<PAGE>
Semiannual Report February 28, 1999
OPPENHEIMER
Equity Income
Fund
[PHOTO APPEARS HERE]
[LOGO OF OPPENHEIMERFUNDS APPEARS HERE]
OppenheimerFunds(R)
THE RIGHT WAY TO INVEST
<PAGE>
Report highlights
- --------------------------------------------------------------------------------
Contents
3 President's Letter
4 An Interview with Your Fund's Manager
9 Financial Statements
32 Officers and Trustees
36 Information and Services
. The broad market pullback of September and October 1998 hurt performance,
but losses were limited by the Fund's defensive allocation of assets and
the strong performance of Treasury securities.
. We sold Treasuries as prices climbed, positioning the Fund to benefit when
other fixed income sectors rebounded.
. Effective April 1, 1999, the Fund's name will be changed to Oppenheimer
Capital Income Fund.
Cumulative Total Returns
For the 6-Month Period
Ended 2/28/99
Class A
Without With
Sales Chg.(1) Sales Chg.(2)
- ---------------------------------------------
11.67% 5.25%
- ---------------------------------------------
Class B
Without With
Sales Chg.(1) Sales Chg.(2)
- ---------------------------------------------
11.30% 6.30%
- ---------------------------------------------
Class C
Without With
Sales Chg.(1) Sales Chg.(2)
- ---------------------------------------------
11.24% 10.24%
- ---------------------------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. In reviewing performance and
rankings, please remember that past performance does not guarantee future
results. Investment return and principal value of an investment in the Fund will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than the original cost. Because the stock market can be volatile, the Fund's
performance may be subject to substantial short-term changes. For updates on the
Fund's performance, please contact your financial advisor, call us at 1-800-525-
7048 or visit our website, www.oppenheimerfunds.com.
1. Includes changes in net asset value per share without deducting any sales
charges.
2. Class A return includes the current maximum initial sales charge of 5.75%.
Class B return includes the applicable contingent deferred sales charge of 5%.
Class C return includes the contingent deferred sales charge of 1%. Class B and
C shares are subject to an annual 0.75% asset-based sales charge. An explanation
of the different performance calculations is in the Fund's prospectus.
2 Oppenheimer Equity Income Fund
<PAGE>
Dear shareholder,
- --------------------------------------------------------------------------------
[PHOTO OF JAMES C. SWAIN APPEARS HERE]
James C. Swain
Chairman
Oppenheimer
Equity Income Fund
[PHOTO OF BRIDGET A. MACASKILL APPEARS HERE]
Bridget A. Macaskill
President
Oppenheimer Equity Income Fund
Contrary to what many analysts had expected, the U.S. economy appears to have
picked up steam over the past few months. The fourth quarter of 1998 posted the
fastest rate of economic growth in two years, and early indications suggest that
the first quarter of 1999 may follow suit.
With respect to the U.S. bond market, stronger-than-expected economic
growth has triggered concerns that the Federal Reserve may raise key interest
rates to forestall an acceleration of inflation. As a result, yields of
longer-term taxable bonds have risen from their October 1998 lows, when
investors had bid up prices during the global "flight to quality." At the same
time, tax exempt bond prices and yields have remained relatively stable.
In the U.S. stock market, it might appear at first glance that prices are
rising as rapidly as the economy is growing. However, a closer look reveals
that, with the exception of large-cap growth companies and the technology
industry, most stock prices remained relatively flat. What's more, the disparity
in valuations between large companies, which have led the market's advance, and
smaller ones, which have lagged, has become historically wide.
What do these observations mean for your investments? In our view, actively
managed portfolios that are closely monitored by expert money managers are
likely to provide better returns than passive index investing in 1999. That's
because selectivity is expected to be more critical to performance than it has
been over the past few years. In a potentially overvalued stock market and
rising interest-rate environment, the ability to identify the most promising
securities could become paramount.
Even though many equity investors may be tempted to jump aboard the
technology bandwagon, we suggest a more prudent course: broad diversification
beyond any single asset class, industry, capitalization range or geographic
region. We believe that the risks of this investment environment require
consideration of a broad range of investments and markets, including bonds. That
way, if one market experiences setbacks, one or more of the others may help
cushion the effects on your overall portfolio.
No matter what the financial markets have in store, we resolve to continue
working with your financial advisor to keep you apprised of potential risks and
opportunities. Providing you with the market information, professionally managed
investments and other resources you need to achieve your financial goals is an
important part of our enduring commitment to you as The Right Way to Invest.
Sincerely,
/s/ James C. Swain /s/ Bridget A. Macaskill
James C. Swain Bridget A. Macaskill
March 19, 1999
3 Oppenheimer Equity Income Fund
<PAGE>
An interview with your Fund's manager
- --------------------------------------------------------------------------------
How did the Fund perform during the six-month period that ended February 28,
1999?
Overall we are satisfied that Oppenheimer Equity Income Fund provided investors
with current income while helping to minimize the risks of an exceptionally
challenging and volatile period in the equity and bond markets. We believe that
our disciplined approach to investing in a diversified, conservative portfolio
of equities, fixed income securities and cash is reflected in the Fund's
performance during this period.
What made this such a challenging period?
During the second half of 1998, widespread economic difficulties in emerging
markets throughout the world sparked fears of a global economic slowdown. Most
equities suffered as a result, with the steepest declines in September and early
October. On the other hand, bonds performed relatively well, especially U.S.
Treasury instruments. With investors throughout the world searching for safe,
high-quality securities, demand for Treasuries rose, driving prices sharply
higher.
Then, on October 15th, the Federal Reserve Board (the Fed) stepped in with
a surprise cut in government lending rates. By signaling the Fed's willingness
to act decisively to avoid a recession in the United States, the move helped
bolster investor confidence. As a result, most equities began to rise as quickly
as they had fallen. By early 1999, most sectors had recovered the ground they'd
lost and in many cases had climbed to new highs. One exception was the financial
services sector, which experienced a weaker recovery due to lingering investor
concerns about financial exposures to emerging markets.
"Our cautious view of the economy led us to adopt a relatively defensive posture
in the stock market."
4 Oppenheimer Equity Income Fund
<PAGE>
[PHOTO OF JOHN DONEY AND BRUCE BARTLETT APPEARS HERE]
Portfolio Management
Team (l to r)
John Doney
(Portfolio Manager)
Bruce Bartlett
On the fixed income side, most types of bonds benefited as investors gained
confidence in the ability of corporate and government entities to meet their
debt commitments. However, Treasuries weakened as investor confidence increased
and demand for the safest possible instruments softened. Consequently, the
"spread" in relative yield between Treasuries and corporate bonds narrowed.
How did you manage the Fund in light of these events?
Our strategy was designed to help cushion investors from market volatility while
providing a high rate of current income. To a large degree, we succeeded in
achieving these goals during the six months that ended on February 28, 1999.
Earlier in 1998, our cautious view of the economy led us to adopt a
relatively defensive posture in the stock market. We sold some of our financial
services and retail stocks because they had become more highly valued since we
purchased them, and used some of our cash to increase our holdings of
Treasuries. Both of these moves proved advantageous during the market correction
of September and early October. As the value of our Treasuries rose, we
gradually sold most of our position, using some of the money to purchase
corporate high-yield bonds and holding the rest as cash. These moves also
benefited the Fund's investors when spreads between corporate bonds and
Treasuries narrowed at the end of 1998 and the beginning of 1999.
5 Oppenheimer Equity Income Fund
<PAGE>
An interview with your Fund's manager
- --------------------------------------------------------------------------------
However, the Fund's performance suffered because of the weak recovery in the
financial services sector. Although we had already sold some of our financial
industry stocks in mid-1998, a relatively high percentage of the Fund's capital
remained invested in financial services companies because we believed they
represented quality investments at a reasonable price. Many of these companies
were regional banks, such as Bank One Corp., with virtually no overseas
exposure. Nevertheless, in the wake of the 1998 market correction, investors
seemed to regard all financial services companies with suspicion. The only
companies in the sector to bounce back fully were those that demonstrated the
ability to deliver strong earnings. For example, Chase Manhattan Corp., another
of our holdings, posted excellent earnings in early 1999 and outperformed the
financial industry sector by a wide margin.
What is your outlook for the future?
We believe the economy is likely to slow in the near future, creating favorable
conditions for bonds while constraining corporate earnings. In light of this
view, we intend to maintain the Fund's defensive posture in equities. We
continue to find attractive values among financial services companies which we
believe offer the potential for strong earnings recoveries in 1999. We also
continue to invest in a wide range of sectors that we believe are likely to
perform relatively well in a slowing economy, such as utilities, health care,
and energy. At the same time, we are keeping cash reserves at relatively high
levels until more attractive value-oriented investment opportunities arise that
meet our strict criteria.
Avg Annual Total Returns
For the Periods Ended 3/31/99(1)
Class A
1 year 5 year 10 year
- -------------------------------------------
- -4.32% 15.70% 12.32%
- -------------------------------------------
Class B Since
1 year 5 year Inception
- -------------------------------------------
- -3.81% 15.90% 13.63%
- -------------------------------------------
Class C Since
1 year 5 year Inception
- -------------------------------------------
- -0.23% N/A 17.32%
- -------------------------------------------
6 Oppenheimer Equity Income Fund
<PAGE>
We remain committed to our value-oriented investment discipline, because we
believe it offers the best defense against market downturns while providing
opportunities to benefit from market advances. We remain committed as well to
striving to provide investors with a high rate of current income. That's what
makes Oppenheimer Equity Income Fund part of The Right Way to Invest.
Top 10 Stock Holdings(2)
- -----------------------------------------
First Union Corp. 2.6%
- -----------------------------------------
Chase Manhattan Corp. 2.4
- -----------------------------------------
Philip Morris Cos., Inc. 2.1
- -----------------------------------------
BankAmerica Corp. 2.1
- -----------------------------------------
Citigroup, Inc. 1.9
- -----------------------------------------
Bank One Corp. 1.9
- -----------------------------------------
American General Corp. 1.3
- -----------------------------------------
RJR Nabisco Holdings Corp. 1.0
- -----------------------------------------
Capital One Financial Corp. 1.0
- -----------------------------------------
Bristol-Myers Squibb Co. 0.9
- -----------------------------------------
Asset Allocation(2)
Common Stock 49.2%
Cash Equivalents 28.6
Bonds 11.7
Others 7.2
Conv. Bonds 1.9
Preferred Stock 1.4
1. Total returns include changes in share price and reinvestment of dividends
and capital gains distributions in a hypothetical investment for the periods
shown. Class A returns include the current maximum initial sales charge of
5.75%. Class A shares were first publicly offered on 12/1/70. The Fund's maximum
sales charge for Class A shares was higher prior to 10/18/91, so actual
performance may have been higher. Class B returns include the applicable
contingent deferred sales charge of 5% (1-year) and 1% (since inception on
8/17/93). Class C returns include the contingent deferred sales charge of 1% for
the 1-year return. Class C shares have an inception date of 11/1/95. Class B and
C shares are subject to a 0.75% annual asset-based sales charge. An explanation
of the different performance calculations is in the Fund's prospectus.
2. Portfolio is subject to change. Percentages are as of February 28, 1999, and
are based on total market value of investments.
7 Oppenheimer Equity Income Fund
<PAGE>
Financials
- --------------------------------------------------------------------------------
8 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments February 28, 1999 (Unaudited)
- -------------------------------------------------------------------------------
Market Value
Shares See Note 1
- -------------------------------------------------------------------------------
Common Stocks--49.2%
- -------------------------------------------------------------------------------
Basic Materials--1.5%
- -------------------------------------------------------------------------------
Chemicals--0.5%
Dexter Corp. 500,000 $13,875,000
- -------------------------------------------------------------------------------
Lyondell Chemical Co. 396,160 5,298,640
------------
19,173,640
- -------------------------------------------------------------------------------
Paper--1.0%
Smurfit-Stone Container Corp.(1) 257,142 4,644,627
- -------------------------------------------------------------------------------
Sonoco Products Co. 660,000 16,170,000
- -------------------------------------------------------------------------------
Union Camp Corp. 200,000 13,375,000
- -------------------------------------------------------------------------------
Westvaco Corp. 375,000 8,390,625
------------
42,580,252
- -------------------------------------------------------------------------------
Capital Goods--2.6%
- -------------------------------------------------------------------------------
Electrical Equipment--0.6%
AMP, Inc. 436,125 23,196,398
- -------------------------------------------------------------------------------
Industrial Services--0.2%
Browning-Ferris Industries, Inc. 225,000 7,087,500
- -------------------------------------------------------------------------------
Manufacturing--1.8%
AlliedSignal, Inc. 500,000 20,687,500
- -------------------------------------------------------------------------------
Cooper Industries, Inc. 163,333 7,145,819
- -------------------------------------------------------------------------------
Hillenbrand Industries, Inc. 300,000 12,562,500
- -------------------------------------------------------------------------------
Pall Corp. 800,000 16,950,000
- -------------------------------------------------------------------------------
Tenneco, Inc. (New) 500,000 14,968,750
------------
72,314,569
- -------------------------------------------------------------------------------
Consumer Cyclicals--1.8%
- -------------------------------------------------------------------------------
Autos & Housing--0.9%
Delphi Automotive Systems Corp.(1) 647,700 11,941,969
- -------------------------------------------------------------------------------
Ford Motor Co. 100,000 5,931,250
- -------------------------------------------------------------------------------
Snap-On, Inc. 675,000 19,068,750
------------
36,941,969
- -------------------------------------------------------------------------------
Media--0.3%
Hollinger International, Inc. 700,000 8,662,500
- -------------------------------------------------------------------------------
R.H. Donnelley Corp. 160,000 2,400,000
------------
11,062,500
- -------------------------------------------------------------------------------
Retail: General--0.6%
Family Dollar Stores, Inc. 700,000 14,000,000
- -------------------------------------------------------------------------------
Sears Roebuck & Co. 300,000 12,187,500
------------
26,187,500
9 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited)(Continued)
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- ----------------------------------------------------------------------
Consumer Staples--6.4%
- ----------------------------------------------------------------------
Consumer Services--1.1%
Dun & Bradstreet Corp. (New) 900,000 $30,825,000
- ----------------------------------------------------------------------
H&R Block, Inc. 300,000 13,612,500
-----------
44,437,500
- ----------------------------------------------------------------------
Food--1.2%
General Mills, Inc. 100,000 8,068,750
- ----------------------------------------------------------------------
RJR Nabisco Holdings Corp. (New) 1,500,000 40,968,750
-----------
49,037,500
- ----------------------------------------------------------------------
Food & Drug Retailers--0.8%
SUPERVALU, Inc. 1,300,000 31,281,250
- ----------------------------------------------------------------------
Household Goods--0.9%
Fort James Corp. 753,433 22,508,811
- ----------------------------------------------------------------------
Newell Co. 345,700 14,692,250
-----------
37,201,061
- ----------------------------------------------------------------------
Tobacco--2.4%
Philip Morris Cos., Inc. 2,200,000 86,075,000
- ----------------------------------------------------------------------
UST, Inc. 400,000 11,825,000
-----------
97,900,000
- ----------------------------------------------------------------------
Energy--2.1%
- ----------------------------------------------------------------------
Oil: Domestic--2.0%
Atlantic Richfield Co. 100,000 5,462,500
- ----------------------------------------------------------------------
Conoco, Inc., Cl. A(1) 1,249,200 25,374,375
- ----------------------------------------------------------------------
Enron Oil & Gas Co. 270,000 4,455,000
- ----------------------------------------------------------------------
Phillips Petroleum Co. 300,000 11,606,250
- ----------------------------------------------------------------------
Ultramar Diamond Shamrock Corp. 400,000 7,900,000
- ----------------------------------------------------------------------
Unocal Corp. 500,000 14,093,750
- ----------------------------------------------------------------------
USX-Marathon Group 500,000 10,343,750
-----------
79,235,625
- ----------------------------------------------------------------------
Oil: International--0.1%
Royal Dutch Petroleum Co., NY Shares 100,000 4,387,500
- ----------------------------------------------------------------------
Financial--26.2%
- ----------------------------------------------------------------------
Banks--15.3%
Bank of New York Co., Inc. (The) 900,000 31,443,750
- ----------------------------------------------------------------------
Bank One Corp. 1,400,000 75,250,000
- ----------------------------------------------------------------------
BankAmerica Corp. (New) 1,300,000 84,906,250
- ----------------------------------------------------------------------
BankBoston Corp. 750,000 30,328,125
10 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Banks (continued)
Bankers Trust Corp. 100,000 $ 8,700,000
- --------------------------------------------------------------------------------
Chase Manhattan Corp. (New) 1,200,000 95,550,000
- --------------------------------------------------------------------------------
First Union Corp. 2,000,000 106,625,000
- --------------------------------------------------------------------------------
Fleet Financial Group, Inc. 500,000 21,468,750
- --------------------------------------------------------------------------------
KeyCorp 600,000 19,350,000
- --------------------------------------------------------------------------------
Mellon Bank Corp. 450,000 30,431,250
- --------------------------------------------------------------------------------
National City Corp. 300,000 20,962,500
- --------------------------------------------------------------------------------
PNC Bank Corp. 301,600 15,702,050
- --------------------------------------------------------------------------------
Summit Bancorp 700,000 27,037,500
- --------------------------------------------------------------------------------
SunTrust Banks, Inc. 500,000 33,968,750
- --------------------------------------------------------------------------------
Union Planters Corp. 387,440 17,507,445
------------
619,231,370
- --------------------------------------------------------------------------------
Diversified Financial--4.8%
American Express Co. 300,000 32,550,000
- --------------------------------------------------------------------------------
Anthracite Capital, Inc. 600,000 4,387,500
- --------------------------------------------------------------------------------
Associates First Capital Corp., Cl. A 157,250 6,388,281
- --------------------------------------------------------------------------------
Capital One Financial Corp. 300,000 38,287,500
- --------------------------------------------------------------------------------
Citigroup, Inc. 1,312,500 77,109,375
- --------------------------------------------------------------------------------
Household International, Inc. 766,650 31,145,156
- --------------------------------------------------------------------------------
Imperial Credit Commercial Mortgage Investment Corp. 500,000 4,531,250
------------
194,399,062
- --------------------------------------------------------------------------------
Insurance--4.3%
Allstate Corp. 700,000 26,250,000
- --------------------------------------------------------------------------------
American General Corp. 700,000 51,275,000
- --------------------------------------------------------------------------------
Enhance Financial Services Group, Inc. 703,425 16,662,380
- --------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. 300,000 16,218,750
- --------------------------------------------------------------------------------
IPC Holdings Ltd. 359,500 7,549,500
- --------------------------------------------------------------------------------
Reliance Group Holdings, Inc. 2,141,500 22,084,219
- --------------------------------------------------------------------------------
St. Paul Cos., Inc. 1,000,000 32,375,000
------------
172,414,849
- --------------------------------------------------------------------------------
Real Estate Investment Trusts--0.5%
Equity Office Properties Trust 340,500 8,767,875
- --------------------------------------------------------------------------------
FBR Asset Investment Corp.(2) 500,000 6,750,000
- --------------------------------------------------------------------------------
Horizon Group Properties, Inc.(1) 30,000 135,000
- --------------------------------------------------------------------------------
Prime Retail, Inc. 600,000 4,800,000
- --------------------------------------------------------------------------------
Wilshire Real Estate Investment Trust, Inc. 330,000 1,051,875
------------
21,504,750
11 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of investments (Unaudited)(Continued)
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- -------------------------------------------------------------------------------
Savings & Loans--1.3%
Golden State Bancorp, Inc.(1) 390,650 $ 6,958,453
- -------------------------------------------------------------------------------
Greenpoint Financial Corp. 400,000 12,275,000
- -------------------------------------------------------------------------------
Sovereign Bancorp, Inc. 262,216 3,212,146
- -------------------------------------------------------------------------------
Washington Mutual, Inc. 750,000 30,000,000
-------------
52,445,599
- -------------------------------------------------------------------------------
Healthcare--1.7%
- -------------------------------------------------------------------------------
Healthcare/Drugs--1.7%
American Home Products Corp. 300,000 17,850,000
- -------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 300,000 37,781,250
- -------------------------------------------------------------------------------
Pharmacia & Upjohn, Inc. 250,000 13,625,000
-------------
69,256,250
- -------------------------------------------------------------------------------
Technology--0.7%
- -------------------------------------------------------------------------------
Electronics--0.7%
Motorola, Inc. 400,000 28,100,000
- -------------------------------------------------------------------------------
Telecommunications--1.8%
- -------------------------------------------------------------------------------
Telephone Utilities--1.8%
GTE Corp. 550,000 35,681,250
- -------------------------------------------------------------------------------
SBC Communications, Inc. 700,000 37,012,500
-------------
72,693,750
- -------------------------------------------------------------------------------
Utilities--4.4%
- -------------------------------------------------------------------------------
Electric Utilities--3.7%
Allegheny Energy, Inc. 300,000 8,906,250
- -------------------------------------------------------------------------------
Central & South West Corp. 600,000 14,887,500
- -------------------------------------------------------------------------------
DQE, Inc. 216,200 8,256,138
- -------------------------------------------------------------------------------
FirstEnergy Corp. 400,000 11,700,000
- -------------------------------------------------------------------------------
Florida Progress Corp. 600,000 24,075,000
- -------------------------------------------------------------------------------
Illinova Corp. 700,000 16,625,000
- -------------------------------------------------------------------------------
New Century Energies, Inc. 308,000 12,493,250
- -------------------------------------------------------------------------------
Potomac Electric Power Co. 500,000 12,187,500
- -------------------------------------------------------------------------------
SCANA Corp. 300,000 7,050,000
- -------------------------------------------------------------------------------
Texas Utilities Co. 500,000 21,218,750
- -------------------------------------------------------------------------------
Unicom Corp. 400,000 14,225,000
-------------
151,624,388
- -------------------------------------------------------------------------------
Gas Utilities--0.7%
Enron Corp. 425,000 27,625,000
-------------
Total Common Stocks (Cost $1,190,649,851) 1,991,319,782
12 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Market Value
Shares See Note 1
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Preferred Stocks--1.4%
- ----------------------------------------------------------------------------------------------------------
Armco, Inc., $7.25 Cum. Cv., Vtg 200,000 $ 9,100,000
- ----------------------------------------------------------------------------------------------------------
Banco Commercial Portuguese International Bank Ltd.,
8% Cv. Preferred Stock, Series A 140,400 16,286,400
- ----------------------------------------------------------------------------------------------------------
California Federal Preferred Capital Corp., 9.125%
Non-Cum. Exchangeable Preferred, Series A, Non-Vtg 55,000 1,450,625
- ----------------------------------------------------------------------------------------------------------
Chiquita Brands International, Inc., $3.75 Cum. Cv., Series B, Non-Vtg 180,000 7,042,500
- ----------------------------------------------------------------------------------------------------------
IXC Communications, Inc., 7.25% Cum. Cv. Jr. Preferred, Non-Vtg.(4)(5) 53,723 12,443,590
- ----------------------------------------------------------------------------------------------------------
Trans World Airlines, Inc., $4.625 Cum. Cv. Preferred Stock(5) 200,000 8,850,000
-----------
Total Preferred Stocks (Cost $42,966,908) 55,173,115
- ----------------------------------------------------------------------------------------------------------
Other Securities--5.5%
- ----------------------------------------------------------------------------------------------------------
American General Delaware LLC, 6% Cv. Monthly Income
Preferred Securities, Series A 75,000 7,003,125
- ----------------------------------------------------------------------------------------------------------
American Heritage Life Investment Corp., 8.50% Cum. Cv
Preferred Redeemable Increased Dividend Equity Securities 35,000 2,196,250
- ----------------------------------------------------------------------------------------------------------
Corning Delaware LP, 6% Cum. Cv. Monthly Income
Preferred Securities, Non-Vtg 150,000 12,262,500
- ----------------------------------------------------------------------------------------------------------
Dollar General Corp., 8.50% Cv. Structured Yield Product
Exchangeable for Stock 451,800 18,100,237
- ----------------------------------------------------------------------------------------------------------
Fresenius Medical Care Capital Trust III, 9% Trust Preferred
Nts., 12/1/06 5,985,000 6,179,513
- ----------------------------------------------------------------------------------------------------------
Houston Industries, Inc., 7% Automatic Common Exchange
Securities for Time Warner, Inc. Common Stock 175,800 19,250,100
- ----------------------------------------------------------------------------------------------------------
Kaufman & Broad Home Corp., 8.25% Cv. Preferred Redeemable
Increased Dividend Equity Securities 1,450,000 11,418,750
- ----------------------------------------------------------------------------------------------------------
MCN Energy Group, Inc., 8% Cv. Preferred Redeemable Increased
Dividend Equity Securities 50,000 1,625,000
- ----------------------------------------------------------------------------------------------------------
MCN Energy Group, Inc., 8.75% Cv. Preferred Redeemable Increased
Dividend Equity Securities 135,000 2,480,625
- ----------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6% Cv. Structured Yield Product
Exchangeable for Common Stock of Cox Communications, Inc. 100,000 5,900,000
- ----------------------------------------------------------------------------------------------------------
National Australia Bank Ltd., ExCaps (each ExCap consists
of $25 principal amount of 7.875% Perpetual Capital Security
and a purchase contract entitling the holder to exchange
ExCaps for ordinary shares)(3) 590,000 17,884,375
- ----------------------------------------------------------------------------------------------------------
Newell Financial Trust I, 5.25% Cv. Preferred Stock(5) 244,000 12,718,500
- ----------------------------------------------------------------------------------------------------------
Nipsco Industries, Inc., 7.75% Cv. Premium Income Equity Securities(1) 200,000 9,887,500
- ----------------------------------------------------------------------------------------------------------
Owens Corning Capital LLC, 6.50% Cv. Monthly Income Preferred
Securities, Non-Vtg.(5) 200,000 9,025,000
- ----------------------------------------------------------------------------------------------------------
PLC Capital Trust II, 6.50% Cum. Cv. Preferred Redeemable Increased
Dividend Equity Securities 56,500 3,414,719
- ----------------------------------------------------------------------------------------------------------
Premier Parks, Inc., 7.50% Cum. Cv. Premium Income Equity
Securities, Non-Vtg 499,000 28,443,000
</TABLE>
13 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Other Securities (continued)
Salomon Smith Barney Holdings, Inc., 7.625% Cv. Preferred
Debt Exchangeable for Common Stock of Financial Security
Assurance Holdings Ltd. 460,000 $ 19,780,000
- --------------------------------------------------------------------------------------------------------------
St. George Bank, ADR $1.35 Cv. Structured Yield Product
Exchangeable for Common Stock of St. George Bank(5) 114,000 5,489,812
- --------------------------------------------------------------------------------------------------------------
Texas Utilities Co., 9.25% Cv. Preferred Redeemable Increased
Dividend Equity Securities 176,500 9,211,094
- --------------------------------------------------------------------------------------------------------------
Union Pacific Capital Trust, 6.25% Cum. Term Income Deferrable
Equity Securities, Non-Vtg. 131,400 6,208,650
- --------------------------------------------------------------------------------------------------------------
WBK Trust, 10% Cv. Structured Yield Product Exchangeable Stock 450,000 14,231,250
------------
Total Other Securities (Cost $189,956,425) 222,710,000
Units
- --------------------------------------------------------------------------------------------------------------
Rights, Warrants and Certificates--0.1%
- --------------------------------------------------------------------------------------------------------------
Golden State Bancorp, Inc. Wts., Exp. 1/01 (Cost $1,316,782) 390,650 1,977,666
Face
Amount(6)
- --------------------------------------------------------------------------------------------------------------
U.S. Government Obligations--4.3%
- --------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, STRIPS, 6.94%, 5/15/21(7) $150,000,000 40,446,000
- --------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, STRIPS, 7.20%, 8/15/08(7) 150,000,000 89,033,400
- --------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, STRIPS, 7.20%, 8/15/20(7) 150,000,000 42,177,750
------------
Total U.S. Government Obligations (Cost $142,504,830) 171,657,150
- --------------------------------------------------------------------------------------------------------------
Foreign Government Obligations--1.5%
- --------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Bonds, Series L, 6.188%, 3/31/05(8) 6,110,000 5,025,475
- --------------------------------------------------------------------------------------------------------------
Canada (Government of) Bonds, 7.50%, 9/1/00CAD 19,460,000 13,327,757
- --------------------------------------------------------------------------------------------------------------
Fideicomiso Petacalco Trust Nts., 10.16%, 12/23/09(5) 9,000,000 7,717,500
- --------------------------------------------------------------------------------------------------------------
Hashemite (Kingdom of Jordan) Disc. Bonds, 6%, 12/23/23(8) 1,250,000 728,125
- --------------------------------------------------------------------------------------------------------------
New South Wales State Bank Bonds, 9.25%, 2/18/03AUD 9,900,000 6,896,404
- --------------------------------------------------------------------------------------------------------------
Queensland (State of) Treasury Corp., Global
Exchangeable Gtd. Nts., 8%, 8/14/01AUD 33,650,000 22,239,385
- --------------------------------------------------------------------------------------------------------------
South Africa (Republic of) Bonds, Series 153, 13%, 8/31/10ZAR 27,500,000 4,097,011
- --------------------------------------------------------------------------------------------------------------
South Australia (Government of) Bonds, 9%, 9/23/02AUD 3,000,000 2,057,221
------------
Total Foreign Government Obligations (Cost $69,722,909) 62,088,878
- --------------------------------------------------------------------------------------------------------------
Non-Convertible Corporate Bonds and Notes--5.8%
- --------------------------------------------------------------------------------------------------------------
AK Steel Corp., 9.125% Sr. Nts., 12/15/06 4,000,000 4,250,000
- --------------------------------------------------------------------------------------------------------------
Allied Waste North America, Inc., 7.875% Sr. Nts., 1/1/09(5) 5,995,000 6,069,937
- --------------------------------------------------------------------------------------------------------------
Amtran, Inc., 9.625% Nts., 12/15/05 3,000,000 3,007,500
- --------------------------------------------------------------------------------------------------------------
Auburn Hills Trust, 12% Gtd. Exchangeable Certificates, 5/1/20(8) 5,000,000 7,942,375
- --------------------------------------------------------------------------------------------------------------
Bank Plus Corp., 12% Sr. Nts., 7/18/07 2,500,000 2,015,625
</TABLE>
14 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(6) See Note 1
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Non-Convertible Corporate Bonds and Notes (continued)
Building Materials Corp. of America, 8% Sr. Nts., 12/1/08(5) $ 5,000,000 $ 5,025,000
- ---------------------------------------------------------------------------------------------------------
Chancellor Media Corp., 9% Sr. Unsec. Sub. Nts., 10/1/08 7,000,000 7,612,500
- ---------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp., 9.125% Sr. Unsec. Nts., 4/15/06 2,400,000 1,524,000
- ---------------------------------------------------------------------------------------------------------
Comcast Corp., 10.25% Sr. Sub. Debs., 10/15/01 6,000,000 6,510,000
- ---------------------------------------------------------------------------------------------------------
Cott Corp., 9.375% Sr. Nts., 7/1/05 6,350,000 5,842,000
- ---------------------------------------------------------------------------------------------------------
CSC Holdings, Inc., 7.625% Sr. Unsec. Debs., 7/15/18 3,000,000 3,090,000
- ---------------------------------------------------------------------------------------------------------
CSC Holdings, Inc., 9.875% Sr. Sub. Debs., 4/1/23 3,500,000 3,972,500
- ---------------------------------------------------------------------------------------------------------
Echostar DBS Corp., 9.375% Sr. Unsec. Nts., 2/1/09(5) 5,000,000 5,037,500
- ---------------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Sec. Nts., Series E, 5/1/11 6,000,000 6,918,732
- ---------------------------------------------------------------------------------------------------------
Emmis Communications Corp., 8.125% Sr. Sub. Nts., 3/15/09(5) 6,500,000 6,467,500
- ---------------------------------------------------------------------------------------------------------
Falcon Holding Group LP, 8.375% Sr. Unsec. Debs., Series B, 4/15/10 2,550,000 2,607,375
- ---------------------------------------------------------------------------------------------------------
Ferrellgas Partners LP, 9.375% Sr. Sec. Nts., Series B, 6/15/06(2) 5,000,000 5,012,500
- ---------------------------------------------------------------------------------------------------------
Fleming Cos., Inc., 10.625% Sr. Nts., 12/15/01 3,000,000 3,090,000
- ---------------------------------------------------------------------------------------------------------
Gulf Canada Resources Ltd., 8.375% Sr. Nts., 11/15/05 2,500,000 2,487,500
- ---------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.45% Sr. Nts., Series C, 12/1/08 10,000,000 9,850,000
- ---------------------------------------------------------------------------------------------------------
Hollinger International Publishing, Inc., 8.625% Sr. Unsec. Nts., 3/15/05 4,710,000 5,016,150
- ---------------------------------------------------------------------------------------------------------
Hollinger International Publishing, Inc., 9.25% Sr. Unsec. Sub. Nts., 2/1/06 5,000,000 5,375,000
- ---------------------------------------------------------------------------------------------------------
ICN Pharmaceuticals, Inc., 8.75% Sr. Nts., 11/15/08(5) 2,000,000 2,030,000
- ---------------------------------------------------------------------------------------------------------
Imax Corp., 7.875% Sr. Nts., 12/1/05 5,000,000 4,925,000
- ---------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 8.60% Sr. Unsec. Nts.,
Series B, 6/1/08 4,500,000 4,286,250
- ---------------------------------------------------------------------------------------------------------
Jacor Communications Co., 8% Sr. Sub. Nts., 2/15/10 2,520,000 2,702,700
- ---------------------------------------------------------------------------------------------------------
Jacor Communications Co., 8.75% Sr. Sub. Nts., Series B, 6/15/07 1,745,000 1,910,775
- ---------------------------------------------------------------------------------------------------------
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 6,000,000 6,060,000
- ---------------------------------------------------------------------------------------------------------
Lenfest Communications, Inc., 8.375% Sr. Unsec. Nts., 11/1/05 6,000,000 6,525,000
- ---------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, 8.75% Sr. Sub. Nts., 1/1/09(5)(9) 2,000,000 2,030,000
- ---------------------------------------------------------------------------------------------------------
Nortek, Inc., 9.125% Sr. Nts., Series B, 9/1/07 7,500,000 7,846,875
- ---------------------------------------------------------------------------------------------------------
NTL, Inc., 11.50% Sr. Nts., 10/1/08(5) 7,650,000 8,644,500
- ---------------------------------------------------------------------------------------------------------
P&L Coal Holdings Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 5,000,000 5,112,500
- ---------------------------------------------------------------------------------------------------------
Park Place Entertainment Corp., 7.875% Sr. Sub. Nts., 12/15/05(5) 5,650,000 5,565,250
- ---------------------------------------------------------------------------------------------------------
PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05 6,000,000 6,292,500
- ---------------------------------------------------------------------------------------------------------
Purina Mills, Inc., 9% Sr. Unsec. Sub. Nts., 3/15/10 1,000,000 945,000
- ---------------------------------------------------------------------------------------------------------
Regal Cinemas, Inc., 8.875% Sr. Sub. Nts., 12/15/10(5) 6,000,000 5,730,000
- ---------------------------------------------------------------------------------------------------------
Reliance Group Holdings, Inc., 9.75% Sr. Sub. Debs., 11/15/03(2) 9,000,000 9,371,250
- ---------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 8.625% Sr. Unsec. Sub. Nts., 2/1/08 6,000,000 5,250,000
- ---------------------------------------------------------------------------------------------------------
SFX Entertainment, Inc., 9.125% Sr. Sub. Nts., 12/1/08(5) 7,000,000 7,227,500
- ---------------------------------------------------------------------------------------------------------
Station Casinos, Inc., 10.125% Sr. Sub. Nts., 3/15/06 8,000,000 8,580,000
- ---------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 8.125% Sr. Sub. Nts., 12/1/08(5) 5,750,000 5,778,750
- ---------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 8.625% Sr. Sub. Nts., 1/15/07 2,000,000 2,010,000
</TABLE>
15 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount/(6)/ See Note 1
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Non-Convertible Corporate Bonds and Notes (continued)
Time Warner Telecom LLC, 9.75% Sr. Nts., 7/15/08 $ 6,000,000 $ 6,450,000
- ---------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11/(5)/ 1,950,270 1,009,265
- ---------------------------------------------------------------------------------------------------------
TV Guide, Inc., 8.125% Sr. Sub. Nts., 3/1/09/(2)/ 6,500,000 6,524,375
- ---------------------------------------------------------------------------------------------------------
World Color Press, Inc., 7.75% Sr. Sub. Nts., 2/15/09/(5)/ 3,000,000 2,925,000
------------
Total Non-Convertible Corporate Bonds and Notes (Cost $226,235,269) 234,456,184
- ---------------------------------------------------------------------------------------------------------
Convertible Corporate Bonds and Notes--1.9%
- ---------------------------------------------------------------------------------------------------------
Apple Computer, Inc., 6% Cv. Sub. Nts., 6/1/01 10,500,000 13,216,875
- ---------------------------------------------------------------------------------------------------------
Cirrus Logic, Inc., 6% Cv. Sub. Nts., 12/15/03/(5)/ 11,000,000 8,030,000
- ---------------------------------------------------------------------------------------------------------
Inco Ltd., 5.75% Cv. Debs., 7/1/04 9,700,000 8,560,250
- ---------------------------------------------------------------------------------------------------------
Inco Ltd., 7.75% Cv. Debs., 3/15/16 9,800,000 8,820,000
- ---------------------------------------------------------------------------------------------------------
Integrated Device Technology, Inc., 5.50% Cv. Sub. Nts., 6/1/02 7,000,000 5,136,250
- ---------------------------------------------------------------------------------------------------------
Mutual Risk Management Ltd., Zero Coupon Exchangeable
Sub. Debs., 5.25%, 10/30/15/(5)//(7)/ 19,500,000 15,380,625
- ---------------------------------------------------------------------------------------------------------
Oryx Energy Co., 7.50% Cv. Sub. Debs., 5/15/14 7,000,000 6,807,500
- ---------------------------------------------------------------------------------------------------------
VLSI Technology, Inc., 8.25% Cv. Sub. Nts., 10/1/05 10,100,000 10,049,500
------------
Total Convertible Corporate Bonds and Notes (Cost $68,787,358) 76,001,000
- ---------------------------------------------------------------------------------------------------------
Structured Instruments--1.6%
- ---------------------------------------------------------------------------------------------------------
Commerzbank International SA, Lehman High Yield Composite
Index Linked Nts., 7.80%, 4/5/99 50,000,000 51,000,000
- ---------------------------------------------------------------------------------------------------------
Shoshone Partners Loan Trust Sr. Nts., 6.689%, 4/28/02
(representing a basket of reference loans and a total return
swap between Chase Manhattan Bank and the Trust)/(2)//(8)/ 16,800,000 14,376,043
------------
Total Structured Instruments (Cost $67,220,346) 65,376,043
- ---------------------------------------------------------------------------------------------------------
Short-Term Notes--19.9%/(10)/
- ---------------------------------------------------------------------------------------------------------
BMW US Capital Corp., 4.82%, 3/11/99 50,000,000 49,933,056
- ---------------------------------------------------------------------------------------------------------
CIESCO, LP, 4.81%, 3/2/99 50,000,000 49,993,319
- ---------------------------------------------------------------------------------------------------------
CIESCO, LP, 4.82%, 3/17/99 25,000,000 24,946,445
- ---------------------------------------------------------------------------------------------------------
CIESCO, LP, 4.82%, 3/23/99 25,000,000 24,926,361
- ---------------------------------------------------------------------------------------------------------
CIT Group Holdings, Inc., 4.82%, 3/8/99 25,000,000 24,976,569
- ---------------------------------------------------------------------------------------------------------
Equilon Enterprises LLC, 4.82%, 3/23/99 25,000,000 24,926,361
- ---------------------------------------------------------------------------------------------------------
Equilon Enterprises LLC, 4.83%, 4/8/99 35,000,000 34,821,558
- ---------------------------------------------------------------------------------------------------------
Equilon Enterprises LLC, 4.86%, 4/5/99 40,000,000 39,811,000
- ---------------------------------------------------------------------------------------------------------
General Electric Capital Corp., 4.93%, 3/15/99 25,000,000 24,953,236
- ---------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 4.83%, 3/5/99 25,000,000 24,986,583
- ---------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 4.84%, 4/6/99 50,000,000 49,758,000
- ---------------------------------------------------------------------------------------------------------
Homeside Lending, Inc., 4.83%, 3/12/99 30,000,000 29,955,725
- ---------------------------------------------------------------------------------------------------------
Homeside Lending, Inc., 4.84%, 3/22/99 25,000,000 24,929,417
- ---------------------------------------------------------------------------------------------------------
Homeside Lending, Inc., 4.85%, 3/4/99 20,000,000 19,991,917
</TABLE>
16 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount/(6)/ See Note 1
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Short-Term Notes (continued)
Homeside Lending, Inc., 4.86%, 3/10/99 $ 20,000,000 $ 19,975,700
- ------------------------------------------------------------------------------------------------------------
International Lease Finance Corp., 4.80%, 3/4/99 50,000,000 49,980,000
- ------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 4.95%, 3/11/99 50,000,000 49,931,250
- ------------------------------------------------------------------------------------------------------------
Monsanto Co., 4.82%, 3/12/99 33,500,000 33,450,662
- ------------------------------------------------------------------------------------------------------------
Motiva Enterprises LLC, 4.82%, 3/16/99 55,000,000 54,889,542
- ------------------------------------------------------------------------------------------------------------
Prudential Funding Corp., 4.83%, 4/5/99 50,000,000 49,765,208
- ------------------------------------------------------------------------------------------------------------
Prudential Funding Corp., 4.83%, 4/7/99 50,000,000 49,751,792
- ------------------------------------------------------------------------------------------------------------
Xerox Capital (Europe) plc, 4.82%, 3/5/99 50,000,000 49,973,222
--------------
Total Short-Term Notes (Cost $806,626,923) 806,626,923
- ------------------------------------------------------------------------------------------------------------
Repurchase Agreements--8.6%
- ------------------------------------------------------------------------------------------------------------
Repurchase agreement with PaineWebber, Inc., 4.73%, dated 2/26/99, to be
repurchased at $347,536,934 on 3/1/99, collateralized by U.S. Treasury Nts.,
4.625%-6.25%, 11/30/00-2/15/06, with a value of $95,213,352, U.S. Treasury
Bonds, 6.375%-11.25%, 2/15/15-8/15/27, with a value of $175,634,801, and U.S.
Treasury Bills, 8/26/99, with a value of $84,862,872 (Cost $347,400,000) 347,400,000 347,400,000
- ------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $3,153,387,601) 99.8% 4,034,786,741
- ------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.2 9,776,329
------------ --------------
Net Assets 100.0% $4,044,563,070
============ ==============
</TABLE>
1. Non-income producing security.
2. Identifies issues considered to be illiquid or restricted--See Note 5 of
Notes to Financial Statements.
3. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, face amount disclosed represents total underlying
principal.
4. Interest or dividend is paid in kind.
5. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $143,195,229 or 3.54% of the Fund's net
assets as of February 28, 1999.
6. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
AUD--Australian Dollar
CAD--Canadian Dollar
ZAR--South African Rand
7. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
8. Represents the current interest rate for a variable rate security.
9. When-issued security to be delivered and settled after February 28, 1999.
10. Short-term notes are generally traded on a discount basis; the interest rate
is the discount rate received by the Fund at the time of purchase.
See accompanying Notes to Financial Statements.
17 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Statement of Assets and Liabilities February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
<S> <C>
Assets
Investments, at value (cost $3,153,387,601) -- see
accompanying statement $4,034,786,741
- --------------------------------------------------------------------------------------
Cash 3,915,790
- --------------------------------------------------------------------------------------
Receivables and other assets:
Interest and dividends 14,743,953
Investments sold 8,414,678
Shares of beneficial interest sold 2,885,765
Other 174,170
--------------
Total assets 4,064,921,097
- --------------------------------------------------------------------------------------
Liabilities
Payables and other liabilities:
Investments purchased 14,630,442
Shares of beneficial interest redeemed 3,811,513
Distribution and service plan fees 1,395,775
Shareholder reports 236,140
Trustees' compensation 70,269
Custodian fees 47,344
Other 166,544
--------------
Total liabilities 20,358,027
- --------------------------------------------------------------------------------------
Net Assets $4,044,563,070
==============
- --------------------------------------------------------------------------------------
Composition of Net Assets
Paid-in capital $2,998,521,888
- --------------------------------------------------------------------------------------
Undistributed net investment income 28,612,421
- --------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 136,026,385
- --------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 881,402,376
--------------
Net assets $4,044,563,070
==============
</TABLE>
18 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Shares:
<S> <C>
Net asset value and redemption price per share (based on net assets of
$3,166,156,636 and 227,120,262 shares of beneficial interest outstanding) $13.94
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering price) $14.79
- -------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $756,934,642 and
54,778,641 shares of beneficial interest outstanding) $13.82
- -------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $121,471,792 and
8,795,545 shares of beneficial interest outstanding) $13.81
</TABLE>
See accompanying Notes to Financial Statements.
19 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Six Months Ended February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Interest $ 48,508,460
- ----------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $10,607) 39,556,810
------------
Total income 88,065,270
- ----------------------------------------------------------------------------------
Expenses
Management fees--Note 4 10,232,905
- ----------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 3,216,467
Class B 3,578,655
Class C 555,292
- ----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 1,987,759
- ----------------------------------------------------------------------------------
Shareholder reports 422,896
- ----------------------------------------------------------------------------------
Registration and filing fees 171,606
- ----------------------------------------------------------------------------------
Trustees' compensation 106,097
- ----------------------------------------------------------------------------------
Custodian fees and expenses 77,593
- ----------------------------------------------------------------------------------
Legal, auditing and other professional fees 44,010
- ----------------------------------------------------------------------------------
Insurance expenses 13,282
- ----------------------------------------------------------------------------------
Other 124,365
-----------
Total expenses 20,530,927
Less expenses paid indirectly--Note 4 (10,544)
-----------
Net expenses 20,520,383
- ----------------------------------------------------------------------------------
Net Investment Income 67,544,887
- ----------------------------------------------------------------------------------
Realized and Unrealized Gain
Net realized gain on:
Investments 247,855,011
Foreign currency transactions 2,720
-----------
Net realized gain 247,857,731
- ----------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 102,264,675
Translation of assets and liabilities denominated in
foreign currencies 2,975,756
-----------
Net change 105,240,431
-----------
Net realized and unrealized gain 353,098,162
- ----------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $420,643,049
============
</TABLE>
See accompanying Notes to Financial Statements.
20 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
February 28, 1999 Year Ended
(Unaudited) August 31, 1998
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 67,544,887 $ 120,767,267
- ----------------------------------------------------------------------------------------
Net realized gain 247,857,731 232,056,916
- ----------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 105,240,431 (176,538,903)
-------------- --------------
Net increase in net assets resulting from operations 420,643,049 176,285,280
- ----------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A (52,787,010) (99,500,973)
Class B (9,123,735) (13,977,579)
Class C (1,411,562) (1,859,540)
- ----------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (245,590,376) (154,035,012)
Class B (57,343,992) (26,561,696)
Class C (8,929,661) (3,223,836)
- ----------------------------------------------------------------------------------------
Beneficial Interest Transactions
Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 237,582,800 253,723,804
Class B 116,271,843 234,393,363
Class C 26,009,721 52,477,300
- ----------------------------------------------------------------------------------------
Net Assets
Total increase 425,321,077 417,721,111
- ----------------------------------------------------------------------------------------
Beginning of period 3,619,241,993 3,201,520,882
-------------- --------------
End of period (including undistributed net investment
income of $28,612,421 and $24,389,841, respectively) $4,044,563,070 $3,619,241,993
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
21 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
-----------------------------------------------
Six Months
Ended
February 28,
1999 Year Ended August 31,
(Unaudited) 1998 1997 1996(2)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $13.75 $14.12 $11.36 $11.39
- ------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .25 .50 .47 .09
Net realized and unrealized gain (loss) 1.36 .41 3.17 (.12)
------ ------ ------ ------
Total income (loss) from investment
operations 1.61 .91 3.64 (.03)
- ------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.25) (.49) (.48) --
Dividends in excess of net investment
income -- -- -- --
Distributions from net realized gain (1.17) (.79) (.40) --
Distributions in excess of net realized gain -- -- -- --
------ ------ ------ ------
Total dividends and distributions
to shareholders (1.42) (1.28) (.88) --
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $13.94 $13.75 $14.12 $11.36
====== ====== ====== ======
- ------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(4) 11.67% 6.17% 33.39% (0.26)%
- ------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in millions) $3,166 $2,889 $2,722 $2,110
- ------------------------------------------------------------------------------------------------
Average net assets (in millions) $3,145 $3,072 $2,446 $2,109
- ------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.59%(5) 3.47% 3.97% 3.28%(5)
Expenses(6) 0.87%(5) 0.87% 0.88% 0.94%(5)
- ------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 13% 18% 24% 14%
</TABLE>
1. For the period from November 1, 1995 (inception of offering) to June 30,
1996.
2. For the two months ended August 31, 1996. The Fund changed its fiscal year
end from June 30 to August 31.
3. For the period from August 17, 1993 (inception of offering) to June 30, 1994.
4. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
22 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Class B
----------------------------------- --------------------------------------
Six Months
Ended
February 28,
Year Ended June 30, 1999 Year Ended August 31,
1996 1995 1994 (Unaudited) 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $10.25 $9.44 $10.01 $13.63 $14.01 $11.29
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .50 .50 .47 .20 .39 .37
Net realized and unrealized gain (loss) 1.36 .92 (.39) 1.35 .40 3.13
------ ----- ------ ------ ------ ------
Total income (loss) from investment
operations 1.86 1.42 .08 1.55 .79 3.50
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.48) (.48) (.47) (.19) (.38) (.38)
Dividends in excess of net investment
income -- -- (.01) -- -- --
Distributions from net realized gain (.24) (.13) (.12) (1.17) (.79) (.40)
Distributions in excess of net realized gain -- -- (.05) -- -- --
------ ----- ------ ------ ------ ------
Total dividends and distributions
to shareholders (.72) (.61) (.65) (1.36) (1.17) (.78)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.39 $10.25 $9.44 $13.82 $13.63 $14.01
====== ====== ===== ====== ====== ======
- --------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(4) 18.61% 15.66% 0.65% 11.30% 5.32% 32.17%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in millions) $2,141 $1,893 $1,773 $757 $635 $431
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $2,054 $1,798 $1,832 $722 $575 $344
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.51% 5.15% 4.72% 2.79%(5) 2.68% 3.16%
Expenses(6) 0.89% 0.96% 0.90% 1.67%(5) 1.67% 1.69%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 43% 46% 30% 13% 18% 24%
</TABLE>
5. Annualized.
6. Beginning in fiscal 1995, the expense ratio reflects the effect of gross
expenses paid indirectly by the Fund. Prior year expense ratios have not been
adjusted.
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended February 28, 1999, were $390,413,443 and $734,707,028, respectively.
23 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (Continuied)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B (Continued)
--------------------------------
Year
Ended
August 31, Year Ended June 30,
1996(2) 1996 1995
- -------------------------------------------------------------------------------
Per Share Operating Data
<S> <C> <C> <C>
Net asset value, beginning of period $11.33 $10.21 $ 9.40
- -------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .07 .41 .43
Net realized and unrealized gain (loss) (.11) 1.35 .91
------ ------ ------
Total income (loss) from investment
operations (.04) 1.76 1.34
- -------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income -- (.40) (.40)
Dividends in excess of net investment income -- -- --
Distributions from net realized gain -- (.24) (.13)
------ ------ ------
Distributions in excess of net realized gain -- -- --
Total dividends and distributions
to shareholders -- (.64) (.53)
- -------------------------------------------------------------------------------
Net asset value, end of period $11.29 $11.33 $10.21
====== ====== ======
- -------------------------------------------------------------------------------
Total Return, at Net Asset Value(4) (0.35)% 17.58% 14.87%
- -------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in millions) $260 $252 $161
- -------------------------------------------------------------------------------
Average net assets (in millions) $255 $208 $122
- -------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.48%(5) 3.68% 4.34%
Expenses(6) 1.76%(5) 1.72% 1.79%
- -------------------------------------------------------------------------------
Portfolio turnover rate(7) 14% 43% 46%
</TABLE>
1. For the period from November 1, 1995 (inception of offering) to June 30,
1996.
2. For the two months ended August 31, 1996. The Fund changed its fiscal year
end from June 30 to August 31.
3. For the period from August 17, 1993 (inception of offering) to June 30, 1994.
4. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
24 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Class C
---------------------------------------------------------------------
Six Months
Ended Period
February 28, Ended
1999 Year Ended Agust 31, June 30,
1994(3) (Unaudited) 1998 1997 1996(2) 1996(1)
- --------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.22 $13.63 $14.02 $11.30 $11.35 $10.76
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .36 .20 .39 .40 .07 .28
Net realized and unrealized gain (loss) (.58) 1.34 .40 3.12 (.12) .88
------ ------ ------ ------ ------ ------
Total income (loss) from investment
operations (.22) 1.54 .79 3.52 (.05) 1.16
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.42) (.19) (.39) (.40) -- (.33)
Dividends in excess of net investment income (.01) -- -- -- -- --
Distributions from net realized gain (.12) (1.17) (.79) (.40) -- (.24)
Distributions in excess of net realized gain (.05) -- -- -- -- --
------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.60) (1.36) (1.18) (.80) -- (.57)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.40 $13.81 $13.63 $14.02 $11.30 $11.35
======= ====== ====== ====== ====== ======
- --------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(4) (2.35)% 11.24% 5.30% 32.31% (0.44)% 10.50%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in millions) $88 $121 $95 $48 $7 $6
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $47 $112 $77 $25 $7 $3
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.99%(5) 2.79%(5) 2.68% 3.15% 2.55%(5) 3.53%(5)
Expenses(6) 1.82%(5) 1.67%(5) 1.67% 1.69% 1.79%(5) 1.81%(5)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 30% 13% 18% 24% 14% 43%
</TABLE>
5. Annualized.
6. Beginning in fiscal 1995, the expense ratio reflects the effect of gross
expenses paid indirectly by the Fund. Prior year expense ratios have not been
adjusted.
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended February 28, 1999, were $390,413,443 and $734,707,028, respectively.
See accompanying Notes to Financial Statements.
<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. It invests in both equity and
debt securities. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). The Fund offers Class A, Class B and Class C shares. Class A shares
are sold with a front-end sales charge, except for purchases greater than $1
million. Class A, Class B and Class C shares may be subject to a contingent
deferred sales charge. All classes of shares have identical rights to earnings,
assets and voting privileges, except that each class has its own distribution
and/or service plan, expenses directly attributable to that class and exclusive
voting rights with respect to matters affecting that class. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of 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 foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
26 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, Gains and Losses. Income, expenses (other than
those attributable to a specific class), 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 the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of the distributions
made during the year from net investment income or net realized gains may differ
from its ultimate characterization for federal income tax purposes. Also, due to
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the fiscal year in which the income or realized gain
was recorded by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the life of
the respective securities, in accordance with federal income tax requirements.
Realized gains and losses on investments and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the same basis
used for federal income tax purposes. Dividends-in-kind are recognized as income
on the ex-dividend date at the current market value of the underlying security.
Interest on payment-in-kind debt instruments is accrued as income at the coupon
rate and a market adjustment is made periodically.
27 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)(Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Significant Accounting Policies (continued)
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 February 28, 1999 Year Ended August 31, 1998
---------------------------------- -----------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 13,217,459 $ 190,015,854 28,301,749 $ 425,894,349
Dividends and
distributions reinvested 20,023,559 281,505,246 16,366,250 238,084,133
Redeemed (16,282,730) (233,938,300) (27,270,231) (410,254,678)
------------ ------------ ----------- ------------
Net increase 16,958,288 $ 237,582,800 17,397,768 $ 253,723,804
============ ============ =========== ============
- ------------------------------------------------------------------------------------------------
Class B:
Sold 7,878,244 $ 112,577,914 17,875,704 $ 267,182,429
Dividends and
distributions reinvested 4,543,074 63,398,134 2,649,899 38,263,417
Redeemed (4,201,571) (59,704,205) (4,755,561) (71,052,483)
------------ ------------ ----------- ------------
Net increase 8,219,747 $ 116,271,843 15,770,042 $ 234,393,363
============ ============ =========== ============
- -----------------------------------------------------------------------------------------------
Class C:
Sold 2,233,044 $ 32,006,795 4,117,941 $ 61,626,191
Dividends and
distributions reinvested 721,485 10,060,833 342,326 4,949,150
Redeemed (1,128,860) (16,057,907) (941,057) (14,098,041)
------------ ------------ ----------- ------------
Net increase 1,825,669 $ 26,009,721 3,519,210 $ 52,477,300
============ ============ =========== ============
- -----------------------------------------------------------------------------------------------
</TABLE>
3. Unrealized Gains and Losses on Investments
As of February 28, 1999, net unrealized appreciation on investments of
$881,399,140 was composed of gross appreciation of $974,831,427, and gross
depreciation of $93,432,287.
28 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. Management Fees and Other Transactions with Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 0.75% of the first
$100 million of average annual net assets of the Fund, 0.70% of the next $100
million, 0.65% of the next $100 million, 0.60% of the next $100 million, 0.55%
of the next $100 million, and 0.50% of average annual net assets in excess of
$500 million. The Fund's management fee for the six months ended February 28,
1999, was 0.52% of average annual net assets for each class of shares.
For the six months ended February 28, 1999, commissions (sales
charges paid by investors) on sales of Class A shares totaled $3,094,740, of
which $888,478 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 A, Class B and Class C shares totaled $402,280,$3,344,025 and
$245,111, respectively. Amounts paid to an affiliated broker/dealer for Class B
and Class C shares were $343,749 and $7,217, respectively. During the six months
ended February 28, 1999, OFDI received contingent deferred sales charges of
$3,120, $606,264 and $22,591, respectively, upon redemption of Class A, Class B
and Class C 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 other Oppenheimer
funds. OFS's total costs of providing such services are allocated ratably to
these funds.
Expenses paid indirectly represent a reduction of custodian fees
for earnings on cash balances maintained by the Fund.
The Fund has adopted a Service Plan for Class A shares to
reimburse OFDI for a portion of its costs incurred in connection with the
personal service and maintenance of shareholder accounts that hold Class A
shares. Reimbursement is made quarterly at an annual rate that may not exceed
0.25% of the average annual net assets of Class A shares of the Fund. OFDI uses
the service fee to reimburse brokers, dealers, banks and other financial
institutions quarterly for providing personal service and maintenance of
accounts of their customers that hold Class A shares. During the six months
ended February 28, 1999, OFDI paid $237,462 to an affiliated broker/dealer as
reimbursement for Class A personal service and maintenance expenses.
29 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to financial Statements (Unaudited)(Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. Management Fees and Other Transactions with Affiliates (continued)
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its costs in distributing Class B and Class C
shares and servicing accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B and Class C shares for its
services rendered in distributing Class B and Class C shares. OFDI also receives
a service fee of 0.25% per year to compensate dealers for providing personal
services for accounts that hold Class B and Class C shares. Each fee is computed
on the average annual net assets of Class B or Class C shares, determined as of
the close of each regular business day. During the six months ended February 28,
1999, OFDI paid $50,559 and $8,394, respectively, to an affiliated broker/dealer
as compensation for Class B and Class C personal service and maintenance
expenses and retained $2,963,897 and $404,645, respectively, as compensation for
Class B and Class C sales commissions and service fee advances, as well as
financing costs. If either Plan is terminated by the Fund, the Board of Trustees
may allow the Fund to continue payments of the asset-based sales charge to OFDI
for distributing shares before the Plan was terminated. As of February 28, 1999,
OFDI had incurred excess distribution and servicing costs of $16,864,308 for
Class B and $1,236,763 for Class C.
- --------------------------------------------------------------------------------
5. Illiquid and Restricted Securities
As of February 28, 1999, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may be considered
illiquid if it lacks a readily available market or if its valuation has not
changed for a certain period of time. The Fund intends to invest no more than
10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid or restricted securities
subject to this limitation as of February 28, 1999, was $42,034,168, which
represents 1.04% of the Fund's net assets.
30 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the six months
ended February 28, 1999.
- --------------------------------------------------------------------------------
7. Subsequent Event
On April 1, 1999, the Fund's name will change to Oppenheimer Capital Income
Fund.
31 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer Equity Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Officers and Trustees James C. Swain, Chairman and Chief Executive Officer
Bridget A. Macaskill, Trustee and President
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
George C. Bowen, Trustee, Vice President,
Treasurer and Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
John P. Doney, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
- -------------------------------------------------------------------------------
Investment Advisor OppenheimerFunds, Inc.
- -------------------------------------------------------------------------------
Distributor OppenheimerFunds Distributor, Inc.
- --------------------------------------------------------------------------------
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
- --------------------------------------------------------------------------------
Custodian of The Bank of New York
Portfolio Securities
- --------------------------------------------------------------------------------
Independent Auditors Deloitte & Touche LLP
- --------------------------------------------------------------------------------
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
The financial statements included herein have been
taken from the records of the Fund without examination
of the independent auditors. This is a copy of a report
to shareholders of Oppenheimer 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, are not insured by the FDIC or any other agency,
and involve investment risks, including the possible
loss of the principal amount invested.
32 Oppenheimer Equity Income Fund
<PAGE>
- --------------------------------------------------------------------------------
OppenheimerFunds Family
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Real Asset Funds
- ----------------------------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
- -----------------------------------------------------------------------------------------------------------
Global Stock Funds
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Developing Markets Fund International Growth Fund Global Growth & Income Fund
International Small Global Fund Europe Fund
Company Fund Quest Global Value Fund
- -----------------------------------------------------------------------------------------------------------
Stock Funds
- -----------------------------------------------------------------------------------------------------------
Enterprise Fund MidCap Fund Growth Fund
Discovery Fund Capital Appreciation Fund Large Cap Growth Fund
Quest Small Cap Value Fund Quest Capital Value Fund Quest Value Fund
Disciplined Value Fund
- -----------------------------------------------------------------------------------------------------------
Stock & Bond Funds
- -----------------------------------------------------------------------------------------------------------
Main Street Growth & Total Return Fund Multiple Strategies Fund
Income Fund/1/ Quest Balanced Disciplined Allocation Fund
Quest Opportunity Value Fund Convertible Securities Fund
Value Fund Capital Income Fund/2/
- -----------------------------------------------------------------------------------------------------------
Taxable Bond Funds
- -----------------------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
World Bond Fund Strategic Income Fund Limited-Term Government Fund
High Yield Fund Bond Fund
- -----------------------------------------------------------------------------------------------------------
Municipal Bond Funds
- -----------------------------------------------------------------------------------------------------------
California Municipal Fund/3/ Pennsylvania Municipal Fund/3/ Rochester Division:
Florida Municipal Fund/3/ Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund/3/ Insured Municipal Fund Limited Term New York
New York Municipal Fund/3/ Intermediate Municipal Fund Municipal Fund
- -----------------------------------------------------------------------------------------------------------
Money Market Funds/4/
- -----------------------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
</TABLE>
1. On 12/22/98, the Fund's name was changed from "Main Street Income & Growth
Fund."
2. On 4/1/99, the Fund's name was changed from "Equity Income Fund."
3. Available only to investors in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds may seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in these funds. Oppenheimer
funds are distributed by OppenheimerFunds Distributor, Inc., Two World Trade
Center, New York, NY 10048-0203.
(C) Copyright 1999 OppenheimerFunds, Inc. All rights reserved.
33 Oppenheimer Equity Income Fund
<PAGE>
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<PAGE>
This page is intentionally left blank
<PAGE>
<TABLE>
<CAPTION>
Information and services
---------------------------------------------------------------
<S> <C>
Internet
24-hr access to account As an Oppenheimer fund shareholder, you have some special
information. Online privileges. Whether it's automatic investment plans,
transactions now available informative newsletters and hotlines, or ready account
access, you can benefit from services designed to make
www.oppenheimerfunds.com investing simple.
General Information And when you need help, our Customer Service
Mon-Fri 8:30am-9pm ET Representatives are only a toll-free phone call away. They
Sat 10am-4pm ET can provide information about your account and handle
administrative requests. You can reach them at our General
1-800-525-7048 Information number.
Account Transactions When you want to make a transaction, you can do it easily
Mon-Fri 8:30am-9pm ET by calling our toll-free Telephone Transactions number or by
Sat 10am-4pm ET visiting our website. And, by enrolling in AccountLink, a
convenient service that "links" your Oppenheimer funds
1-800-852-8457 accounts and your bank checking or savings account, you can
use the Telephone Transactions number or website to make
investments.
PhoneLink For added convenience, you can get automated information
24-hr automated information with OppenheimerFunds PhoneLink service, available 24 hours
and automated transactions a day, 7 days a week. PhoneLink gives you access to a
variety of fund, account, and market information. Of course,
1-800-533-3310 you can always speak with a Customer Service Representative
during the General Information hours shown at the left.
Telecommunication Device
for the Deaf (TDD) You can count on us whenever you need assistance. That's
Mon-Fri 8:30am-6pm ET why the International Customer Service Association, an
independent, nonprofit organization made up of over 3,200
1-800-843-4461 customer service management professionals from around the
country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds OppenheimerFunds Services, with their Award of Excellence in
Information Hotline 1993.
24 hours a day, timely
and insightful messages So call us today, or visit us at our website at
on the economy and issues that www.oppenheimerfunds.com--we're here to help.
affect your investments
1-800-835-3104
</TABLE>
RS0300.001.0299 April 29, 1999 [LOGO OF OPPENHEIMERFUNDS APPEARS HERE]
