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Oppenheimer Equity Income Fund
Semi-Annual Report December 31, 1993
[Logo]
[Graphic]
"SURE, I HAVE AMBITIOUS GOALS.
BUT I DON'T WANT UNNECESSARY RISK.
"THIS FUND HAS GIVEN ME RELIABLE INCOME,
PLUS CAPITAL GROWTH.
"I CALL THAT A WINNING COMBINATION."
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Fund Facts
- --------------------------------------------------------------------------------
Six Facts Every Shareholder Should Know About
Oppenheimer Equity Income Fund
------------------------------------------------------------
1 The Fund's objectives are primarily to seek as much
current income as prudent investing will allow, and
secondarily to preserve capital while providing an
In this report: opportunity for capital appreciation.
Answers to ------------------------------------------------------------
three timely 2 The Fund's dividends and capital gains distributions
questions you paid per Class A share for the six months ended
should ask your December 31, 1993, totaled $0.4121.
Fund's
managers. ------------------------------------------------------------
3 The Fund's total return at net asset value for Class A
/ / With the shares for the six months ended December 31, 1993, was
U.S. stock 4.23%.(1)
market near
record highs, ------------------------------------------------------------
what steps have 4 The Fund was recently awarded a **** ranking from
been taken to Morningstar, Inc.(2)
insulate the
Fund's ------------------------------------------------------------
portfolio 5 The Fund's managers pursue a conservative investment
against a strategy, using common stocks and convertible
possible securities to generate capital gains, and government
correction in and corporate bonds and convertible securities to
stock prices? produce current income. Asset allocation at December
31, 1993, was:(3)
/ / Why is
the Fund
emphasizing COMMON STOCKS 42.6%
convertible BONDS AND PREFERRED STOCKS 34.7%
securities? U.S. GOVERNMENT SECURITIES 11.6% [Graphic]
NON-DOLLAR (FOREIGN BONDS) 6.7%
/ / Where is CASH EQUIVALENTS 4.4%
the Fund
seeking
opportunities ------------------------------------------------------------
for capital 6 "With the belief that the stock market is reaching its
appreciation? peak, we have begun to adopt a more defensive posture
in recent months. Our investments in convertible
securities have performed extremely well. These
investments provided substantial capital gains, while
at the same time offered high yields and lowered the
volatility of the overall portfolio."
PORTFOLIO MANAGER, JOHN DONEY, DECEMBER 31, 1993
1. Based on the change in net asset value per Class A share from 6/30/93 and
12/31/92 to 12/31/93. The Fund's average annual total returns after deducting
the current maximum sales charge of 5.75% per Class A share for the 1-, 5-, and
10-year periods ended 12/31/93 were 7.98%, 9.65% and 11.93%, respectively. The
Fund's maximum initial sales charge on Class A shares was higher during a
portion of the period shown and actual performance would be different as a
result. Cumulative total return for Class B shares from 8/17/93 (inception of
the class) to 12/31/93 was -3.39%. Class B performance information reflects the
change in value of a hypothetical investment made on 8/17/93 and held until
12/31/93, with all dividends and capital gains distributions reinvested and
after applying the contingent deferred sales charge of 5%. All total return
calculations include reinvestment of dividends and capital gains distributions.
2. MORNINGSTAR MUTUAL FUNDS, 1/7/94, an independent mutual fund monitoring
service, which ranks funds in specific investment categories monthly by a
quantitative system that uses investment performance, risk assessment factors
and adjusts returns for fees and sales loads. 1-star is the lowest ranking,
5-stars the highest. Of 1,002 equity funds ranked by Morningstar in that period,
10% received a 5-star ranking and 22.5% received a 4-star ranking. Risk
assessment reflects fund performance relative to 3-month Treasury bill returns.
3. The Fund's portfolio is subject to change.
Past performance is no guarantee of future results. The principal value and
return 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.
2 Oppenheimer Equity Income Fund
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REPORT TO SHAREHOLDERS
Oppenheimer Equity Income Fund provided a total
return at net asset value of 4.23% per Class A
share during the six months ended December 31,
- ---------------------------- 1993.(4) That figure for the twelve-month period
COMPETITIVE TOTAL RETURNS ended December 31 was 14.57%.(4) This was higher
than the return of the S&P 500(5) and the Lipper
For the 12 months ended average for equity income funds.(6) In addition,
December 31, 1993 the Fund was awarded a **** ranking by
- ---------------------------- Morningstar, Inc.(7)
Oppenheimer Equity 14.57% The U.S. economy is growing moderately
Income Fund A(4) and interest rates have stabilized after an
(at net asset value) extended period of decline. In this environment,
- ---------------------------- and with the stock market at record highs, the
S&P 500(5) 10.06% Fund's managers have adopted a more conservative
- ---------------------------- investment posture. We have maintained a large
Lipper equity 13.38% position in convertible securities, which tend
income funds average(6) to hold their value better than common stocks
during market corrections, while providing
relatively substantial yield in this
low-interest-rate economy.
The Fund's convertible securities have
provided impressive capital gains, as well as
boosted the yield and lowered the volatility of
the portfolio. For instance, our investments in
Fordand Chrysler are performing well, as U.S.
automotive companies continue to gain market
share at the expense of their Japanese
competitors.
In the common stock portion of the
portfolio, we continue to favor financial
services companies, which have appreciated
considerably, despite periods of volatility. We
are also emphasizing companies that are
positioned to benefit from the U.S. economic
recovery. For example, we are invested in John
Deere and Tenneco, farm equipment manufacturers
that are enjoying a substantial increase in
equipment sales after several years of
lackluster demand.
We believe that 1994 will provide a
relatively stable investment environment, with
interest rates holding near current levels and
inflation remaining under control. We will
continue to monitor economic developments
closely, to seek the best investment
opportunities for the Fund. We are pleased that
Oppenheimer Equity Income Fund has produced both
high income and capital growth, and we look
forward to serving your investment needs.
--------------
"THE FUND
WAS AWARDED
**** BY
MORNINGSTAR."
James C. Swain Jon S. Fossel
Chairman President
Oppenheimer Equity Oppenheimer Equity
Income Fund Income Fund
January 21, 1994
4. See footnote 1, page 2.
5. The Standard & Poor's 500 Index is an unmanaged index of common stocks that
is widely recognized as an indicator of overall market performance. The S&P 500
Index does not take taxes or sales charges into consideration.
6. Source of data: Lipper Analytical Services, Inc., an independent mutual fund
monitoring service, 12/31/93. Lipper total return averages for the 12 months
ended 12/31/93 were for 75 equity income funds. These averages are shown for
comparative purposes only. Lipper performance rankings do not take sales
charges into consideration.
7. See footnote 2, page 2.
3 Oppenheimer Equity Income Fund
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STATEMENT OF INVESTMENTS December 31, 1993 (Unaudited)
FACE MARKET VALUE
AMOUNT SEE NOTE 1
<C> <S> <C> <C>
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REPURCHASE AGREEMENTS--4.3%
- ----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital
Markets, 3.125%, dated 12/31/93 and maturing 1/3/94,
collateralized by U.S. Treasury Nts.:
9.125%, 5/15/99, with a value of $59,525,050 $58,300,000 $58,300,000
4.25%, 1/31/95, with a value of $25,212,661 24,700,000 24,700,000
------------
Total Repurchase Agreements (Cost $83,000,000) 83,000,000
- ----------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS--18.2%
- ----------------------------------------------------------------------------------------------------------------------------------
Argentina (Republic of):
Bonds, Bonos de Consolidacion de Deudas, Series 1, 3.1875%, 4/1/01(3) (6) 4,197,375 3,647,443
Par Bonds, 4%, 3/31/23(5) 8,648,500 6,886,105
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Canada (Government of) Bonds:
Series H62, 10.50%, 6/1/95 24,000,000(4) 19,615,684
Series H62, 9.25%, 10/1/96 55,800,000(4) 46,563,184
-------------------------------------------------------------------------------------------------------
Ontario Hydro (Province of) Canada
Gtd. Debs., 10.875%, 1/8/96 16,000,000(4) 13,406,739
-------------------------------------------------------------------------------------------------------
Quebec, Canada (Province of) Debs., 10.25%, 4/7/98 10,000,000(4) 8,732,886
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South Australia (Government of) Bonds, 9%, 9/2/23 3,000,000(4) 2,254,679
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Student Loan Marketing Assn. Indexed Currency Opt. Nts., 10.50%, 11/1/95 6,400,000 2,688,000
-------------------------------------------------------------------------------------------------------
Treasury Corp. of Victoria Gtd. Sr. Nts., 8.25%, 10/15/03 35,000,000(4) 25,656,478
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U.S. Treasury Nts:
13.125%, 5/15/94 21,000,000 21,761,039
7.875%, 6/30/96 14,200,000 15,437,954
7.875%, 7/31/96 82,000,000 88,790,413
7.875%, 4/15/98 82,000,000 90,814,174
------------
Total Government Obligations (Cost $354,145,726) 342,607,335
- ----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE BONDS AND NOTES--0.2%
- ----------------------------------------------------------------------------------------------------------------------------------
Citibank 17.30% CD, 7/29/94(7) (Cost $3,516,663) 1,420,300,000(4) 3,314,584
- ----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM CORPORATE BONDS AND NOTES--15.1%
- ----------------------------------------------------------------------------------------------------------------------------------
American Medical International, Inc., 11% Sr. Nts., 10/15/00 4,000,000 4,440,000
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Armco, Inc., 13.50% Sr. Nts., 6/15/94 2,813,000 2,886,841
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Auburn Hills Trust, 12.375% Gtd. Exch. Ctfs., 5/1/20(3) 5,000,000 7,687,500
-------------------------------------------------------------------------------------------------------
Banco Nacional de Comercio Exterior SNC International Finance BV,
8% Gtd. Matador Bonds, 8/5/03(2) 2,000,000 2,060,000
-------------------------------------------------------------------------------------------------------
Banco Nacional de Mexico SA, 7% Exch. Sub. Debs., 12/15/99(2) 15,000,000 18,675,000
-------------------------------------------------------------------------------------------------------
Bank of Boston Corp., 7.75% Cv. Sub. Debs., 6/15/11 9,500,000 10,723,125
-------------------------------------------------------------------------------------------------------
Bank of New York Co., Inc. (The), 7.50% Cv. Sub. Debs., 8/15/01 5,000,000 7,912,500
-------------------------------------------------------------------------------------------------------
Box Energy Corp., 8.25% Cv. Sub. Nts., 12/1/02 5,000,000 6,587,500
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FACE MARKET VALUE
AMOUNT SEE NOTE 1
<C> <S> <C> <C>
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LONG-TERM CORPORATE Carter Hawley Hale Stores, Inc., 6.25% Sr. Sub. Nts., 12/31/00(2) $7,800,000 $7,975,500
BONDS AND NOTES -------------------------------------------------------------------------------------------------------
(CONTINUED) Chrysler Financial Corp., 9% Nts., 10/15/94 2,000,000 2,090,000
-------------------------------------------------------------------------------------------------------
Coastal Corp., 11.75% Sr. Debs., 6/15/06 8,946,000 10,377,360
-------------------------------------------------------------------------------------------------------
Comcast Corp., 10.25% Sr. Sub. Debs., 10/15/01 8,000,000 9,080,000
-------------------------------------------------------------------------------------------------------
Delta Airlines, Inc., 3.23% Cv. Sub. Nts., 6/15/03 11,000,000 9,088,750
-------------------------------------------------------------------------------------------------------
Freeport-McMoRan, Inc., 6.55% Cv. Sub. Nts., 1/15/01 10,120,000 9,373,650
-------------------------------------------------------------------------------------------------------
IMC Fertilizer Group, Inc., 6.25% Cv. Sub. Nts., 12/1/01 5,500,000 5,341,875
-------------------------------------------------------------------------------------------------------
Imo Industries, Inc., 12.25% Sr. Sub. Debs., 8/15/97 9,684,000 9,805,050
-------------------------------------------------------------------------------------------------------
Inco Ltd., 7.75% Cv. Debs., 3/15/16 9,800,000 10,486,000
-------------------------------------------------------------------------------------------------------
Intelcom Group, Inc., 7% Cv. Sub. Nts., 10/30/98(2) 5,000,000 4,278,120
-------------------------------------------------------------------------------------------------------
Kroger Co. (The):
6.375% Cv. Jr. Sub. Nts., 12/1/99 10,000,000 12,600,000
8.25% Cv. Jr. Sub. Debs., 4/15/11(2) 14,750,000 15,635,000
-------------------------------------------------------------------------------------------------------
Lend Lease Finance International Ltd., 4.75% Gtd.
Cv. Bonds, 6/1/03(2) 4,000,000 4,607,500
-------------------------------------------------------------------------------------------------------
MagneTek, Inc., 10.75% Sr. Sub. Debs., 11/15/98 3,000,000 3,255,000
-------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 3.06% Debs., 6/30/99 10,000,000 10,200,000
-------------------------------------------------------------------------------------------------------
New South Wales State Bank, 9.25% Bonds, 2/3/18 9,900,000(4) 7,615,819
-------------------------------------------------------------------------------------------------------
Oryx Energy Co., 7.50% Cv. Sub. Debs., 5/15/14 3,000,000 2,895,000
-------------------------------------------------------------------------------------------------------
Playtex Family Products Corp., 11.50% Sr. Sec. Nts., 6/15/97 9,500,000 9,690,000
-------------------------------------------------------------------------------------------------------
Reliance Group Holdings, Inc., 9.75% Sr. Sub. Debs., 11/15/03 4,250,000 4,388,125
-------------------------------------------------------------------------------------------------------
RJR Nabisco, Inc., 10.50% Sr. Nts., 4/15/98 14,000,000 15,470,000
-------------------------------------------------------------------------------------------------------
Rowan Cos., Inc., 11.875% Sr. Nts., 12/1/01 7,000,000 7,822,500
-------------------------------------------------------------------------------------------------------
Stone Container Corp., 8.875% Cv. Sr. Sub. Nts., 7/15/00(2) 5,000,000 5,775,000
-------------------------------------------------------------------------------------------------------
Thomas Nelson, Inc., 5.75% Cv. Nts., 11/30/99(2) 5,000,000 6,350,000
-------------------------------------------------------------------------------------------------------
Time Warner, Inc.:
0% Liq. Yld. Opt. Nts., 12/17/12 30,000,000 9,975,000
8.75% Cv. Sub. Debs., 1/10/15 3,179,000 3,345,898
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Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(2) 2,500,000 2,578,125
-------------------------------------------------------------------------------------------------------
Turner Broadcasting System, Inc., 12% Sr. Sub. Debs., 10/15/01 8,000,000 8,670,000
-------------------------------------------------------------------------------------------------------
U.S. Home Corp., 4.875% Cv. Sub. Debs., 11/1/05 4,350,000 4,235,813
-------------------------------------------------------------------------------------------------------
Viacom International, Inc., 10.25% Sr. Sub. Nts., 9/15/01 12,000,000 13,590,000
------------
Total Long-Term Corporate Bonds and Notes (Cost $257,110,429) 287,567,551
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5 Oppenheimer Equity Income Fund
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STATEMENT OF INVESTMENTS (Unaudited) (Continued)
MARKET VALUE
SHARES SEE NOTE 1
<C> <S> <C> <C>
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COMMON STOCKS--42.3%
- ----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS--1.9%
- ----------------------------------------------------------------------------------------------------------------------------------
ALUMINUM--0.3% Reynolds Metals Co. 150,000 $6,806,250
- ----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--1.3% Goodrich (B.F.) Co. (The) 145,000 5,836,250
-------------------------------------------------------------------------------------------------------
Imperial Chemical Industries PLC, ADS 225,000 10,631,250
-------------------------------------------------------------------------------------------------------
Lyondell Petrochemical Co. 420,600 8,937,750
------------
25,405,250
- ----------------------------------------------------------------------------------------------------------------------------------
GOLD--0.1% Aviall, Inc. 125,000 1,906,250
- ----------------------------------------------------------------------------------------------------------------------------------
STEEL--0.2% Armco, Inc.(1) 500,600 3,003,600
- ----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--2.6%
- ----------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES--0.6% General Motors Corp. 200,000 10,975,000
- ----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD FURNISHINGS Maytag Corp. 700,000 12,600,000
AND APPLIANCES--0.7%
- ----------------------------------------------------------------------------------------------------------------------------------
PUBLISHING--0.5% Dun & Bradstreet Corp. (The) 151,000 9,305,375
- ----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: GENERAL Sears, Roebuck and Co. 300,000 15,825,000
MERCHANDISE CHAINS--0.8%
- ----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS--2.4%
- ----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE: Johnson & Johnson 100,000 4,475,000
DIVERSIFIED--0.9% -------------------------------------------------------------------------------------------------------
Warner-Lambert Co. 202,000 13,635,000
------------
18,110,000
- ----------------------------------------------------------------------------------------------------------------------------------
TOBACCO--1.5% Philip Morris Cos., Inc. 500,000 27,875,000
- ----------------------------------------------------------------------------------------------------------------------------------
ENERGY--4.4%
- ----------------------------------------------------------------------------------------------------------------------------------
OIL: EXPLORATION AND Oryx Energy Co. 185,500 3,199,875
PRODUCTION--0.2%
- ----------------------------------------------------------------------------------------------------------------------------------
OIL: INTEGRATED Atlantic Richfield Co. 100,500 10,577,625
DOMESTIC--0.6%
- ----------------------------------------------------------------------------------------------------------------------------------
OIL: INTEGRATED Mobil Corp. 176,500 13,943,500
INTERNATIONAL--3.2% -------------------------------------------------------------------------------------------------------
Royal Dutch Petroleum Co. 201,500 21,031,563
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Texaco, Inc. 251,500 16,253,187
-------------------------------------------------------------------------------------------------------
YPF Sociedad Anonima, Sponsored ADR 400,000 10,400,000
-------------
61,628,250
- ----------------------------------------------------------------------------------------------------------------------------------
OIL WELL SERVICES AND Baker Hughes, Inc. 389,000 7,780,000
EQUIPMENT--0.4%
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL--18.3%
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES: American Express Co. 700,000 21,612,500
MISCELLANEOUS--2.4% -------------------------------------------------------------------------------------------------------
Bear Stearns Cos., Inc. (The) 672,583 14,712,753
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Dean Witter, Discover & Co. 156,124 5,405,794
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Merrill Lynch & Co., Inc. 111,000 4,662,000
------------
46,393,047
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6 Oppenheimer Equity Income Fund
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MARKET VALUE
SHARES SEE NOTE 1
<C> <S> <C> <C>
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INSURANCE BROKERS--0.7% Marsh & McLennan Cos., Inc. $151,500 $12,309,375
- ----------------------------------------------------------------------------------------------------------------------------------
INSURANCE: LIFE--0.6% Reliance Group Holdings, Inc. 1,500,000 12,000,000
- ----------------------------------------------------------------------------------------------------------------------------------
INSURANCE: Allstate Corp. 230,000 6,785,000
MULTI-LINE--0.4%
- ----------------------------------------------------------------------------------------------------------------------------------
INSURANCE: PROPERTY AND Continental Corp. 500,000 13,812,500
CASUALTY--2.3% -------------------------------------------------------------------------------------------------------
General Re Corp. 101,000 10,807,000
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SAFECO Corp. 200,000 11,000,000
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St. Paul Cos., Inc. (The) 100,000 8,987,500
------------
44,607,000
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MAJOR BANKS: OTHER--2.6% BankAmerica Corp. 500,000 23,187,500
-------------------------------------------------------------------------------------------------------
Magna Group, Inc. 400,000 7,700,000
-------------------------------------------------------------------------------------------------------
Mellon Bank Corp. 350,000 18,550,000
------------
49,437,500
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MAJOR BANKS: Crestar Financial Corp. 275,000 11,515,625
REGIONAL--5.9% -------------------------------------------------------------------------------------------------------
First America Bank Corp. 72,700 2,853,475
-------------------------------------------------------------------------------------------------------
First Bank System, Inc. 200,000 6,150,000
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First Fidelity Bancorporation 450,000 20,475,000
-------------------------------------------------------------------------------------------------------
First Union Corp. 300,000 12,375,000
-------------------------------------------------------------------------------------------------------
Huntington Bancshares, Inc. 419,375 9,907,734
-------------------------------------------------------------------------------------------------------
NBD Bancorp, Inc. 186,450 5,500,275
-------------------------------------------------------------------------------------------------------
National City Corp. 700,000 17,150,000
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Signet Banking Corp. 181,000 6,289,750
-------------------------------------------------------------------------------------------------------
Society Corp. 230,000 6,842,500
-------------------------------------------------------------------------------------------------------
U.S. Bancorp, Inc. 500,000 12,500,000
------------
111,559,359
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MONEY CENTER BANKS--3.0% Bankers Trust New York Corp. 114,200 9,036,075
-------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. 600,000 20,325,000
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Chemical Banking Corp. 700,000 28,087,500
------------
57,448,575
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SAVINGS AND Fleet Financial Group, Inc. 250,000 8,343,750
LOANS/HOLDING COS.--0.4%
- ----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--4.7%
- ----------------------------------------------------------------------------------------------------------------------------------
CONGLOMERATES--1.4% Tenneco, Inc. 500,000 26,312,500
- ----------------------------------------------------------------------------------------------------------------------------------
MACHINERY: Deere & Co. 262,000 19,388,000
DIVERSIFIED--1.0%
- ----------------------------------------------------------------------------------------------------------------------------------
POLLUTION CONTROL--0.6% Browning-Ferris Industries, Inc. 417,500 10,750,625
- ----------------------------------------------------------------------------------------------------------------------------------
RAILROADS--1.0% Santa Fe Pacific Corp. 450,000 10,012,500
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Union Pacific Corp. 150,000 9,393,750
------------
19,406,250
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STATEMENT OF INVESTMENTS (Unaudited)(Continued)
MARKET VALUE
SHARES SEE NOTE 1
<C> <S> <C> <C>
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TRANSPORTATION: Ryder Systems, Inc. 500,000 $13,250,000
MISCELLANEOUS--0.7%
- ----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--2.8%
- ----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE--1.0% United Technologies Corp. 300,000 18,600,000
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS: DEFENSE--0.7% General Motors Corp., Cl. H. 360,000 13,995,000
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS: Tektronix, Inc. 400,000 9,400,000
INSTRUMENTATION--0.5%
- ----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--0.6% MCI Communications Corp. 150,000 4,237,500
-------------------------------------------------------------------------------------------------------
Sprint Corp. 200,000 6,950,000
------------
11,187,500
- ----------------------------------------------------------------------------------------------------------------------------------
UTILITIES--5.2%
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC COS.--4.3% American Electric Power Co., Inc. 454,000 16,854,750
-------------------------------------------------------------------------------------------------------
Houston Industries, Inc. 378,500 18,026,063
-------------------------------------------------------------------------------------------------------
Public Service Co. of Colorado 200,000 6,425,000
-------------------------------------------------------------------------------------------------------
Public Service Enterprise Group, Inc. 604,000 19,328,000
-------------------------------------------------------------------------------------------------------
Texas Utilities Co. 504,000 21,798,000
------------
82,431,813
- ----------------------------------------------------------------------------------------------------------------------------------
NATURAL GAS--0.2% Sonat, Inc. 100,000 2,887,500
- ----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE (NEW)--0.7% BCE, Inc. 403,900 14,086,011
------------
Total Common Stocks (Cost $662,186,524) 805,576,280
- ----------------------------------------------------------------------------------------------------------------------------------
DERIVATIVE SECURITIES--1.7%
- ----------------------------------------------------------------------------------------------------------------------------------
American Express Co., 6.25% First Data Corp. DECS 557,000 22,140,750
-------------------------------------------------------------------------------------------------------
Salomon, Inc., 5.25% Hewlett-Packard Co. ELKS 125,000 9,671,875
------------
Total Derivative Securities (Cost $30,016,625) 31,812,625
- ----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--17.4%
- ----------------------------------------------------------------------------------------------------------------------------------
Ahmanson (H.F.) & Co., $3.00 Cv., Series D 170,100 8,675,100
-------------------------------------------------------------------------------------------------------
Alco Standard Corp., $2.375 Cv. Depositary Shares, Series AA 114,300 7,929,563
-------------------------------------------------------------------------------------------------------
Alumax, Inc., $19.50 Cv., Series A 100,000 9,850,000
-------------------------------------------------------------------------------------------------------
AMR Corp., $3.00 Cum. Cv. Depositary Shares, Series A(2) 350,000 18,375,000
-------------------------------------------------------------------------------------------------------
Armco, Inc., $3.625 Cum. Cv. 200,000 11,100,000
-------------------------------------------------------------------------------------------------------
BANC ONE CORP., $3.50 Cum. Cv., Series C 77,000 5,293,750
-------------------------------------------------------------------------------------------------------
Bethlehem Steel Corp., $3.50 Cv.(2) 100,000 5,950,000
-------------------------------------------------------------------------------------------------------
Boise Cascade Corp., $1.58 Cum. Cv., Series G 460,000 10,925,000
-------------------------------------------------------------------------------------------------------
Ceridian Corp., $18.50 Cv. Depositary Shares 271,000 13,685,500
-------------------------------------------------------------------------------------------------------
Chiles Offshore Corp., $1.50 Cv. 122,000 2,775,500
-------------------------------------------------------------------------------------------------------
Chrysler Financial Corp., $4.625 Cv. Depositary Shares, Series A(2) 100,000 14,900,000
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MARKET VALUE
SHARES SEE NOTE 1
<C> <S> <C> <C>
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PREFERRED STOCKS Citicorp:
(continued) $1.217 Cv. Depositary Shares, Series 15 500,000 $9,937,500
Cv. Depositary Shares, Series 13(2) 200,000 21,850,000
-------------------------------------------------------------------------------------------------------
Cooper Industries, Inc., $1.60 Cv. Exch. 297,000 8,575,875
-------------------------------------------------------------------------------------------------------
Cyprus Amax Minerals Co., $4.00 Cv., Series A 200,000 13,000,000
-------------------------------------------------------------------------------------------------------
Delta Airlines, Inc., $3.50 Cv. Depositary Shares, Series C 182,000 9,737,000
-------------------------------------------------------------------------------------------------------
First Chicago Corp., $2.875 Cum. Cv. Depositary Shares, Series B 135,000 6,952,500
-------------------------------------------------------------------------------------------------------
Ford Motor Co., $4.20 Cum. Cv., Series A 150,000 16,275,000
-------------------------------------------------------------------------------------------------------
Freeport-McMoRan, Inc., $4.375 Cv. Exch.(2) 200,000 9,700,000
-------------------------------------------------------------------------------------------------------
General Motors Corp., $3.31 Cum., Series C 340,200 17,350,200
-------------------------------------------------------------------------------------------------------
Inland Steel Industries, Inc., $4.625 Cum. Cv. Exch., Series G 196,800 13,087,200
-------------------------------------------------------------------------------------------------------
K Mart Corp., $3.41 Cum. Cv. Depositary Shares, Series A 348,000 15,442,500
-------------------------------------------------------------------------------------------------------
LCI International, Inc., $1.25 Cv. 80,000 2,300,000
-------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp., $3.875 Cum. Cv.(2) 400,000 20,500,000
-------------------------------------------------------------------------------------------------------
Reading & Bates Corp., $1.625 Cv. 72,000 1,836,000
-------------------------------------------------------------------------------------------------------
RJR Nabisco Holdings Corp., $.835 Cum. Cv., Series A 1,200,000 8,400,000
-------------------------------------------------------------------------------------------------------
Sears, Roebuck and Co., $3.75 Exch., Series A 275,000 15,468,750
-------------------------------------------------------------------------------------------------------
Transco Energy Co., $3.00 Cum. Cv., Series E(2) 147,000 7,129,500
-------------------------------------------------------------------------------------------------------
UAL Corp., $6.25 Cv., Series A(2) 175,000 19,250,000
-------------------------------------------------------------------------------------------------------
Washington Mutual Savings Bank, $6.00 Cv., Series D 46,800 5,288,400
--------------
Total Preferred Stocks (Cost $274,643,825) 331,539,838
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $1,664,619,792) 99.2% 1,889,065,656
- ----------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES .8 15,379,659
------------ --------------
NET ASSETS 100.0% $1,904,445,315
------------ --------------
------------ --------------
<FN>
1. Non-income producing security.
2. Restricted security--See Note 6 of Notes to Financial Statements.
3. Represents the current interest rate for a variable rate security.
4. Face amount is reported in foreign currency.
5. Represents the current interest rate for an increasing rate security.
6. Interest is paid in kind.
7. Indexed instrument for which the principal amount due at maturity is affected by the relative value of
a foreign currency.
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Equity Income Fund
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STATEMENT OF ASSETS AND LIABILITIES December 31, 1993 (Unaudited)
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS Investments, at value (cost $1,664,619,792)--see accompanying statement $1,889,065,656
-------------------------------------------------------------------------------------------------------
Cash 790,765
-------------------------------------------------------------------------------------------------------
Receivables:
Dividends and interest 15,003,211
Investments sold 9,831,309
Shares of beneficial interest sold 2,372,177
-------------------------------------------------------------------------------------------------------
Other 267,637
--------------
Total assets 1,917,330,755
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES Unrealized depreciation on forward foreign currency exchange contracts--Note 5 385,926
-------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 4,943,116
Investments purchased 4,152,292
Dividends and distributions 1,975,369
Distribution assistance--Note 4 1,019,363
Other 409,374
--------------
Total liabilities 12,885,440
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $1,904,445,315
--------------
--------------
- ----------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS Paid-in capital $1,650,884,337
-------------------------------------------------------------------------------------------------------
Undistributed net investment income 16,864,741
-------------------------------------------------------------------------------------------------------
Accumulated net realized gain from investment transactions 12,683,020
-------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies--Note 3 224,013,217
--------------
NET ASSETS $1,904,445,315
--------------
--------------
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE Class A Shares:
Net asset value and redemption price per share (based on net assets of
$1,860,917,707 and 185,786,866 shares of beneficial interest outstanding) $10.02
Maximum offering price per share (net asset value plus sales charge of 5.75%
of offering price) $10.63
-------------------------------------------------------------------------------------------------------
Class B shares:
Net asset value, redemption price and offering price per share (based on net
assets of $43,527,608 and 4,357,898 shares of beneficial interest outstanding) $ 9.99
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Six Months Ended December 31, 1993 (Unaudited)
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME Interest $27,007,649
-------------------------------------------------------------------------------------------------------
Dividends (net of withholding taxes of $279,187) 23,489,343
--------------
Total income 50,496,992
- ----------------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fees--Note 4 5,049,981
-------------------------------------------------------------------------------------------------------
Distribution assistance:
Class A--Note 4 1,488,024
Class B--Note 4 78,090
-------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 1,286,859
-------------------------------------------------------------------------------------------------------
Shareholder reports 208,122
-------------------------------------------------------------------------------------------------------
Custodian fees and expenses 92,000
-------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 36,046
-------------------------------------------------------------------------------------------------------
Legal and auditing fees 28,032
-------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 708
Class B 13,597
-------------------------------------------------------------------------------------------------------
Other 119,347
--------------
Total expenses 8,400,806
- ----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 42,096,186
-------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED Net realized gain (loss) from:
GAIN (LOSS) ON INVESTMENTS Investments 17,888,385
AND FOREIGN CURRENCY Foreign currency transactions 841,720
TRANSACTIONS -------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 25,367,951
Translation of assets and liabilities denominated in foreign currencies (11,205,819)
--------------
Net realized and unrealized gain on investments and foreign currency transactions 32,892,237
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $74,988,423
--------------
--------------
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1993 JUNE 30,
(UNAUDITED) 1993
<C> <S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
OPERATIONS Net investment income $42,096,186 $84,853,288
-------------------------------------------------------------------------------------------------------
Net realized gain on investments and foreign currency transactions 18,730,105 52,518,543
-------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on
investments and translation of assets and liabilities denominated
in foreign currencies 14,162,132 122,260,203
-------------- --------------
Net increase in net assets resulting from operations 74,988,423 259,632,034
- ----------------------------------------------------------------------------------------------------------------------------------
EQUALIZATION Net change 546,821 2,468,327
- ----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.24 and $.48 per share, respectively) (43,177,338) (83,156,753)
SHAREHOLDERS Class B ($.221 per share) (543,016) --
-------------------------------------------------------------------------------------------------------
Distributions from net realized gain on investments:
Class A ($.1721 and $.145 per share, respectively) (31,163,261) (24,974,899)
Class B ($.1721 per share) (711,551) --
- ----------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net increase in net assets resulting from Class A
TRANSACTIONS beneficial interest transactions--Note 2 69,677,916 80,452,974
-------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B
beneficial interest transactions--Note 2 44,481,529 --
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase 114,099,523 234,421,683
-------------------------------------------------------------------------------------------------------
Beginning of period 1,790,345,792 1,555,924,109
-------------- --------------
End of period (including undistributed net investment income
of $16,864,741 and $29,426,684, respectively) $1,904,445,315 $1,790,345,792
-------------- --------------
-------------- --------------
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
CLASS A CLASS B
----------------------------------------------------------------------------- ------------
SIX MONTHS
ENDED PERIOD ENDED
DECEMBER 31, YEAR ENDED DECEMBER 31,
1993 JUNE 30, 1993(1)
(UNAUDITED) 1993 1992 1991 1990 1989 (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning
of period $10.01 $9.15 $8.86 $9.18 $9.11 $8.51 $10.22
- -------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .17 .50 .50 .48 .48 .52 .16
Net realized and unrealized gain
(loss) on investments, options
written and foreign currency
transactions .25 .99 .39 (.17) .33 .58 --
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total income from
investment operations .42 1.49 .89 .31 .81 1.10 .16
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net
investment income (.24) (.48) (.48) (.48) (.50) (.48) (.22)
Distributions from net realized
gain on investments, options
written and foreign currency
transactions (.17) (.15) (.12) (.15) (.24) (.02) (.17)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total dividends and distributions
to shareholders (.41) (.63) (.60) (.63) (.74) (.50) (.39)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.02 $10.01 $9.15 $8.86 $9.18 $9.11 $9.99
------------ ------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------ ------------
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 4.23% 16.76% 10.26% 3.68% 9.07% 13.30% 1.61%
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $1,860,918 $1,790,346 $1,555,924 $1,393,303 $1,329,830 $1,017,074 $43,528
- -------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,837,918 $1,657,692 $1,525,599 $1,323,858 $1,179,704 $885,179 $21,124
- -------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 185,787 178,819 170,117 157,239 144,921 111,613 4,358
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.51%(3) 5.12% 5.33% 5.31% 5.10% 5.89% 2.56%(3)
Expenses .89%(3) .79% .82% .79% .79% .85% 1.44%(3)
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 9.6% 59.0% 37.0% 64.0% 122.0% 91.4% 9.6%
<FN>
1. For the period from August 17, 1993 (inception of offering) to December 31, 1993.
2. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all
dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net
asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns.
3. Annualized.
4. 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 six months ended December 31, 1993 were $200,473,502 and $164,310,948, respectively.
See accompanying Notes to Financial Statements.
</TABLE>
13 Oppenheimer Equity Income Fund
<PAGE>
------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT Oppenheimer Equity Income Fund (the Fund) is
ACCOUNTING POLICIES registered under the Investment Company Act of 1940,
as amended, as a diversified, open-end management
investment company. The Fund's investment advisor is
Oppenheimer Management Corporation (the Manager). The
Fund offers both Class A and Class B shares. Class A
shares are sold with a front-end sales charge. Class B
shares may be subject to a contingent deferred sales
charge. Both classes of shares have identical rights
to earnings, assets and voting privileges, except that
each class has its own distribution 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 4:00 p.m. (New York time) 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 debt securities are valued by a portfolio
pricing service approved by the Board of Trustees.
Long-term debt securities which cannot be valued by
the approved portfolio pricing service are valued by
averaging the mean between the bid and asked prices
obtained from two active market makers in such
securities. Short-term 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.
Securities for which market quotes are not readily
available are valued under procedures established by
the Board of Trustees to determine fair value in good
faith. Forward foreign currency contracts are valued
at the forward rate on a daily basis.
------------------------------------------------------
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 Fund generally enters into forward
currency exchange 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. A
forward exchange contract is a commitment to purchase
or sell a foreign currency at a future date, at a
negotiated rate. Risks may arise from the potential
inability of the counterparty to meet the terms of the
contract and from unanticipated movements in the value
of a foreign currency relative to the U.S. dollar.
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 results 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. 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 INCOME 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 tax provision is required.
14 Oppenheimer Equity Income Fund
<PAGE>
- -------------------------------------------------------------------------------
EQUALIZATION. Prior to September 24, 1993, the Fund
followed the accounting practice of equalization, by
which a portion of the proceeds from sales and costs
of redemptions of Fund shares equivalent on a per
share basis to the amount of undistributed net
investment income were credited or charged to
undistributed income. The cumulative effect of the
change in accounting practice resulted in a
reclassification of $11,484,596 from undistributed net
investment income to paid-in capital.
------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and
distributions to shareholders are recorded on the
ex-dividend date.
------------------------------------------------------
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.
Interest on payment-in-kind debt instruments is
accrued as income at the coupon rate and a market
adjustment is made on the ex-date.
- --------------------------------------------------------------------------------
2. SHARES OF The Fund has authorized an unlimited number of no par
BENEFICIAL INTEREST value shares of beneficial interest of each class.
Transactions in shares of beneficial interest were
as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31, 1993(1) YEAR ENDED JUNE 30, 1993
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 13,086,026 $132,384,093 29,572,911 $276,573,097
Dividends and distributions reinvested 6,904,415 68,952,844 10,613,035 97,981,463
Redeemed (13,022,913) (131,659,021) (31,483,466) (294,101,586)
------------ ------------ ------------ ------------
Net increase 6,967,528 $69,677,916 8,702,480 $80,452,974
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
----------------------------------------------------------------------------------------------------
Class B:
Sold 4,307,456 $ 43,989,574 -- $ --
Dividends and distributions reinvested 115,847 1,158,717 -- --
Redeemed (65,405) (666,762) -- --
------------ ------------ ------------ ------------
Net increase 4,357,898 $44,481,529 -- $ --
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
<FN>
1. For the six months ended December 31, 1993 for Class A shares and for the period from August 17, 1993
(inception of offering) to December 31, 1993 for Class B shares.
</TABLE>
- --------------------------------------------------------------------------------
3. UNREALIZED GAINS At December 31, 1993, net unrealized appreciation on
AND LOSSES ON investments of $224,445,864 was composed of
INVESTMENTS gross appreciation of $260,933,127, and gross
depreciation of $36,487,263.
15 Oppenheimer Equity Income Fund
<PAGE>
------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
4. MANAGEMENT FEES AND Management fees paid to the Manager were in accordance
OTHER TRANSACTIONS with the investment advisory agreement with the Fund
WITH AFFILIATES which provides for an annual fee of .75% on the first
$100 million of net assets with a reduction of .05% on
each $100 million thereafter, to .50% on net assets in
excess of $500 million. The Manager has agreed to
reimburse the Fund if aggregate expenses (with
specified exceptions) exceed 1.5% of the first $30
million of average annual net assets of the Fund, plus
1% of average annual net assets in excess of $30
million.
For the six months ended December 31, 1993,
commissions (sales charges paid by investors) on sales
of Class A shares totaled $4,105,890, of which
$1,314,246 was retained by Oppenheimer Funds
Distributor, Inc. (OFDI), a subsidiary of the Manager,
as general distributor, and by an affiliated
broker/dealer. During the six months ended December
31, 1993, OFDI received contingent deferred sales
charges of $6,901 upon redemption of Class B shares.
Oppenheimer Shareholder Services (OSS), a
division of the Manager, is the transfer and
shareholder servicing agent for the Fund, and for
other registered investment companies. OSS's total
costs of providing such services are allocated ratably
to these companies.
Under separate approved plans of
distribution, each class may expend up to .25% of
its net assets annually to reimburse OFDI for costs
incurred in distributing shares of the Fund (prior to
October 1, 1993, Class A reimbursements were made
with respect to shares sold subsequent to March 31,
1991), including amounts paid to brokers, dealers,
banks and other institutions. In addition, Class B
shares are subject to an asset-based sales charge of
.75% of net assets annually, to reimburse OFDI for
sales commissions paid from its own resources at the
time of sale and associated financing costs. In the
event of termination or discontinuance of the Class B
plan of distribution, the Fund would be contractually
obligated to pay OFDI for any expenses not previously
reimbursed or recovered through contingent deferred
sales charges. During the six months ended
December 31, 1993, OFDI paid $89,881 to an affiliated
broker/dealer as reimbursement for Class A
distribution-related expenses and retained $78,090
as reimbursement for Class B distribution-related
expenses and sales commissions.
- --------------------------------------------------------------------------------
5. FORWARD FOREIGN At December 31, 1993, the Fund had outstanding forward
CURRENCY EXCHANGE exchange currency contracts to sell foreign currencies
CONTRACTS as follows:
<TABLE>
<CAPTION>
EXPIRATION CONTRACT VALUATION AS OF UNREALIZED
DATE AMOUNT DECEMBER 31, 1993 DEPRECIATION
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Canadian Dollar 1/10/94 $87,518,797 $87,904,723 $385,926
</TABLE>
16 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
6. RESTRICTED SECURITIES The Fund owns securities purchased in private
placement transactions, without registration under the
Securities Act of 1933 (the Act). The securities are
valued under methods approved by the Board of Trustees
as reflecting fair value. The Fund intends to invest
no more than 10% of its net assets (determined at the
time of purchase) in restricted and illiquid
securities, excluding securities eligible for resale
pursuant to Rule 144A of the Act that are determined
to be liquid by the Board of Trustees or by the
Manager under Board-approved guidelines. Restricted
and illiquid securities amount to $10,628,120, or .56%
of the Fund's net assets, at December 31, 1993.
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS OF
SECURITY ACQUISITION DATE COST PER UNIT DEC. 31, 1993
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AMR Corp., $3.00 Cum. Cv. Depositary Shares,
Series A Preferred Stock(1) 1/28/93--2/25/93 $ 49.82 $ 52.50
-----------------------------------------------------------------------------------------------------------
Banco Nacional de Comercio Exterior SNC
International Finance BV, 8% Gtd.
Matador Bonds, 8/5/03(1) 11/12/93 $ 97.88 $103.00
-----------------------------------------------------------------------------------------------------------
Banco Nacional de Mexico SA,
7% Exch. Sub. Debs., 12/15/99(1) 12/1/92 $100.00 $124.50
-----------------------------------------------------------------------------------------------------------
Bethlehem Steel Corp., $3.50 Cv. Preferred Stock(1) 10/19/93--10/22/93 $ 49.51 $ 59.50
-----------------------------------------------------------------------------------------------------------
Carter Hawley Hale Stores, Inc.,
6.25% Sr. Sub. Nts., 12/31/00(1) 12/16/93 $100.00 $102.25
-----------------------------------------------------------------------------------------------------------
Chrysler Financial Corp., $4.625 Cv. Depositary
Shares, Series A Preferred Stock(1) 2/12/92 $ 50.00 $149.00
-----------------------------------------------------------------------------------------------------------
Citicorp, Cv. Depositary Shares,
Series 13 Preferred Stock(1) 9/4/92--9/25/92 $ 62.94 $109.25
-----------------------------------------------------------------------------------------------------------
Freeport-McMoRan, Inc., $4.375
Cv. Exch. Preferred Stock(1) 2/26/92 $ 50.00 $ 48.50
-----------------------------------------------------------------------------------------------------------
Intelcom Group, Inc., 7% Cv. Sub. Nts., 10/30/98 10/26/93 $100.00 $ 85.56
-----------------------------------------------------------------------------------------------------------
Kroger Co. (The), 8.25% Cv. Jr. Sub. Debs., 4/15/11(1) 3/6/91 $100.00 $106.00
-----------------------------------------------------------------------------------------------------------
Lend Lease Finance International Ltd.,
4.75% Gtd. Cv. Bonds, 6/1/03(1) 6/10/93 $100.00 $115.19
-----------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp.,
$3.875 Cum. Cv. Preferred Stock(1) 2/10/93 $ 50.00 $ 51.25
-----------------------------------------------------------------------------------------------------------
Stone Container Corp., 8.875% Cv. Sr. Sub.
Nts., 7/15/00(1) 6/24/93 $ 99.36 $115.50
-----------------------------------------------------------------------------------------------------------
Thomas Nelson, Inc., 5.75% Cv. Nts., 11/30/99 11/11/92 $100.00 $127.00
-----------------------------------------------------------------------------------------------------------
Transco Energy Co., $3.00 Cum. Cv.,
Series E Preferred Stock(1) 10/29/93 $ 50.00 $ 48.50
-----------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts.,
Series 1993-A, 12/1/11(1) 11/15/93 $100.00 $103.13
-----------------------------------------------------------------------------------------------------------
UAL Corp., $6.25 Cv., Series A Preferred Stock(1) 2/5/93--2/25/93 $ 99.55 $110.00
<FN>
1. Transferable under Rule 144A of the Act.
</TABLE>
17 Oppenheimer Equity Income Fund
<PAGE>
-----------------------------------------------------------
OPPENHEIMER EQUITY INCOME FUND
- --------------------------------------------------------------------------------
OFFICERS AND James C. Swain, Chairman and Chief
TRUSTEES Executive Officer
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee and President
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
Andrew J. Donohue, Vice President
John P. Doney, Vice President
George C. Bowen, Vice President,
Secretary and Treasurer
Lynn M. Coluccy, Assistant Treasurer
Robert G. Zack, Assistant Secretary
-----------------------------------------------------------
INVESTMENT ADVISOR Oppenheimer Management Corporation
-----------------------------------------------------------
DISTRIBUTOR Oppenheimer Funds Distributor, Inc.
-----------------------------------------------------------
TRANSFER AND Oppenheimer Shareholder Services
SHAREHOLDER
SERVICING AGENT
-----------------------------------------------------------
CUSTODIAN OF The Bank of New York
PORTFOLIO SECURITIES
-----------------------------------------------------------
INDEPENDENT Deloitte & Touche
AUDITORS
-----------------------------------------------------------
LEGAL COUNSEL Myer, Swanson & Adams, P.C.
The financial statements included herein have been taken
from the records of the Fund without examination by the
independent auditors.
This is a copy of a report shareholders of Oppenheimer
Equity Income Fund. This report must be preceded or
accompanied by a Prospectus of Oppenheimer Equity Income
Fund. For material information concerning the Fund, see
the Prospectus.
18 Oppenheimer Equity Income Fund
<PAGE>
----------------------------------------------------------
THE FAMILY OF OPPENHEIMERFUNDS
- --------------------------------------------------------------------------------
OppenheimerFunds offers over 30 funds designed to fit
virtually every investment goal. Whether you're investing
for retirement, your children's education, or tax-free
income, we have the funds to help you
seek your objective.
When you invest with OppenheimerFunds, you
can feel comfortable knowing that you are investing with a
respected financial institution with over 30 years of
experience in helping people just like you reach their
financial goals. And you're investing with a leader in
global, growth stock, and flexible fixed income
investments--with over 1.7 million shareholder accounts
and more than $25 billion under Oppenheimer's management
and that of our affiliates.
As an OppenheimerFunds shareholder, you can
easily exchange shares of eligible funds of the same class
by mail or by telephone for a small administrative fee.(1)
For more information on OppenheimerFunds, please contact
your financial advisor or call us at 1-800-525-7048 for a
prospectus. You may also write us at the address shown on
the back cover. As always, please read the prospectus
carefully before you invest.
- --------------------------------------------------------------------------------
SPECIALTY STOCK Global Bio-Tech Fund Gold & Special Minerals Fund
FUNDS Global Environment Fund
- --------------------------------------------------------------------------------
STOCK FUNDS Discovery Fund Global Fund
Time Fund Oppenheimer Fund
Target Fund Value Stock Fund
Special Fund
- --------------------------------------------------------------------------------
STOCK AND BOND FUNDS Main Street Income & Growth Equity Income Fund
Fund
Total Return Fund Asset Allocation Fund
Global Growth & Income Fund
- --------------------------------------------------------------------------------
BOND FUNDS High Yield Fund Strategic Short-Term Income
Champion High Yield Fund Fund
Investment Grade Bond Fund Strategic Income & Growth
Mortgage Income Fund(3) Fund
Strategic Income Fund U.S. Government Trust
Strategic Diversified Income Government Securities Fund
Fund
Strategic Investment Grade
Bond Fund
- --------------------------------------------------------------------------------
TAX-EXEMPT FUNDS New York Tax-Exempt Fund(2) Tax-Free Bond Fund
California Tax-Exempt Fund(2) Insured Tax-Exempt Bond Fund
Pennsylvania Tax-Exempt Intermediate Tax-Exempt Bond
Fund(2) Fund
Florida Tax-Exempt Fund(2)
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS Money Market Fund Tax-Exempt Cash Reserves
Cash Reserves
1. The fee is waived for PhoneLink exchanges between
existing accounts. Exchange privileges are subject to
change or termination.
2. Available only to residents of those states.
3. Formerly GNMA Fund.
OppenheimerFunds are distributed by Oppenheimer Funds
Distributor, Inc., Two World Trade Center, New York, NY
10048-0203. -C- Copyright 1994 Oppenheimer Management
Corporation. All rights reserved.
19 Oppenheimer Equity Income Fund
<PAGE>
------------------------------------------------
"How may I help you?"
- --------------------------------------------------------------------------------
General Information "Just as OppenheimerFunds offers over 30
1-800-525-7048 different funds designed to help meet virtually
Talk to a Customer Service every investment need, Oppenheimer Shareholder
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Service for the hearing level of customer service. The International
impaired. Customer Service Association knows it, too, as
Monday through Friday from it recently awarded Oppenheimer Shareholder
8:30 a.m. to 8:00 p.m. ET. Services a 1993 Award of Excellence for
consistently demonstrating superior customer
OppenheimerFunds service.
Information Hotline "Whatever your needs, we're ready
1-800-835-3104 to assist you."
Hear timely and insightful
messages on the economy and
issues that affect your
finances. 24 hours a day,
7 days a week.
[Picture]
Barbara Hennigar
President
Oppenheimer Shareholder Services
1993
AWARD of
EXCELLENCE
INTERNATIONAL
CUSTOMER
SERVICE
ASSOCIATION
[LOGO]
Oppenheimer Funds Distributor, Bulk Rate
Inc. U.S. Postage
P.O. Box 5270 PAID
Denver, CO 80217-5270 Permit No. 469
Denver, CO
