at June 30, 1996 -- $ --
=========== ===========
================================================================================
7. Illiquid and Restricted
Securities
At June 30, 1996, investments in securities included issues that are illiquid or
restricted. The securities are often purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Trustees as reflecting fair value. A security may also be considered
illiquid if its valuation has not changed for a certain period of time. The Fund
intends to invest no more than 10% of its net assets (determined at the time of
purchase and reviewed from time to time) in illiquid or restricted securities.
The aggregate value of these securities subject to this limitation at June 30,
1996 was $35,120,000, which represents 0.62% of the Fund's net assets.
Information concerning these securities is as follows:
<TABLE>
<CAPTION>
Valuation Per Unit
Security Acquisition Date Cost Per Unit As of June 30, 1996
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Corporate Express, Inc. 4.50% Cv. Nts., 7/1/00 6/19/96 $ 1.00 $ .99
Globalstar Telecommunications Ltd., 6.50% Cv. Preferred
Equivalent Obligations due 3/1/06 2/29/96 $ 50.00 $ 42.00
Physicians Clinical Laboratory Inc., 7.50% Cv. Sub. Debs., 8/15/00 1/12/94--
10/25/95 $ 1.06 $ .10
</TABLE>
20 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Independent Auditors' Report
================================================================================
The Board of Directors and Shareholders of Oppenheimer Main Street Income &
Growth Fund:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Main Street Income and Growth Fund
as of June 30, 1996, the related statement of operations for the year then
ended, the statements of changes in net assets for the years ended June 30, 1996
and 1995, and the financial highlights for the period July 1, 1991 to June 30,
1996. 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 generally accepted auditing
standards. 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. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at June 30,
1996 by correspondence with the custodian and brokers; where replies were not
received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Oppenheimer Main
Street Income and Growth Fund at June 30, 1996, the results of its operations,
the changes in its net assets, and the financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
July 22, 1996
21 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Federal Income Tax Information (Unaudited)
================================================================================
In early 1997, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1996. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
Distributions of $.20357, $.16076 and $.15823 per share were paid to Class
A, Class B and Class C shareholders, respectively, on December 26, 1995, of
which, for each class of shares, $.0213 was designated as a "capital gain
distribution" for federal income tax purposes. Whether received in stock or
cash, the capital gain distribution should be treated by shareholders as a gain
from the sale of capital assets held for more than one year (long-term capital
gains).
Dividends paid by the Fund during the fiscal year ended June 30, 1996 which
are not designated as capital gain distributions should be multiplied by 27.15%
to arrive at the net amount eligible for the corporate dividend-received
deduction.
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.
22 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Oppenheimer Main Street Income & Growth Fund
A Series of Oppenheimer Main Street Funds, Inc.
================================================================================
Officers and James C. Swain, Chairman and Chief Executive Officer
Directors Bridget A. Macaskill, Director and President
Robert G. Avis, Director
William A. Baker, Director
Charles Conrad, Jr., Director
Jon S. Fossel, Director
Sam Freedman, Director
Raymond J. Kalinowski, Director
C. Howard Kast, Director
Robert M. Kirchner, Director
Ned M. Steel, Director
George C. Bowen, Vice President,
Treasurer and Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
Robert C. Doll, Jr., Vice President
Robert J. Milnamow, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
================================================================================
Investment Advisor OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
================================================================================
Transfer and OppenheimerFunds Services
Shareholder
Servicing Agent
================================================================================
Custodian of The Bank of New York
Portfolio
Securities
================================================================================
Independent Deloitte & Touche LLP
Auditors
================================================================================
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of Oppenheimer Main Street Income &
Growth Fund. This report must be preceded or accompanied by a Prospectus of
Oppenheimer Main Street Income & Growth Fund. For material information
concerning the Fund, see the Prospectus.
Shares of Oppenheimer funds are not deposits or obligations of any bank, are not
guaranteed by any bank, and are not insured by the FDIC or any other agency, and
involve investment risks, including possible loss of the principal amount
invested.
23 Oppenheimer Main Street Income & Growth Fund
<PAGE>
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RA0700.001.0696 August 31, 1996
[PICTURE OF JENNIFER LEONARD]
Jennifer Leonard, Customer Service Representative
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"How may I help you?"
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So call us today--we're here to help.
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