[COVER]
Semiannual Report February 28, 1998
O P P E N H E I M E R
Main Street
Income &
Growth Fund(r)
[GRAPHIC OF A BUS]
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE>
Contents
3 President's Letter
4 Fund Performance
6 An Interview with the Fund's Managers
10 Statement of Investments
18 Statement of Assets and Liabilities
20 Statement of Operations
21 Statements of Changes in Net Assets
22 Financial Highlights
26 Notes to Financial Statements
33 Officers and Directors
36 Information and Services
Report highlights
- ------------------
[bullet] Maintain a Long-Term Focus: The U.S. stock market experienced numerous
bouts of day-to-day volatility during the past six months. However, when viewed
from a six-month perspective, the stock market rose modestly, achieving new
highs on most of the major broad-market indexes in February. This underscores
the importance of keeping a long-term perspective when investing.
[bullet] Our pharmaceutical holdings produced above-average returns and led the
Fund's overall performance. These companies reported good earnings, were not
economically sensitive, had no significant ties to the problems in Asia and have
a host of new products coming out this year.
Cumulative Total Returns
For the 6-Month Period Ended 2/28/98
Class A
Without With
Sales Chg.(1) Sales Chg.(2)
13.01% 6.51%
Class B
Without With
Sales Chg.(1) Sales Chg.(2)
12.58% 7.58%
Class C
Without With
Sales Chg.(1) Sales Chg.(2)
12.63% 11.63%
Class Y
Without With
Sales Chg.(1) Sales Chg.(2)
13.12% 13.12%
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
In reviewing performance and rankings, please remember that 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.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account.
2. Class A returns include the current maximum initial sales charge of 5.75%.
Class B returns include the applicable contingent deferred sales charge of 5%.
Class C returns include the contingent deferred sales charge of 1%. Class Y
shares are not available for sale to individual shareholders. An explanation of
the different performance calculations is in the Fund's prospectus. Class B and
C shares are subject to an annual 0.75% asset-based sales charge.
2 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Dear shareholder,
- -------------------------------------------------------------------------------
[PHOTO OF JAMES C. SWAIN]
James C. Swain
Chairman
Oppenheimer Main Street
Income & Growth Fund
[PHOTO OF BRIDGET A. MACASKILL]
Bridget A. Macaskill
President
Oppenheimer Main Street
Income & Growth Fund
These have been very positive times for many American investors. The U.S.
economy has continued to grow at a moderate pace, unemployment has fallen to
its lowest level in 30 years and inflation has also fallen to a record low. In
fact, long-term interest rates have fallen to their lowest level since the
government began issuing 30-year Treasury bonds in 1977.
What benefits does this provide to the average American? First, when
unemployment levels are low, many individuals tend to feel a greater sense of
job security and can command higher wages because there are fewer unemployed
workers vying for their jobs. Second, many homeowners are opting to refinance
their existing home mortgage loans and take advan- tage of lower financing
rates. And third, because wages are increasing faster than the rate of
inflation, a paycheck may stretch farther and investors, as consumers, are able
to enjoy a higher level of disposable income. This extra income can be put to
use in many ways, including allocating more money to investment opportunities.
Some industry analysts have tempered such positive news by suggesting that
if the rate of inflation falls any lower, it might actually trigger a period of
deflation, where we see the prices of American goods and services decline. While
lower prices may sound like positive news, in reality it isn't: When prices fall
too low, it erodes the value of those goods to the producer. That is, when
economic conditions force a decrease in the price of goods, companies have to
sell more of those items in order to make the same amount of profit, which
translates into greater difficulties for corporations seeking to improve their
bottom lines.
At OppenheimerFunds, we do not believe we will see a period of deflation
in the United States. The fundamental factors that have driven the U.S. market
still appear to be in place: an economy that's in its eighth year of expansion
with moderate growth, low unemployment, virtually no inflation and low interest
rates. However, because of economic uncertainties in other parts of the world,
particularly Asia, we expect to see slower growth for stocks in 1998 and a year
in which double-digit returns from the equity markets are unlikely. It's also
possible that we may see investors favor the fixed, more secure interest
payments offered from the bond markets.
In closing, we'd like to reassure you that as professional money managers,
we continue to keep a watchful eye on these situations and are closely
monitoring your fund's investments. In times like these, your financial advisor
can be of invaluable assistance to you in helping review your financial plan and
guide your investments accordingly.
Thank you for your confidence in OppenheimerFunds, The Right Way to
Invest. 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
March 20, 1998
3 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Performance update
- --------------------------------------------------------------------------------
Oppenheimer Main Street Income & Growth Fund per formed well over the past six
months. For the six-month period ended February 28, 1998, the Fund's Class A
shares provided a cumulative total return of 13.01%.(2)
[MOUNTAIN GRAPHIC]
Growth of $10,000
Over five years(3)
(without sales charges)
[BOX] Oppenheimer Main Street Income
& Growth Fund Class A shares
[BOX] S&P 500 Index
[PLOT POINTS]
3/31/93 10000 10000
10348 10048
11827 10308
12519 10547
12488 10147
11836 10190
12527 10688
12327 10686
13303 11727
14265 12846
15510 13867
16120 14702
17026 15491
17441 16186
17696 16687
18652 18078
18940 18562
21375 21803
23088 23436
23611 24109
3/31/98 25974 27472
<TABLE>
<CAPTION>
Avg Annual Total Returns
For the Periods Ended 3/31/98(1)
Class A
1 year 5 year 10 year
<S> <C> <C>
29.25% 19.60% 21.66%
Class B
Since
1 year 5 year Inception
31.11% N/A 21.68%
Class C
Since
1 year 5 year Inception
35.10% N/A 18.71%
Class Y
Since
1 year 5 year Inception
37.43% N/A 30.46%
Cumulative Total Return
For the Period Ended 3/31/98(1)
Class A
5 year
144.71% $24,471(3)
</TABLE>
1. Total returns include changes in share price and reinvestment of dividends
and capital gains distributions in a hypothetical investment for the periods
shown. Class A returns include the current maximum initial sales charge of
5.75%. Class A shares were first publicly offered on 2/3/88. The Fund's maximum
sales charge for Class A shares was lower prior to 10/29/93, so actual
performance may have been higher. Class B returns include the applicable
contingent deferred sales charge of 5% (1-year) and 3% (since inception on
10/1/94). Class C returns include the contingent deferred sales charge of 1%
since inception on 12/1/93. Class Y shares were first publicly offered on
11/1/96 and are not available for sale to individual shareholders. An
explanation of the different performance calculations is in the Fund's
prospectus. Class B and C shares are subject to an annual 0.75% asset-based
sales charge.
2. Includes changes in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account.
3. Results of a hypothetical $10,000 investment in Class A shares on March 31,
1993. The S&P 500 is a broad-based unmanaged stock index including daily
reinvestment of dividends, and cannot be purchased directly by investors. Past
performance does not guarantee future results.
4 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Portfolio review
- --------------------------------------------------------------------------------
Oppenheimer Main Street Income & Growth Fund is for investors who are looking
for high total return from a diversified portfolio.
What We Look For
[bullet] High growth from stocks in high growth industries.
[bullet] Large companies with strong economies of scale.
[bullet] Dividend-paying stocks of quality companies for income.
[bullet] Underearning companies undergoing positive changes.
[bullet] Smaller "niche" companies.
[PIE CHART]
<TABLE>
<CAPTION>
Portfolio Allocation(4)
<S> <C>
[BOX] Stocks 88.0%
[BOX] Short-Term
Instruments 8.7
[BOX] Bonds 2.6
[BOX] Other Securities 0.7
</TABLE>
Top 10 Stock Holdings(4)
<TABLE>
<S> <C> <C> <C>
.................................................................
Schlumberger Ltd. 2.9% Bristol-Myers Squibb Co. 1.9%
.................................................................
Travelers Group, Inc. 2.8 IBM Corp. 1.9
.................................................................
Merck & Co., Inc. 2.7 Wells Fargo & Co. 1.8
.................................................................
American Express Co. 2.3 Morgan Stanley, Dean 1.6
Witter, Discover & Co.
.................................................................
McDonald's Corp. 1.9 Hilton Hotels Corp. 1.6
.................................................................
</TABLE>
Top 5 Industries(4)
<TABLE>
<S> <C>
.......................................
Diversified Financial 9.9%
.......................................
Banks 9.9
.......................................
Healthcare/Drugs 9.7
.......................................
Leisure & Entertainment 7.1
.......................................
Energy Services & Producers 5.0
.......................................
</TABLE>
4. Portfolio is subject to change. Percentages are as of February 28, 1998 and
are based on total market value of investments.
5 Oppenheimer Main Street Income & Growth Fund
<PAGE>
An interview with your Fund's managers
- --------------------------------------------------------------------------------
"We decreased our
bond holdings
during the past
six months,
primarily the result
of profit taking."
How has the Fund performed during the six-month period ended February 28, 1998?
Oppenheimer Main Street Income & Growth Fund's Class A shares provided a
cumulative total return of 13.01% for the six-month period ended February 28,
1998.(1)
How did the U.S. financial markets perform over the last six months?
When viewed from a day-to-day perspective, the U.S. stock market was quite
volatile, appearing to rise and fall sharply with each new release of global
economic news. The sharpest drop occurred at the end of October, when the Dow
Jones Industrial Average experienced its largest one-day point loss in history.
This was a reaction to problems in Asian markets, where currency devaluations
created concerns for U.S. companies doing business overseas.
However, when viewed from a six-month perspective, the U.S. stock market
rose modestly, achieving new record highs on most of the major broad-market
indexes in February. In our view, this once again underscores the importance of
maintaining a long-term perspective when investing.
The U.S. bond market rose steadily over the past six months, interrupted
occasionally by bouts of day-to-day volatility. Overall, however, the absence of
inflationary pressures and the continuation of moderate economic growth
supported bond prices.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account.
6 Oppenheimer Main Street Income & Growth Fund
<PAGE>
How were the Fund's assets allocated among stocks and bonds?
As of February 28, 1998, the Portfolio was composed of about 88% stocks and
about 3% bonds. That represents a substantial decrease in our bond holdings and
an increase in cash over the past six months. This change is primarily the
result of profit-taking. Earlier in the six-month period, 30-year U.S. Treasury
securities comprised about 15% of the Fund. We sold most of these bonds as
interest rates declined, locking in capital gains. We have not yet reinvested
the proceeds, but expect to find opportunities in the stock market.
Where did you find the most attractive opportunities in the stock market?
As always, we looked for companies with superior growth characteristics. With
that thought in mind, we bought stock in Wal-Mart, a retail company that
exhibited solid, consistent growth and was available at a reasonable valuation.
In the healthcare industry, we focused on large drug companies such as Merck,
which are benefiting from strong drug sales. We invested in technology
companies, such as IBM, where valuations seemed attractive after a period of
temporary price weakness. In addition, we found opportunities in certain foreign
banks, mainly in Europe. These banks are in the beginning stages of
restructuring, and we expect them to achieve the same kinds of productivity
improvements that U.S. banks have been making for several years.
7 Oppenheimer Main Street Income & Growth Fund
<PAGE>
An interview with your Fund's managers
- --------------------------------------------------------------------------------
"The drug
companies were
probably the
best-performing
sector for
the Fund."
How was the Fund affected by the economic crisis in Asia?
We had no direct involvement in Asian companies, but some of the Fund's U.S.
stock holdings were negatively affected, especially those with significant
markets in Asia. For example, a few of the Fund's energy service stocks felt the
brunt of lower demand from the region and lower oil prices overall. The crisis
also hurt some of the U.S. banks in our portfolio, primarily because these
multi-national banks have been helping to finance businesses in Asia, and the
crisis rendered some Asian companies unable to repay their loans. However, the
large bond position we maintained at the time of the crisis in late October
helped cushion negative effects on the Fund.
What investments contributed most to the Fund's performance?
The drug companies were probably the best-performing sector for the Fund. These
companies have been reporting good earnings, they're generally not economically
sensitive, and they have plenty of new products coming out this year.
Merck was our largest position in the pharmaceutical sector and the Fund's
second largest position at the end of the period. In our opinion, Merck has one
of the industry's most productive R&D efforts. They also have some attractive
products scheduled for release this year, including one for asthma and one for
migraine headaches. Yet, earlier in 1997, Merck was one of the least expensively
valued stocks in the drug industry. We thought Merck was undervalued given our
view of the potential for the new drugs.
8 Oppenheimer Main Street Income & Growth Fund
<PAGE>
"We expect more
stock market
volatility
in 1998 as
investor sentiment
changes with
each new
release of
economic data."
Why did the Fund recently reduce its dividend?
We reduced the dividend as of March 13, 1998 because lower interest rates and
dividend yields have affected the Fund's ability to generate income. At that
time, bond yields were at their lowest levels in decades, and the average
dividend-paying stock had a yield of under two percent. That's because stock
prices have risen significantly, but their dividends-per-share have generally
not been adjusted to keep pace.
Remember, the investment objective of Oppenheimer Main Street Income &
Growth Fund is to seek high total returns from equity and debt securities.
Accordingly, we look for stocks and bonds not just to generate dividend income,
but to deliver an attractive combination of income and growth over time. If
income-producing opportunities should arise in the stock or bond markets that
would give us good potential for high total returns, we will certainly consider
them. However, right now those opportunities appear to be few and far between.
What is your outlook for the financial markets in 1998?
We are cautiously optimistic because positive rates of economic growth and low
inflation should continue to support the revenues and earnings of U.S.
companies. Yet, persistent economic problems in Asia may cause some slowdown in
revenues. As a result, we expect more stock market volatility in 1998 as
investor sentiment changes with each new release of economic data. In the end,
however, we believe that the stock market should produce positive results in
line with historical averages. We also expect slowing economic growth and low
inflation to keep interest rates at current levels or modestly lower.
9 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Statement of Investments February 28, 1998 (Unaudited)
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
===============================================================
<S> <C> <C>
Common Stocks -- 88.9%
- ---------------------------------------------------------------
Basic Materials -- 2.0%
- ---------------------------------------------------------------
Chemicals -- 2.0%
Du Pont (E.I.) De Nemours & Co. 600,000 $36,787,500
- ---------------------------------------------------------------
Monsanto Co. 2,506,800 127,533,450
- ---------------------------------------------------------------
Sigma-Aldrich Corp. 1,235,000 48,782,500
-----------
213,103,450
- ---------------------------------------------------------------
Consumer Cyclicals -- 15.5%
- ---------------------------------------------------------------
Autos & Housing -- 0.6%
Stanley Works (The) 1,318,600 63,045,562
- ---------------------------------------------------------------
Leisure & Entertainment -- 6.5%
Hilton Hotels Corp. 5,523,000 164,654,437
- ---------------------------------------------------------------
Marriott International, Inc. 1,670,300 126,525,225
- ---------------------------------------------------------------
McDonald's Corp. 3,676,100 201,266,475
- ---------------------------------------------------------------
Mirage Resorts, Inc.(1) 2,035,700 46,566,637
- ---------------------------------------------------------------
Time Warner, Inc. 2,100,000 141,750,000
-----------
680,762,774
- ---------------------------------------------------------------
Media -- 3.3%
CBS Corp. 3,903,139 120,753,363
- ---------------------------------------------------------------
Chancellor Media Corp.(1) 1,000,000 44,750,000
- ---------------------------------------------------------------
Cox Communications, Inc., Cl. A(1) 1,933,600 74,564,450
- ---------------------------------------------------------------
Omnicom Group, Inc. 2,355,800 107,777,850
-----------
347,845,663
- ---------------------------------------------------------------
Retail: General -- 3.1%
CVS Corp. 898,000 66,508,125
- ---------------------------------------------------------------
Federated Department Stores, Inc.(1) 2,174,500 101,929,687
- ---------------------------------------------------------------
Wal-Mart Stores, Inc. 3,325,000 153,989,062
-----------
322,426,874
- ---------------------------------------------------------------
Retail: Specialty -- 2.0%
Gap, Inc. 2,675,000 119,539,062
- ---------------------------------------------------------------
Home Depot, Inc. 750,000 47,859,375
- ---------------------------------------------------------------
Tiffany & Co. 867,000 40,749,000
-----------
208,147,437
</TABLE>
10 Oppenheimer Main Street Income & Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
=================================================================
<S> <C> <C>
Consumer Non-Cyclicals -- 21.3%
- -----------------------------------------------------------------
Beverages -- 2.4%
Anheuser-Busch Cos., Inc. 2,433,500 $114,070,312
- -----------------------------------------------------------------
PepsiCo, Inc. 3,675,000 134,367,187
-------------
248,437,499
- -----------------------------------------------------------------
Food -- 4.7%
Bestfoods 589,300 62,097,487
- -----------------------------------------------------------------
H.J. Heinz Co. 1,625,000 91,507,812
- -----------------------------------------------------------------
Nabisco Holdings Corp., Cl. A 2,701,100 127,458,156
- -----------------------------------------------------------------
Ralston-Ralston Purina Group 1,225,800 124,342,088
- -----------------------------------------------------------------
Unilever NV, NY Shares 1,300,000 83,606,250
-------------
489,011,793
- -----------------------------------------------------------------
Healthcare/Drugs -- 9.7%
American Home Products Corp. 1,550,000 145,312,500
- -----------------------------------------------------------------
Amgen, Inc.(1) 1,430,000 75,968,750
- -----------------------------------------------------------------
Bristol-Myers Squibb Co. 2,000,000 200,375,000
- -----------------------------------------------------------------
Johnson & Johnson 945,000 71,347,500
- -----------------------------------------------------------------
Merck & Co., Inc. 2,280,000 290,842,500
- -----------------------------------------------------------------
Pfizer, Inc. 250,000 22,125,000
- -----------------------------------------------------------------
Schering-Plough Corp. 1,444,800 109,895,100
- -----------------------------------------------------------------
Warner Lambert Co. 700,000 102,375,000
-------------
1,018,241,350
- -----------------------------------------------------------------
Healthcare/Supplies & Services -- 2.2%
Bard (C.R.), Inc. 1,160,000 40,455,000
- -----------------------------------------------------------------
Becton, Dickinson & Co. 532,100 33,854,863
- -----------------------------------------------------------------
Cardinal Health, Inc. 365,300 29,908,938
- -----------------------------------------------------------------
HEALTHSOUTH Corp.(1) 1,800,000 48,600,000
- -----------------------------------------------------------------
Tenet Healthcare Corp.(1) 2,100,000 78,356,250
-------------
231,175,051
- -----------------------------------------------------------------
Tobacco -- 2.3%
Philip Morris Cos., Inc. 3,375,000 146,601,563
- -----------------------------------------------------------------
RJR Nabisco Holdings Corp. 2,860,000 98,848,750
-------------
245,450,313
</TABLE>
11 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
=================================================================
<S> <C> <C>
Energy -- 5.5%
- -----------------------------------------------------------------
Energy Services & Producers -- 5.1%
Apache Corp. 1,300,000 $44,200,000
- -----------------------------------------------------------------
Halliburton Co. 1,875,000 87,187,500
- -----------------------------------------------------------------
Nabors Industries, Inc.(1) 1,200,000 27,450,000
- -----------------------------------------------------------------
Schlumberger Ltd. 4,080,000 307,530,000
- -----------------------------------------------------------------
Stolt Comex Seaway SA(1) 210,400 5,075,900
- -----------------------------------------------------------------
Western Atlas, Inc.(1) 816,800 62,025,750
-------------
533,469,150
- -----------------------------------------------------------------
Oil-Integrated -- 0.4%
Enron Corp. 1,000,000 47,000,000
- -----------------------------------------------------------------
Financial -- 21.7%
- -----------------------------------------------------------------
Banks -- 10.0%
BankAmerica Corp. 1,200,000 93,000,000
- -----------------------------------------------------------------
Chase Manhattan Corp. (New) 600,000 74,437,500
- -----------------------------------------------------------------
Citicorp 700,000 92,750,000
- -----------------------------------------------------------------
Commercial Federal Corp. 867,750 30,696,656
- -----------------------------------------------------------------
Credit Suisse Group 270,000 48,753,166
- -----------------------------------------------------------------
First Chicago NBD Corp. 917,100 75,374,156
- -----------------------------------------------------------------
Fleet Financial Group, Inc. 1,000,000 78,812,500
- -----------------------------------------------------------------
KeyCorp 600,000 42,037,500
- -----------------------------------------------------------------
Mellon Bank Corp. 1,244,200 77,529,213
- -----------------------------------------------------------------
Northern Trust Corp. 540,000 41,073,750
- -----------------------------------------------------------------
Societe Generale 236,800 35,699,196
- -----------------------------------------------------------------
Summit Bancorp 1,417,500 70,432,031
- -----------------------------------------------------------------
UBS, Bearer (1) 17,000 26,480,021
- -----------------------------------------------------------------
Unibanco-Uniao de Bancos Brasileiros
SA, Sponsored GDR Representing 500
Units of one Preferred Share of
Unibanco and one Preferred Share
of Unibanco Holdings SA 1,000,000 34,250,000
- -----------------------------------------------------------------
Union Planters Corp. 500,000 30,906,250
- -----------------------------------------------------------------
Wells Fargo & Co. 604,333 194,595,226
-------------
1,046,827,165
</TABLE>
12 Oppenheimer Main Street Income & Growth Fund
<PAGE>
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
=======================================================================
<S> <C> <C>
- -----------------------------------------------------------------------
Diversified Financial -- 10.0%
American Express Co. 2,658,400 $ 239,422,150
- -----------------------------------------------------------------------
Associates First Capital Corp., Cl. A 977,200 78,176,000
- -----------------------------------------------------------------------
Fannie Mae 1,606,000 102,482,875
- -----------------------------------------------------------------------
MBNA Corp. 1,055,000 37,782,188
- -----------------------------------------------------------------------
Merrill Lynch & Co., Inc. 1,520,000 108,775,000
- -----------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 2,471,200 172,211,750
- -----------------------------------------------------------------------
Price (T. Rowe) Associates, Inc. 200,000 13,275,000
- -----------------------------------------------------------------------
Travelers Group, Inc. 5,304,401 295,720,356
-------------
1,047,845,319
- -----------------------------------------------------------------------
Insurance -- 1.7%
Allstate Corp. 1,577,600 147,111,200
- -----------------------------------------------------------------------
ESG Re Ltd.(1) 25,000 662,500
- -----------------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 756,500 27,895,938
-------------
175,669,638
- -----------------------------------------------------------------------
Industrial -- 5.4%
- -----------------------------------------------------------------------
Electrical Equipment -- 2.5%
- -----------------------------------------------------------------------
AMP, Inc. 980,000 43,303,750
- -----------------------------------------------------------------------
General Electric Co. 1,000,000 77,750,000
- -----------------------------------------------------------------------
Grainger (W.W.), Inc. 667,500 64,622,344
- -----------------------------------------------------------------------
Hubbell, Inc., Cl. B 680,200 34,265,075
- -----------------------------------------------------------------------
Raychem Corp. 961,500 41,765,156
-------------
261,706,325
- -----------------------------------------------------------------------
Industrial Materials -- 0.2%
Bemis Co., Inc. 515,600 23,234,225
- -----------------------------------------------------------------------
Industrial Services -- 1.6%
- -----------------------------------------------------------------------
Donnelley (R.R.) & Sons Co. 1,325,000 52,503,125
- -----------------------------------------------------------------------
Interpublic Group of Cos., Inc. 1,676,850 91,388,325
- -----------------------------------------------------------------------
USA Waste Services, Inc.(1) 500,000 20,812,500
-------------
164,703,950
- -----------------------------------------------------------------------
Manufacturing -- 1.1%
Avery-Dennison Corp. 1,569,900 79,279,950
- -----------------------------------------------------------------------
Sealed Air Corp.(1) 515,600 34,706,325
- -----------------------------------------------------------------------
Steelcase, Inc., Cl. A(1) 77,000 2,776,813
-------------
116,763,088
</TABLE>
13 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
================================================================
<S> <C> <C>
Technology -- 13.5%
- ----------------------------------------------------------------
Computer Hardware -- 2.4%
Adaptec, Inc.(1) 815,000 $21,546,563
- ----------------------------------------------------------------
International Business Machines Corp. 1,910,000 199,475,625
- ----------------------------------------------------------------
Komag, Inc.(1) 143,000 2,055,625
- ----------------------------------------------------------------
Seagate Technology, Inc.(1) 1,100,000 26,743,750
-----------
249,821,563
- ----------------------------------------------------------------
Computer Software/Services -- 4.1%
Automatic Data Processing, Inc. 907,500 55,414,219
- ----------------------------------------------------------------
BMC Software, Inc.(1) 1,060,000 81,090,000
- ----------------------------------------------------------------
Cadence Design Systems, Inc.(1) 1,800,000 62,887,500
- ----------------------------------------------------------------
First Data Corp. 2,300,000 78,200,000
- ----------------------------------------------------------------
Microsoft Corp.(1) 1,200,000 101,700,000
- ----------------------------------------------------------------
Sungard Data Systems, Inc.(1) 1,112,000 38,016,500
- ----------------------------------------------------------------
Synopsys, Inc.(1) 500,000 17,468,750
-----------
434,776,969
- ----------------------------------------------------------------
Electronics -- 2.4%
Altera Corp.(1) 900,000 38,812,500
- ----------------------------------------------------------------
Analog Devices, Inc.(1) 1,000,000 32,250,000
- ----------------------------------------------------------------
Berg Electronics Corp.(1) 595,000 16,808,750
- ----------------------------------------------------------------
General Motors Corp., Cl. H 500,900 20,756,044
- ----------------------------------------------------------------
Intel Corp. 300,000 26,906,250
- ----------------------------------------------------------------
LSI Logic Corp.(1) 1,000,000 23,687,500
- ----------------------------------------------------------------
Texas Instruments, Inc. 530,000 30,673,750
- ----------------------------------------------------------------
Thermo Electron Corp.(1) 739,900 30,335,900
- ----------------------------------------------------------------
Waters Corp.(1) 587,200 29,029,700
-----------
249,260,394
- ----------------------------------------------------------------
Telecommunications-Technology -- 4.6%
ADC Telecommunications, Inc.(1) 900,000 23,231,250
- ----------------------------------------------------------------
Bay Networks, Inc.(1) 1,917,500 64,955,313
- ----------------------------------------------------------------
CIENA Corp.(1) 1,000,000 41,937,500
- ----------------------------------------------------------------
Cisco Systems, Inc.(1) 1,575,000 103,753,125
- ----------------------------------------------------------------
Lucent Technologies, Inc. 901,400 97,689,225
- ----------------------------------------------------------------
MCI Communications Corp. 1,000,000 47,812,500
- ----------------------------------------------------------------
Tellabs, Inc.(1) 1,780,000 107,467,500
-----------
486,846,413
</TABLE>
14 Oppenheimer Main Street Income & Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
============================================================================================
<S> <C> <C>
Utilities -- 4.0%
- --------------------------------------------------------------------------------------------
Gas Utilities -- 0.7%
Consolidated Natural Gas Co. 530,600 $ 30,509,500
- --------------------------------------------------------------------------------------------
Sonat, Inc. 1,000,000 43,125,000
-------------
73,634,500
- --------------------------------------------------------------------------------------------
Telephone Utilities -- 3.3%
- --------------------------------------------------------------------------------------------
AT&T Corp. 1,134,800 69,080,950
- --------------------------------------------------------------------------------------------
GTE Corp. 1,000,000 54,125,000
- --------------------------------------------------------------------------------------------
Sprint Corp. 1,100,000 72,600,000
- --------------------------------------------------------------------------------------------
Teleport Communications Group, Inc., Cl. A(1) 1,977,500 108,020,938
- --------------------------------------------------------------------------------------------
WorldCom, Inc.(1) 1,170,500 44,698,469
-------------
348,525,357
-------------
Total Common Stocks (Cost $6,843,726,920) 9,327,731,822
============================================================================================
Other Securities -- 0.7%
- --------------------------------------------------------------------------------------------
Cia de Inversiones en Telecomunicaciones SA, 7% Provisionally
Redeemable Income Debt Exchangeable for Stock, 3/3/98(2) 225,000 15,693,750
- --------------------------------------------------------------------------------------------
Continental Airlines Finance Trust, 8.50% Cv. Trust Originated
Preferred Securities(2) 125,000 13,296,875
- --------------------------------------------------------------------------------------------
Houston Industries, Inc., 7% Automatic Common Exchange
Securities, Exchangeable for Time Warner, Inc. Common Stock,
7/1/00 703,000 43,498,125
-------------
Total Other Securities (Cost $50,997,133) 72,488,750
Units
============================================================================================
Rights, Warrants and Certificates -- 0.0%
- --------------------------------------------------------------------------------------------
American Satellite Network, Inc. Wts., Exp. 6/99 (Cost $0) 18,750 --
Face
Amount
============================================================================================
U.S. Government Obligations -- 2.4%
- --------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
6.50%, 11/15/26 $57,950,000 62,078,995
6.625%, 2/15/27 64,300,000 70,046,877
STRIPS, 6.929%, 5/15/21(3) 462,000,000 114,579,696
-------------
Total U.S. Government Obligations (Cost $213,452,093) 246,705,568
</TABLE>
15 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
=============================================================================================
<S> <C> <C>
Convertible Corporate Bonds and Notes--0.3%
- ---------------------------------------------------------------------------------------------
ALZA Corp., 5% Cv. Sub. Debs., 5/1/06 $12,800,000 $14,848,000
- ---------------------------------------------------------------------------------------------
Saks Holdings, Inc., 5.50% Cv. Sub. Nts., 9/15/06 10,000,000 9,287,500
- ---------------------------------------------------------------------------------------------
Time Warner, Inc., Zero Coupon Cv. Sr. Sub. Nts., 5.083%,
6/22/13(3) 20,000,000 10,725,000
-----------
Total Convertible Corporate Bonds and Notes (Cost $31,319,650) 34,860,500
=============================================================================================
Short-Term Notes--6.3%(4)
- ---------------------------------------------------------------------------------------------
American Express Credit Corp., 5.49%, 3/24/98 50,000,000 49,824,625
- ---------------------------------------------------------------------------------------------
Countrywide Funding Corp.:
5.52%, 3/25/98 50,000,000 49,816,000
5.57%, 3/27/98 50,000,000 49,798,861
- ---------------------------------------------------------------------------------------------
Ford Motor Credit Co., 5.49%, 3/6/98 50,000,000 49,961,875
- ---------------------------------------------------------------------------------------------
General Electric Capital Services, Inc.:
5.49%, 3/27/98 50,000,000 49,801,750
5.49%, 3/9/98 50,000,000 49,939,000
5.47%, 3/2/98 8,500,000 8,498,659
- ---------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
5.50%, 3/31/98 50,000,000 49,770,833
5.51%, 3/17/98 50,000,000 49,877,555
- ---------------------------------------------------------------------------------------------
Household Finance Corp.:
5.49%, 3/5/98 50,000,000 49,969,500
5.52%, 4/2/98 50,000,000 49,754,667
- ---------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 5.49%, 3/11/98 50,000,000 49,923,750
- ---------------------------------------------------------------------------------------------
Morgan (J.P.) & Co., Inc., 5.49%, 3/23/98 50,000,000 49,832,250
New Center Asset Trust, 5.49%, 3/16/98 50,000,000 49,885,625
-----------
Total Short-Term Notes (Cost $656,654,950) 656,654,950
</TABLE>
16 Oppenheimer Main Street Income & Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
========================================================================================================
<S> <C> <C>
Repurchase Agreements -- 2.5%
- --------------------------------------------------------------------------------------------------------
Repurchase agreement with Salomon Smith Barney Holdings,
Inc., 5.64%, dated 2/27/98, to be repurchased at $263,223,657 on
3/2/98, collateralized by U.S. Treasury Bonds, 9.875% - 10.625%,
8/15/15 - 11/15/15, with a value of $200,837,743, and U.S.
Treasury Nts., 4.75% - 6%, 10/31/98 - 8/15/00, with a value
of $68,078,468 (Cost $263,100,000) $ 263,100,000 $ 263,100,000
- --------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $8,059,250,746) 101.1% 10,601,541,590
- --------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets ( 1.1) (114,102,475)
------------- ---------------
Net Assets 100.0% $10,487,439,115
============= ===============
</TABLE>
1. Non-income producing security.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have been determined to be liquid under guidelines established by the Board of
Directors. These securities amount to $28,990,625 or 0.28% of the Fund's net
assets as of February 28, 1998.
3. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
4. Short-term notes are generally traded on a discount basis; the interest rate
is the discount rate received by the Fund at the time of purchase.
See accompanying Notes to Financial Statements.
17 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Statement of Assets and Liabilities February 28, 1998 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
=================================================================================================
Assets
Investments, at value (cost $8,059,250,746)--see accompanying statement $10,601,541,590
- -------------------------------------------------------------------------------------------------
Cash 594,846
- -------------------------------------------------------------------------------------------------
Receivables:
Investments sold 118,946,718
Shares of capital stock sold 26,097,081
Interest and dividends 10,402,785
- -------------------------------------------------------------------------------------------------
Other 136,602
---------------
Total assets 10,757,719,622
=================================================================================================
Liabilities
Payables and other liabilities:
Investments purchased 251,881,115
Shares of capital stock redeemed 10,941,899
Distribution and service plan fees 3,971,257
Transfer and shareholder servicing agent fees 1,987,812
Shareholder reports 855,553
Directors' fees 2,555
Other 640,316
---------------
Total liabilities 270,280,507
=================================================================================================
Net Assets $10,487,439,115
===============
=================================================================================================
Composition of Net Assets
Par value of shares of capital stock $ 2,976,723
- -------------------------------------------------------------------------------------------------
Additional paid-in capital 7,793,195,740
- -------------------------------------------------------------------------------------------------
Undistributed net investment income 8,131,250
- -------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 140,844,558
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and
liabilities denominated in foreign currencies 2,542,290,844
---------------
Net assets $10,487,439,115
===============
</TABLE>
18 Oppenheimer Main Street Income & Growth Fund
<PAGE>
<TABLE>
<S> <C>
==========================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$5,184,290,233 and 146,642,696 shares of capital stock outstanding) $ 35.35
Maximum offering price per share (net asset value plus sales charge of 5.75%
of offering price) $ 37.51
- ------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$4,096,948,076 and 116,679,796 shares of capital stock outstanding) $ 35.11
- ------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of
$1,170,121,896 and 33,331,191 shares of capital stock outstanding) $ 35.11
- ------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $36,078,910 and 1,018,666 shares of capital stock outstanding) $ 35.42
</TABLE>
See accompanying Notes to Financial Statements.
19 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Statement of Operations For the Six Months Ended February 28, 1998 (Unaudited)
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
=======================================================================================
Investment Income
Dividends (net of foreign withholding taxes of $117,609) $ 47,322,449
- ---------------------------------------------------------------------------------------
Interest 41,098,971
--------------
Total income 88,421,420
=======================================================================================
Expenses
Distribution and service plan fees--Note 4:
Class A 5,720,418
Class B 18,057,383
Class C 5,394,238
- ---------------------------------------------------------------------------------------
Management fees--Note 4 21,583,893
- ---------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 8,376,009
- ---------------------------------------------------------------------------------------
Shareholder reports 1,342,872
- ---------------------------------------------------------------------------------------
Registration and filing fees:
Class A 243,582
Class B 259,283
Class C 49,178
Class Y 6,047
- ---------------------------------------------------------------------------------------
Custodian fees and expenses 219,788
- ---------------------------------------------------------------------------------------
Legal and auditing fees 53,359
- ---------------------------------------------------------------------------------------
Directors' fees and expenses 35,512
- ---------------------------------------------------------------------------------------
Insurance expenses 18,460
- ---------------------------------------------------------------------------------------
Other 204,896
--------------
Total expenses 61,564,918
=======================================================================================
Net Investment Income 26,856,502
=======================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 394,208,686
Closing of futures contracts 26,934,981
Foreign currency transactions (2,456,937)
--------------
Net realized gain 418,686,730
- ---------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 716,978,239
Translation of assets and liabilities denominated in foreign currencies 2,135,884
--------------
Net change 719,114,123
--------------
Net realized and unrealized gain 1,137,800,853
=======================================================================================
Net Increase in Net Assets Resulting from Operations $1,164,657,355
==============
</TABLE>
See accompanying Notes to Financial Statements.
20 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Statements of Changes in Net Assets
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
===============================================================================================
<S> <C> <C>
Operations
Net investment income $ 26,856,502 $ 69,037,133
- -----------------------------------------------------------------------------------------------
Net realized gain 418,686,730 436,466,588
- -----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 719,114,123 1,410,723,467
--------------- --------------
Net increase in net assets resulting from operations 1,164,657,355 1,916,227,188
===============================================================================================
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A (26,685,696) (48,672,471)
Class B (7,607,162) (14,534,654)
Class C (2,168,281) (4,918,987)
Class Y (139,053) (39,313)
- -----------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (337,281,806) (230,404,395)
Class B (260,771,891) (151,242,446)
Class C (77,383,084) (54,897,836)
Class Y (1,708,194) (67)
===============================================================================================
Capital Stock Transactions
Net increase in net assets resulting from capital
stock transactions--Note 2:
Class A 500,978,031 576,537,290
Class B 616,466,178 898,948,324
Class C 89,008,785 114,188,051
Class Y 18,490,788 15,023,989
===============================================================================================
Net Assets
Total increase 1,675,855,970 3,016,214,673
- -----------------------------------------------------------------------------------------------
Beginning of period 8,811,583,145 5,795,368,472
--------------- --------------
End of period (including undistributed net investment
income of $8,131,250 and $17,874,940, respectively) $10,487,439,115 $8,811,583,145
=============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
21 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Financial Highlights
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
-----------------------------------------
Six
Months
Ended
February 28,
1998 Year Ended August 31,
(Unaudited) 1997 1996(3)
===============================================================================================
<S> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $ 33.87 $ 27.95 $ 28.89
- -----------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .16 .39 .07
Net realized and unrealized gain (loss) 4.02 7.91 (1.01)
------- ------- -------
Total income (loss) from investment operations 4.18 8.30 (.94)
Dividends and distributions to shareholders:
Dividends from net investment income (.20) (.40) --
Distributions from net realized gain (2.50) (1.98) --
Distributions in excess of net realized gain -- -- --
------- ------- -------
Total dividends and distributions to shareholders (2.70) (2.38) --
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $ 35.35 $ 33.87 $ 27.95
===============================================================================================
Total Return, at Net Asset Value(5) 13.01% 31.09% (3.25)%
===============================================================================================
Ratios/Supplemental Data
Net assets, end of period (in millions) $ 5,184 $ 4,457 $ 3,143
- -----------------------------------------------------------------------------------------------
Average net assets (in millions) $ 4,751 $ 3,857 $ 3,090
- -----------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.95%(6) 1.29% 1.57%(6)
Expenses 0.93%(6) 0.94% 0.98%(6)
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 51.3% 61.7% 17.5%
Average brokerage commission rate(8) $0.0626 $0.0604 $0.0590
</TABLE>
1. For the period from November 1, 1996 (inception of offering) to August 31,
1997.
2. For the period from December 1, 1993 (inception of offering) to June 30,
1994.
3. For the two months ended August 31, 1996. The Fund changed its fiscal year
end from June 30 to August 31.
4. For the period from October 1, 1994 (inception of offering) to June 30,
1995.
5. 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.
22 Oppenheimer Main Street Income & Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Class B
----------------------------------------
Six
Months
Ended
February 28,
Year Ended June 30, 1998 Year Ended August 31,
1996 1995 1994 1993 (Unaudited) 1997 1996(3)
================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$24.07 $20.40 $19.88 $15.46 $33.66 $27.79 $28.77
- ----------------------------------------------------------------------------------------------------------------
.40 .47 .37 .16 .04 .17 .04
4.93 3.66 2.50 6.65 3.98 7.86 (1.02)
- ----------------------------------------------------------------------------------------------------------------
5.33 4.13 2.87 6.81 4.02 8.03 (.98)
(.43) (.46) (.36) (.19) (.07) (.18) --
(.08) -- -- (2.20) (2.50) (1.98) --
-- -- (1.99) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------
(.51) (.46) (2.35) (2.39) (2.57) (2.16) --
- ----------------------------------------------------------------------------------------------------------------
$28.89 $24.07 $20.40 $19.88 $35.11 $33.66 $27.79
================================================================================================================
22.26% 20.52% 14.34% 46.38% 12.58% 30.12% (3.41)%
================================================================================================================
$3,147 $1,924 $740 $58 $4,097 $3,308 $1,909
- ----------------------------------------------------------------------------------------------------------------
$2,516 $1,319 $270 $39 $3,646 $2,642 $1,818
- ----------------------------------------------------------------------------------------------------------------
1.55% 2.31% 2.46% 1.02% 0.19%(6) 0.53% 0.82%(6)
0.99% 1.07% 1.28% 1.46% 1.69%(6) 1.69% 1.74%(6)
- ----------------------------------------------------------------------------------------------------------------
92.6% 101.3% 199.4% 283.0% 51.3% 61.7% 17.5%
$0.0571 -- -- -- $0.0626 $0.0604 $0.0590
</TABLE>
6. Annualized.
7. 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 February 28, 1998 were $4,816,103,138 and $4,553,857,139,
respectively.
8. 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.
23 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Financial Highlights (Continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B (continued) Class C
---------------------------- ------------
Six
Months
Ended
February 28,
Year Ended June 30, 1998
1996 1995(4) (Unaudited)
==================================================================================================
<S> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $24.00 $21.49 $33.64
- --------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .23 .25 .03
Net realized and unrealized gain (loss) 4.87 2.54 4.01
Total income (loss) from investment operations 5.10 2.79 4.04
- --------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.25) (.28) (.07)
Distributions from net realized gain (.08) -- (2.50)
Distributions in excess of net realized gain -- -- --
Total dividends and distributions to shareholders (.33) (.28) (2.57)
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $28.77 $24.00 $35.11
==================================================================================================
Total Return, at Net Asset Value(5) 21.34% 13.15% 12.63%
==================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in millions) $1,800 $628 $1,170
- --------------------------------------------------------------------------------------------------
Average net assets (in millions) $1,155 $249 $1,089
- --------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.74% 1.25%(6) 0.19%(6)
Expenses 1.76% 1.89%(6) 1.68%(6)
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 92.6% 101.3% 51.3%
Average brokerage commission rate(8) $0.0571 -- $0.0626
</TABLE>
1. For the period from November 1, 1996 (inception of offering) to August 31,
1997.
2. For the period from December 1, 1993 (inception of offering) to June 30,
1994.
3. For the two months ended August 31, 1996. The Fund changed its fiscal year
end from June 30 to August 31.
4. For the period from October 1, 1994 (inception of offering) to June 30,
1995.
5. 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.
24 Oppenheimer Main Street Income & Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Class Y
------------------------
Period
Ended Period
February 28, Ended
Year Ended August 31, Year Ended June 30, 1998 August 31,
1997 1996(3) 1996 1995 1994(2) (Unaudited) 1997(1)
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$27.78 $28.75 $23.97 $20.33 $20.76 $33.94 $29.55
.16 .04 .21 .33 .13 .20 .41
7.85 (1.01) 4.88 3.62 (.42) 4.02 6.30
---- ---- ---- ---- ---- ---- ----
8.01 (.97) 5.09 3.95 (.29) 4.22 6.71
- -------------------------------------------------------------------------------------------------------------
(.17) -- (.23) (.31) (.14) (.24) (.34)
(1.98) -- (.08) -- -- (2.50) (1.98)
-- -- -- -- -- -- --
---- ---- ---- ---- ---- ---- ----
(2.15) -- (.31) (.31) (.14) (2.74) (2.32)
- -------------------------------------------------------------------------------------------------------------
$33.64 $27.78 $28.75 $23.97 $20.33 $35.42 $33.94
====== ====== ====== ====== ====== ====== ======
=============================================================================================================
30.07% (3.37)% 21.35% 19.63% (0.97)% 13.12% 23.98%
=============================================================================================================
$1,030 $744 $741 $462 $170 $36 $16
- -------------------------------------------------------------------------------------------------------------
$904 $730 $588 $325 $72 $24 $5
- -------------------------------------------------------------------------------------------------------------
0.54% 0.82%(6) 0.80% 1.57% 1.86%(6) 1.11%(6) 1.58%(6)
1.69% 1.73%(6) 1.74% 1.82% 2.11%(6) 0.76%(6) 0.65%(6)
- -------------------------------------------------------------------------------------------------------------
61.7% 17.5% 92.6% 101.3% 199.4% 51.3% 61.7%
$0.0604 $0.0590 $0.0571 -- -- $0.0626 $0.0604
</TABLE>
6. Annualized.
7. 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 February 28, 1998 were $4,816,103,138 and $4,553,857,139,
respectively.
8. 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.
25 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Notes to Financial Statements (Unaudited)
===============================================================================
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, Class C and Class Y shares. Class A
shares are sold with a front-end sales charge. 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 that class and exclusive voting rights with respect to matters
affecting that class. Classes A, B and C have separate distribution and/or
service plans. No such plan has been adopted for Class Y shares. Class B shares
will automatically convert to Class A shares six years after the date of
purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.
- --------------------------------------------------------------------------------
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
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
an 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 is used.
26 Oppenheimer Main Street Income & Growth Fund
<PAGE>
===============================================================================
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 foreign 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.
27 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
Distributions to Shareholders. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
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 its 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 fiscal year in which the
income or realized gain was recorded by the Fund.
- --------------------------------------------------------------------------------
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.
28 Oppenheimer Main Street Income & Growth Fund
<PAGE>
===============================================================================
2. Capital Stock
The Fund has authorized 420 million shares of $.01 par value capital stock (200
million for Class A, 150 million for Class B, 50 million for Class C and 20
million for Class Y). Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
Six Months Ended February 28, 1998 Year Ended August 31, 1997
-------------------------------------------------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 16,151,584 $554,720,707 33,556,681 $1,034,114,167
Dividends and distributions
reinvested 10,674,046 349,634,871 9,085,326 266,799,418
Redeemed (11,793,056) (403,377,547) (23,475,410) (724,376,295)
----------- ------------ ----------- --------------
Net increase 15,032,574 $500,978,031 19,166,597 $ 576,537,290
=========== ============ =========== ==============
- ------------------------------------------------------------------------------------------------
Class B:
Sold 16,339,512 $557,901,922 34,495,825 $1,058,128,830
Dividends and distributions
reinvested 7,812,134 254,354,850 5,396,671 157,340,936
Redeemed (5,757,838) (195,790,594) (10,274,858) (316,521,442)
----------- ------------ ----------- --------------
Net increase 18,393,808 $616,466,178 29,617,638 $ 898,948,324
=========== ============ =========== ==============
- ------------------------------------------------------------------------------------------------
Class C:
Sold 3,300,655 $112,624,957 7,368,632 $ 225,510,151
Dividends and distributions
reinvested 2,305,757 75,047,127 1,933,297 56,297,865
Redeemed (2,893,970) (98,663,299) (5,469,271) (167,619,965)
----------- ------------ ----------- --------------
Net increase 2,712,442 $ 89,008,785 3,832,658 $ 114,188,051
=========== ============ =========== ==============
- ------------------------------------------------------------------------------------------------
Class Y:
Sold 689,235 $ 23,777,996 530,156 $ 16,705,572
Dividends and distributions
reinvested 56,315 1,847,247 1,199 39,301
Redeemed (205,730) (7,134,455) (52,509) (1,720,884)
----------- ------------ ----------- --------------
Net increase 539,820 $ 18,490,788 478,846 $ 15,023,989
=========== ============ =========== ==============
</TABLE>
29 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
===============================================================================
3. Unrealized Gains and Losses on Investments
At February 28, 1998, net unrealized appreciation on investments of
$2,542,290,844 was composed of gross appreciation of $2,592,648,493, and gross
depreciation of $50,357,649.
===============================================================================
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% of the first
$200 million of average annual net assets, 0.60% of the next $150 million,
0.55% of the next $150 million and 0.45% of average annual net assets in excess
of $500 million.
For the six months ended February 28, 1998, commissions (sales
charges paid by investors) on sales of Class A shares totaled $12,554,183, of
which $3,272,057 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 $19,281,097 and $966,280,
respectively, of which $789,217 and $27,670, respectively, was paid to an
affiliated broker/dealer. During the six months ended February 28, 1998, OFDI
received contingent deferred sales charges of $2,834,339 and $72,330,
respectively, 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 shareholder 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 six months
ended February 28, 1998, OFDI paid $282,026 to an affiliated broker/dealer as
reimbursement for Class A personal service and maintenance expenses.
30 Oppenheimer Main Street Income & Growth Fund
<PAGE>
===============================================================================
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to reimburse OFDI for its 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 and Class C shares for
its services rendered in distributing Class B and Class C shares. OFDI also
receives a service fee of 0.25% per year to reimburse dealers for providing
personal services for accounts that hold Class B and C shares. Each fee is
computed on the average annual net assets of Class B or Class C shares,
determined as of the close of each regular business day. During the six months
ended February 28, 1998, OFDI paid $72,462 and $90,868, respectively, to an
affiliated broker/dealer as reimbursement for Class B and Class C personal
service and maintenance expenses and retained $14,855,811 and $1,094,238,
respectively, as reimbursement for Class B and Class C sales commissions and
service fee advances, as well as financing costs. If either Plan is terminated
by the Fund, the Board of Directors may allow the Fund to continue payments of
the asset-based sales charge to OFDI for distributing shares before the Plan
was terminated. At February 28, 1998, OFDI had incurred excess distribution and
servicing costs of $99,762,424 for Class B and $8,815,665 for Class C.
===============================================================================
5. Futures Contracts
The Fund may buy and sell interest rate futures contracts in order to gain
exposure to or protect against changes in interest rates. The Fund may also buy
or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against
increases in interest rates and the resulting negative effect on the value of
fixed rate portfolio securities. The Fund may also purchase futures contracts
to gain exposure to changes in interest rates as it may be more efficient or
cost effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to
deposit either cash or securities (initial margin) in an amount equal to a
certain percentage of the contract value. Subsequent payments (variation
margin) are made or received by the Fund each day. The variation margin
payments are equal to the daily changes in the contract value and are recorded
as unrealized gains and losses. The Fund recognizes a realized gain or loss
when the contract is closed or expires.
Securities held in collateralized accounts to cover initial
margin requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable
and/or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options)
include the possibility that there may be an illiquid market and that a change
in the value of the contract or option may not correlate with changes in the
value of the underlying securities.
31 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
===============================================================================
6. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the six months
ended February 28, 1998.
32 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Oppenheimer Main Street Income & Growth Fund
- --------------------------------------------------------------------------------
A series of Oppenheimer Main Street Funds, Inc.
===============================================================================
Officers and Directors James C. Swain, Chairman and Chief Executive Officer
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, Director, Vice President, Treasurer
and Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
Robert C. Doll, Jr., 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 Shareholder OppenheimerFunds Services
Servicing Agent
===============================================================================
Custodian of The Bank of New York
Portfolio Securities
===============================================================================
Independent Auditors Deloitte & Touche LLP
===============================================================================
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
The financial statements included herein have been taken
from the records of the Fund without examination of the
independent auditors. 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.
33 Oppenheimer Main Street Income & Growth Fund
<PAGE>
OppenheimerFunds Family
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
=======================================================================================
Real Asset Funds
- ---------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
=======================================================================================
Global Stock Funds
- ---------------------------------------------------------------------------------------
Developing Markets Fund International Growth Fund Quest Global Value Fund
International Small Global Fund Global Growth & Income Fund
Company Fund
=======================================================================================
Stock Funds
- ---------------------------------------------------------------------------------------
Enterprise Fund MidCap Fund Growth Fund
Discovery Fund Capital Appreciation Fund Disciplined Value Fund
Quest Small Cap Value Fund Quest Capital Value Fund Quest Value Fund
=======================================================================================
Stock & Bond Funds
- ---------------------------------------------------------------------------------------
Main Street Income & Total Return Fund Disciplined Allocation Fund
Growth Fund Quest Growth & Income Multiple Strategies Fund
Quest Opportunity Value Fund Convertible Securities Fund1
Value Fund Equity Income Fund
=======================================================================================
Taxable Bond Funds
- ---------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
World Bond Fund Strategic Income Fund Limited-Term Government Fund
High Yield Fund Bond Fund
=======================================================================================
Municipal Bond Funds
- ---------------------------------------------------------------------------------------
California Municipal Fund(2) Pennsylvania Municipal Fund(2) Rochester Division:
Florida Municipal Fund(2) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(2) Insured Municipal Fund Limited Term New York
New York Municipal Fund(2) Intermediate Municipal Fund Municipal Fund
=======================================================================================
Money Market Funds(3)
- ---------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
</TABLE>
1. On 4/28/98, the Fund's name was changed from "Bond Fund for Growth."
2. Available only to investors in certain states.
3. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these Funds seek to preserve the value of your investment at $1.00 per share,
it is possible to lose money by investing in these Funds.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two
World Trade Center, New York, NY 10048-0203.
(C) Copyright 1998 OppenheimerFunds, Inc. All rights reserved.
34 Oppenheimer Main Street Income & Growth Fund
<PAGE>
Information and services
- --------------------------------------------------------------------------------
Internet
24-hr access to account information.
Online transactions now available
www.oppenheimerfunds.com
General Information
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
1-800-525-7048
Account Transactions
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PhoneLink
24-hr automated information
and automated transactions
1-800-533-3310
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1-800-843-4461
OppenheimerFunds
Information Hotline
24 hours a day, timely and
insightful messages on the
economy and issues that
affect your investments
1-800-835-3104
[OppenheimerFunds Logo]
Distributor, Inc.
RS0700.001.0298 April 29, 1998
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