<PAGE>
Oppenheimer Equity Income Fund
Annual Report June 30, 1995
[PHOTO]
"We need our investment
to do a lot...
we want it
to provide
money to
live on and
increase in
value, too."
[LOGO]
<PAGE>
This Fund is for people who want their investment
to work two ways: provide both current income
and the potential for long-term growth.
News
"SINCE MID-1992, THE FUND HAS HOVERED IN THE EQUITY-INCOME
GROUP'S TOP HALF. AN ATTRACTIVELY HIGH YIELD AND A LOW RISK
SCORE ADDS TO ITS APPEAL."
--MORNINGSTAR MUTUAL FUNDS
12/23/94
How Your Fund Is Managed
Oppenheimer Equity Income Fund is designed to give you the benefits of a
diversified portfolio of stocks, bonds and other fixed income investments. We
manage your Fund to provide quarterly income from fixed income and other
dividend-paying securities with a secondary objective of capital appreciation
by investing in stocks, while maintaining principal as well.
Diversification provides another advantage to shareholders: less risk.
Because the Fund's assets are allocated across different types of securities,
investment risk is reduced. And to maintain performance while offsetting
risks in this year's volatile markets, your managers have increased the
holdings of quality stocks over their previous levels.
Performance
Total return at net asset value for the 12 months ended 6/30/95 was 15.66%
for Class A shares and 14.87% for Class B shares.(1)
Your Fund's average annual total returns at maximum offering price for Class A
shares for the 1-, 5- and 10-year periods ended 6/30/95 were 9.01%, 7.93% and
11.07%, respectively. For Class B shares, average annual total returns for the
1-year period ended 6/30/95 and since inception of the Class on 8/17/93 were
9.87% and 4.29%, respectively.(2)
Outlook
"We're currently taking profits on stocks that we believe have reached their
peak price for this cycle. We remain defensively optimistic--positioned so
that we can participate in what we believe remains a rising market, while
relying on our bond and cash holdings in seeking to limit the effects of any
short-term volatility."
JOHN DONEY, PORTFOLIO MANAGER
JUNE 30, 1995
All figures assume reinvestment of dividends and capital gains distributions.
Past performance is not indicative of future results. Investment and
principal value on 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. Based on the change in net asset value per share for the period
shown, without deducting any sales charges. Such performance would have been
lower if sales charges were taken into account.
2. Class A returns show results of hypothetical investments on 6/30/94,
6/30/90 and 6/30/85, after deducting the current maximum initial sales charge
of 5.75%. Class A shares were first publicly offered on 12/1/70. The Fund's
maximum sales charge for Class A shares was higher during a portion of some
of the periods shown, and actual investment results will be different as a
result of the change. Class B returns show results of hypothetical
investments on 6/30/94 and 8/17/93 (inception of class), and the deduction of
the applicable contingent deferred sales charge of 5% (1-year) and 4% (since
inception). An explanation of the different performance calculations is in
the Fund's prospectus.
2 Oppenheimer Equity Income Fund
<PAGE>
[PHOTO]
James C. Swain
Chairman
Oppenheimer
Equity Income Fund
[PHOTO]
Jon S. Fossel
President
Oppenheimer
Equity Income Fund
Dear OppenheimerFunds Shareholder,
In the first six months of 1995, the stock and bond markets have improved
significantly. The Federal Reserve's seven interest rate hikes between
February 1994 and February 1995 appear to have achieved their intended
effect, as the rate of economic growth has slowed throughout the year. This
economic outlook of sustainable, healthy growth with low inflation, falling
interest rates, and talk of deficit reduction inspired investors' confidence
in the stock market. As a result, the Dow Jones Industrial Average hit record
highs repeatedly in the first half of the year.
The stock market has been strong for other reasons as well. Overall,
corporate America has done an excellent job of restructuring, and has become
more productive and profitable. Combined with continued investment in
technology and increased competitiveness abroad as a result of a weaker
dollar, these events resulted in spectacular first quarter earnings reports.
While the market's rise this year has been dramatic, it has caused our
equity investment team to become slightly more cautious. Because the market
has already registered significant gains this year, the stock market is
starting to see signs of short-term volatility, and your Fund's managers want
to protect the gains the Fund has made.
Still, the market's expansion has been fueled by underlying fundamental
strengths. So, while we are cautious, we believe it has room to continue.
Congress's continuing emphasis on deficit reduction, plus Washington's
commitment to correcting our trade imbalance, should benefit the market--in
addition to attracting foreign investments to U.S. stocks, creating even
greater demand and possibly pushing their prices up further.
Should the economy slow more than anticipated, however, we would expect to
see earnings slow eventually, which could cause the market to hesitate. In
this event, smaller companies and international stocks could begin to
outperform the large, globally-oriented companies that have led the market so
far this year. However, until your Fund's managers see signs of either
increased inflation or recession on the horizon, they remain constructive on
the market in general and will view any volatility in the near term as a time
to search for buying opportunities.
At OppenheimerFunds, our approach to the stock market is to invest with a
long-term view, to participate in upswings while remaining prudent, and,
finally, to know when to become more defensive to protect the gains we have
made.
Your portfolio manager discusses the outlook for your Fund on the following
pages. Thank you for your confidence in OppenheimerFunds, and we look forward
to helping you continue to reach your investment goals in the future.
/s/ James C. Swain /s/ Jon S. Fossel
James C. Swain Jon S. Fossel
July 24, 1995
3 Oppenheimer Equity Income Fund
<PAGE>
Q + A [PHOTO] [PHOTO]
An interview with your Fund's manager.
Q What factors contributed
to the Fund's outstanding
performance?
THE FUND'S RETURNS WERE QUITE STRONG OVER THE YEAR. WHAT FACTORS CONTRIBUTED
TO ITS OUTSTANDING PERFORMANCE?
The Fund has had a great year for two reasons--strong stock picks and the
dramatic improvement in the market. Buoyed by a decline in interest rates and
continued strong corporate earnings, the market is up even more than most
professionals expected. That has been a pleasant surprise for us and for
shareholders.
WHAT IMPACT HAS THE CURRENT MARKET HAD ON YOUR INVESTMENT DECISIONS?
In this Fund, we tend to look at individual issuers rather than industries,
making our decisions based on companies' specific valuations and future
prospects, rather than on predictions for their sector of the market.
We've been buying cyclical companies where we see earnings trends that are
powerful enough to overcome any tendency for stock prices to suffer, because
we're moving into a slower economy. Dow Chemical and Occidental Petroleum are
two good examples.
We've also maintained our high level of exposure in the banking sector--our
major holdings are still Chase, Chemical and Citicorp--in the belief that they
still represent some of the best values in the stock market. As a group, bank
stocks generally have good yields now, and we believe future dividend
increases are likely.(1)
HAS IT BECOME MORE DIFFICULT IN TODAY'S MARKET ENVIRONMENT TO EARN STRONG
DIVIDEND YIELDS?
With stock prices up and few companies raising dividends, it's much tougher
now. In fact, the yield on the S&P 500 is currently at a historical record
low. In the face of this difficulty, however, we have
[PHOTO]
1. The Fund's portfolio is subject to change.
4 Oppenheimer Equity Income Fund
<PAGE>
FACING PAGE
Top left: John Doney,
Portfolio Manager
Top right: The equity trading desk
Bottom: Mark Binning, Securities
Coordinator, consults with Lawrence
Apolito, VP Equity Trading
THIS PAGE
Top: John Doney
Bottom: Robert Doll, Executive VP
and Director of Equity Investments
A Two reasons--
strong stock picks and
the dramatic improvement
in the market.
[PHOTO]
maintained our quarterly dividend, which was just paid on June 21.
WHEN THE STOCK MARKET WAS STRUGGLING IN 1994, WERE YOU ABLE TO TAKE ADVANTAGE
OF ANY BUYING OPPORTUNITIES THAT WERE CREATED TO STRENGTHEN THE PORTFOLIO?
During 1994, we bought some higher-quality common stocks like Minnesota Mining
and Manufacturing (3M) and Anheuser Busch, but we bought them because they
represented good value rather than for their quality.
We continue to evaluate stocks based on their fundamentals and valuations,
avoiding those with unfavorable earnings outlooks or stock prices that are
high enough on a historical basis to be considered vulnerable.
WHAT MOVES ARE YOU MAKING WITHIN THE PORTFOLIO AS A WHOLE?
We're selling stocks where we believe prospects for earnings are not
particularly good over the next year, and also cutting back on those like
Johnson & Johnson, American Express and Tektronics, that have done quite well
over the period.
Also, we've increased our percentage of convertibles within the airline
industry--notably Delta Airlines--where fundamentals and profitability have
improved.
Finally, our fixed-rate bond portfolio is currently around 16% of assets,
which includes U.S. government issues, foreign government bonds and a small
percentage of corporates. In the government bond sector, we're using shorter
maturity bonds because of the recent drop in long-term yields. We've also
allowed cash in the portfolio to build to around 17% as a defensive measure.
WHAT IS YOUR OUTLOOK FOR THE FUND GOING FORWARD?
We expect that the market will continue to be strong long term. We're
currently taking profits on stocks that we believe have reached their peak
price for this phase of the business cycle, because they're the ones that
would be most vulnerable to disappointments in the event of a temporary
market decline.
We remain defensively optimistic--positioned so that we can participate in
what we believe remains an up market, while relying on our bond and cash
holdings in seeking to limit the effects of any short-term volatility.
[PHOTO]
5 Oppenheimer Equity Income Fund
<PAGE>
----------------------------------------
STATEMENT OF INVESTMENTS JUNE 30, 1995
----------------------------------------
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--13.1%
-----------------------------------------------------------------------------------------------------------------------------------
AGENCY--0.1%
-----------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY/FULL FAITH--0.1% Nafin Securities Ltd., 6% Gtd. Bonds, 12/19/96 $2,000,000 $1,830,000
-----------------------------------------------------------------------------------------------------------------------------------
TREASURY--13.0%
U.S. TREASURY NTS.:
7.50%, 12/31/96 146,500,000 150,070,938
7.625%, 5/31/96 100,000,000 101,718,689
7.875%, 6/30/96 14,200,000 14,492,875
-----------
266,282,502
Total U.S. Government Obligations
(Cost $265,052,972) 268,112,502
-----------------------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS--6.6%
-----------------------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Par Bonds, 5%, 3/31/23(2) 5,750,000 2,752,812
--------------------------------------------------------------------------------------------
Argentina (Republic of) Past Due Interest Bonds,
7.313%, 3/31/05(3) 2,500,000 1,542,187
--------------------------------------------------------------------------------------------
Banco Nacional de Comercio Exterior SNC International
Finance BV Bonds, 9.875%, 6/24/96 23,150,000 22,773,812
--------------------------------------------------------------------------------------------
Banco Nacional de Comercio Exterior SNC International
Finance BV Gtd. Matador Bonds, 8%, 8/5/03 2,000,000 1,432,500
--------------------------------------------------------------------------------------------
Banco Nacional de Obras y Servicios Publicos SA Nts.,
10.75%, 8/16/96 6,000,000 5,977,500
--------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Interest Due and Unpaid Bonds,
7.813%, 1/1/01(3) 4,850,000 3,913,344
--------------------------------------------------------------------------------------------
Canada (Government of) Bonds, Series H62, 9.25%, 10/1/96 CAD 55,800,000 41,776,603
--------------------------------------------------------------------------------------------
Ecuador (Republic of) Par Bonds, 3%, 2/28/25(3) 10,250,000 3,312,031
--------------------------------------------------------------------------------------------
New South Wales State Bank Bonds, 9.25%, 2/18/03 AUD 9,900,000 7,118,300
--------------------------------------------------------------------------------------------
Ontario Hydro (Province of) Canada Gtd. Debs., 10.875%,
1/8/96 CAD 16,000,000 11,900,637
--------------------------------------------------------------------------------------------
Quebec, Canada (Province of) Debs., 10.25%, 4/7/98 CAD 10,000,000 7,759,069
--------------------------------------------------------------------------------------------
Queensland Treasury Corp. Gtd. Nts., 8%, 8/14/01 AUD 33,650,000 22,778,510
--------------------------------------------------------------------------------------------
South Australia (Government of) Bonds, 9%, 9/23/02 AUD 3,000,000 2,122,505
------------
Total Foreign Government Obligations (Cost $150,552,349) 135,159,810
-----------------------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES--3.3%
-----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--1.8%
-----------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING--0.5% Auburn Hills Trust, 12% Gtd. Exch. Certificates, 5/1/20(4) 5,000,000 7,423,280
--------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A,
12/1/11(5) 2,500,000 1,612,500
---------
9,035,780
-----------------------------------------------------------------------------------------------------------------------------------
MEDIA--1.0% Comcast Corp., 10.25% Sr. Sub. Debs., 10/15/01 6,000,000 6,420,000
--------------------------------------------------------------------------------------------
Viacom International, Inc., 10.25% Sr. Sub. Nts., 9/15/01 12,000,000 13,410,000
-----------
19,830,000
-----------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL--0.3% WestPoint Stevens, Inc., 8.75% Sr. Nts., 12/15/01 6,000,000 5,947,500
-----------------------------------------------------------------------------------------------------------------------------------
ENERGY--0.8%
-----------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS--0.8% Coastal Corp., 11.75% Sr. Debs., 6/15/06 8,946,000 9,733,221
--------------------------------------------------------------------------------------------
Rowan Cos., Inc., 11.875% Sr. Nts., 12/1/01 7,000,000 7,525,000
----------
17,258,221
</TABLE>
6 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL--0.2%
-----------------------------------------------------------------------------------------------------------------------------------
INSURANCE--0.2% Reliance Group Holdings, Inc., 9.75% Sr. Sub. Debs.,
11/15/03 $4,250,000 $4,154,375
-----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--0.5%
-----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING--0.5% Imo Industries, Inc., 12.25% Sr. Sub. Debs., 8/15/97 7,078,000 7,111,517
--------------------------------------------------------------------------------------------
MagneTek, Inc., 10.75% Sr. Sub. Debs., 11/15/98 3,000,000 3,172,500
--------------------------------------------------------------------------------------------
10,284,017
----------
Total Non-Convertible Corporate Bonds and Notes
(Cost $60,588,617) 66,509,893
-----------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND NOTES--6.6%
-----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS--1.0%
-----------------------------------------------------------------------------------------------------------------------------------
METALS--1.0% Inco, Ltd.:
5.75% Cv. Debs., 7/1/04 9,700,000 10,803,375
7.75% Cv. Debs., 3/15/16 9,800,000 10,008,250
----------
20,811,625
-----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--3.0%
-----------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING--0.2% U.S. Home Corp., 4.875% Cv. Sub. Debs., 11/1/05 4,350,000 3,605,063
-----------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT--2.3% AMR Corp., 6.125% Cv. Sub. Debs., 11/1/24 20,000,000 20,900,000
--------------------------------------------------------------------------------------------
Delta Airlines, Inc., 3.23% Cv. Sub. Nts., 6/15/03 13,500,000 12,993,750
--------------------------------------------------------------------------------------------
Time Warner, Inc., 8.75% Cv. Sr. Nts., 1/10/15 3,179,000 3,306,160
--------------------------------------------------------------------------------------------
Time Warner, Inc., Zero Coupon Cv. Liquid Yield Option
Nts., 12/17/12 30,000,000 10,050,000
----------
47,249,910
-----------------------------------------------------------------------------------------------------------------------------------
MEDIA--0.3% Thomas Nelson, Inc., 5.75% Cv. Nts., 11/30/99(6) 5,000,000 5,818,750
-----------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL--0.2% Carter Hawley Hale Stores, Inc., 6.25% Cv. Sr. Sub.
Nts., 12/31/00 7,800,000 5,070,000
-----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS--0.2%
-----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES--0.2% ICN Pharmaceuticals, Inc., 8.50% Cv. Sub. Debs., 11/15/99 4,500,000 4,410,000
-----------------------------------------------------------------------------------------------------------------------------------
ENERGY--0.5%
-----------------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED--0.5% Box Energy Corp., 8.25% Cv. Sub. Nts., 12/1/02 5,000,000 4,662,500
--------------------------------------------------------------------------------------------
Oryx Energy Co., 7.50% Cv. Sub. Debs., 5/15/14 7,000,000 6,212,500
----------
10,875,000
-----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL--0.9%
-----------------------------------------------------------------------------------------------------------------------------------
BANKS--0.9% Banco de Galicia y Buenos Aires SA, 7% Cv.
Negotiable Obligation Bonds, 8/1/02 2,500,000 1,762,500
--------------------------------------------------------------------------------------------
Bank of New York Co., Inc. (The), 7.50% Cv. Sub.
Debs., 8/15/01 7,750,000 16,081,250
----------
17,843,750
-----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--0.8%
-----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.3% Cooper Industries, Inc., 7.05% Cv. Unsec. Sub. Bonds, 1/1/15 6,741,000 6,993,788
-----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL MATERIALS--0.5% Stone Container Corp., 8.875% Cv. Sr. Sub. Nts., 7/15/00 5,000,000 9,881,250
-----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--0.2%
-----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY--0.2% Intelcom Group, Inc., 7% Cv. Sub. Nts., 10/30/98(7) 5,525,000 3,683,026
-----------
Total Convertible Corporate Bonds and Notes (Cost $120,304,987) 136,242,162
</TABLE>
7 Oppenheimer Equity Income Fund
<PAGE>
--------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
--------------------------------------
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--43.5%
-----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS--4.5%
-----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--2.4% Dow Chemical Co. (The) 200,000 $14,375,000
--------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 200,000 13,750,000
--------------------------------------------------------------------------------------------
Goodrich (B.F.) Co. (The) 200,000 10,725,000
--------------------------------------------------------------------------------------------
Lyondell Petrochemical Co. 420,600 10,777,875
----------
49,627,875
-----------------------------------------------------------------------------------------------------------------------------------
METALS--0.4% Cyprus Amax Minerals Co. 100,000 2,850,000
--------------------------------------------------------------------------------------------
Reynolds Metals Co. 100,000 5,175,000
---------
8,025,000
-----------------------------------------------------------------------------------------------------------------------------------
PAPER--1.7% Union Camp Corp. 200,000 11,575,000
--------------------------------------------------------------------------------------------
Westvaco Corp. 250,000 11,062,500
--------------------------------------------------------------------------------------------
Weyerhaeuser Co. 250,000 11,781,250
---------
34,418,750
-----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--3.4%
-----------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING--1.1% General Motors Corp. 475,000 22,265,625
-----------------------------------------------------------------------------------------------------------------------------------
MEDIA--0.4% Dun & Bradstreet Corp. (The) 151,000 7,927,500
-----------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL--1.9% Sears, Roebuck & Co. 641,219 38,392,988
-----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS--3.9%
-----------------------------------------------------------------------------------------------------------------------------------
BEVERAGES--0.3% Anheuser-Busch Cos., Inc. 100,000 5,687,500
-----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS--0.3% Johnson & Johnson 100,000 6,762,500
-----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES--0.2% U.S. Healthcare, Inc. 100,000 3,062,500
-----------------------------------------------------------------------------------------------------------------------------------
TOBACCO--3.1% Philip Morris Cos., Inc. 600,000 44,625,000
--------------------------------------------------------------------------------------------
RJR Nabisco Holdings Corp. 240,000 6,690,000
--------------------------------------------------------------------------------------------
UST, Inc. 400,000 11,900,000
----------
63,215,000
-----------------------------------------------------------------------------------------------------------------------------------
ENERGY--4.3%
-----------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS--0.3% Baker Hughes, Inc. 339,000 6,949,500
-----------------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED--4.0% Mobil Corp. 176,500 16,944,000
--------------------------------------------------------------------------------------------
Occidental Petroleum Corp. 600,000 13,725,000
--------------------------------------------------------------------------------------------
Phillips Petroleum Co. 300,000 10,012,500
--------------------------------------------------------------------------------------------
Royal Dutch Petroleum Co. 201,500 24,557,812
--------------------------------------------------------------------------------------------
Texaco, Inc. 251,500 16,504,688
----------
81,744,000
-----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL--17.0%
-----------------------------------------------------------------------------------------------------------------------------------
BANKS--13.2% Banc One Corp. 700,000 22,575,000
--------------------------------------------------------------------------------------------
Bank of Boston Corp. 405,636 15,211,350
--------------------------------------------------------------------------------------------
BankAmerica Corp. 600,000 31,575,000
--------------------------------------------------------------------------------------------
Chase Manhattan Corp. 550,000 25,850,000
</TABLE>
8 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BANKS--(CONTINUED)
Chemical Banking Corp. 550,000 $25,987,500
--------------------------------------------------------------------------------------------
Citicorp 92,457 5,350,949
--------------------------------------------------------------------------------------------
Crestar Financial Corp. 275,000 13,475,000
--------------------------------------------------------------------------------------------
First Bank System, Inc. 200,000 8,200,000
--------------------------------------------------------------------------------------------
First Fidelity Bancorporation 399,300 23,558,700
--------------------------------------------------------------------------------------------
First Union Corp. 300,000 13,575,000
--------------------------------------------------------------------------------------------
Fleet Financial Group, Inc. 400,000 14,850,000
--------------------------------------------------------------------------------------------
KeyCorp 400,000 12,550,000
--------------------------------------------------------------------------------------------
Magna Group, Inc. 400,000 8,800,000
--------------------------------------------------------------------------------------------
Mellon Bank Corp. 450,000 18,731,250
--------------------------------------------------------------------------------------------
National City Corp. 500,000 14,687,500
--------------------------------------------------------------------------------------------
Signet Banking Corp. 400,000 8,750,000
--------------------------------------------------------------------------------------------
U.S. Bancorp, Inc. 300,000 7,218,750
----------
270,945,999
-----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--1.3% American Express Co. 600,000 21,075,000
--------------------------------------------------------------------------------------------
Capital One Financial Corp. 300,000 5,850,000
---------
26,925,000
-----------------------------------------------------------------------------------------------------------------------------------
INSURANCE--2.5% Allstate Corp. 130,000 3,851,250
--------------------------------------------------------------------------------------------
General Re Corp. 101,000 13,521,375
--------------------------------------------------------------------------------------------
Reliance Group Holdings, Inc. 2,079,000 13,513,500
--------------------------------------------------------------------------------------------
Safeco Corp. 200,000 11,487,500
--------------------------------------------------------------------------------------------
St. Paul Cos., Inc. 200,000 9,850,000
----------
52,223,625
-----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--2.8%
-----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.8% AMP, Inc. 400,000 16,900,000
-----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING--1.1% Tenneco, Inc. 500,000 23,000,000
-----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--0.9% Ryder Systems, Inc. 500,000 11,937,500
--------------------------------------------------------------------------------------------
Union Pacific Corp. 100,000 5,537,500
---------
17,475,000
-----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--2.9%
-----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE--0.8% United Technologies Corp. 200,000 15,625,000
-----------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE--1.3% Minnesota Mining & Manufacturing Co. 200,000 11,450,000
--------------------------------------------------------------------------------------------
Moore Corp. Ltd. 716,000 15,841,500
----------
27,291,500
-----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS--0.8% Tektronix, Inc. 350,000 17,237,500
</TABLE>
9 Oppenheimer Equity Income Fund
<PAGE>
--------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
--------------------------------------
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES--4.7%
-----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--4.7% Allegheny Power System, Inc. 300,000 $7,050,000
--------------------------------------------------------------------------------------------
Baltimore Gas & Electric Co. 260,000 6,500,000
--------------------------------------------------------------------------------------------
Detroit Edison Co. 300,000 8,850,000
--------------------------------------------------------------------------------------------
Entergy Corp. 550,000 13,268,750
--------------------------------------------------------------------------------------------
Florida Progress Corp. 500,000 15,625,000
--------------------------------------------------------------------------------------------
Ohio Edison Co. 400,000 9,050,000
--------------------------------------------------------------------------------------------
Public Service Co. of Colorado 200,000 6,500,000
--------------------------------------------------------------------------------------------
Public Service Enterprise Group, Inc. 604,000 16,761,000
--------------------------------------------------------------------------------------------
Texas Utilities Co. 400,000 13,750,000
--------------------------------------------------------------------------------------------
97,354,750
-----------
Total Common Stocks (Cost $699,903,319) 893,057,112
-----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--16.8%
-----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS--3.5%
-----------------------------------------------------------------------------------------------------------------------------------
METALS--1.7% Alumax, Inc., $4.00 Cv., Series A 50,000 6,718,750
--------------------------------------------------------------------------------------------
Armco, Inc., $3.625 Cum. Cv. 200,000 10,475,000
--------------------------------------------------------------------------------------------
Cyprus Amax Minerals Co., $4.00 Cv., Series A 150,000 9,375,000
--------------------------------------------------------------------------------------------
Reynolds Metals Co., 7% Preferred Redeemable Increased
Dividend Equity Securities, $3.31 Cv., 12/31/97 160,000 7,720,000
-----------
34,288,750
-----------------------------------------------------------------------------------------------------------------------------------
PAPER--1.8% Boise Cascade Corp., $1.58 Cum. Cv., Series G 460,000 15,352,500
--------------------------------------------------------------------------------------------
Bowater, 7% Preferred Redeemable Increased Dividend Equity
Securities, Series B, $6.58 Cv., 1/1/98 95,000 3,586,250
--------------------------------------------------------------------------------------------
James River Corp. of Virginia, Dividend Enhanced Convertible
Stock, 9% Cv. Exchangeable Depositary Shares, Series P 700,000 17,325,000
-----------
36,263,750
-----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--0.6%
-----------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT--0.6% Delta Airlines, Inc., $3.50 Cv. Depositary Shares,
Series C 200,000 11,700,000
-----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS--2.8%
-----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES--0.7% U.S. Surgical Corp., $2.20 Depositary Shares Representing
1/50th Share of Series A Preferred Stock 550,000 14,025,000
-----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS--0.8% Westinghouse Electric Corp., Participating Equity Preferred
Shares, $12.125 Cv., Series C(5) 1,100,000 16,500,000
-----------------------------------------------------------------------------------------------------------------------------------
TOBACCO--1.3% RJR Nabisco Holdings Corp., $6.50 Cv., Series C 4,315,000 26,429,375
-----------------------------------------------------------------------------------------------------------------------------------
ENERGY--2.4%
-----------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS--0.5% Noble Drilling Corp., $1.50 Cv. Exchangeable 122,000 2,897,500
--------------------------------------------------------------------------------------------
Santa Fe Energy Resources, Inc., Dividend Enhanced Convertible
Stock, $.732 Cv. Exchangeable, Series A 805,000 7,748,125
----------
10,645,625
</TABLE>
10 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OIL-INTEGRATED--1.9% Atlantic Richfield Co., 9% Exchangeable Notes for Common
Stock of Lyondell Petrochemical Co., 9/15/97 400,000 $ 10,400,000
--------------------------------------------------------------------------------------------
Occidental Petroleum Corp., $3.00 Cum. Cv. Canadian Occidental
Petroleum Ltd.-Indexed 90,000 5,332,500
--------------------------------------------------------------------------------------------
Occidental Petroleum Corp., $3.875 Cum. Cv.(5) 400,000 22,900,000
----------
38,632,500
-----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL--4.5%
-----------------------------------------------------------------------------------------------------------------------------------
BANKS--2.8% Citicorp, Cv. Depositary Shares, Series 13 200,000 32,025,000
--------------------------------------------------------------------------------------------
Citicorp, Preferred Equity Redemption Cumulative Stock,
$1.217 Cv. Depositary Shares, Series 15, 11/30/95 329,141 6,665,105
--------------------------------------------------------------------------------------------
First Chicago Corp., $2.875 Cum Cv. Depositary Shares, Series B 135,000 7,830,000
--------------------------------------------------------------------------------------------
Sovereign Bancorp Inc., 6.25% Cv., Series B 36,500 1,966,437
--------------------------------------------------------------------------------------------
Washington Mutual, Inc., $6.00 Non-Cum. Cv. Perpetual
Preferred Stock, Series D 96,800 9,655,800
-----------
58,142,342
-----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--1.5% Allstate Corp., $2.30 Debt Exchangeable for
Common Stock of PMI Group, Inc. 111,000 4,523,250
--------------------------------------------------------------------------------------------
American Express Co., Debt Exchangeable for Common Stock of
First Data Corp., 6.25%, 10/15/96 557,000 27,014,500
-----------
31,537,750
-----------------------------------------------------------------------------------------------------------------------------------
INSURANCE--0.2% American General Delaware LLC, $3.00 Cv. Monthly Income
Preferred Securities, Series A 75,000 3,890,625
-----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--1.7%
-----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL MATERIALS--0.5% Owens-Corning Capital LLC, 6.50% Cv. Monthly Income Preferred
Securities 200,000 10,275,000
-----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--1.2% Browning-Ferris Industries, Inc., 7.25% Cv. Automatic Common
Exchangeable Securities(8) 225,000 8,212,500
--------------------------------------------------------------------------------------------
Case Equipment Corp., Cum. Cv., Series A(5) 130,000 10,530,000
--------------------------------------------------------------------------------------------
Corning Delaware LP, 6% Cv. Monthly Income Preferred
Securities 150,000 7,668,750
----------
26,411,250
-----------------------------------------------------------------------------------------------------------------------------------
UTILITIES--1.3%
-----------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES--0.9% Valero Energy Corp., Cv. 200,000 9,200,000
-----------------------------------------------------------------------------------------------------------------------------------
Williams Companies, Inc., $3.50 Cv. 147,000 9,058,875
----------
18,258,875
-----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES--0.4% Compania de Inversiones en Telecomunicaciones SA,
Provisionally Redeemable Income Debt Exchangeable for Stock,
7%, 3/3/98(5) 165,000 8,456,250
--------------------------------------------------------------------------------------------
Total Preferred Stocks (Cost $286,304,865) 345,457,092
</TABLE>
11 Oppenheimer Equity Income Fund
<PAGE>
--------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
--------------------------------------
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
STRUCTURED INSTRUMENTS--0.3%
-----------------------------------------------------------------------------------------------------------------------------------
CS First Boston Corp. Argentina Structured Product
Asset Return Trust Certificates, 9.40%, 9/1/97
(representing debt of Argentina (Republic of)
Bonos del Tesoro Bonds, Series II, 6.063%, 9/1/97
and an interest rate swap between Credit Suisse
Financial Products and the Trust) (Cost $7,428,571)(5) $7,428,571 $7,157,673
-----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--9.7%
-----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital
Markets, 6.125%, dated 6/30/95, to be repurchased at
$200,300,184 on 7/3/95, collateralized by U.S.
Treasury Bonds, 11.25%, 2/15/15, with a value of
$20,423,668, U.S. Treasury Nts., 4.75%--7.875%,
3/31/96--8/15/01, with a value of $133,595,446, and
U.S. Treasury Bills maturing 9/28/95--12/14/95, with
a value of $50,382,907 (Cost $200,198,000) 200,198,000 200,198,000
-------------
Total Investments, at Value (Cost $1,790,333,680) 99.9% 2,051,894,244
-----------------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.1 2,801,386
-----------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $2,054,695,630
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<FN>
1. Face amount is reported in local currency. Foreign currency abbreviations
are as follows:
AUD--Australian Dollar
CAD--Canadian Dollar
2. Represents the current interest rate for an increasing rate security.
3. Represents the current interest rate for a variable rate security.
4. Variable rate obligation maturing in more than a year. The interest rate
is the effective rate on June 30, 1995 and may change as the credit rating
changes.
5. Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $67,156,423 or 3.3% of the Fund's net
assets, at June 30, 1995.
6. Identifies issues considered to be illiquid--See Note 5 of Notes to Financial
Statements.
7. Interest or dividend is paid in kind.
8. Non-income producing security.
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Equity Income Fund
<PAGE>
---------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1995
---------------------------------------------------
<TABLE>
<S> <C>
ASSETS Investments, at value (cost $1,790,333,680)--see accompanying
statement $2,051,894,244
------------------------------------------------------------------------------------
Cash 347,939
------------------------------------------------------------------------------------
Receivables:
Interest and dividends 11,728,444
Shares of beneficial interest sold 3,355,907
Investments sold 3,075,000
------------------------------------------------------------------------------------
Other 55,182
------------------------------------------------------------------------------------
Total assets 2,070,456,716
------------------------------------------------------------------------------------
LIABILITIES Payables and other liabilities:
Investments purchased 8,716,903
Shares of beneficial interest redeemed 4,851,255
Distribution and service plan fees--Note 4 976,601
Transfer and shareholder servicing agent fees--Note 4 136,630
Other 1,079,697
------------------------------------------------------------------------------------
Total liabilities 15,761,086
------------------------------------------------------------------------------------
Net Assets $2,054,695,630
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS PAID-IN CAPITAL $1,760,752,758
------------------------------------------------------------------------------------
Overdistributed net investment income (970,447)
------------------------------------------------------------------------------------
Accumulated net realized gain from investment transactions 33,385,470
------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets
and liabilities denominated in foreign currencies--Note 3 261,527,849
------------------------------------------------------------------------------------
Net assets $2,054,695,630
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets
of $1,893,248,866 and 184,622,931 shares of beneficial interest
outstanding) $10.25
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $10.88
------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $161,446,764 and 15,815,667 shares of
beneficial interest outstanding) $10.21
</TABLE>
See accompanying Notes to Financial Statements.
13 Oppenheimer Equity Income Fund
<PAGE>
----------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1995
----------------------------------------------------------
<TABLE>
<S> <C>
----------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME Interest $59,082,794
-------------------------------------------------------------------------------------
Dividends (net of withholding taxes of $402,699) 58,281,419
-------------------------------------------------------------------------------------
Total income 117,364,213
-------------------------------------------------------------------------------------
EXPENSES Management fees--Note 4 10,347,426
-------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 4 3,341,473
Class B--Note 4 1,223,578
-------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 2,166,379
-------------------------------------------------------------------------------------
Shareholder reports 1,157,551
-------------------------------------------------------------------------------------
Custodian fees and expenses 334,295
-------------------------------------------------------------------------------------
Registration and filing fees:
Class A 116,381
Class B 27,668
-------------------------------------------------------------------------------------
Legal and auditing fees 106,390
-------------------------------------------------------------------------------------
Trustees' fees and expenses 66,822
-------------------------------------------------------------------------------------
Other 543,970
------------
Total expenses 19,431,933
-------------------------------------------------------------------------------------
NET INVESTMENT INCOME 97,932,280
----------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED Net realized gain on:
GAIN (LOSS) ON INVESTMENTS Investments 31,284,132
AND FOREIGN CURRENCY Foreign currency transactions 2,241,544
TRANSACTIONS ------------
Net realized gain 33,525,676
-------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 156,924,050
Translation of assets and liabilities denominated in
foreign currencies (3,645,863)
------------
Net change 153,278,187
------------
Net realized and unrealized gain on investments and foreign currency
transactions 186,803,863
----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $284,736,143
------------
------------
</TABLE>
See accompanying Notes to Financial Statements.
14 Oppenheimer Equity Income Fund
<PAGE>
-----------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
-----------------------------------
<TABLE>
<CAPTION>
Year Ended June 30,
1995 1994
<S> <C> <C>
-------------------------------------------------------------------------------------------------------------------------
OPERATIONS Net investment income $97,932,280 $88,048,979
----------------------------------------------------------------------------------
Net realized gain on investments and foreign
currency transactions 33,525,676 23,085,323
----------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on
investments and translation of assets and liabilities
denominated in foreign currencies 153,278,187 (101,601,423)
----------------------------------------------------------------------------------
Net increase in net assets resulting from operations 284,736,143 9,532,879
----------------------------------------------------------------------------------
EQUALIZATION Net change -- 546,821
-------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.48 and $.47 per share, respectively) (88,319,907) (85,741,017)
SHAREHOLDERS Class B ($.40 and $.42 per share, respectively) (5,380,964) (2,115,733)
----------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A ($.01 per share) -- (1,829,618)
Class B ($.01 per share) -- (45,147)
----------------------------------------------------------------------------------
Distributions from net realized gain on investments
and foreign currency transactions:
Class A ($.1272 and $.1221 per share, respectively) (23,241,171) (22,569,711)
Class B ($.1272 and $.1221 per share, respectively) (1,584,662) (515,610)
----------------------------------------------------------------------------------
Distributions in excess of gain on investments and
foreign currency transactions:
Class A ($.05 per share) -- (8,593,810)
Class B ($.05 per share) -- (196,327)
-------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting
TRANSACTIONS from Class A beneficial interest
transactions--Note 2 (34,706,185) 88,576,248
----------------------------------------------------------------------------------
Net increase in net assets resulting from Class B
beneficial interest transactions--Note 2 62,397,726 93,399,883
----------------------------------------------------------------------------------
NET ASSETS Total increase 193,900,980 70,448,858
----------------------------------------------------------------------------------
Beginning of period 1,860,794,650 1,790,345,792
------------- -------------
End of period (including overdistributed net
investment income of $970,447 and $3,381,130,
respectively) $2,054,695,630 $1,860,794,650
-------------- --------------
-------------- --------------
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Equity Income Fund
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
<TABLE>
<CAPTION>
Class A
-------------------------------------------
Year Ended June 30,
1995 1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning
of period $9.44 $10.01 $9.15 $8.86
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income .50 .47 .50 .50
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions .92 (.39) .99 .39
Total income (loss) from investment
operations 1.42 .08 1.49 .89
-------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.48) (.47) (.48) (.48)
Dividends in excess of net
investment income -- (.01) -- --
Distributions from net realized gain
on investments and foreign
currency transactions (.13) (.12) (.15) (.12)
Distributions in excess of
capital gains -- (.05) -- --
Total dividends and distributions
to shareholders (.61) (.65) (.63) (.60)
-------------------------------------------------------------------------------
Net asset value, end of period $10.25 $9.44 $10.01 $9.15
-------------------------------------------------------------------------------
Total Return, at Net Asset
Value(2) 15.66% .65% 16.76% 10.26%
-------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $1,893,249 $1,772,944 $1,790,346 $1,555,924
-------------------------------------------------------------------------------
Average net assets (in
thousands) $1,797,670 $1,831,606 $1,657,692 $1,525,599
-------------------------------------------------------------------------------
Number of shares outstanding at
end of period (in thousands) 184,623 187,841 178,819 170,117
-------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.15% 4.72% 5.12% 5.33%
Expenses .96% .90% .79% .82%
-------------------------------------------------------------------------------
Portfolio turnover rate(4) 45.7% 30.4% 59.0% 37.0%
<FN>
1. For the period from August 17, 1993 (inception of offering) to June 30, 1994.
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. Total returns are not
annualized for periods of less than one full year.
</TABLE>
16 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------------------------------------
Year Ended June 30,
1991 1990 1989 1988 1987 1986 1995 1994(1)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning
of period $9.18 $9.11 $8.51 $9.85 $9.26 $7.78 $9.40 $10.22
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .48 .48 .52 .48 .46 .50 .43 .36
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions (.17) .33 .58 (.35) 1.22 1.59 .91 (.58)
Total income (loss) from investment
operations .31 .81 1.10 .13 1.68 2.09 1.34 (.22)
------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.48) (.50) (.48) (.60) (.48) (.46) (.40) (.42)
Dividends in excess of net
investment income -- -- -- -- -- -- -- (.01)
Distributions from net realized gain
on investments and foreign
currency transactions (.15) (.24) (.02) (.87) (.61) (.15) (.13) (.12)
Distributions in excess of
capital gains -- -- -- -- -- -- -- (.05)
Total dividends and distributions
to shareholders (.63) (.74) (.50) (1.47) (1.09) (.61) (.53) (.60)
------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.86 $9.18 $9.11 $8.51 $9.85 $9.26 $10.21 $9.40
------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset
Value(2) 3.68% 9.07% 13.30% 2.04% 20.45% 28.42% 14.87% (2.35)%
------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $1,393,303 $1,329,830 $1,017,074 $806,892 $730,655 $381,122 $161,447 $87,850
------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,323,858 $1,179,704 $ 885,179 $743,232 $526,897 $228,642 $122,471 $47,414
------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding at
end of period (in thousands) 157,239 144,921 111,613 94,824 74,169 41,166 15,816 9,341
------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.31% 5.10% 5.89% 5.48% 5.08% 6.00% 4.34% 3.99%(3)
Expenses .79% .79% .85% .83% .91% 1.03% 1.79% 1.82%(3)
------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 64.0% 122.0% 91.4% 124.1% 94.7% 105.3% 45.7% 30.4%
<FN>
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 period ended June 30, 1995 were $822,550,797 and
$820,422,707, respectively.
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Equity Income Fund
<PAGE>
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
-------------------------------------------------------------------------------
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
and/or service plan, expenses directly attributable
to a particular class and exclusive voting rights
with respect to matters affecting a single class.
Class B shares will automatically convert to
Class A shares six years after the date of
purchase. The following is a summary of significant
accounting policies consistently followed by the
Fund.
---------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are
valued at the close of the New York Stock Exchange
on each trading day. Listed and unlisted securities
for which such information is regularly reported
are valued at the last sale price of the day or, in
the absence of sales, at values based on the
closing bid or asked price or the last sale price
on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a
portfolio pricing service approved by the Board of
Trustees. Such securities which cannot be valued by
the approved portfolio pricing service are valued
using dealer-supplied valuations provided the
Manager is satisfied that the firm rendering the
quotes is reliable and that the quotes reflect
current market value, or under consistently applied
procedures established by the Board of Trustees 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.
---------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The accounting
records of the Fund are maintained in U.S. dollars.
Prices of securities denominated in foreign
currencies are translated into U.S. dollars at the
closing rates of exchange. Amounts related to the
purchase and sale of securities and investment
income are translated at the rates of exchange
prevailing on the respective dates of such
transactions. The effect of changes in foreign
currency exchange rates on investments is
separately identified from the fluctuations
arising from changes in market values of securities
held and reported with all other foreign currency
gains and losses in the Fund's result 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.
---------------------------------------------------
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 $32,950,419 from undistributed
net investment income to paid-in capital.
18 Oppenheimer Equity Income Fund
<PAGE>
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
--------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING DISTRIBUTIONS TO SHAREHOLDERS. Dividends and
POLICIES (CONTINUED) 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 paydown gains and
losses and the recognition of certain foreign
currency gains (losses) as ordinary income (loss)
for tax purposes. The character of the
distributions made during the year from net
investment income or net realized gains may differ
from their ultimate characterization for federal
income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which
amounts are distributed may differ from the year
that the income or realized gain (loss) was
recorded by the Fund. Effective July 1, 1993, the
Fund adopted Statement of Position 93-2:
Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of
Capital Distributions by Investment Companies. As a
result, the Fund changed the classification of
distributions to shareholders to better disclose
the differences between financial statement amounts
and distributions determined in accordance with
income tax regulations. During the year ended
June 30, 1995, in accordance with Statement of
Position 93-2, undistributed net investment income
was decreased by $1,820,726, and accumulated net
realized gain on investments was increased by the
same amount.
---------------------------------------------------
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. 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.
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.
---------------------------------------------------
2. SHARES OF The Fund has authorized an unlimited number of no
BENEFICIAL INTEREST par value shares of beneficial interest of each
class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1995 June 30, 1994(1)
------------------------- --------------------------
Shares Amount Shares Amount
----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Class A:
Sold 19,327,605 $207,336,132 26,551,307 $264,515,469
Dividends and distributions reinvested 11,012,028 83,402,034 11,168,493 110,189,163
Redeemed (33,557,623) (325,444,351) (28,698,217) (286,128,384)
----------- ------------- ----------- ------------
Net increase (decrease) (3,217,990) $(34,706,185) 9,021,583 $88,576,248
----------- ------------- ----------- ------------
----------- ------------- ----------- ------------
Class B:
Sold 7,529,176 $72,586,104 9,581,829 $95,687,102
Dividends and distributions reinvested 670,317 6,342,433 266,194 2,603,845
Redeemed (1,724,724) (16,530,811) (507,125) (4,891,064)
----------- ------------- ----------- ------------
Net increase 6,474,769 $62,397,726 9,340,898 $93,399,883
----------- ------------- ----------- ------------
----------- ------------- ----------- ------------
<FN>
1. For the year ended June 30, 1994 for Class A shares and for the period
from August 17, 1993 (inception of offering) to June 30, 1994 for Class B
shares.
</TABLE>
19 Oppenheimer Equity Income Fund
<PAGE>
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
--------------------------------------------------------------------------------
3. UNREALIZED GAINS AND At June 30, 1995, net unrealized appreciation on
LOSSES ON INVESTMENTS investments of $261,560,564 was composed of gross
appreciation of $296,970,357, and gross
depreciation of $35,409,793.
--------------------------------------------------------------------------------
4. MANAGEMENT FEES AND Management fees paid to the Manager were in
OTHER TRANSACTIONS accordance with the investment advisory agreement
WITH AFFILIATES with the Fund which provides for a fee of .75% on
the first $100 million of average annual 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 year ended June 30, 1995, commissions
(sales charges paid by investors) on sales of
Class A shares totaled $4,629,585, of which
$1,414,085 was retained by Oppenheimer Funds
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 shares totaled $2,424,041, of which
$193,761 was paid to an affiliated broker/dealer.
During the year ended June 30, 1995, OFDI received
contingent deferred sales charges of $232,362 upon
redemption of Class B shares, as reimbursement for
sales commissions advanced by OFDI at the time of
sale of such 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, each class may
expend up to .25% of its net assets annually to
reimburse OFDI for costs incurred in connection
with the personal service and maintenance of
accounts that hold shares of the Fund, including
amounts paid to brokers, dealers, banks and other
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, the Board of Trustees may allow the
Fund to continue payment of the asset-based sales
charge of OFDI for distribution expenses incurred
on Class B shares sold prior to termination or
discontinuance of the plan. During the year ended
June 30, 1995, OFDI paid $204,516 and $10,645,
respectively, to an affiliated broker/dealer as
reimbursement for Class A and Class B personal
service and maintenance expenses and retained
$1,120,169 as reimbursement for Class B sales
commissions and service fee advances, as well as
financing costs.
--------------------------------------------------------------------------------
5. ILLIQUID AND RESTRICTED At June 30, 1995, investments in securities
SECURITIES included issues that are illiquid or restricted.
The securities are often purchased in private
placement transactions, are not registered under
the Securities Act of 1933, may have contractual
restrictions on resale, and are valued under
methods approved by the Board of Trustees as
reflecting fair value. The Fund intends to invest
no more than 10% of its net assets (determined at
the time of purchase) in illiquid and restricted
securities. The aggregate value of these securities
subject to this limitation at June 30, 1995 was
$5,818,750, which represents .28% of the Fund's net
assets. Information concerning these securities is
as follows:
<TABLE>
<CAPTION>
Valuation
Acquisition Cost Per Unit as of
Security Date Per Unit June 30, 1995
-------------------------------------------------------------------------
<S> <C> <C> <C>
Thomas Nelson, Inc., 5.75% Cv.
Nts., 11/30/99 11/11/92 $100.00 $116.38
</TABLE>
Pursuant to guidelines adopted by the Board of
Trustees, certain unregistered securities are
determined to be liquid and are not included within
the 10% limitation specified above.
20 Oppenheimer Equity Income Fund
<PAGE>
----------------------------
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Trustees and Shareholders of Oppenheimer Equity Income Fund:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Oppenheimer Equity Income Fund as
of June 30, 1995, the related statement of operations for the year then
ended, the statements of changes in net assets for the years ended June 30,
1995 and 1994, and the financial highlights for the period July 1, 1985 to
June 30, 1995. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned at June 30, 1995 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Oppenheimer
Equity Income Fund at June 30, 1995, the results of its operations, the
changes in its net assets, and the financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
July 24, 1995
21 Oppenheimer Equity Income Fund
<PAGE>
------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
------------------------------------------
In early 1996, shareholders will receive information regarding all dividends
and distributions paid to them by the Fund during calendar year 1995.
Regulations of the U.S. Treasury Department require the Fund to report this
information to the Internal Revenue Service.
A distribution of $.2472 per share was paid on December 23, 1994, of which
$.1272 was designated as a "capital gain distribution" for federal income
tax purposes. Whether received in stock or cash, the capital gain
distribution should be treated by shareholders as a gain from the sale of
capital assets held for more than one year (long-term capital gains).
Dividends paid by the Fund during the fiscal year ended June 30, 1995 which
are not designated as capital gain distributions should be multiplied by
55.85% to arrive at the net amount eligible for the corporate
dividend-received deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because
of the complexity of the federal regulations which may affect your individual
tax return and the many variations in state and local tax regulations, we
recommend that you consult your tax advisor for specific guidance.
22 Oppenheimer Equity Income Fund
<PAGE>
------------------------------
OPPENHEIMER EQUITY INCOME FUND
------------------------------
-------------------------------------------------------------------------------
OFFICERS AND TRUSTEES James C. Swain, Chairman and Chief Executive Officer
Robert G. Avis, Trustee
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
Robert J. Bishop, Assistant Treasurer
Scott Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
--------------------------------------------------------------------------------
INVESTMENT ADVISOR Oppenheimer Management Corporation
--------------------------------------------------------------------------------
DISTRIBUTOR Oppenheimer Funds Distributor, Inc.
--------------------------------------------------------------------------------
TRANSFER AND SHAREHOLDER Oppenheimer Shareholder 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.
This is a copy of a report to shareholders of
Oppenheimer Equity Income Fund. This report must be
preceded by a Prospectus of Oppenheimer Equity
Income Fund. For material information concerning the
Fund, see the Prospectus. Shares of Oppenheimer
funds are not deposits or obligations of any bank,
are not guaranteed by any bank, and are not insured
by the FDIC or any other agency, and involve
investment risks, including possible loss of the
principal amount invested.
23 Oppenheimer Equity Income Fund
<PAGE>
INFORMATION
GENERAL INFORMATION
Monday-Friday 8:30 a.m.-8 p.m. ET
Saturday 10 a.m.-2 p.m. ET
1-800-525-7048
TELEPHONE TRANSACTIONS
Monday-Friday 8:30 a.m.-8 p.m. ET
1-800-852-8457
PHONELINK
24 hours a day, automated
information and transactions
1-800-533-3310
TELECOMMUNICATIONS DEVICE
FOR THE DEAF (TDD)
Monday-Friday 8:30 a.m.-8 p.m. ET
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
RA0300.001.0695 August 31, 1995
[PHOTO]
Jennifer Leonard, Customer Service Representative
Oppenheimer Shareholder Services
"How may I help you?"
As an OppenheimerFunds shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or
ready account access, you can benefit from services designed to make
investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account
and handle administrative requests. You can reach them at our General
Information number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your OppenheimerFunds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get auto-mated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an indepen-dent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, hon-ored the OppenheimerFunds' transfer agent,
Oppenheimer Shareholder Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
-------------------------------------------------------------------------------
[LOGO] --------------
Oppenheimer Funds Distributor, Inc. Bulk Rate
P.O. Box 5270 U.S. Postage
Denver, CO 80217-5270 PAID
Permit No. 469
Denver, CO
---------------
