-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, GUAGm5sgRj4KtaXrpTQmGCVfUyUQVHR8QjrcYwxEJn8zsZMwpRBuppL/cIQ4kFJY LmNn9LgZgZpXaeR6NQMvew== 0000912057-94-002914.txt : 19940901 0000912057-94-002914.hdr.sgml : 19940901 ACCESSION NUMBER: 0000912057-94-002914 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940831 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER EQUITY INCOME FUND INC CENTRAL INDEX KEY: 0000045156 STANDARD INDUSTRIAL CLASSIFICATION: 0000 IRS NUMBER: 840578481 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-01512 FILM NUMBER: 94547504 BUSINESS ADDRESS: STREET 1: 3410 S GALENA ST CITY: DENVER STATE: CO ZIP: 80231 BUSINESS PHONE: 3036713200 FORMER COMPANY: FORMER CONFORMED NAME: CENTENNIAL EQUITY INCOME FUND INC DATE OF NAME CHANGE: 19830428 FORMER COMPANY: FORMER CONFORMED NAME: HAMILTON INCOME FUND INC DATE OF NAME CHANGE: 19811115 FORMER COMPANY: FORMER CONFORMED NAME: HAMILTON MILE HI FUND INC DATE OF NAME CHANGE: 19701016 N-30D 1 N-30D OPPENHEIMER EQUITY INCOME FUND ANNUAL REPORT JUNE 30, 1994 [LOGO] "I NEED INCOME AND GROWTH FROM MY INVESTMENT, BUT NOT WITH A LOT OF RISK. "THIS FUND INVESTS IN A DIVERSIFIED PORTFOLIO OF STOCKS AND BONDS. THAT MEANS I'VE RECEIVED CURRENT INCOME FOR THE THINGS I NEED TODAY, AND GROWTH FOR THE THINGS I'LL WANT TOMORROW." FUND FACTS FACTS EVERY SHAREHOLDER SHOULD KNOW ABOUT OPPENHEIMER EQUITY INCOME FUND IN THIS REPORT: ANSWERS TO THREE TIMELY QUESTIONS YOU SHOULD ASK YOUR FUND'S MANAGERS. - - DID THE FEDERAL RESERVE'S MOVES TO RAISE SHORT-TERM INTEREST RATES AFFECT THE FUND'S PERFORMANCE OR INVESTMENT STRATEGY? - - WHY IS THE FUND PUTTING SO MUCH EMPHASIS ON CONVERTIBLE SECURITIES? - - WHAT'S DRIVING THE FUND'S BUYING AND SELLING IN TODAY'S MARKETS? 1 The Fund's objectives are primarily to seek as much current income as prudent investing will allow, and secondarily to preserve capital while providing an opportunity for capital appreciation. 2 Total return at net asset value for Class A shares was 0.65% for the 12 months ended June 30, 1994. For Class B shares, total return at net asset value from inception of the Class on August 17, 1993 to June 30, 1994 was -2.35%.(1) 3 Average annual total returns for Class A shares for the 1-, 5-, and 10-year periods ended June 30, 1994 were -5.14%, 6.67%, and 12.58%, respectively. For Class B shares, total return since inception on August 17, 1993 was -7.23%.(2) 4 In recognition of its excellent performance, the Fund's Class A shares were awarded STAR STAR STAR STAR from Morningstar, Inc. on June 30, 1994. The Fund was ranked among 1,052 equity funds.(3) 5 "There's more to successful investing than going after gains in rising markets. It's just as important not to give gains back when the markets turn down. That's where the Fund's position in convertible securities comes in. By building our position in convertibles, we've added strong current income and good capital-gains potential to the portfolio, while holding the Fund's overall portfolio volatility to below-market levels." PORTFOLIO MANAGER JOHN DONEY, JUNE 30, 1994 1. Based on the change in net asset value for the periods shown, without deducting any sales charges. deducting the maximum initial sales charge of 5.75% on 6/30/93, 6/30/89, 6/30/84, and 6/30/79 respectively, held until 6/30/94. The total return for Class B shares was based on a hypothetical investment held until 6/30/94, after deducting the contingent deferred sales charge of 5%. 3. Source: Morningstar Mutual Funds, 6/30/94. Morningstar, Inc., an independent mutual fund monitoring service, produces proprietary monthly rankings of mutual funds in broad investment categories (equity, taxable bond, tax-exempt bond, or "hybrid") that reflect historical risk-adjusted performance based on a fund's 3-, 5-, and 10-year average annual total returns in excess of 90-day U.S. Treasury bill returns, after considering expenses and sales charges. Risk is calculated by a factor that reflects fund performance below 3-month U.S. Treasury bill returns. Risk and returns are combined to produce star rankings, reflecting risk-adjusted performance relative to the average fund in a category.The highest ranking is 5 stars, the lowest, 1 star. Within each category, 10% of funds received 5 stars, 22.5% received 4 stars. The Fund was ranked among 1,052 equity funds. Rankings are subject to change. The Fund's Class A and Class B shares have the same portfolio. 2 Oppenheimer Equity Income Fund REPORT TO SHAREHOLDERS OUTSTANDING TOTAL RETURN AVERAGE ANNUAL TOTAL RETURN FOR THE 15-YEAR PERIOD ENDED 6/30/94 OPPENHEIMER EQUITY INCOME FUND A5 14.20% LIPPER EQUITY INCOME FUNDS AVERAGE6 13.20% The conservative, disciplined investment philosophy, which has earned Oppenheimer Equity Income Fund's Class A shares a STAR STAR STAR STAR ranking from Morningstar, Inc., was once again rewarded for the year ended June 30, 1994.(4) As noted in the Fund's last report, your managers had been taking a cautious view of the markets since the fall of 1993. As the stock market moved to record highs and interest rates fell to post-war lows, the Fund established a significant position in convertible securities, which hold their value better than common stocks during market downturns, while providing an attractive level of current income. As 1994 opened, this approach paid off. Concerned about future inflation in the strengthening U.S. economy, the Federal Reserve raised short-term interest rates four times between early February and mid-May. As interest rates rose, the bond markets declined and the stock market followed, but with its conservative posture, your Fund held its value well over the entire period. At this writing, the economy seems to be growing at a gradual pace, and concerns over inflation have somewhat subsided. Nonetheless, uncertainties remain, and your managers continue to hold to a steady, conservative course. In recent weeks, your managers added further to the Fund's convertible position, buying shares in companies including U.S. Surgical, Westinghouse, of the portfolio, they continued to emphasize financial services firms - notably regional banks - whose stocks have performed well despite the stock market's recent volatility. Your managers also used periods of market strength to take profits in several issues that performed well in the past, including Santa Fe Pacific, Union Pacific, General Motors, Baker Hughes, Atlantic Richfield, and MCI. When the markets weakened, the proceeds were used to buy shares in companies with promising appreciation prospects - notably Moore Corporation and AMP, Inc.- at attractive prices. Looking ahead, the Fund's future appears bright. While there continues to be some uncertainty on the investment horizon, the economy continues to grow at a modest, sustainable pace, and inflation remains well under control - precisely the conditions that have produced good investment gains in the past. We appreciate your trust in Oppenheimer Equity Income Fund, and we look forward to continuing to help you meet your investment goals. James C. Swain Jon S. Fossel Chairman, Oppenheimer Equity President, Oppenheimer Equity Income Fund Income Fund July 22, 1994 4. See footnote 3, page 2. 5. See footnote 2, page 2. 6. Source: Lipper Analytical Services, Inc., an independent mutual fund monitoring service, 6/30/94. The Lipper average for the 15-year period ended 6/30/94 was for 18 equity income funds. This average is shown for comparative purposes only. Lipper performance rankings do not take sales charges into consideration. All figures assume reinvestment of dividends and capital gains distributions. Past performance is not indicative of future results. Investment return and principal value on an investment in the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. 3 Oppenheimer Equity Income Fund - ------ Statement of Investments June 30, 1994 Face Market Value Amount See Note 1 - ------ Repurchase Agreements--11.8% - ------ Repurchase agreement with First Chicago Capital Markets, 4.22%, dated 6/30/94, to be repurchased at $220,325,789 on 7/1/94, collateralized by U.S. Treasury Nts., 3.875%--9.25%, 12/31/94--11/30/98, with a value of $160,145,242 and by U.S. Treasury Bills, 0%, 6/29/95, with a value of $64,643,620 (Cost $220,300,000) $220,300,000 $220,300,000 - ------ Indexed Instruments--0.2% - ------ Citibank 17.30% CD, 7/29/94(7) 1,420,300,000(4) 3,397,956 (Cost $3,516,663) - ------ Government Obligations--11.4% - ------ Argentina (Republic of): Bonds, Bonos de Consolidacion de Deudas: Series I, 4.375%, 4/1/01(3) (6) 2,842,250(4) 1,566,986 Series I, 4.375%, 4/1/01(3) (6) 4,263,375(4) 2,929,386 Par Bonds, 3.70%, 3/31/23(5) 8,778,700(4) 4,813,469 - ------ Banco Nacional de Comercio Exterior SNC International Finance BV: 9.875% Bonds, 6/24/96 23,150,000 23,844,500 8% Gtd. Matador Bonds, 8/5/03(2) 2,000,000 1,700,000 - ------ Brazil (Federal Republic of) Interest Due and Unpaid Bonds, 4.31%, 1/1/01(3) 4,950,000 3,446,438 - ------ Canada (Government of) Bonds, Series H62, 9.25%, 10/1/96 55,800,000(4) 40,935,116 Ontario Hydro (Province of) Canada Gtd. Debs., 10.875%, 1/8/96 16,000,000(4) 11,979,429 Quebec, Canada (Province of) Debs., 10.25%, 4/7/98 10,000,000(4) 7,440,998 - ------ South Australia (Government of) Bonds, 9%, 9/2/23 3,000,000(4) 2,048,105 - ------ Spain (Kingdom of): Bonds, 11.45%, 8/30/98 750,000,000(4) 5,968,620 Gtd. Bonds, Bonos y Obligacion del Estado, 12.25%, 3/25/00 250,000,000(4) 2,044,536 - ------ Treasury Corp. of Victoria Gtd. Sr. Nts., 8.25%, 10/15/03 35,000,000(4) 22,730,937 - ------ U.S. Treasury Nts., 7.875%, 6/30/96 14,200,000 14,661,500 - ------ U.S. Treasury STRIPS, Series 50, 0%, 2/15/14 300,000,000 64,355,392 - ------ Total Government Obligations (Cost $230,834,737) 212,273,224 - ------ Corporate Bonds and Notes--15.0% - ------ American Medical International, Inc., 11% Sr. Nts., 10/15/00 4,000,000 4,240,000 - ------ Auburn Hills Trust, 12.375% Gtd. Exch. Ctfs., 5/1/20(3) 5,000,000 6,800,000 - ------ Banco Nacional de Mexico SA, 7% Exch. Sub. Debs., 12/15/99(2) 15,000,000 16,050,000 - ------ Banco Nacional de Obras y Servicios Publicos S.A., 10.75% Notes, 8/16/96 6,000,000 6,240,000 - ------ Bank of Boston Corp., 7.75% Cv. Sub. Debs., 6/15/11 9,500,000 10,497,500 - ------ Bank of New York Co., Inc. (The), 7.50% Cv. Sub. Debs., 8/15/01 5,000,000 7,481,250 - ------ Box Energy Corp., 8.25% Cv. Sub. Nts., 12/1/02 5,000,000 5,212,500 - ------ Carter Hawley Hale Stores, Inc., 6.25% Sr. Sub. Nts., 12/31/00 7,800,000 7,176,000 - ------ Chrysler Financial Corp., 9% Nts., 10/15/94 2,000,000 2,018,840 - ------ Coastal Corp., 11.75% Sr. Debs., 6/15/06 8,946,000 10,075,433 - ------ Comcast Corp., 10.25% Sr. Sub. Debs., 10/15/01 8,000,000 8,000,000 - ------ Delta Airlines, Inc., 3.23% Cv. Sub. Nts., 6/15/03 11,000,000 7,576,250 - ------ Freeport-McMoRan, Inc., 6.55% Cv. Sub. Nts., 1/15/01 10,120,000 9,057,400 4 Oppenheimer Equity Income Fund - ------ Face Market Value Amount See Note 1 - ------ Corporate Bonds and Notes (continued) IMC Fertilizer Group, Inc., 6.25% Cv. Sub. Nts., 12/1/01 $5,500,000 $5,142,500 - ------ Imo Industries, Inc., 12.25% Sr. Sub. Debs., 8/15/97 9,684,000 9,514,530 - ------ Inco Ltd.: 5.75% Cv. Debs., 7/1/04 9,700,000 9,918,250 7.75% Cv. Debs., 3/15/16 9,800,000 9,849,000 - ------ Intelcom Group, Inc., 7% Cv. Sub. Nts., 10/30/98(2) (6) 5,175,000 - ------ Kroger Co. (The): 6.375% Cv. Jr. Sub. Nts., 12/1/99 10,000,000 13,100,000 8.25% Cv. Jr. Sub. Debs., 4/15/11(2) 14,750,000 15,118,750 - ------ Lend Lease Finance International Ltd., 4.75% Gtd. Cv. Bonds, 6/1/03(2) 4,000,000 4,290,000 - ------ MagneTek, Inc., 10.75% Sr. Sub. Debs., 11/15/98 3,000,000 3,082,500 - ------ Merrill Lynch & Co., Inc. Equity Participation Securities, 3.06%, 6/30/99 10,000,000 9,575,000 - ------ New South Wales State Bank, 9.25% Bonds, 2/3/18 9,900,000(4) 6,889,854 - ------ Oryx Energy Co., 7.50% Cv. Sub. Debs., 5/15/14 7,000,000 5,976,250 - ------ Reliance Group Holdings, Inc., 9.75% Sr. Sub. Debs., 11/15/03 4,250,000 3,867,500 - ------ RJR Nabisco, Inc., 10.50% Sr. Nts., 4/15/98 14,000,000 14,853,802 - ------ Rohr, Inc., 7.75% Cv. Sub. Nts., 5/15/04 5,000,000 5,875,000 - ------ Rowan Cos., Inc., 11.875% Sr. Nts., 12/1/01 7,000,000 7,525,000 - ------ Stone Container Corp., 8.875% Cv. Sr. Sub. Nts., 7/15/00 (2) 5,000,000 7,668,750 - ------ Thomas Nelson, Inc., 5.75% Cv. Nts., 11/30/99(2) 5,000,000 5,387,500 - ------ Time Warner, Inc.: 0% Liq. Yld. Opt. Nts., 12/17/12 30,000,000 9,037,500 8.75% Cv. Sub. Debs., 1/10/15 3,179,000 3,190,921 - ------ Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(2) 2,500,000 2,256,250 - ------ Turner Broadcasting System, Inc., 12% Sr. Sub. Debs., 10/15/01 8,000,000 8,460,000 - ------ U.S. Home Corp., 4.875% Cv. Sub. Debs., 11/1/05 4,350,000 2,816,625 - ------ Viacom International, Inc., 10.25% Sr. Sub. Nts., 9/15/01 12,000,000 12,150,000 - ------ Total Corporate Bonds and Notes (Cost $268,841,201) 278,587,114 Shares - ------ Common Stocks--41.8% - ------ Basic Materials--3.0% - ------ Aluminum--0.3% Reynolds Metals Co. 100,000 4,800,000 - ------ Chemicals--1.6% Goodrich (B.F.) Co. (The) 200,000 8,700,000 - ------ Imperial Chemical Industries PLC, ADS 225,000 10,687,500 - ------ Lyondell Petrochemical Co. 420,600 10,357,275 - ------ 29,744,775 - ------ Paper and Forest Products--1.0% Union Camp Corp. 200,000 9,075,000 - ------ Weyerhaeuser Co. 250,000 10,000,000 - ------ 19,075,000 - ------ Steel--0.1% Armco, Inc.(1) 360,200 2,026,125 - ------ Consumer Cyclicals--3.2% - ------ Automobiles--1.5% General Motors Corp. 537,626 27,015,707 - ------ Household Furnishings and Appliances--0.5% Maytag Corp. 500,000 9,250,000 - ------ Publishing--0.4% Dun & Bradstreet Corp. (The) 151,000 8,380,500 5 Oppenheimer Equity Income Fund - ------ Statement of Investments (Continued) Market Value Shares See Note 1 - ------ Retail Stores: General Merchandise Chains--0.8% Sears, Roebuck and Co. 300,000 $14,400,000 - ------ Consumer Non-Cyclicals--2.9% - ------ Healthcare: Diversified--1.2% - ------ Warner-Lambert Co. 202,000 13,332,000 - ------ 21,907,000 - ------ Tobacco--1.7% Philip Morris Cos., Inc. 600,000 30,900,000 - ------ Energy--3.5% - ------ Oil: Integrated International--3.1% Mobil Corp. 176,500 14,406,812 - ------ Royal Dutch Petroleum Co. 201,500 21,081,937 - ------ Texaco, Inc. 251,500 15,184,313 - ------ YPF Sociedad Anonima, Sponsored ADR 300,000 7,162,500 - ------ 57,835,562 - ------ Oil Well Services and Equipment--0.4% Baker Hughes, Inc. 389,000 7,974,500 - ------ Financial--19.2% - ------ Financial Services: Miscellaneous--2.1% American Express Co. 700,000 18,025,000 - ------ Bear Stearns Cos., Inc. (The) 500,000 8,500,003 - ------ Dean Witter, Discover & Co. 156,124 5,854,650 - ------ Lehman Brothers Holdings, Inc. 140,000 2,117,500 - ------ Merrill Lynch & Co., Inc. 111,000 3,885,000 - ------ 38,382,153 - ------ Insurance Brokers--0.7% Marsh & McLennan Cos., Inc. 151,500 12,631,312 - ------ Insurance: Life-- 0.6% Reliance Group Holdings, Inc. 2,000,000 10,750,000 - ------ Insurance: Multi-Line--0.3% Allstate Corp. 230,000 5,462,500 - ------ Insurance: Property and Casualty--1.8% Continental Corp. 275,000 4,262,500 - ------ General Re Corp. 101,000 11,009,000 - ------ SAFECO Corp. 200,000 11,125,000 - ------ St. Paul Cos., Inc. (The) 200,000 8,025,000 - ------ 34,421,500 - ------ Major Banks: Other--2.7% BankAmerica Corp. 500,000 22,875,000 - ------ Magna Group, Inc. 400,000 7,750,000 - ------ Mellon Bank Corp. 350,000 19,687,500 - ------ 50,312,500 - ------ Major Banks: Regional--6.9% Banc One Corp. 300,000 10,275,000 - ------ Crestar Financial Corp. 275,000 12,512,500 - ------ First Bank System, Inc. 300,000 10,950,000 - ------ First Fidelity Bancorporation 450,000 20,868,750 - ------ First Union Corp. 300,000 13,837,500 - ------ Huntington Bancshares, Inc. 419,375 10,641,641 - ------ KeyCorp 400,000 12,750,000 - ------ National City Corp. 700,000 19,162,500 - ------ Signet Banking Corp. 181,000 7,307,875 6 Oppenheimer Equity Income Fund - ------ Market Value Shares See Note 1 - ------ Major Banks: Regional (continued) U.S. Bancorp, Inc. 400,000 $10,350,000 - ------ 128,655,766 - ------ Money Center Banks--3.3% Bankers Trust New York Corp. 114,200 7,608,575 - ------ Chase Manhattan Corp. 700,000 26,775,000 - ------ Chemical Banking Corp. 700,000 26,950,000 - ------ 61,333,575 - ------ Savings and Loans/Holding Cos.--0.8% Fleet Financial Group, Inc. 400,000 15,100,000 - ------ Industrial--3.6% - ------ Conglomerates--1.2% Tenneco, Inc. 500,000 23,187,500 - ------ Electrical Equipment--0.7% AMP, Inc. 200,000 13,850,000 - ------ - ------ Transportation: Miscellaneous--0.7% Ryder Systems, Inc. 500,000 12,562,500 - ------ Technology--2.4% - ------ Aerospace/Defense--1.0% United Technologies Corp. 300,000 19,275,000 - ------ Electronics: Instrumentation--0.8% Tektronix, Inc. 500,000 14,125,000 - ------ Office Equipment and Supplies--0.6% Moore Corp. Ltd. 675,200 11,394,000 - ------ Utilities--4.0% - ------ Electric Cos.--3.3% American Electric Power Co., Inc. 454,000 12,825,500 - ------ Houston Industries, Inc. 378,500 12,348,562 - ------ Public Service Co. of Colorado 200,000 5,225,000 - ------ Public Service Enterprise Group, Inc. 604,000 15,704,000 - ------ Texas Utilities Co. 504,000 15,813,000 - ------ 61,916,062 - ------ Telephone--0.7% BCE, Inc. 403,900 13,076,263 - ------ Total Common Stocks (Cost $679,192,511) 777,462,550 - ------ Preferred Stocks--20.6% - ------ Alumax, Inc., $19.50 Cv., Series A 100,000 11,500,000 - ------ American Express Co., Debt Exchangeable for Common Stock of First Data Corp., 6.25%, 10/15/96 557,000 22,001,500 - ------ AMR Corp., $3.00 Cum. Cv. Depositary Shares, Series A(2) 350,000 15,487,500 - ------ Armco, Inc., $3.625 Cum. Cv. 200,000 10,300,000 - ------ Boise Cascade Corp., $1.58 Cum Cv., Series G 460,000 9,890,000 - ------ Bowater, 7% Preferred Redeemable Increased Dividend Equity Securities, Series B, $6.58 Cv., 1/1/98 95,000 2,315,625 - ------ Case Equipment Corp., Series A Cum. Cv.(2) 130,000 6,511,375 - ------ Chiles Offshore Corp., $1.50 Cv. 122,000 2,775,500 - ------ Chrysler Financial Corp., $4.625 Cv. Depositary Shares, Series A(2) 100,000 13,225,000 - ------ Citicorp: Cv. Depositary Shares, Series 13(2) 200,000 22,450,000 Preferred Equity Redemption Cumulative Stock, $1.217 Cv. Depositary Shares, Series 15, 11/30/95 500,000 9,812,500 7 Oppenheimer Equity Income Fund - ------ Statement of Investments (Continued) Market Value Shares See Note 1 - ------ Preferred Stocks (continued) Compania de Inversiones en Telecomunicaciones SA, Provisionally Redeemable Income Debt Exchangeable for Stock, 7%, 3/3/98(2) 165,000 $9,817,500 - ------ Cooper Industries, Inc., $1.60 Cv. Exch. 297,000 6,756,750 - ------ Cyprus Amax Minerals Co., $4.00 Cv., Series A 150,000 10,106,250 - ------ Delta Airlines, Inc., $3.50 Cv. Depositary Shares, Series C 182,000 8,235,500 - ------ First Chicago Corp., $2.875 Cum. Cv. Depositary Shares, Series B 135,000 6,800,625 - ------ Ford Motor Co., $4.20 Cum. Cv., Series A 150,000 14,550,000 - ------ Freeport-McMoRan, Inc., $4.375 Cv. Exch.(2) 200,000 7,500,000 - ------ James River Corp. of Virginia, Dividend Enhanced Convertible Stock 700,000 12,337,500 - ------ K Mart Corp., Preferred Equity Redeemable for Common Stock, - ------ LCI International, Inc., $1.25 Cv. 80,000 1,960,000 - ------ Occidental Petroleum Corp.: $3.00 Cv. 281,000 11,626,375 $3.875 Cum. Cv.(2) 400,000 19,725,000 - ------ Parker & Parsley Capital LLC., 6.25% Cum. Cv. Guaranteed Monthly Income Preferred Shares(2) 112,000 5,866,000 - ------ Reynolds Metals Co., 7% Preferred Redeemable Increased Dividend Equity Securities, $3.31 Cv., 12/31/97 160,000 7,980,000 - ------ RJR Nabisco Holdings Corp.: $6.50 Cv., Series C 3,115,000 20,636,875 Preferred Equity Redemption Cumulative Stock, $.835 Cum. Cv., Series C Depositary Shares 1,200,000 7,500,000 - ------ Salomon, Inc., 5.25% Hewlett-Packard Co. Common Equity-Linked Securities, 3/15/97 125,000 9,718,750 - ------ Santa Fe Energy Resources, Inc., Dividend Enhanced Convertible Stock, $.732 Cv., Series A 805,000 7,748,125 - ------ Sears, Roebuck and Co., Preferred Equity Redeemable for Common Stock, $3.75 Exch., Series A, Cv., 4/1/95 275,000 15,125,000 - ------ Transco Energy Co., $3.00 Cum. Cv., Series E(2) 147,000 7,092,750 - ------ UAL Corp., $6.25 Cv., Series A(2) 175,000 14,787,500 - ------ U.S. Surgical Corp., Dividend Enhanced Convertible Stock, $2.20(2) 550,000 13,337,500 - ------ Valero Energy Corp., Cv. 145,000 6,235,000 - ------ Washington Mutual Savings Bank, $6.00 Cv., Series D 96,800 9,171,800 - ------ Westinghouse Electric Corp., Participating Equity Preferred Shares, $12.125 Cv., Series C(2) 890,000 11,347,500 - ------ Total Preferred Stocks (Cost $364,266,696) 383,149,800 - ------ Total Investments, at Value (Cost $1,766,951,808) 100.8% 1,875,170,644 - ------ Liabilities in Excess of Other Assets (.8) (14,375,994) - ------ ------ Net Assets 100.0% $1,860,794,650 - ------ ------ - ------ ------ 1. Non-income producing security. 2. Restricted security--See Note 5 of Notes to Financial Statements. 3. Represents the current interest rate for a variable rate security. 4. Face amount is reported in foreign currency. 5. Represents the current interest rate for an increasing rate security. 6. Interest is paid in kind. 7. Indexed instrument for which the principal amount due at maturity is affected by the relative value of a foreign currency. See accompanying Notes to Financial Statements. 8 Oppenheimer Equity Income Fund - ------ Statement of Assets and Liabilities June 30, 1994 - ------ Assets Investments, at value (cost $1,766,951,808)--see accompanying statement $1,875,170,644 - ------ Receivables: Dividends and interest 12,901,758 Investments sold 9,173,491 Shares of beneficial interest sold 1,775,082 - ------ Other 85,909 - ------ Total assets 1,899,106,884 - ------ Liabilities Bank overdraft 6,811,592 - ------ Payables and other liabilities: Investments purchased 22,666,668 Distribution and service plan fees--Note 4 864,631 Other 1,575,078 - ------ Total liabilities 38,312,234 - ------ Net Assets $1,860,794,650 - ------ - ------ - ------ Composition of Net Assets Paid-in capital $1,733,061,217 - ------ Distributions in excess of net investment income (3,381,130) - ------ Accumulated net realized gain from investment and foreign currency transactions 22,864,901 - ------ Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 108,249,662 - ------ Net assets $1,860,794,650 - ------ - ------ - ------ Net Asset Value Per Share Class A Shares: Net asset value and redemption price per share (based on net assets of $1,772,944,207 and 187,840,921 shares of beneficial interest outstanding) $ 9.44 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $10.02 - ------ Class B shares: Net asset value, redemption price and offering price per share (based on net assets of $87,850,443 and 9,340,898 shares of beneficial interest outstanding) $ 9.40 See accompanying Notes to Financial Statements. 9 Oppenheimer Equity Income Fund - ------ Statement of Operations For the Year Ended June 30, 1994 - ------ Investment Income Interest $54,718,271 - ------ Dividends (net of withholding taxes of $315,970) 50,544,683 - ------ Total income 105,262,954 - ------ Expenses Management fees--Note 4 10,114,770 - ------ Distribution and service plan fees: Class A--Note 4 2,986,993 Class B--Note 4 411,604 - ------ Transfer and shareholder servicing agent fees--Note 4 2,451,831 - ------ Shareholder reports 527,489 - ------ Custodian fees and expenses 231,210 - ------ Registration and filing fees: Class A 93,411 Class B 37,554 - ------ Trustees' fees and expenses 71,550 - ------ Legal and auditing fees 68,743 - ------ Other 218,820 - ------ Total expenses 17,213,975 - ------ Net Investment Income 88,048,979 - ------ Realized and Unrealized Gain (Loss) on Investments And Foreign Currency Transactions Net realized gain (loss) from: Investments 24,812,847 Foreign currency transactions (1,727,524) - ------ Net change in unrealized appreciation or depreciation on: Investments (93,532,224) Translation of assets and liabilities denominated in foreign currencies (8,069,199) - ------ Net realized and unrealized loss on investments and foreign currency transactions (78,516,100) - ------ Net Increase in Net Assets Resulting From Operations $9,532,879 - ------ - ------ See accompanying Notes to Financial Statements. 10 Oppenheimer Equity Income Fund - ------ Statements of Changes in Net Assets Year Ended June 30, 1994 1993 - ------ Operations Net investment income $88,048,979 $84,853,288 - ------ Net realized gain on investments and foreign currency transactions - ------ Net change in unrealized appreciation or depreciation on investments and translation of assets and liabilities denominated in foreign currencies (101,601,423) 122,260,203 - ------ ------ Net increase in net assets resulting from operations 9,532,879 259,632,034 - ------ Equalization Net change 546,821 2,468,327 - ------ Dividends and Distributions to Shareholders Dividends from net investment income: Class A ($.47 per share and $.48 per share, respectively) (85,741,017) (83,156,753) Class B ($.416 per share) (2,115,733) -- - ------ Dividends in excess of net investment income: Class A ($.01 per share) (1,829,618) -- Class B ($.01 per share) (45,147) -- - ------ Distributions from net realized gain on investments and foreign currency transactions: Class A ($.1221 and $.145 per share, respectively) (22,569,711) (24,974,899) Class B ($.1221 per share) (515,610) -- - ------ Distributions in excess of capital gains: Class A ($.05 per share) (8,593,810) -- Class B ($.05 per share) (196,327) -- - ------ Beneficial Interest Transactions Net increase in net assets resulting from Class A beneficial interest transactions--Note 2 88,576,248 80,452,974 - ------ Net increase in net assets resulting from Class B beneficial interest transactions--Note 2 93,399,883 -- - ------ Net Assets Total increase 70,448,858 234,421,683 - ------ Beginning of year 1,790,345,792 1,555,924,109 - ------ ------ End of year [including undistributed (overdistributed) net investment income of $(3,381,130) and $29,426,684, respectively] $1,860,794,650 $1,790,345,792 - ------ ------ - ------ ------ See accompanying Notes to Financial Statements. 11 Oppenheimer Equity Income Fund - ------ Financial Highlights Class A Class B - ------ ------ Period Ended Year Ended June 30, June 30, 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1994(1) - ------ Per Share Operating Data: Net asset value, beginning of period $10.01 $9.15 $8.86 $9.18 $9.11 $8.51 $9.85 $9.26 $7.78 $6.83 $10.22 - ------ Income from investment operations: Net investment income .47 .50 .50 .48 .48 .52 .48 .46 .50 .47 .36 Net realized and unrealized gain (loss) on investments, options written and foreign currency transactions (.39) .99 .39 (.17) .33 .58 (.35) 1.22 1.59 1.48 (.58) - ------ ------ ------ ------ ------ ------ ------ - ------ ------ ------ ------ Total income from investment operations .08 1.49 .89 .31 .81 1.10 .13 1.68 2.09 1.95 (.22) - ------ Dividends and distributions Dividends from net investment income (.47) (.48) (.48) (.48) (.50) (.48) (.60) (.48) (.46) (.45) (.42) Dividends in excess of net investment income (.01) -- -- -- -- -- -- -- -- -- (.01) Distributions from net realized gain on investments, options written and foreign currency transactions (.12) (.15) (.12) (.15) (.24) (.02) (.87) (.61) (.15) (.55) (.12) Distributions in excess of capital gains (.05) -- -- -- -- -- -- -- -- -- (.05) - ------ ------ ------ ------ ------ ------ ------ - ------ ------ ------ ------ Total dividends and distributions to shareholders (.65) (.63) (.60) (.63) (.74) (.50) (1.47) (1.09) (.61) (1.00) (.60) - ------ Net asset value, end of period $9.44 $10.01 $9.15 $8.86 $9.18 $9.11 $8.51 $9.85 $9.26 $7.78 $9.40 - ------ ------ ------ ------ ------ ------ ------ - ------ ------ ------ ------ - ------ ------ ------ ------ ------ ------ ------ - ------ ------ ------ ------ - ------ Total Return, at Net Asset Value(2) .65% 16.76% 10.26% 3.68% 9.07% 13.30% 2.04% 20.45% 28.42% 32.40% (2.35)% - ------ Ratios/Supplemental Data: Net assets, end of period (in thousands) $1,772,944 $1,790,346 $1,555,924 $1,393,303 $1,329,830 $1,017,074 $806,892 $730,655 $381,122 $134,828 $87,850 - ------ Average net assets (in thousands) $1,831,606 $1,657,692 $1,525,599 $1,323,858 $1,179,704 $885,179 $743,232 $526,897 $228,642 $98,324 $47,414 - ------ Number of shares outstanding at end of period (in thousands) 187,841 178,819 170,117 157,239 144,921 111,613 94,824 74,169 41,166 17,321 9,341 - ------ Ratios to average net assets: Net investment income 4.72% 5.12% 5.33% 5.31% 5.10% 5.89% 5.48% 5.08% 6.00% 7.01% 3.99%(3) Expenses .90% .79% .82% .79% .79% .85% .83% .91% 1.03% 1.11% 1.82%(3) - ------ Portfolio turnover rate(4) 30.4% 59.0% 37.0% 64.0% 122.0% 91.4% 124.1% 94.7% 105.3% 122.5% 30.4%
1. For the period from August 17, 1993 (inception of offering) to June 30, 1994. 2. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. 3. Annualized. 4. The lesser of purchases or sales of portfolio securities for a year, divided by the monthly average of the market value of portfolio securities owned during acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the year ended June 30, 1994 were $543,750,868 and $575,903,141, respectively. See accompanying Notes to Financial Statements. 12 Oppenheimer Equity Income Fund - ------ Notes to Financial Statements - ------ 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 advisor is Oppenheimer Management Corporation (the Manager). The Fund offers both Class A and Class B shares. Class A shares are sold with a front-end sales charge. Class B shares may be subject to a contingent deferred sales charge. Both classes of shares have identical rights to earnings, assets and voting privileges, except that each class has its own distribution and/or service plan, expenses directly attributable to a particular class and exclusive voting rights with respect to matters affecting a single class. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. - ------ Investment Valuation. Portfolio securities are valued at 4:00 p.m. (New York time) on each trading day. Listed and unlisted securities for which such information is regularly reported are valued at the last sale price of the day or, in the absence of sales, at values based on the closing bid or asked price or the last sale price on the prior trading day. Long-term debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Long-term debt securities which cannot be valued by the approved portfolio pricing service are valued by averaging the mean between the bid and asked prices obtained from two active market makers in such securities. Short-term debt securities having a remaining maturity of 60 days or less are valued at cost (or last determined market value) adjusted for amortization to maturity of any premium or discount. Securities for which market quotes are not readily available are valued under procedures established by the Board of Trustees to determine fair value in good faith. - ------ Foreign Currency Translation. The accounting records of the Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. The Fund generally enters into forward currency exchange contracts as a hedge, upon the purchase or sale of a security denominated in a foreign changes in foreign currency exchange rates on portfolio positions. A forward exchange is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. Risks may arise from the potential inability of the counterparty to meet the terms of the contract and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's results of operations. - ------ Repurchase Agreements. The Fund requires the custodian to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited. - ------ Allocation of Income, Expenses and Gains and Losses. Income, expenses (other than those attributable to a specific class) and gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. 13 Oppenheimer Equity Income Fund - ------ Notes to Financial Statements (Continued) - ------ 1. Significant Accounting Policies (continued) Federal Income Taxes. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by loss carryovers, to shareholders. Therefore, no federal income tax provision is required. - ------ Equalization. Prior to September 24, 1993, the Fund followed the accounting practice of equalization, by which a portion of the proceeds from sales and costs of redemptions of Fund shares equivalent on a per share basis to the amount of undistributed net investment income were credited or charged to undistributed income. The cumulative effect of the change in accounting practice resulted in a reclassification of $32,950,419 from undistributed net investment income to paid-in capital. - ------ Distributions to Shareholders. Dividends and distributions to shareholders are recorded on the ex-dividend date. - ------ Change in Accounting for Distributions to Shareholders. Effective July 1, 1993, the Fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, subsequent to June 30, 1993, amounts have been reclassified to reflect a decrease in paid-in capital of $7,105,629, an increase in undistributed net investment income of $3,005,844, and an increase in undistributed capital gain on investments of $4,099,785. During the year ended June 30, 1994, in accordance with Statement of Position 93-2, undistributed income was decreased by $1,727,524 and undistributed capital gain on investments was increased by $1,727,524. - ------ Other. Investment transactions are accounted for on the date the investments are purchased or sold (trade date) and dividend income is recorded on the ex-dividend date. Discount on securities purchased is amortized over the life of the respective securities, in accordance with federal income tax requirements. Realized gains and losses on investments and unrealized appreciation and depreciation are determined on an identified cost basis, which is the same basis used for federal income tax purposes. Interest on payment-in-kind debt instruments is accrued as income at the coupon rate and a market adjustment is made on the ex-date. - ------ 2. Shares of 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: Year Ended June 30, 1994(1) Year Ended June 30, 1993 - ------ ------ Shares Amount Shares Amount - ------ Class A: Sold 26,551,307 $264,515,469 29,572,911 $276,573,097 Dividends and distributions reinvested 11,168,493 110,189,163 10,613,035 97,981,463 Redeemed (28,698,217) (286,128,384) (31,483,466) (294,101,586) - ------ ------ ------ ------ Net increase 9,021,583 $88,576,248 8,702,480 $80,452,974 - ------ ------ ------ ------ - ------ ------ ------ ------ - ------ Class B: Sold 9,581,829 $95,687,102 -- $-- Dividends and distributions reinvested 266,194 2,603,845 -- -- Redeemed (507,125) (4,891,064) -- -- - ------ ------ ------ ------ Net increase 9,340,898 $93,399,883 -- $-- - ------ ------ ------ ------ - ------ ------ ------ ------ 1. For the year ended June 30, 1994 for Class A shares and for the period from August 17, 1993 (inception of offering) to June 30, 1994 for Class B shares. 14 Oppenheimer Equity Income Fund - ------ - ------ 3. Unrealized Gains and Losses on Investments At June 30, 1994, net unrealized appreciation on investments of $108,218,836 was composed of gross appreciation of $187,771,512, and gross depreciation of - ------ 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 an annual fee of .75% on the first $100 million of net assets with a reduction of .05% on each $100 million thereafter, to .50% on net assets in excess of $500 million. The Manager has agreed to reimburse the Fund if aggregate expenses (with specified exceptions) exceed 1.5% of the first $30 million of average annual net assets of the Fund, plus 1% of average annual net assets in excess of $30 million. For the year ended June 30, 1994, commissions (sales charges paid by investors) on sales of Class A shares totaled $7,807,280, of which $2,506,452 was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of the Manager, as general distributor, and by an affiliated broker/dealer. During the period ended June 30, 1994, OFDI received contingent deferred sales charges of $65,013 upon redemption of Class B shares, as reimbursement for sales commissions advanced by OFDI at the time of sale of such shares. Oppenheimer Shareholder Services (OSS), a division of the Manager, is the transfer and shareholder servicing agent for the Fund, and for other registered investment companies. OSS's total costs of providing such services are allocated ratably to these companies. Under separate approved plans, each class may expend up to .25% of its net assets annually to reimburse OFDI for costs incurred in connection with the personal service and maintenance of accounts that hold shares of the Fund (prior to October 1, 1993, Class A reimbursements were made with respect to shares sold subsequent to March 31, 1991), including amounts paid to brokers, dealers, banks and other institutions. In addition, Class B shares are subject to an asset-based sales charge of .75% of net assets annually, to reimburse OFDI for sales commissions paid from its own resources at the time of sale and associated financing costs. In the event of termination or discontinuance of the Class B plan, the Board of Trustees may allow the Fund to continue payment of the asset-based sales charge to OFDI for distribution expenses incurred on Class B shares sold prior to termination or discontinuance of the plan. During the year ended June 30, 1994, OFDI paid $195,662 to an affiliated broker/dealer as reimbursement for Class A personal service and maintenance expenses and retained $411,604 as reimbursement for Class B sales commissions and service fee advances, as well as financing costs. - ------ 5. Restricted Securities The Fund owns securities purchased in private placement transactions, without registration under the Securities Act of 1933 (the Act). The securities are valued under methods approved by the Board of Trustees as reflecting fair value. time of purchase) in restricted and illiquid securities, excluding securities eligible for resale pursuant to Rule 144A of the Act that are determined to be liquid by the Board of Trustees or by the Manager under Board-approved guidelines. Restricted and illiquid securities amount to $8,003,959, or .43% of the Fund's net assets, at June 30, 1994. Valuation Cost Per Per Unit as of Security Acquisition Date Unit June 30, 1994 - ------ AMR Corp., $3.00 Cum. Cv. Depositary Shares, Series A Preferred Stock(1) 1/28/93--2/25/93 $49.82 $ 44.25 - ------ Banco Nacional de Comercio Exterior SNC International Finance BV, 8% Gtd. Matador Bonds, 8/5/03(1) 11/12/93 $97.88 $ 85.00 - ------ Banco Nacional de Mexico SA, 7% Exch. Sub. Debs., 12/15/99(1) 12/1/92 $100.00 $107.00 - ------ Case Equipment Corp., Series A Cum. Cv. Preferred Stock(1) 6/30/94 $50.09 $ 50.09 - ------ Chrysler Financial Corp., $4.625 Cv. Depositary Shares, Series A Preferred Stock(1) 2/12/92 $50.00 $132.25 - ------ Citicorp, Cv. Depositary Shares, Series 13 Preferred Stock(1) 9/4/92--9/25/92 $62.94 $112.25 15 Oppenheimer Equity Income Fund - ------ Notes to Financial Statements (Continued) - ------ 5. Restricted Securities (continued) Valuation Cost Per Per Unit as of Security Acquisition Date Unit June 30, 1994 - ------ Compania de Inversiones en Telecomunicaciones SA, Provisionally Redeemable Income Debt Exchangeable for Stock, 7%, 3/3/98(1) 2/28/94 $72.00 $ 59.50 - ------ Freeport-McMoRan, Inc., $4.375 Cv. Exch. Preferred Stock(1) 2/26/92 $45.63 $ 37.50 - ------ Intelcom Group, Inc., 7% Cv. Sub. Nts., 10/30/98 10/26/93--4/27/94 $99.43 $ 50.56 - ------ Kroger Co. (The), 8.25% Cv. Jr. Sub. Debs., 4/15/11(1) 3/6/91 $100.00 $102.50 - ------ Lend Lease Financial International Ltd., 4.75% Gtd. Cv. Bonds, 6/1/03(1) 6/10/93 $100.00 $107.25 - ------ Occidental Petroleum Corp., $3.875 Cum. Cv. Preferred Stock(1) 2/10/93 $50.00 $49.31 - ------ Parker & Parsley Capital LLC., 6.25% Cum. Cv. Guaranteed Monthly Income Preferred Shares(1) 3/24/94 $50.00 $52.38 - ------ Stone Container Corp., 8.875% Cv. Sr. Sub. Nts., 7/15/00(1) 6/24/93 $99.36 $153.38 - ------ Thomas Nelson, Inc., 5.75% Cv. Nts., 11/30/99 11/11/92 $100.00 $107.75 - ------ Transco Energy Co., $3.00 Cum. Cv., Series E Preferred Stock (1) 10/29/93 $50.00 $ 48.25 - ------ Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(1) 11/15/93 $100.00 $ 90.25 - ------ UAL Corp., $6.25 Cv., Series A Preferred Stock(1) 2/5/93--2/25/93 $99.55 $ 84.50 - ------ U.S. Surgical Corp., Dividend Enhanced - ------ Westinghouse Electric Corp., Participating Equity Preferred Shares $12.125 Cv., Series C(1) 3/24/94 $14.44 $ 12.75 1. Transferable under Rule 144A of the Act. - ------ Federal Income Tax Information (Unaudited) - ------ In early 1995, shareholders will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 1994. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. A distribution of $.1721 per share was paid on December 28, 1993, of which $.1551 was designated as a ``capital gain distribution'' for federal income tax purposes. Whether received in stock or cash, the capital gain distribution should be treated by shareholders as a gain from the sale of capital assets held for more than one year (long-term capital gains). Dividends paid by the Fund during the fiscal year ended June 30, 1994 which are not designated as capital gain distributions should be multiplied by 55.7% to arrive at the net amount eligible for the corporate dividend-received deduction. The foregoing information is presented to assist shareholders in reporting distributions received from the Fund to the Internal Revenue Service. Because of the complexity of the federal regulations which may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax advisor for specific guidance. 16 Oppenheimer Equity Income Fund - ------ Independent Auditors' Report - ------ The Board of Trustees and Shareholders of Oppenheimer Equity Income Fund: We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Oppenheimer Equity Income Fund as of June 30, 1994, the related statement of operations for the year then ended, the statements of changes in net assets for the years ended June 30, 1994 and 1993, and the financial highlights for the period July 1, 1984 to June 30, 1994. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned at June 30, 1994 by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of Oppenheimer Equity Income Fund at June 30, 1994, the results of its operations, the changes in its net assets, and the financial highlights for the respective stated periods, in conformity with generally accepted accounting principles. DELOITTE & TOUCHE Denver, Colorado July 22, 1994 17 Oppenheimer Equity Income Fund - ------ Oppenheimer Equity Income Fund - ------ Officers and Trustees James C. Swain, Chairman and Chief Executive Officer Robert G. Avis, Trustee William A. Baker, Trustee Charles Conrad, Jr., Trustee Jon S. Fossel, Trustee and President Raymond J. Kalinowski, Trustee C. Howard Kast, Trustee Robert M. Kirchner, Trustee Ned M. Steel, Trustee Andrew J. Donohue, Vice President John P. Doney, Vice President George C. Bowen, Vice President, Secretary and Treasurer Robert J. Bishop, Assistant Treasurer Scott Farrar, Assistant Treasurer Robert G. Zack, Assistant Secretary - ------ Investment Advisor Oppenheimer Management Corporation - ------ Distributor Oppenheimer Funds Distributor, Inc. - ------ Transfer and Shareholder Servicing Agent Oppenheimer Shareholder Services - ------ Custodian of Portfolio Securities The Bank of New York - ------ Independent Auditors Deloitte & Touche - ------ Legal Counsel Myer, Swanson & Adams, P.C. This is a copy of a report to shareholders of Oppenheimer Equity Income Fund. This report must be preceded or accompanied by a Prospectus of Oppenheimer Equity Income Fund. For material information concerning the Fund, see the Prospectus. 18 Oppenheimer Equity Income Fund - ------ The Family of OppenheimerFunds - ------ OppenheimerFunds offers over 30 funds designed to fit virtually every investment goal. Whether you're investing for retirement, your children's education, or tax-free income, we have the funds to help you seek your objective. When you invest with OppenheimerFunds, you can feel comfortable knowing that you are investing with a respected financial institution with over 30 years of experience in helping people just like you reach their financial goals. And you're investing with a leader in global, growth stock, and flexible fixed income investments--with over 1.8 million shareholder accounts and more than $26 billion under Oppenheimer's management and that of our affiliates. As an OppenheimerFunds shareholder, you can easily exchange shares of eligible funds of the same class by mail or by telephone for a small administrative fee.1 For more information on OppenheimerFunds, please contact your financial advisor or call us at 1-800-525-7048 for a prospectus. You may prospectus carefully before you invest. - ------ Specialty Stock Fund Gold & Special Minerals Fund - ------ Stock Funds Discovery Fund Global Fund Time Fund Oppenheimer Fund Target Fund Value Stock Fund Special Fund - ------ Stock and Bond Funds Main Street Income & Growth Fund Total Return Fund Global Growth & Income Fund Equity Income Fund Asset Allocation Fund - ------ Bond Funds High Yield Fund Champion High Yield Fund Strategic Income & Growth Fund Strategic Income Fund Strategic Diversified Income Fund Strategic Investment Grade Bond Fund Strategic Short-Term Income Fund Investment Grade Bond Fund Mortgage Income Fund U.S. Government Trust Limited-Term Government2 - ------ Tax-Exempt Funds New York Tax-Exempt Fund3 California Tax-Exempt Fund3 Pennsylvania Tax-Exempt Fund3 Florida Tax-Exempt Fund3 New Jersey Tax-Exempt Fund3 Tax-Free Bond Fund Insured Tax-Exempt Bond Fund Intermediate Tax-Exempt Bond Fund - ------ Money Market Funds Money Market Fund Cash Reserves 1. The fee is waived for PhoneLink exchanges between existing accounts. Exchange privileges are subject to change or termination. 2. Formerly Government Securities Fund. 3. Available only to residents of those states. OppenheimerFunds are distributed by Oppenheimer Funds Distributor, Inc., Two World Trade Center, New York, NY 10048-0203. (C) Copyright 1994 Oppenheimer Management Corporation. All rights reserved. 19 Oppenheimer Equity Income Fund "HOW MAY I HELP YOU?" GENERAL INFORMATION 1-800-525-7048 Talk to a Customer Service Representative. Monday through Friday from 8:30 a.m. to 8:00 p.m., and Saturday from 10:00 a.m. to 2:00 p.m. ET. TELEPHONE TRANSACTIONS 1-800-852-8457 Make account transactions with a Customer Service Representative. Monday through Friday from 8:30 a.m. to 8:00 p.m. ET. PHONELINK 1-800-533-3310 Get automated information or make automated transactions. 24 hours a day, 7 days a week. TELECOMMUNICATION DEVICE FOR THE DEAF 1-800-843-4461 Service for the hearing impaired. Monday through Friday from 8:30 a.m. to 8:00 p.m. ET. OPPENHEIMERFUNDS INFORMATION HOTLINE 1-800-835-3104 Hear timely and insightful messages on the economy and issues that affect your finances. 24 hours a day, 7 days a week. "Just as OppenheimerFunds offers over 30 different mutual funds designed to help meet virtually every investment need, Oppenheimer Shareholder Services offers a variety of services to satisfy your individual needs. Whenever you require help, we're only a toll-free phone call away. "For personalized assistance and account information, call our General Information number to speak with our knowledgeable Customer Service Representatives and get the help you need. "When you want to make ac count transactions, it's easy for you to redeem shares, exchange shares, or conduct AccountLink transactions, simply by calling our Telephone Transactions number. response system is available 24 hours a day, 7 days a week. PhoneLink gives you access to a variety of fund, account, and market information. You can even make purchases, exchanges and redemptions using your touch-tone phone. Of course, PhoneLink will always give you the option to speak with a Customer Service Representative during the hours shown to the left. "When you invest in OppenheimerFunds, you know you'll receive a high level of customer service. The International Customer Service Association knows it, too, as it awarded Oppenheimer Shareholder Services a 1993 Award of Excellence for consistently demonstrating superior customer service. "Whatever your needs, we're ready to assist you." [PHOTO] Barbara Hennigar Chief Executive Officer Oppenheimer Shareholder Services RA300.0794.N [LOGO] 1993 AWARD OF EXCELLENCE ICSA INTERNATIONAL CUSTOMER SERVICE ASSOCIATION [LOGO] OPPENHEIMER FUNDS. Bulk Rate U.S. Postage PAID Permit No. 377 Hackensack, NJ -----END PRIVACY-ENHANCED MESSAGE-----