Oppenheimer Equity Income Fund
Semiannual Report December 31, 1995
[COVER PHOTO] "We need our
investment
to do a lot...
we want it
to provide
money to
live on and
increase in
value, too."
[LOGO-OPENHEIMER FUNDS(R)]
<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
"This fund has one of the best
payouts in the equity-income
group."
--Morningstar Mutual Funds
September 15, 1995
How Your Fund Is Managed
Oppenheimer Equity Income Fund is designed to give you the benefits of a
diversified port-folio of stocks, bonds, and other fixed-income investments. We
manage your Fund to provide quarterly income from dividend-paying stocks and
other income-producing instruments with a secondary objective of capital
appreciation by investing in stocks, while maintaining prin-cipal 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
higher quality stocks over their previous levels.1
Performance
Total return at net asset value for the six months ended 12/31/95 was 11.34% for
Class A shares and 10.86% for Class B shares.2
Your Fund's average annual total returns at maximum offering price for
Class A shares for the 1-, 5-, and 10-year periods ended 12/31/95 were 20.56%,
11.01% and 11.00%, respectively. For Class B shares, average annual total
returns for the 1-year period ended 12/31/95 and since inception of the Class on
8/17/93 were 21.98% and 8.50%, respectively.3
Outlook
"Our outlook is optimistic. We continue to see a lot of positives in the stock
market--such as low interest rates and inflation, and the fact that we've been
able to find companies that have had good earnings regardless of a slower
economy."
John Doney, Portfolio Manager
December 31, 1995
Total returns include change in share price and reinvestment of dividends and
capital gains distributions. Past performance does not guarantee future results.
Investment return and principal value of an investment in the Fund will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than the original cost. For more complete information, please review the
prospectus carefully before you invest.
1. The Fund's portfolio is subject to change.
2. 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.
3. Class A returns show results of hypothetical investments on 12/31/94,
12/31/90 and 12/31/85, 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
12/31/94 and 8/17/93 (inception of class), and the deduction of the applicable
contingent deferred sales charge of 5% (1-year) and 3% (since inception).
Certain Class C performance is not shown above because Class C shares were first
publicly offered on 11/1/95. An explanation of the different performance
calculations is in the Fund's prospectus.
2 Oppenheimer Equity Income Fund
<PAGE>
Dear OppenheimerFunds Shareholder,
[PHOTO-JAMES C. SWAIN]
James C. Swain
Chairman
Oppenheimer
Equity Income Fund
[PHOTO-BRIDGET A. MACASKILL]
Bridget A. Macaskill
President
Oppenheimer
Equity Income Fund
The U.S. stock market put on quite a show in 1995 with the Dow Jones Industrial
Average breaking the 5000 barrier. During 1995, conditions were ideal for rising
stock prices. The economy grew fast enough to generate strong corporate
profits--but not so fast as to rekindle inflation. And intermediate- and
long-term interest rates fell sharply, as investors anticipated that the Federal
Reserve Board had shifted from its restrictive monetary policy of the prior
year.
Leading the rally on Wall Street for much of the year were technology
stocks. Even after a bumpy Fall, many stocks in semiconductors, computers,
software and telecommunications doubled during the year. The global demand for
these products--developed and manufactured by American companies--continued
unabated.
The reduction in the rate of growth of health care expenditures is just one
reason why inflation remains moderate. Another reason is the plentiful supply of
inexpensive energy. In addition, the emergence of capitalism throughout the
world has created a global economy of new markets and new competitors, dampening
prices and labor costs. And after many years of promise, technology has finally
created efficiencies in the business environment.
But the primary fuel to stock prices came from corporate profits, which
have been surging in the past few years, due in large part to a rise in U.S.
corporate productivity. The determination of Corporate America to be successful
in today's highly competitive markets has led to a strategy of tight cost
control with an emphasis on efficiency. With a global boom in technology and a
weak dollar in the first half of the year--which made U.S. goods more attractive
overseas--corporate earnings and profitability have remained very strong,
growing about 20% between 1994 and 1995.
With the Dow less than 1000 just 15 years ago and only 2500 five years ago,
it's clear that the stock market's advance has been tremendous. So the question
remains, "Is the case for stocks still strong?"
Certainly, market volatility would be expected at this point in a five year
bull market, especially since there hasn't been a "normal correction" of 10% or
more since 1990. And the slowdown in the economy is likely to translate into
soft profit growth this year.
But the underlying economic conditions that have driven stocks thus
far--moderate growth with low inflation, falling interest rates, and a Corporate
America that's committed to increased efficiency--remain in place. Additionally,
there is increasing demand for U.S. exports in light of expanding international
economies, as well as the increasing belief that U.S. technologies lead the
world. As a result, we believe that the stock market continues to offer a good
value for investors. But, realistically, we don't expect another year like 1995
any time soon.
Your portfolio manager discusses the outlook for your Fund in light of
these broad issues on the following pages. Thank you for your confidence in
OppenheimerFunds, and we look forward to helping you reach your investment goals
in the future.
/s/ James C. Swain /s/ Bridget A. Macaskill
James C. Swain Bridget A. Macaskill
January 22, 1996
3 Oppenheimer Equity Income Fund
<PAGE>
Q + A [PHOTO-JOHN DONEY] [PHOTO-MARK BINNING AND LAWRENCE APOLITO]
An interview with your Fund's managers.
Q What
helped
performance?
How has the Fund performed over the past six months?
We're very pleased with the Fund's performance. Our strong performance is tied
to the fact that both the stock and bond markets have posted extremely favorable
performance over the period, benefiting from declining interest rates, continued
low inflation, and steady corpo- rate earnings in the face of a slowing economy.
Strong markets, in combination with good security selection over the period,
allowed us to meet our dual goals of pro- viding quarterly income while
capturing the potential for growth.
[PHOTO-RICHARD RUBINSTEIN]
What investments have made positive contributions to performance?
Over the period, we'd been heavily invested in financial stocks, one of the top
performing sectors in this year's mar-ket. In particular, we've had a lot of
success with bank and insurance stocks. Though these stocks have performed very
well, we believe we will continue to see upward earnings progress in 1996,
especially when you consider that, even after this year's appreciation, bank
stocks are selling at reasonable prices compared to the valuations found in
other sectors of the market.1
In terms of income, we have been focusing on long-term bonds and convertible
securities. Because bonds rallied, and their performance was so outstanding over
the period, we've been selling. Convertibles have also done well, and should
continue as we go forward. This is based on their yields being in demand because
interest rates are low, and their prices have been strong because of their ties
to the underlying common stock.
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: Mark Binning and
Lawrence Apolito, Equity Trading
Bottom: Richard Rubinstein,
Member of Equity Investments
Team
This page
Top: John Doney
Bottom: Diane Sobin and Bruce
Bartlett, Members of Equity
Investments Team
A We found
companies
that had
good earnings
regardless
of a slower economy.
Were there any investments that didn't perform as well as you'd expected?
Over the period, we've reduced our holdings in cyclical stocks somewhat,
especially in the areas of paper products and chemi-cals. While stocks in this
area of the market have not been poor performers per se, they just haven't
performed as well as the overall market or our expectations for them. As a
result, we've moved out of cyclicals both in convertibles and common stocks.
What areas are you currently targeting?
Right now we're looking for companies that exhibit reliability in earnings--and
while we're looking across all industry sectors, a search like this tends to
lead to higher quality stocks that have historically exhibited more stability.
[PHOTO-DIANE SOBIN AND BRUCE BARTLETT]
We're also interested in companies that have been restructuring, or that have
other internal factors that should help make earnings growth more certain. And
while some companies in more cyclical businesses may meet our standards, we
expect the majority of our investments to be in companies that don't need a push
from the economy to achieve their desired sales. Companies in this category
include the traditional growth stocks such as brand name consumer goods and
phar-maceutical companies.
Some other moves we've made recently include increasing our holdings of
electrical utilities somewhat, due to their lower than usual valuations and high
yield potential, and moving some money into healthcare stocks, with the belief
that they will offer reliable earnings over the next year.
[PHOTO-JOHN DONEY]
What is your outlook for the Fund?
Our outlook is optimistic. We continue to see a lot of positives in the stock
market--such as low interest rates and inflation, and the fact that we've been
able to find companies that have had good earnings regardless of a slower
economy. These factors, along with our careful research into the individual
stocks we buy, should lead to solid returns for the Fund in the coming year.[ ]
5 Oppenheimer Equity Income Fund
<PAGE>
Financials
Contents
Statement of Investments 7
Statement of Assets & Liabilities 15
Statement of Operations 16
Statements of Changes in Net Assets 17
Financial Highlights 18
Notes to Financial Statements 20
6 Oppenheimer Equity Income Fund
<PAGE>
Statement of Investments December 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
===================================================================================================================================
U.S. Government Obligations--11.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Treasury--11.6%
U.S. Treasury Nts.:
7.50%, 12/31/96 $146,500,000 $149,796,250
7.625%, 5/31/96 100,000,000 101,000,000
7.875%, 6/30/96 14,200,000 14,386,375
------------
Total U.S. Government Obligations (Cost $263,167,288) 265,182,625
===================================================================================================================================
Foreign Government Obligations--7.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Argentina (Republic of):
Par Bonds, 5%, 3/31/23(2) 5,750,000 3,281,094
Past Due Interest Bonds, Series L, 6.812%, 3/31/05(3) 2,500,000 1,787,500
---------------------------------------------------------------------------------------------------------------
Banco Nacional de Comercio Exterior SNC International Finance BV:
Bonds, 9.875%, 6/24/96 23,150,000 23,222,344
Gtd. Bonds, 8%, 8/5/03 2,000,000 1,590,000
---------------------------------------------------------------------------------------------------------------
Banco Nacional de Obras y Servicios Publicos SA Nts., 10.75%, 8/16/96 6,000,000 6,030,000
---------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Interest Due and Unpaid Bonds, 6.688%, 1/1/01(3) 9,500,000 8,181,875
---------------------------------------------------------------------------------------------------------------
Canada (Government of) Bonds, Series H62, 9.25%, 10/1/96 CAD 55,800,000 42,047,169
---------------------------------------------------------------------------------------------------------------
Ecuador (Republic of) Disc. Bonds, 6.812%, 2/28/25(3) 6,000,000 3,052,500
---------------------------------------------------------------------------------------------------------------
Nafin Securities Ltd., 6% Gtd. Bonds, 12/19/96 2,000,000 1,942,500
---------------------------------------------------------------------------------------------------------------
New South Wales State Bank Bonds, 9.25%, 2/18/03 AUD 9,900,000 7,681,870
---------------------------------------------------------------------------------------------------------------
Ontario Hydro (Province of) Canada Gtd. Debs., 10.875%, 1/8/96 CAD 16,000,000 11,760,902
---------------------------------------------------------------------------------------------------------------
Panama (Republic of) Debs., 6.75%, 5/10/02(3) 5,000,000 4,284,375
---------------------------------------------------------------------------------------------------------------
Quebec, Canada (Province of) Debs., 10.25%, 4/7/98 CAD 10,000,000 7,959,138
---------------------------------------------------------------------------------------------------------------
Queensland Treasury Corp. Gtd. Nts., 8%, 8/14/01 AUD 33,650,000 25,069,616
---------------------------------------------------------------------------------------------------------------
South Australia (Government of) Bonds, 9%, 9/23/02 AUD 3,000,000 2,302,734
---------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Collateralized Par Bonds, Series W-A, 6.75%, 3/31/20 20,000,000 11,475,000
------------
Total Foreign Government Obligations (Cost $172,162,957) 161,668,617
===================================================================================================================================
Non-Convertible Corporate Bonds and Notes--2.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Auburn Hills Trust, 12% Gtd. Exchangeable Certificates, 5/1/20 5,000,000 7,822,755
---------------------------------------------------------------------------------------------------------------
Coastal Corp., 11.75% Sr. Debs., 6/15/06 8,946,000 9,512,343
---------------------------------------------------------------------------------------------------------------
Comcast Corp., 10.25% Sr. Sub. Debs., 10/15/01 6,000,000 6,585,000
---------------------------------------------------------------------------------------------------------------
Imo Industries, Inc., 12.25% Sr. Sub. Debs., 8/15/97 4,469,000 4,502,517
---------------------------------------------------------------------------------------------------------------
MagneTek, Inc., 10.75% Sr. Sub. Debs., 11/15/98 3,000,000 3,127,500
---------------------------------------------------------------------------------------------------------------
Reliance Group Holdings, Inc., 9.75% Sr. Sub. Debs., 11/15/03 4,250,000 4,398,750
---------------------------------------------------------------------------------------------------------------
Rowan Cos., Inc., 11.875% Sr. Nts., 12/1/01 7,000,000 7,577,500
---------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(4) 2,500,000 1,862,500
---------------------------------------------------------------------------------------------------------------
Viacom International, Inc., 10.25% Sr. Sub. Nts., 9/15/01 12,000,000 14,078,555
---------------------------------------------------------------------------------------------------------------
WestPoint Stevens, Inc., 8.75% Sr. Nts., 12/15/01 6,000,000 6,045,000
------------
Total Non-Convertible Corporate Bonds and Notes (Cost $58,013,190) 65,512,420
</TABLE>
7 Oppenheimer Equity Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
===================================================================================================================================
Convertible Corporate Bonds and Notes--6.1%
- -----------------------------------------------------------------------------------------------------------------------------------
AMR Corp., 6.125% Cv. Sub. Debs., 11/1/24 $20,000,000 $ 20,800,000
---------------------------------------------------------------------------------------------------------------
Banco de Galicia y Buenos Aires SA, 7% Cv. Negotiable
Obligation Bonds, 8/1/02 3,100,000 2,890,750
---------------------------------------------------------------------------------------------------------------
Bank of New York, Inc. (The), 7.50% Cv. Sub. Debs., 8/15/01 7,750,000 19,297,500
---------------------------------------------------------------------------------------------------------------
Box Energy Corp., 8.25% Cv. Sub. Nts., 12/1/02 5,000,000 4,925,000
---------------------------------------------------------------------------------------------------------------
Cooper Industries, Inc., 7.05% Cv. Unsec. Sub. Bonds, 1/1/15 6,741,000 6,976,935
---------------------------------------------------------------------------------------------------------------
Delta Air Lines, Inc., 3.23% Cv. Sub. Nts., 6/15/03 15,500,000 14,763,750
---------------------------------------------------------------------------------------------------------------
ICN Pharmaceuticals, Inc., 8.50% Cv. Sub. Debs., 11/15/99 4,500,000 4,876,875
---------------------------------------------------------------------------------------------------------------
Inco Ltd.:
5.75% Cv. Debs., 7/1/04 9,700,000 12,755,500
7.75% Cv. Debs., 3/15/16 9,800,000 10,461,500
---------------------------------------------------------------------------------------------------------------
IntelCom Group, Inc.:
7% Cv. Sub. Nts., 10/30/98(5) 5,000,000 3,986,390
7% Cv. Sub. Nts., 10/30/98 700,000 558,095
---------------------------------------------------------------------------------------------------------------
Mutual Risk Management Ltd., Zero Coupon Cv.
Exchangeable Sub. Debs., 5.25%, 10/30/15(4)(6) 19,500,000 8,141,250
---------------------------------------------------------------------------------------------------------------
Oryx Energy Co., 7.50% Cv. Sub. Debs., 5/15/14 7,000,000 6,273,750
---------------------------------------------------------------------------------------------------------------
Stone Container Corp., 8.875% Cv. Sr. Sub. Nts., 7/15/00 3,000,000 4,158,750
---------------------------------------------------------------------------------------------------------------
Time Warner, Inc.:
8.75% Cv. Sr. Nts., 1/10/15 1,748,150 1,809,335
Zero Coupon Cv. Liquid Yield Option Nts., 6.245%, 12/17/12(6) 30,000,000 10,350,000
---------------------------------------------------------------------------------------------------------------
U.S. Home Corp., 4.875% Cv. Sub. Debs., 11/1/05 4,350,000 4,186,875
------------
Total Convertible Corporate Bonds and Notes (Cost $114,285,835) 137,212,255
Shares
===================================================================================================================================
Common Stocks--47.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Basic Materials--3.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Chemicals--1.6%
Dexter Corp. 400,000 9,450,000
---------------------------------------------------------------------------------------------------------------
Dow Chemical Co. (The) 200,000 14,075,000
---------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 200,000 13,975,000
------------
37,500,000
- -----------------------------------------------------------------------------------------------------------------------------------
Metals--0.2%
Reynolds Metals Co. 100,000 5,662,500
- -----------------------------------------------------------------------------------------------------------------------------------
Paper--1.4%
Union Camp Corp. 200,000 9,525,000
---------------------------------------------------------------------------------------------------------------
Westvaco Corp. 375,000 10,406,250
---------------------------------------------------------------------------------------------------------------
Weyerhaeuser Co. 250,000 10,812,500
------------
30,743,750
</TABLE>
8 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--2.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Autos & Housing--1.4%
General Motors Corp. 475,000 $25,115,625
---------------------------------------------------------------------------------------------------------------
Snap-On, Inc. 133,900 6,058,975
-----------
31,174,600
- -----------------------------------------------------------------------------------------------------------------------------------
Retail: General--1.1%
Sears, Roebuck & Co. 641,219 25,007,541
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--5.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare/Drugs--1.6%
American Home Products Corp. 100,000 9,700,000
---------------------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 200,000 17,175,000
---------------------------------------------------------------------------------------------------------------
Johnson & Johnson 100,000 8,562,500
-----------
35,437,500
- -----------------------------------------------------------------------------------------------------------------------------------
Tobacco--3.4%
Philip Morris Cos., Inc. 600,000 54,300,000
---------------------------------------------------------------------------------------------------------------
RJR Nabisco Holdings Corp. 240,000 7,410,000
---------------------------------------------------------------------------------------------------------------
UST, Inc. 500,000 16,687,500
-----------
78,397,500
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--4.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Energy Services &
Producers--0.2%
Pacific Enterprises 50,000 1,412,500
---------------------------------------------------------------------------------------------------------------
Schlumberger Ltd. 50,000 3,462,500
-----------
4,875,000
- -----------------------------------------------------------------------------------------------------------------------------------
Oil-Integrated--4.1%
Mobil Corp. 176,500 19,768,000
---------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp. 600,000 12,825,000
---------------------------------------------------------------------------------------------------------------
Phillips Petroleum Co. 400,000 13,650,000
---------------------------------------------------------------------------------------------------------------
Royal Dutch Petroleum Co. 201,500 28,436,687
---------------------------------------------------------------------------------------------------------------
Texaco, Inc. 251,500 19,742,750
-----------
94,422,437
- -----------------------------------------------------------------------------------------------------------------------------------
Financial--22.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Banks--17.6%
Banc One Corp. 700,000 26,425,000
---------------------------------------------------------------------------------------------------------------
Bank of Boston Corp. 505,636 23,385,665
---------------------------------------------------------------------------------------------------------------
BankAmerica Corp. 600,000 38,850,000
---------------------------------------------------------------------------------------------------------------
Bankers Trust New York Corp. 100,000 6,650,000
---------------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. 550,000 33,343,750
---------------------------------------------------------------------------------------------------------------
Chemical Banking Corp. 550,000 32,312,500
---------------------------------------------------------------------------------------------------------------
Citicorp 193,453 13,009,714
---------------------------------------------------------------------------------------------------------------
Crestar Financial Corp. 275,000 16,259,375
---------------------------------------------------------------------------------------------------------------
First Chicago NBD Corp. 452,500 17,873,750
---------------------------------------------------------------------------------------------------------------
First Fidelity Bancorporation 399,300 30,097,238
---------------------------------------------------------------------------------------------------------------
First Union Corp. 300,000 16,687,500
---------------------------------------------------------------------------------------------------------------
Fleet Financial Group, Inc. 400,000 16,300,000
</TABLE>
9 Oppenheimer Equity Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Banks
(continued)
Great Western Financial Corp. 600,000 $ 15,300,000
---------------------------------------------------------------------------------------------------------------
KeyCorp 400,000 14,500,000
---------------------------------------------------------------------------------------------------------------
Klamath First Bancorp, Inc.(7) 270,000 3,712,500
---------------------------------------------------------------------------------------------------------------
Magna Group, Inc. 400,000 9,500,000
---------------------------------------------------------------------------------------------------------------
Mellon Bank Corp. 450,000 24,187,500
---------------------------------------------------------------------------------------------------------------
National City Corp. 500,000 16,562,500
---------------------------------------------------------------------------------------------------------------
PNC Bank Corp. 301,600 9,726,600
---------------------------------------------------------------------------------------------------------------
Signet Banking Corp. 400,000 9,500,000
---------------------------------------------------------------------------------------------------------------
U.S. Bancorp, Inc. 245,000 8,238,125
---------------------------------------------------------------------------------------------------------------
UJB Financial Corp. 500,000 17,875,000
------------
400,296,717
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Financial--1.4%
American Express Co. 600,000 24,825,000
---------------------------------------------------------------------------------------------------------------
Capital One Financial Corp. 300,000 7,162,500
------------
31,987,500
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance--3.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Allstate Corp. 724,432 29,792,266
---------------------------------------------------------------------------------------------------------------
GCR Holdings Ltd.(7) 100,000 2,250,000
---------------------------------------------------------------------------------------------------------------
General Re Corp. 50,000 7,750,000
---------------------------------------------------------------------------------------------------------------
Prudential Reinsurance Holdings, Inc. 248,000 5,797,000
---------------------------------------------------------------------------------------------------------------
Reliance Group Holdings, Inc. 2,141,500 18,470,438
---------------------------------------------------------------------------------------------------------------
St. Paul Cos., Inc. 200,000 11,125,000
------------
75,184,704
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial--3.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Electrical Equipment--0.7%
AMP, Inc. 400,000 15,350,000
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing--2.7%
Keystone International, Inc. 300,000 6,000,000
---------------------------------------------------------------------------------------------------------------
Minnesota Mining & Manufacturing Co. 400,000 26,500,000
---------------------------------------------------------------------------------------------------------------
Tenneco, Inc. 600,000 29,775,000
------------
62,275,000
- -----------------------------------------------------------------------------------------------------------------------------------
Technology--2.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--1.3%
Goodrich (B.F.) Co. 141,000 9,605,625
---------------------------------------------------------------------------------------------------------------
United Technologies Corp. 200,000 18,975,000
------------
28,580,625
</TABLE>
10 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Hardware--0.6%
Moore Corp. Ltd. 716,000 $ 13,335,500
- -----------------------------------------------------------------------------------------------------------------------------------
Electronics--0.6%
Tektronix, Inc. 275,000 13,509,375
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities--4.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Electric Utilities--4.6%
Allegheny Power System, Inc. 300,000 8,587,500
---------------------------------------------------------------------------------------------------------------
Central & South West Corp. 400,000 11,150,000
---------------------------------------------------------------------------------------------------------------
Detroit Edison Co. 300,000 10,350,000
---------------------------------------------------------------------------------------------------------------
Entergy Corp. 550,000 16,087,500
---------------------------------------------------------------------------------------------------------------
Florida Progress Corp. 500,000 17,687,500
---------------------------------------------------------------------------------------------------------------
Ohio Edison Co. 400,000 9,400,000
---------------------------------------------------------------------------------------------------------------
Public Service Co. of Colorado 200,000 7,075,000
---------------------------------------------------------------------------------------------------------------
Public Service Enterprise Group, Inc. 604,000 18,497,500
---------------------------------------------------------------------------------------------------------------
SCANA Corp. 200,000 5,725,000
-------------
104,560,000
-------------
Total Common Stocks (Cost $773,756,189) 1,088,300,249
===================================================================================================================================
Preferred Stocks--16.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Basic Materials--2.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Metals--1.5%
Alumax, Inc., $4.00 Cv., Series A 50,000 6,450,000
---------------------------------------------------------------------------------------------------------------
Armco, Inc., $3.625 Cum. Cv. 200,000 9,950,000
---------------------------------------------------------------------------------------------------------------
Cyprus Amax Minerals Co., $4.00 Cv., Series A 150,000 8,887,500
---------------------------------------------------------------------------------------------------------------
Reynolds Metals Co., 7% Preferred Redeemable
Increased Dividend Equity Securities, $3.31 Cv., 12/31/97 160,000 8,100,000
-------------
33,387,500
- -----------------------------------------------------------------------------------------------------------------------------------
Paper--1.2%
Boise Cascade Corp., $1.58 Cum. Cv., Series G 300,000 8,587,500
---------------------------------------------------------------------------------------------------------------
Bowater, 7% Preferred Redeemable Increased Dividend
Equity Securities, Series B, $6.58 Cv., 1/1/98 95,000 2,897,500
---------------------------------------------------------------------------------------------------------------
James River Corp. of Virginia, Depositary Shares each representing
a one-hundredth interest in a share of Series P, 9% Cum. Cv. Preferred
Stock, Dividend Enhanced Convertible Stock 700,000 16,362,500
-------------
27,847,500
</TABLE>
11 Oppenheimer Equity Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--1.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Leisure &
Entertainment--1.2%
Continental Airlines Finance Trust,
8.50% Cv. Trust Originated Preferred Securities(4) 250,000 $13,375,000
---------------------------------------------------------------------------------------------------------------
Delta Air Lines, Inc., $3.50 Cv. Depositary Shares, Series C 250,000 14,843,750
-----------
28,218,750
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--2.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare/Supplies &
Services--0.6%
U.S. Surgical Corp., $2.20 Depositary Shares representing
one-fiftieth share of Series A Preferred Stock 550,000 13,887,500
- -----------------------------------------------------------------------------------------------------------------------------------
Household Goods--0.8%
Westinghouse Electric Corp., Participating Equity
Preferred Shares, $12.125 Cv., Series C(4) 1,100,000 17,325,000
- -----------------------------------------------------------------------------------------------------------------------------------
Tobacco--1.2%
RJR Nabisco Holdings Corp., $6.50 Cv., Series C 4,315,000 27,508,125
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--2.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Energy Services &
Producers--0.5%
Noble Drilling Corp., $1.50 Cv. Exchangeable 122,000 3,141,500
---------------------------------------------------------------------------------------------------------------
Santa Fe Energy Resources, Inc., Dividend Enhanced
Convertible Stock, $.732 Cv. Exchangeable, Series A 805,000 7,949,375
-----------
11,090,875
- -----------------------------------------------------------------------------------------------------------------------------------
Oil-Integrated--1.7%
Atlantic Richfield Co., 9% Exchangeable Notes for
Common Stock of Lyondell Petrochemical Co., 9/15/97 400,000 9,400,000
---------------------------------------------------------------------------------------------------------------
Enron Corp., 6.25% Cv. Automatic Common Exchangeable Securities 270,000 6,480,000
---------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp., $3.875 Cum. Cv.(4) 400,000 22,300,000
-----------
38,180,000
- -----------------------------------------------------------------------------------------------------------------------------------
Financial--4.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Banks--2.7%
Citicorp, Cv. Depositary Shares, Series 13 200,000 36,500,000
---------------------------------------------------------------------------------------------------------------
Fidelity Federal Bank, 12% Non-Cum.
Exchangeable Perpetual Preferred Stock, Series A(8) 100,000 2,537,500
---------------------------------------------------------------------------------------------------------------
First Chicago NBD Corp., Depositary Shares
(each representing a one-hundredth interest in a
share of 5.75% cum. cv. preferred stock, series B) 135,000 9,045,000
---------------------------------------------------------------------------------------------------------------
Sovereign Bancorp Inc., 6.25% Cv., Series B 36,500 2,080,500
---------------------------------------------------------------------------------------------------------------
Washington Mutual, Inc., $6.00 Non-Cum. Cv. Perpetual
Preferred Stock, Series D 96,800 11,083,600
-----------
61,246,600
</TABLE>
12 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Financial--1.5%
Allstate Corp., $2.30 Debt Exchangeable for
Common Stock of PMI Group, Inc. 111,000 $ 4,551,000
---------------------------------------------------------------------------------------------------------------
American Express Co., Debt Exchangeable for
Common Stock of First Data Corp., 6.25%, 10/15/96 557,000 30,913,500
------------
35,464,500
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance--0.2%
American General Delaware LLC, $3.00 Cv.
Monthly Income Preferred Securities, Series A 75,000 3,928,125
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial--2.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial Materials--0.5%
Owens-Corning Capital LLC, 6.50% Cv. Monthly Income
Preferred Securities(4) 200,000 11,975,000
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial Services--1.1%
Browning-Ferris Industries, Inc., 7.25% Cv.
Automatic Common Exchangeable Securities(7) 225,000 7,059,375
---------------------------------------------------------------------------------------------------------------
Case Equipment Corp., Cum. Cv., Series A(4) 100,000 11,400,000
---------------------------------------------------------------------------------------------------------------
Corning Delaware LP, 6% Cv. Monthly Income Preferred Securities 150,000 7,556,250
------------
26,015,625
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing--0.5%
Elsag Bailey Financing Trust, 5.50% Cv. Trust Originated
Preferred Securities(4) 220,000 11,082,500
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities--1.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Gas Utilities--0.5%
Valero Energy Corp., Cv. 200,000 10,300,000
- -----------------------------------------------------------------------------------------------------------------------------------
Telephone Utilities--1.0%
Compania de Inversiones en Telecomunicaciones SA,
Provisionally Redeemable Income Debt
Exchangeable for Stock, 7%, 3/3/98(4) 200,000 11,275,000
---------------------------------------------------------------------------------------------------------------
US West, Inc., 7.625% Cv. Debt Exchangeable for
Common Stock of Enhanced Financial Services Group 415,000 11,049,375
------------
22,324,375
------------
Total Preferred Stocks (Cost $309,080,296) 379,781,975
Units
===================================================================================================================================
Rights, Warrants and Certificates--0.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Venezuela Government Wts., Exp. 4/20 (Cost $0) 100,000 --
Face
Amount(1)
===================================================================================================================================
Structured Instruments--0.2%
- -----------------------------------------------------------------------------------------------------------------------------------
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, 5.898%, 9/1/97
and an interest rate swap between Credit Suisse Financial
Products and the Trust] (Cost $5,714,285)(4) $5,714,285 5,641,348
</TABLE>
13 Oppenheimer Equity Income Fund
<PAGE>
Statement of Investments (Unaudited) (Continued)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
===================================================================================================================================
Repurchase Agreement--7.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets,
5.90%, dated 12/29/95, to be repurchased at $162,906,724
on 1/2/96, collateralized by U.S. Treasury Nts., 5.125%--8.75%,
12/31/96--11/5/04, with a value of $88,369,019, U.S. Treasury
Bonds, 6.25%--11.25%, 8/15/03--8/15/23, with a value of
$53,553,750, and U.S. Treasury Bills maturing 11/14/96,
with a value of $24,285,857 (Cost $162,800,000) $162,800,000 $ 162,800,000
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $1,858,980,040) 99.4% 2,266,099,489
- -----------------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.6 13,007,662
------------ --------------
Net Assets 100.0% $2,279,107,151
============ ==============
</TABLE>
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
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. 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 $114,377,598 or 5.02% of the Fund's net assets, at December
31, 1995.
5. Interest or dividend is paid in kind.
6. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
7. Non-income producing security.
8. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the period ended December 31, 1995.
The aggregate fair value of all securities of affiliated companies as of
December 31, 1995 amounted to $2,537,500. Transactions during the period in
which the issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
Balance Gross Balance
June 30, 1995 Gross Additions Reductions December 31, 1995
--------------- --------------- -------------- ----------------- Dividend
Shares Cost Shares Cost Shares Cost Shares Cost Income
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Fidelity Federal Bank, 12%
Non-Cum. Exchangeable
Perpetual Preferred Stock, Series A -- $ -- 100,000 $2,500,000 -- $ -- 100,000 $2,500,000 $ --
</TABLE>
See accompanying Notes to Financial Statements.
14 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities December 31, 1995 (Unaudited)
<S> <C>
===================================================================================================================================
Assets Investments, at value--see accompanying statement:
Unaffiliated companies (cost $1,856,480,040) $2,263,561,989
Affiliated companies (cost $2,500,000) 2,537,500
---------------------------------------------------------------------------------------------------------------
Cash 489,070
---------------------------------------------------------------------------------------------------------------
Receivables:
Interest and dividends 20,209,664
Investments sold 1,884,999
Shares of beneficial interest sold 1,759,226
---------------------------------------------------------------------------------------------------------------
Other 137,456
--------------
Total assets 2,290,579,904
===================================================================================================================================
Liabilities Payables and other liabilities:
Shares of beneficial interest redeemed 7,441,132
Dividends 2,324,383
Distribution and service plan fees 1,094,576
Shareholder reports 406,956
Transfer and shareholder servicing agent fees 100,813
Other 104,893
--------------
Total liabilities 11,472,753
===================================================================================================================================
Net Assets $2,279,107,151
==============
===================================================================================================================================
Composition of
Net Assets
Paid-in capital $1,851,322,319
---------------------------------------------------------------------------------------------------------------
Undistributed net investment income 1,331,339
---------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 19,344,516
---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets
and liabilities denominated in foreign currencies 407,108,977
--------------
Net assets $2,279,107,151
==============
===================================================================================================================================
Net Asset Value
Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $2,072,698,051 and 189,753,553 shares of beneficial interest outstanding) $10.92
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $11.59
---------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $205,553,405 and 18,913,996 shares of beneficial interest outstanding) $10.87
---------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $855,695 and 78,506 shares of beneficial interest outstanding) $10.90
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations For the Six Months Ended December 31, 1995 (Unaudited)
<S> <C>
===================================================================================================================================
Investment Income Interest $ 30,876,400
---------------------------------------------------------------------------------------------------------------
Dividends (net of withholding taxes of $168,761) 29,576,977
------------
Total income 60,453,377
===================================================================================================================================
Expenses Management fees--Note 4 5,856,934
---------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 1,874,080
Class B 926,427
Class C 511
---------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 1,458,815
---------------------------------------------------------------------------------------------------------------
Shareholder reports 278,425
---------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 109,246
---------------------------------------------------------------------------------------------------------------
Legal and auditing fees 35,644
---------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 30,314
---------------------------------------------------------------------------------------------------------------
Insurance expenses 23,799
---------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class B 10,633
Class C 294
---------------------------------------------------------------------------------------------------------------
Other 40,374
------------
Total expenses 10,645,496
===================================================================================================================================
Net Investment Income 49,807,881
===================================================================================================================================
Realized and Unrealized Gain
Net realized gain on:
Investments 35,415,872
Foreign currency transactions 65,180
------------
Net realized gain 35,481,052
---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 143,540,781
Translation of assets and liabilities denominated in foreign currencies 2,040,347
------------
Net change 145,581,128
------------
Net realized and unrealized gain 181,062,180
===================================================================================================================================
Net Increase in Net Assets Resulting From Operations $230,870,061
============
</TABLE>
See accompanying Notes to Financial Statements.
16 Oppenheimer Equity Income Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
December 31, 1995 June 30,
(Unaudited) 1995
<S> <C> <C>
===================================================================================================================================
Operations Net investment income $ 49,807,881 $ 97,932,280
---------------------------------------------------------------------------------------------------------------
Net realized gain 35,481,052 33,525,676
---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 145,581,128 153,278,187
-------------- --------------
Net increase in net assets resulting from operations 230,870,061 284,736,143
===================================================================================================================================
Dividends and
Distributions to
Shareholders
Dividends from net investment income:
Class A (44,024,684) (88,319,907)
Class B (3,473,892) (5,380,964)
Class C (7,519) --
---------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (45,032,336) (23,241,171)
Class B (4,473,953) (1,584,662)
Class C (15,717) --
===================================================================================================================================
Beneficial Interest
Transactions
Net increase (decrease) in net assets resulting from
beneficial interest transactions--Note 2:
Class A 56,314,253 (34,706,185)
Class B 33,382,260 62,397,726
Class C 873,048 --
===================================================================================================================================
Net Assets Total increase 224,411,521 193,900,980
---------------------------------------------------------------------------------------------------------------
Beginning of period 2,054,695,630 1,860,794,650
-------------- --------------
End of period [including undistributed (overdistributed)
net investment income of $1,331,339 and $(970,447), respectively] $2,279,107,151 $2,054,695,630
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Equity Income Fund
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------
Six Months Ended
December 31, 1995 Year Ended June 30,
(Unaudited) 1995 1994
<S> <C> <C> <C>
===================================================================================================================
Per Share Operating Data:
Net asset value, beginning of period $10.25 $ 9.44 $10.01
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .25 .50 .47
Net realized and unrealized gain (loss) .90 .92 (.39)
------ ------ ------
Total income (loss) from investment operations 1.15 1.42 .08
- -------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.24) (.48) (.47)
Dividends in excess of net investment income -- -- (.01)
Distributions from net realized gain (.24) (.13) (.12)
Distributions in excess of capital gains -- -- (.05)
------ ------ ------
Total dividends and distributions to shareholders (.48) (.61) (.65)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.92 $10.25 $ 9.44
====== ====== ======
===================================================================================================================
Total Return, at Net Asset Value(3) 11.34% 15.66% 0.65%
===================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $2,072,698 $1,893,249 $1,772,944
- -------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,990,738 $1,797,670 $1,831,606
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.61%(4) 5.15% 4.72%
Expenses .90%(4) .96% .90%
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 18.0% 45.7% 30.4%
Average brokerage commission rate(6) $0.15 -- --
</TABLE>
1. For the period from November 1, 1995 (inception of offering) to December 31,
1995.
2. For the period from August 17, 1993 (inception of offering) to June 30, 1994.
3. 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.
4. Annualized.
18 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Class B Class C
- ------------------------------------------ ------------------------------------------------------ ----------------
Six months Ended Period Ended
December 31, 1995 Year Ended June 30, Dec. 31, 1995(1)
1993 1992 1991 (Unaudited) 1995 1994(2) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
==============================================================================================================================
$ 9.15 $8.86 $9.18 $10.21 $ 9.40 $10.22 $10.81
- ------------------------------------------------------------------------------------------------------------------------------
.50 .50 .48 .21 .43 .36 .05
.99 .39 (.17) .89 .91 (.58) .40
- ---------- ---------- ---------- -------- -------- ------- -------
1.49 .89 .31 1.10 1.34 (.22) .45
- ------------------------------------------------------------------------------------------------------------------------------
(.48) (.48) (.48) (.20) (.40) (.42) (.12)
-- -- -- -- -- (.01) --
(.15) (.12) (.15) (.24) (.13) (.12) (.24)
-- -- -- -- -- (.05) --
- ---------- ---------- ---------- -------- -------- ------- -------
(.63) (.60) (.63) (.44) (.53) (.60) (.36)
- ------------------------------------------------------------------------------------------------------------------------------
$10.01 $9.15 $8.86 $10.87 $10.21 $ 9.40 $10.90
========== ========== ========== ======== ======== ======= =======
==============================================================================================================================
16.76% 10.26% 3.68% 10.86% 14.87% (2.35)% 4.20%
==============================================================================================================================
$1,790,346 $1,555,924 $1,393,303 $205,553 $161,447 $87,850 $856
- ------------------------------------------------------------------------------------------------------------------------------
$1,657,692 $1,525,599 $1,323,858 $184,158 $122,471 $47,414 $320
- ------------------------------------------------------------------------------------------------------------------------------
5.12% 5.33% 5.31% 3.79%(4) 4.34% 3.99%(4) 3.50%(4)
.79% .82% .79% 1.73%(4) 1.79% 1.82%(4) 2.20%(4)
- ------------------------------------------------------------------------------------------------------------------------------
59.0% 37.0% 64.0% 18.0% 45.7% 30.4% 18.0%
-- -- -- $0.15 -- -- $0.15
</TABLE>
5. 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 December 31, 1995 were $426,206,642 and $355,357,135, respectively.
6. Total brokerage commissions paid on purchases and sales of portfolio
securities for the period divided by the total number of related shares
purchased and sold.
See accompanying Notes to Financial Statements.
19 Oppenheimer Equity Income Fund
<PAGE>
Notes to Financial Statements (Unaudited)
===============================================================================
1. Significant
Accounting Policies
Oppenheimer Equity Income Fund (the Fund) is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Fund's investment objective is to seek as much current
income as is compatible with prudent investment. The Fund's investment advisor
is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B and
Class C shares. Class A shares are sold with a front-end sales charge. Class B
and Class C shares may be subject to a contingent deferred sales charge. All
classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own distribution and/or service plan,
expenses directly attributable to 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 are valued 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 Statement of Operations.
- -------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- -------------------------------------------------------------------------------
Allocation of Income, Expenses, and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- -------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
- -------------------------------------------------------------------------------
Distributions to Shareholders. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
- -------------------------------------------------------------------------------
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.
20 Oppenheimer Equity Income Fund
<PAGE>
===============================================================================
1. Significant
Accounting Policies
(continued)
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.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
===============================================================================
2. Shares of
Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Six Months Ended December 31, 1995(1) Year Ended June 30, 1995
------------------------------------- ------------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Class A:
Sold 9,382,573 $ 102,178,754 19,327,605 $ 207,336,132
Dividends and distributions reinvested 7,731,840 83,793,589 11,012,028 83,402,034
Redeemed (11,983,791) (129,658,090) (33,557,623) (325,444,351)
------------- ------------- ------------- -------------
Net increase (decrease) 5,130,622 $ 56,314,253 (3,217,990) $ (34,706,185)
============= ============= ============= =============
- --------------------------------------------------------------------------------------------------------------
Class B:
Sold 3,649,121 $ 39,355,528 7,529,176 $ 72,586,104
Dividends and distributions reinvested 677,384 7,301,491 670,317 6,342,433
Redeemed (1,228,176) (13,274,759) (1,724,724) (16,530,811)
------------- ------------- ------------- -------------
Net increase 3,098,329 $ 33,382,260 6,474,769 $ 62,397,726
============= ============= ============= =============
- --------------------------------------------------------------------------------------------------------------
Class C:
Sold 76,459 $ 850,947 -- $ --
Dividends and distributions reinvested 2,146 23,222 -- --
Redeemed (99) (1,121) -- --
------------- ------------- ------------- -------------
Net increase 78,506 $ 873,048 -- $ --
============= ============= ============= =============
</TABLE>
1. For the six months ended December 31, 1995 for Class A shares and Class B
shares and for the period from November 1, 1995 (inception of offering) to
December 31, 1995 for Class C shares.
21 Oppenheimer Equity Income Fund
<PAGE>
Notes to Financial Statements (Unaudited) (Continued)
===============================================================================
3. Unrealized Gains and
Losses On Investments
At December 31, 1995, net unrealized appreciation on investments of $407,119,449
was composed of gross appreciation of $429,418,918, and gross depreciation of
$22,299,469.
===============================================================================
4. Management Fees and
Other Transactions
With Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of .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 six months ended December 31, 1995, commissions (sales charges paid
by investors) on sales of Class A shares totaled $2,162,374, of which $676,570
was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and
Class C shares totaled $1,251,338 and $7,496, of which $93,130 and $141,
respectively, was paid to an affiliated broker/dealer. During the six months
ended December 31, 1995, OFDI received contingent deferred sales charges of
$178,323 upon redemption of Class B shares as reimbursement for sales
commissions advanced by OFDI at the time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer
and shareholder servicing agent for the Fund, and for other registered
investment companies. OFS's total costs of providing such services are allocated
ratably to these companies.
Under separate approved plans, each class may expend up to .25% of its net
assets annually to compensate 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 and Class C shares are subject to an asset-based sales charge
of .75% of net assets annually, to compensate 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 or Class C plan, the
Board of Trustees may allow the Fund to continue payment of the asset-based
sales charge to OFDI for distribution expenses incurred on Class B or Class C
shares sold prior to termination or discontinuance of the plan. At December 31,
1995, OFDI had incurred unreimbursed expenses of $6,304,461 for Class B and
$13,641 for Class C. During the six months ended December 31, 1995, OFDI paid
$115,999 and $14,572, respectively, to an affiliated broker/dealer as
compensation for Class A and Class B personal service and maintenance expenses,
and retained $775,614 and $436, respectively, as compensation for Class B and
Class C sales commissions and service fee advances, as well as financing costs.
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
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Bridget A. Macaskill, Trustee and President
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 OppenheimerFunds, Inc.
===============================================================================
Distributor OppenheimerFunds Distributor, Inc.
===============================================================================
Transfer and Shareholder
Servicing Agent
OppenheimerFunds Services
===============================================================================
Custodian of
Portfolio Securities
The Bank of New York
===============================================================================
Independent Auditors
Deloitte & Touche LLP
===============================================================================
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
The financial statements included herein have been taken
from the records of the Fund without examination by the
independent auditors. 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
RS0300.001.1295 February 28, 1996
(Picture of Jennifer Leonard)
(Caption) Jennifer Leonard, Customer Service Representative
OppenheimerFunds Service
"How may I help you?"
As an Oppenheimer funds 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 Oppenheimer funds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated 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 independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFun ds Services, with their Award of Excellence in 1993.
So call us today--we're here to help.
(Oppenheimer Logo)
OppenheimerFunds Distributor, Inc.
P.O. Box 5270
Denver, CO 80217-5270
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Bulk Rate
U.S. Postage
PAID
Permit No. 469
Denver, CO
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