-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EKfLEpB8Jh8CQVu91JRbZj61K+DOmQD8QoAYvkEisy+xvzUw5xHZn7fXhtxz5Sb6 XZhdD8lx4FLaDdRDIgBMLw== 0000950133-97-001713.txt : 19970512 0000950133-97-001713.hdr.sgml : 19970512 ACCESSION NUMBER: 0000950133-97-001713 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19970509 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER EQUITY INCOME FUND INC CENTRAL INDEX KEY: 0000045156 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [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: 97598577 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 OPPENHEIMER EQUITY INCOME FUND 1 [PHOTO] OPPENHEIMER EQUITY INCOME FUND Semiannual Report February 28, 1997 "We need our investment to do a lot-- we want it to provide money to live on and increase in value too." [OPPENHEIMERFUNDS LOGO] THE RIGHT WAY TO INVEST 2 THIS FUND IS FOR PEOPLE WHO WANT THEIR INVESTMENT TO WORK TWO WAYS: PROVIDE BOTH CURRENT INCOME AND THE POTENTIAL FOR LONG-TERM GROWTH. NEWS BEAT THE AVERAGE Total Return for the 1-Year Period Ended 3/31/97: Oppenheimer Equity Income Fund Class A shares (at net asset value)(1) 16.85% Lipper Income Average For 46 Funds for the Period Ended 3/31/97(3) 8.71% HOW YOUR FUND IS MANAGED Oppenheimer Equity Income Fund is designed to give you the benefits of a diversified portfolio of stocks, bonds, and other income-producing investments. We manage your Fund to seek income from dividend-paying stocks and other income-producing instruments with a secondary objective of capital appreciation by investing in stocks with growth possibilities. Diversification provides another advantage to shareholders: less risk. Because the Fund's assets can be allocated across different types of securities, investment risk may be reduced. PERFORMANCE Cumulative total returns for the six months ended 2/28/97 were 20.14% for Class A shares, 19.58% for Class B shares and 19.70% for Class C shares, without deducting sales charges.(1) Your Fund's average annual total returns for Class A shares for the 1-, 5- and 10-year periods ended 3/31/97 were 10.13%, 12.27% and 9.99%, respectively. For Class B shares, average annual total returns for the 1-year period ended 3/31/97 and since inception on 8/17/93 were 10.91% and 11.29%, respectively. For Class C shares, average annual total returns for the 1-year period ended 3/31/97 and since inception on 11/1/95 were 14.85% and 17.63%, respectively.(2) OUTLOOK "This is a relatively conservative fund, so as we intend to do in any market environment, we will work to limit our risk exposure and also provide opportunities for income and long-term growth." John Doney, Portfolio Manager February 28, 1997 Total returns include change in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. 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. For more complete information, please review the prospectus carefully before you invest. 1. Includes change in net asset value per share for the period shown, without deducting any sales charges. Such performance is not annualized and would have been lower if sales charges were taken into account. 2. 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 during a portion of some of the periods shown, so actual performance would have been lower. Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 3% (since inception). Class C returns include the 1% contingent deferred sales charge for the 1-year result. An explanation of the different performance calculations is in the Fund's prospectus. Class B and Class C shares are subject to an annual 0.75% asset-based sales charge. 3. Source: Lipper Analytical Services, 3/31/97. The Lipper average is shown for comparative purposes only. Funds included in the Lipper index may have different investment policies and risks than the Fund. Oppenheimer Equity Income Fund is characterized by Lipper as an income fund. Lipper rankings are based on total return and do not take sales charges into consideration. 2 Oppenheimer Equity Income Fund 3 [PHOTO] James C. Swain Chairman Oppenheimer Equity Income Fund [PHOTO] Bridget A. Macaskill President Oppenheimer Equity Income Fund DEAR SHAREHOLDER, As we advised you at year end, we don't expect 1997's stock market to report the record-breaking returns we saw last year. However, we do believe it may be a period in which investors can take advantage of some great buying opportunities created by lower stock valuations. Our optimism can be traced to solid economic fundamentals that should remain stable throughout the calendar year and the robust investing habits of aging baby boomers. First, the economy has been expanding slowly, but steadily. Interest rates have remained relatively low despite the Federal Reserve's recent increase in short-term rates. In turn, low interest rates translate into reduced borrowing rates for companies and individuals. Companies have taken advantage of the savings by using it to improve their technologies, thereby increasing their productivity and efficiency. By downsizing and implementing other cost-cutting strategies, companies in the United States should now be better equipped to compete globally. In addition, inflation has been at its lowest level in three decades. While it's true that an increase in interest rates often indicates an accelerating economy, the Federal Reserve has been quick to acknowledge that inflation and growth are under control. In fact, they've labeled the recent move as a "preemptive" act to keep inflation at these low levels and extend the economy's healthy growth cycle. Second, monthly cash flows into mutual funds have been higher, largely due to the savings pattern of the baby boomers. The first wave of this generationNthose just turning 50Nare beginning to direct more money toward their retirement. Concerned about proposed cutbacks in Social Security benefits, more and more individuals believe they will have to fund a large portion of their retirement themselves. And, as they gradually pay off their children's college expenses and reduce their mortgages, they are positioned to save more aggressively. For these reasons we remain confident about the opportunities available in the stock market this year. Of course, selectivity will be the key to allocating an effective portfolio. Therefore, it will be important to base choices on the individual merits of a company, such as strong management, fundamental business policies and long-term prospects for the future. And for investors, as always, maintaining a long-term time horizon is essential. Because, while short-term swings will certainly occur and past performance is no guarantee of future results, the market's long-term trend has been to move higher and higher. Your portfolio managers discuss the outlook for your Fund in light of these broad issues on the following pages. Thank you for your confidence in OppenheimerFunds. We look forward to helping you reach your investment goals in the future. /s/ JAMES C. SWAIN /s/ BRIDGET A. MACASKILL James C. Swain Bridget A. Macaskill March 21, 1997 3 Oppenheimer Equity Income Fund 4 Q + A [PHOTO] [PHOTO] Q WHAT INVESTMENTS MADE POSITIVE CONTRIBUTIONS TO PERFORMANCE? AN INTERVIEW WITH YOUR FUND'S MANAGERS. HOW DID THE FUND PERFORM? Oppenheimer Equity Income Fund had a very good year, benefiting significantly in the second half of the year from a very strong stock market. Our strategy of buying out-of-favor stocks with positive earnings potential was very successful. Stocks that we had purchased early in the period at inexpensive prices rose in value. This occurred as market perception of these stocks changed and the investment community made similar investments in them. In contrast to the stock market's resilience, however, the bond market faded as rates declined. We decreased our exposure to lower-returning bonds by moving more of the portfolio into investments with higher earnings potential such as convertible bonds and common stock. WHAT INVESTMENTS MADE POSITIVE CONTRIBUTIONS TO PERFORMANCE? We've continued to have success with our holdings in financial stocks, particularly banks. We maintained a substantial position in banks with strong price-appreciation potential for several years. During the latest period, stock prices for our bank holdings appreciated greatly, contributing to the Fund's performance. These strong results were due primarily to ongoing industry consolidations which helped to streamline operations and increase productivity. In addition, the Fund's investments in convertible bonds of medical supply, energy and credit card processing companies helped performance.(1) WERE THERE ANY INVESTMENTS THAT DIDN'T PERFORM AS WELL AS YOU'D EXPECTED? Our holdings in electric utilities and basic materials, like chemicals and papers, did not perform as well as the rest of the portfolio. Fortunately, we were underweighted in both [PHOTO] 1. The Fund's portfolio is subject to change. 4 Oppenheimer Equity Income Fund 5 FACING PAGE Top left: John Doney, Portfolio Manager Top right: The equity trading desk Bottom: Mark Binning, Securities Coordinator, consults with Lawrence Apolito, VP Equity Trading THIS PAGE Top: John Doney Bottom: Robert Doll, Executive VP and Director of Equity Investments A WE'VE CONTINUED TO HAVE SUCCESS WITH OUR HOLDINGS IN FINANCIAL STOCKS, PARTICULARLY BANKS. of these sectors. In reality, these holdings had an average year, but their earnings did not compare with the strength of many of our other holdings. Energy stocks lagged the market during most of 1996, until the fourth quarter when oil prices spiked upward and drove energy stock prices higher. We took advantage of this rise and sold part of our holdings that had reached what we considered full price. WHAT AREAS ARE YOU CURRENTLY TARGETING? We continue to look for value and long-term growth potential in our stock considerations. We employ a "bottom-up" approach, evaluating each company independently, rather than targeting whole industries. This strategy has brought us to consider some consumer non-cyclical products, such as retail stores, that have underperformed recently. However, we remain optimistic about the merchandising capabilities of many retail franchises and believe they are well-poised to outperform in the future. We also continue to look for attractively priced convertible bonds with a solid level of income that have the potential to appreciate. Besides providing income, convertibles can be exchanged into common stock, thereby offering appreciation potential when the stock market is doing well. WHAT IS YOUR OUTLOOK FOR THE FUND? We expect a year with stock market returns to be around 8%-10%. Though the stock market has reached new highs, we expect common stocks to continue to perform well. [PHOTO] At the same time, we expect to see greater volatility in the prices of many stocks and think that a relatively cautious posture is appropriate for the portfolio going forward. This is a relatively conservative fund, so as we intend to do in any market environment, we will work to limit our risk exposure and also provide opportunities for income and long-term growth. [PHOTO] 5 Oppenheimer Equity Income Fund 6 STATEMENT OF INVESTMENTS February 28, 1997 (Unaudited)
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 =============================================================================================================== U.S. GOVERNMENT OBLIGATIONS--10.2% - --------------------------------------------------------------------------------------------------------------- U.S. Treasury Bonds, STRIPS, Zero Coupon: 7.20%, 8/15/08(2) $150,000,000 $ 69,572,388 7.22%, 8/15/20(2) 800,000,000 155,028,686 -------------------------------------------------------------------------------------------------------- U.S. Treasury Nts., STRIPS, Zero Coupon, 6.78%, 2/15/04(2) 102,500,000 65,556,020 ------------ Total U.S. Government Obligations (Cost $282,573,802) 290,157,094 =============================================================================================================== FOREIGN GOVERNMENT OBLIGATIONS--3.6% - --------------------------------------------------------------------------------------------------------------- Argentina (Republic of): Global Bonds, 11.375%, 1/30/17(3)(4) 1,850,000 1,974,875 Past Due Interest Bonds, Series L, 6.625%, 3/31/05(5) 6,370,000 5,776,794 -------------------------------------------------------------------------------------------------------- Banco Nacional de Comercio Exterior SNC International Finance BV Gtd. Nts., 8%, 8/5/03 9,000,000 8,718,750 -------------------------------------------------------------------------------------------------------- Bonos de la Tesoreria de la Federacion, Zero Coupon: 27.48%, 6/5/97(2) MXP 100,000,000 11,838,103 28.21%, 9/4/97(2) MXP 48,667,190 5,451,989 -------------------------------------------------------------------------------------------------------- Canada (Government of) Bonds, 7.50%, 9/1/00 CAD 19,460,000 15,338,921 -------------------------------------------------------------------------------------------------------- Ecuador (Republic of) Disc. Bonds, 6.437%, 2/28/25(5) 2,900,000 2,008,250 -------------------------------------------------------------------------------------------------------- New South Wales State Bank Bonds, 9.25%, 2/18/03 AUD 9,900,000 8,250,346 -------------------------------------------------------------------------------------------------------- Poland (Republic of) Bonds, 16%, 10/12/98 PLZ 14,450,000 4,385,387 -------------------------------------------------------------------------------------------------------- Quebec, Canada (Province of) Debs., 10.25%, 4/7/98 CAD 10,000,000 7,827,926 -------------------------------------------------------------------------------------------------------- Queensland Treasury Corp. Exchangeable Gtd. Nts., 8%, 8/14/01 AUD 33,650,000 26,900,235 -------------------------------------------------------------------------------------------------------- South Australia (Government of) Bonds, 9%, 9/23/02 AUD 3,000,000 2,466,634 ------------ Total Foreign Government Obligations (Cost $96,863,204) 100,938,210 =============================================================================================================== NON-CONVERTIBLE CORPORATE BONDS AND NOTES--6.2% - --------------------------------------------------------------------------------------------------------------- AK Steel Corp., 9.125% Sr. Nts., 12/15/06(3) 3,000,000 3,135,000 -------------------------------------------------------------------------------------------------------- Auburn Hills Trust, 11.93% Gtd. Exchangeable Certificates, 5/1/20(5) 5,000,000 7,520,229 -------------------------------------------------------------------------------------------------------- Banco Bamerindus do Brasil SA, 9% Unsec. Unsub. Bonds, 10/29/98 1,500,000 1,462,500 -------------------------------------------------------------------------------------------------------- Bank of America Malaysia, Zero Coupon Nts., 7.16%, 3/27/97(2) MYR 1,393,000 558,693 -------------------------------------------------------------------------------------------------------- Brooks Fiber Properties, Inc., 0%/11.875% Sr. Disc. Nts., 11/1/06(6) 2,800,000 1,834,000 -------------------------------------------------------------------------------------------------------- CalEnergy, Inc., 9.50% Sr. Nts., 9/15/06 2,000,000 2,155,000 -------------------------------------------------------------------------------------------------------- California Energy, Inc., 10.25% Sr. Disc. Nts., 1/15/04 4,350,000 4,752,375 -------------------------------------------------------------------------------------------------------- Chase Malaysia, Zero Coupon Nts., 7.16%, 3/27/97(2) MYR 4,400,000 1,764,716 -------------------------------------------------------------------------------------------------------- Chesapeake Energy Corp., 9.125% Sr. Nts., 4/15/06 4,000,000 4,210,000 -------------------------------------------------------------------------------------------------------- Comcast Corp., 10.25% Sr. Sub. Debs., 10/15/01 6,000,000 6,480,000 -------------------------------------------------------------------------------------------------------- Cott Corp., 9.375% Sr. Nts., 7/1/05 6,350,000 6,508,750 -------------------------------------------------------------------------------------------------------- El Paso Electric Co., 9.40% First Mtg. Bonds, Series E, 5/1/11 6,000,000 6,540,000 -------------------------------------------------------------------------------------------------------- Falcon Drilling Co., Inc., 8.875% Sr. Nts., Series B, 3/15/03 5,850,000 5,996,250 -------------------------------------------------------------------------------------------------------- Ferrellgas Partners LP, 9.375% Sr. Sec. Nts., Series B, 6/15/06 5,000,000 5,200,000 -------------------------------------------------------------------------------------------------------- First Nationwide Escrow Corp., 10.625% Sr. Sub. Nts., 10/1/03(3) 6,190,000 6,886,375 -------------------------------------------------------------------------------------------------------- Granite Broadcasting Corp., 9.375% Sr. Sub. Nts., Series A, 12/1/05 5,000,000 4,975,000 -------------------------------------------------------------------------------------------------------- Heritage Media Corp., 8.75% Sr. Sub. Nts., 2/15/06 4,500,000 4,455,000 -------------------------------------------------------------------------------------------------------- HMC Acquisition Properties, Inc., 9% Sr. Nts., Series B, 12/15/07 3,000,000 3,108,750 -------------------------------------------------------------------------------------------------------- HMH Properties, Inc., 9.50% Sr. Sec. Nts., Series B, 5/15/05 7,000,000 7,393,750
6 Oppenheimer Equity Income Fund 7
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 =============================================================================================================== NON-CONVERTIBLE CORPORATE BONDS AND NOTES (CONTINUED) Hollinger International Publishing, Inc., 9.25% Sr. Sub. Gtd. Nts., 2/1/06 $ 5,000,000 $ 5,062,500 -------------------------------------------------------------------------------------------------------- Ioche-Maxion SA, 12.375% Medium-Term Nts., 11/8/02 3,091,000 3,176,002 -------------------------------------------------------------------------------------------------------- Lenfest Communications, Inc., 8.375% Sr. Unsec. Nts., 11/1/05 6,000,000 5,865,000 -------------------------------------------------------------------------------------------------------- Magellan Health Services, Inc., 11.25% Sr. Sub. Nts., Series A, 4/15/04 8,250,000 9,209,062 -------------------------------------------------------------------------------------------------------- MagneTek, Inc., 10.75% Sr. Sub. Debs., 11/15/98 3,000,000 3,165,000 -------------------------------------------------------------------------------------------------------- MFS Communications Co., Inc., 0%/9.375% Sr. Disc. Nts., 1/15/04(6) 8,500,000 7,650,000 -------------------------------------------------------------------------------------------------------- Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(6) 3,750,000 3,562,500 -------------------------------------------------------------------------------------------------------- Reliance Group Holdings, Inc., 9.75% Sr. Sub. Debs., 11/15/03 9,000,000 9,495,000 -------------------------------------------------------------------------------------------------------- Rowan Cos., Inc.: 11.875% Sr. Nts., 12/1/01 7,000,000 7,446,510 -------------------------------------------------------------------------------------------------------- Sun Media Corp., 9.50% Sr. Sub. Nts., 2/15/07(3) 800,000 822,000 -------------------------------------------------------------------------------------------------------- Tenet Healthcare Corp.: 10.125% Sr. Sub. Nts., 3/1/05 5,000,000 5,537,500 8.625% Sr. Sub. Nts., 1/15/07 2,000,000 2,067,500 -------------------------------------------------------------------------------------------------------- Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(3) 2,500,000 2,153,125 -------------------------------------------------------------------------------------------------------- Triton Energy Corp., 9.75% Sr. Sub. Disc. Nts., 12/15/00 3,500,000 3,701,250 -------------------------------------------------------------------------------------------------------- Viacom International, Inc., 10.25% Sr. Sub. Nts., 9/15/01 12,000,000 12,958,499 -------------------------------------------------------------------------------------------------------- WestPoint Stevens, Inc.: 8.75% Sr. Nts., 12/15/01 6,000,000 6,240,000 9.375% Sr. Sub. Debs., 12/15/05 2,000,000 2,115,000 ------------ Total Non-Convertible Corporate Bonds and Notes (Cost $165,294,994) 175,162,836 =============================================================================================================== CONVERTIBLE CORPORATE BONDS AND NOTES--3.1% - --------------------------------------------------------------------------------------------------------------- ALZA Corp., 5% Cv. Sub. Debs., 5/1/06 10,000,000 9,950,000 -------------------------------------------------------------------------------------------------------- Apple Computer, Inc., 6% Cv. Sub. Nts., 6/1/01 5,500,000 4,640,625 -------------------------------------------------------------------------------------------------------- Box Energy Corp., 8.25% Cv. Sub. Nts., 12/1/02 5,000,000 4,925,000 -------------------------------------------------------------------------------------------------------- Cooper Industries, Inc., 7.05% Cv. Unsec. Sub. Bonds, 1/1/15 4,938,000 5,357,730 -------------------------------------------------------------------------------------------------------- Inco Ltd.: 5.75% Cv. Debs., 7/1/04 9,700,000 12,634,250 7.75% Cv. Debs., 3/15/16 9,800,000 10,228,750 -------------------------------------------------------------------------------------------------------- Integrated Device Technology, Inc., 5.50% Cv. Sub. Nts., 6/1/02 7,000,000 5,731,250 -------------------------------------------------------------------------------------------------------- Mutual Risk Management Ltd., Zero Coupon Exchangeable Sub. Debs., 5.25%, 10/30/15(2)(3) 19,500,000 8,019,375 -------------------------------------------------------------------------------------------------------- Oryx Energy Co., 7.50% Cv. Sub. Debs., 5/15/14 7,000,000 6,641,250 -------------------------------------------------------------------------------------------------------- Platinum Technology, Inc., 6.75% Cv. Sub. Nts., 11/15/01 4,100,000 5,283,875 -------------------------------------------------------------------------------------------------------- Stone Container Corp., 8.875% Cv. Sr. Sub. Nts., 7/15/00 3,000,000 3,870,000 -------------------------------------------------------------------------------------------------------- VLSI Technology, Inc., 8.25% Cv. Sub. Nts., 10/1/05 11,800,000 11,224,750 ------------ Total Convertible Corporate Bonds and Notes (Cost $81,804,213) 88,506,855
7 Oppenheimer Equity Income Fund 8 STATEMENT OF INVESTMENTS (Unaudited) (Continued)
MARKET VALUE SHARES SEE NOTE 1 =============================================================================================================== COMMON STOCKS--58.2% - --------------------------------------------------------------------------------------------------------------- BASIC MATERIALS--3.1% - --------------------------------------------------------------------------------------------------------------- CHEMICALS--1.5% Dexter Corp. 400,000 $ 11,800,000 -------------------------------------------------------------------------------------------------------- Dow Chemical Co. 100,000 8,100,000 -------------------------------------------------------------------------------------------------------- Du Pont (E.I.) De Nemours & Co. 200,000 21,450,000 ------------ 41,350,000 - --------------------------------------------------------------------------------------------------------------- METALS--0.5% - --------------------------------------------------------------------------------------------------------------- Reynolds Metals Co. 231,200 14,507,800 - --------------------------------------------------------------------------------------------------------------- PAPER--1.1% Union Camp Corp. 200,000 9,650,000 -------------------------------------------------------------------------------------------------------- Westvaco Corp. 375,000 11,062,500 -------------------------------------------------------------------------------------------------------- Weyerhaeuser Co. 250,000 11,562,500 ------------ 32,275,000 - --------------------------------------------------------------------------------------------------------------- CONSUMER CYCLICALS--4.6% - --------------------------------------------------------------------------------------------------------------- AUTOS & HOUSING--2.3% Ford Motor Co. 500,000 16,437,500 -------------------------------------------------------------------------------------------------------- General Motors Corp. 400,000 23,150,000 -------------------------------------------------------------------------------------------------------- Snap-On, Inc. 675,000 26,240,625 ------------ 65,828,125 - --------------------------------------------------------------------------------------------------------------- LEISURE & ENTERTAINMENT--1.2% AMR Corp.(7) 89,900 7,068,387 -------------------------------------------------------------------------------------------------------- Delta Air Lines, Inc. 348,640 28,065,520 ------------ 35,133,907 - --------------------------------------------------------------------------------------------------------------- RETAIL: GENERAL--1.1% Family Dollar Stores, Inc. 200,000 4,725,000 -------------------------------------------------------------------------------------------------------- Penney (J.C.) Co., Inc. 200,000 9,850,000 -------------------------------------------------------------------------------------------------------- Sears Roebuck & Co. 300,000 16,275,000 ------------ 30,850,000 - --------------------------------------------------------------------------------------------------------------- CONSUMER NON-CYCLICALS--5.8% - --------------------------------------------------------------------------------------------------------------- FOOD--0.5% SUPERVALU, Inc. 500,000 15,500,000 - --------------------------------------------------------------------------------------------------------------- HEALTHCARE/DRUGS--1.4% American Home Products Corp. 200,000 12,800,000 -------------------------------------------------------------------------------------------------------- Bristol-Myers Squibb Co. 200,000 26,100,000 ------------ 38,900,000 - --------------------------------------------------------------------------------------------------------------- TOBACCO--3.9% Philip Morris Cos., Inc. 600,000 81,075,000 -------------------------------------------------------------------------------------------------------- RJR Nabisco Holdings Corp. 350,000 12,818,750 -------------------------------------------------------------------------------------------------------- UST, Inc. 500,000 15,437,500 ------------ 109,331,250 - --------------------------------------------------------------------------------------------------------------- ENERGY--2.9% - --------------------------------------------------------------------------------------------------------------- OIL-INTEGRATED--2.9% Elf Aquitaine SA, Sponsored ADR 200,000 9,600,000 -------------------------------------------------------------------------------------------------------- Mobil Corp. 100,000 12,275,000 -------------------------------------------------------------------------------------------------------- Occidental Petroleum Corp. 400,000 10,200,000 -------------------------------------------------------------------------------------------------------- Phillips Petroleum Co. 300,000 12,412,500 -------------------------------------------------------------------------------------------------------- Royal Dutch Petroleum Co. 100,000 17,300,000 -------------------------------------------------------------------------------------------------------- Unocal Corp. 200,000 7,725,000 -------------------------------------------------------------------------------------------------------- USX-Marathon Group 500,000 13,312,500 ------------ 82,825,000
8 Oppenheimer Equity Income Fund 9
MARKET VALUE SHARES SEE NOTE 1 =============================================================================================================== FINANCIAL--33.3% - --------------------------------------------------------------------------------------------------------------- BANKS--26.8% Banc One Corp. 770,000 $ 33,976,250 -------------------------------------------------------------------------------------------------------- Bank of Boston Corp. 505,636 38,112,313 -------------------------------------------------------------------------------------------------------- Bank of New York Co., Inc. (The) 792,838 30,722,472 -------------------------------------------------------------------------------------------------------- BankAmerica Corp. 600,000 68,250,000 -------------------------------------------------------------------------------------------------------- Bankers Trust New York Corp. 100,000 9,075,000 -------------------------------------------------------------------------------------------------------- Chase Manhattan Corp. (New) 1,122,000 112,340,250 -------------------------------------------------------------------------------------------------------- Citicorp 741,398 86,558,217 -------------------------------------------------------------------------------------------------------- Commonwealth Bank, ADR(3) 305,333 6,003,763 -------------------------------------------------------------------------------------------------------- Crestar Financial Corp. 550,000 20,212,500 -------------------------------------------------------------------------------------------------------- First Chicago NBD Corp. 452,500 26,471,250 -------------------------------------------------------------------------------------------------------- First Union Corp. 839,055 73,627,076 -------------------------------------------------------------------------------------------------------- Fleet Financial Group, Inc. 400,000 24,400,000 -------------------------------------------------------------------------------------------------------- Great Western Financial Corp. 600,000 26,325,000 -------------------------------------------------------------------------------------------------------- Greenpoint Financial Corp. 500,000 30,000,000 -------------------------------------------------------------------------------------------------------- KeyCorp 400,000 21,400,000 -------------------------------------------------------------------------------------------------------- Magna Group, Inc. 400,000 12,750,000 -------------------------------------------------------------------------------------------------------- Mellon Bank Corp. 450,000 36,168,750 -------------------------------------------------------------------------------------------------------- National City Corp. 500,000 25,250,000 -------------------------------------------------------------------------------------------------------- PNC Bank Corp. 301,600 12,780,300 -------------------------------------------------------------------------------------------------------- Signet Banking Corp. 400,000 12,700,000 -------------------------------------------------------------------------------------------------------- Summit Bancorp 500,000 23,875,000 -------------------------------------------------------------------------------------------------------- U.S. Bancorp, Inc. 245,000 12,096,875 -------------------------------------------------------------------------------------------------------- Washington Mutual, Inc. 339,702 17,961,743 ------------ 761,056,759 - --------------------------------------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL--1.8% American Express Co. 600,000 39,225,000 -------------------------------------------------------------------------------------------------------- Capital One Financial Corp. 300,000 11,925,000 -------------------------------------------------------------------------------------------------------- Echelon International Corp., Inc.(7) 33,333 574,994 ------------ 51,724,994 - --------------------------------------------------------------------------------------------------------------- INSURANCE--4.7% Allstate Corp. 724,432 45,910,878 -------------------------------------------------------------------------------------------------------- American General Corp. 500,000 21,687,500 -------------------------------------------------------------------------------------------------------- American States Financial Corp. 550,000 18,012,500 -------------------------------------------------------------------------------------------------------- GCR Holdings Ltd. 100,000 2,387,500 -------------------------------------------------------------------------------------------------------- IPC Holdings Ltd. 419,000 10,265,500 -------------------------------------------------------------------------------------------------------- ITT Hartford Group, Inc. 150,000 11,250,000 -------------------------------------------------------------------------------------------------------- Reliance Group Holdings, Inc. 2,141,500 23,288,813 ------------ 132,802,691
9 Oppenheimer Equity Income Fund 10 STATEMENT OF INVESTMENTS (Unaudited) (Continued)
MARKET VALUE SHARES SEE NOTE 1 =============================================================================================================== INDUSTRIAL--2.8% - --------------------------------------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT--0.8% AMP, Inc. 500,000 $ 19,437,500 -------------------------------------------------------------------------------------------------------- Cooper Industries, Inc. 43,686 1,933,106 ------------- 21,370,606 - --------------------------------------------------------------------------------------------------------------- MANUFACTURING--2.0% Keystone International, Inc. 300,000 5,662,500 -------------------------------------------------------------------------------------------------------- Minnesota Mining & Manufacturing Co. 400,000 36,800,000 -------------------------------------------------------------------------------------------------------- Tenneco, Inc. (New) 365,300 14,383,688 ------------- 56,846,188 - --------------------------------------------------------------------------------------------------------------- TRANSPORTATION--0.0% Newport News Shipbuilding, Inc. 80,000 1,240,000 - --------------------------------------------------------------------------------------------------------------- TECHNOLOGY--0.5% - --------------------------------------------------------------------------------------------------------------- AEROSPACE/DEFENSE--0.5% United Technologies Corp. 200,000 15,050,000 - --------------------------------------------------------------------------------------------------------------- UTILITIES--5.2% - --------------------------------------------------------------------------------------------------------------- ELECTRIC UTILITIES--3.0% Allegheny Power System, Inc. 300,000 9,187,500 -------------------------------------------------------------------------------------------------------- Central & South West Corp. 400,000 9,750,000 -------------------------------------------------------------------------------------------------------- DTE Energy Co. 300,000 9,075,000 -------------------------------------------------------------------------------------------------------- Entergy Corp. 550,000 14,506,250 -------------------------------------------------------------------------------------------------------- Florida Progress Corp. 500,000 15,750,000 -------------------------------------------------------------------------------------------------------- Ohio Edison Co. 400,000 9,000,000 -------------------------------------------------------------------------------------------------------- Potomac Electric Power Co. 400,000 10,150,000 -------------------------------------------------------------------------------------------------------- Public Service Co. of Colorado 200,000 7,800,000 ------------- 85,218,750 - --------------------------------------------------------------------------------------------------------------- GAS UTILITIES--0.2% Pacific Enterprises 150,000 4,575,000 - --------------------------------------------------------------------------------------------------------------- TELEPHONE UTILITIES--2.0% GTE Corp. 550,000 25,712,500 -------------------------------------------------------------------------------------------------------- Portugal Telecom SA, Sponsored ADR 410,000 14,298,750 -------------------------------------------------------------------------------------------------------- SBC Communications, Inc. 300,000 17,250,000 ------------- 57,261,250 ------------- Total Common Stocks (Cost $919,986,603) 1,653,647,320 =============================================================================================================== PREFERRED STOCKS--3.9% - --------------------------------------------------------------------------------------------------------------- Armco, Inc., $3.625 Cum. Cv. 200,000 8,300,000 -------------------------------------------------------------------------------------------------------- Banco Commercial Portuguese International Bank Ltd., 8% Cv. Preferred Stock, Series A 396,000 22,473,000 -------------------------------------------------------------------------------------------------------- California Federal Preferred Capital, 9.125% Non-Cum., Series A(7) 55,000 1,409,375 -------------------------------------------------------------------------------------------------------- Chiquita Brands International, Inc. $3.75 Cv., Series B 180,000 9,900,000 -------------------------------------------------------------------------------------------------------- Fidelity Federal Bank, 12% Non-Cum. Exchangeable Perpetual Preferred Stock, Series A(8) 100,000 2,837,500 -------------------------------------------------------------------------------------------------------- First Chicago NBD Corp., Depositary Shares (each representing a one-hundredth interest in a share of 5.75% cum. cv. preferred stock, series B) 135,000 13,635,000 -------------------------------------------------------------------------------------------------------- Fresenius Medical Care Trust, 9% Preferred Securities 1,600,000 1,654,000 -------------------------------------------------------------------------------------------------------- Glendale Federal Bank, F.S.B., 8.75% Non-Cum. Cv., Series E 175,000 11,637,500 -------------------------------------------------------------------------------------------------------- Occidental Petroleum Corp., $3.875 Cum. Cv.(3) 400,000 23,950,000 -------------------------------------------------------------------------------------------------------- Sovereign Bancorp, Inc., 6.25% Cv., Series B 36,500 2,783,125 -------------------------------------------------------------------------------------------------------- Valero Energy Corp., 6.25% Cv. Preferred 200,000 11,925,000 ------------ Total Preferred Stocks (Cost $90,896,041) 110,504,500
10 Oppenheimer Equity Income Fund 11
MARKET VALUE SHARES SEE NOTE 1 =============================================================================================================== OTHER SECURITIES--8.0% - --------------------------------------------------------------------------------------------------------------- Allstate Corp., $2.30 Debt Exchangeable for Common Stock of PMI Group, Inc. 111,000 $ 5,217,000 -------------------------------------------------------------------------------------------------------- American General Delaware, LLC, $3.00 Cv. Monthly Income Preferred Securities, Series A 75,000 4,359,375 -------------------------------------------------------------------------------------------------------- Atlantic Richfield Co., 9% Exchangeable Nts. for Common Stock of Lyondell Petrochemical Co., 9/15/97 400,000 9,150,000 -------------------------------------------------------------------------------------------------------- Browning-Ferris Industries, Inc., 7.25% Cv. Automatic Common Exchangeable Securities 225,000 7,228,125 -------------------------------------------------------------------------------------------------------- Continental Airlines Finance Trust, 8.50% Cv. Trust Originated Preferred Securities(3) 200,000 13,200,000 -------------------------------------------------------------------------------------------------------- Corning Delaware LP, 6% Cv. Monthly Income Preferred Securities 150,000 9,356,250 -------------------------------------------------------------------------------------------------------- Elsag Bailey Financing Trust, 5.50% Cv. Trust Originated Preferred Securities(3) 250,000 8,937,500 -------------------------------------------------------------------------------------------------------- Enron Corp., 6.25% Cv. Automatic Common Exchangeable Securities, redeemable into Enron Oil & Gas Co. Common Stock 270,000 5,636,250 -------------------------------------------------------------------------------------------------------- Hollinger International, Inc., 9.75% Preferred Redeemable Increased Dividend Equity Securities, Cv., 8/1/00 800,000 8,300,000 -------------------------------------------------------------------------------------------------------- James River Corp. of Virginia, Depositary Shares each representing a one-hundredth interest in a share of Series P, 9% Cum. Cv. Preferred Stock, Dividend Enhanced Convertible Stock 700,000 21,437,500 -------------------------------------------------------------------------------------------------------- MCN Corp., 8.75% Cv. Preferred Redeemable Increased Dividend Equity Securities 135,000 3,847,500 -------------------------------------------------------------------------------------------------------- Merrill Lynch & Co., Inc., 6% Cv. Structured Yield Product Exchangeable for Common Stock of Cox Communications, Inc., 6/1/99 500,000 10,250,000 -------------------------------------------------------------------------------------------------------- News Corp. Ltd. (The), Units (5% Exchangeable Trust Originated Preferred Securities for ordinary shares or ADSs of British Sky Broadcasting Group plc)(3)(10) 125,000 12,820,313 -------------------------------------------------------------------------------------------------------- Owens Corning Capital LLC, 6.50% Cv. Monthly Income Preferred Securities, Non-Vtg.(3) 200,000 11,175,000 -------------------------------------------------------------------------------------------------------- RJR Nabisco Holdings Corp., $6.50 Cv., Series C 4,315,000 30,744,375 -------------------------------------------------------------------------------------------------------- Salomon, Inc., 7.625% Cv. Preferred, Debt Exchangeable for Common Stock of Financial Security Assurance Holdings Ltd. 460,000 14,145,000 -------------------------------------------------------------------------------------------------------- Santa Fe Energy Resources, Inc., 8.25% Dividend Enhanced Convertible Stock(9) 805,000 8,955,625 -------------------------------------------------------------------------------------------------------- U S West, Inc., 7.625% Cv. Debt Exchangeable for Common Stock of Enhance Financial Services Group, Inc. 415,000 12,968,750 -------------------------------------------------------------------------------------------------------- U.S. Surgical Corp., $2.20 Depositary Shares representing one-fiftieth share of Series A Preferred Stock 500,000 20,187,500 -------------------------------------------------------------------------------------------------------- Westinghouse Electric Corp., $1.30 Cv. Participating Equity Preferred Stock, Series C(3) 600,000 9,450,000 ------------ Total Other Securities (Cost $194,374,912) 227,366,063
11 Oppenheimer Equity Income Fund 12 STATEMENT OF INVESTMENTS (Unaudited) (Continued)
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 ===================================================================================================================== STRUCTURED INSTRUMENTS--0.4% -------------------------------------------------------------------------------------------------------------- Canadian Imperial Bank, 17% U.S. Dollar CD Linked to South African Rand, 1/21/98 $ 5,000,000 $ 5,075,000 -------------------------------------------------------------------------------------------------------------- CS First Boston Corp. Argentina Structured Product Asset Return Trust Certificates, 9.40%, 9/1/97 [representing debt of Argentina (Republic of) Bonos del Tesoro Bonds, Series II, 5.50%, 9/1/97 and an interest rate swap between Credit Suisse Financial Products and the Trust](8) 2,285,714 2,238,743 -------------------------------------------------------------------------------------------------------------- ING (U.S.) Financial Holdings Corp., Zero Coupon Nts. Linked to the Greek Drachma/Swiss Franc Exchange Rate, 14.83%, 12/4/97(2) 5,000,000 4,260,500 -------------- Total Structured Instruments (Cost $11,778,028) 11,574,243 ===================================================================================================================== REPURCHASE AGREEMENT--5.9% - --------------------------------------------------------------------------------------------------------------------- Repurchase agreement with Zion First National Bank, 5.38%, dated 2/28/97, to be repurchased at $168,175,365 on 3/3/97, collateralized by U.S. Treasury Nts., 5.50%--7.50%, 5/15/98--8/15/04, with a value of $171,672,288 (Cost $168,100,000) 168,100,000 168,100,000 - --------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $2,011,671,797) 99.5% 2,825,957,121 - --------------------------------------------------------------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 0.5 14,888,943 ------------- -------------- NET ASSETS 100.0% $2,840,846,064 ============= ==============
1. Face amount is reported in U.S. Dollars, except for those denoted in the following currencies: AUD -- Australian Dollar MYR -- Malaysian Ringgit CAD -- Canadian Dollar PLZ -- Polish Zloty MXP -- Mexican Peso 2. For zero coupon bonds, the interest rate shown is the effective yield on the date of purchase. 3. 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 $108,527,326 or 3.82% of the Fund's net assets, at February 28, 1997. 4. A sufficient amount of liquid assets has been designated to cover outstanding written call and put options, as follows:
SHARES SUBJECT EXPIRATION EXERCISE PREMIUM MARKET VALUE TO CALL/PUT DATE PRICE RECEIVED SEE NOTE 1 ================================================================================================================== Call Option on Argentina (Republic of) Global Bonds, 11.375%, 1/30/17 1,850,000 3/97 $108.20 $29,600 $15,725 ------------------------------------------------------------------------------------------------------------------ Put Option on Argentina (Republic of) Global Bonds, 11.375%, 1/30/17 1,850,000 5/97 104.40 55,500 51,800 ------- ------- $85,100 $67,525 ======= =======
5. Represents the current interest rate for a variable rate security. 6. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. 7. Non-income producing security. 8. Identifies issues considered to be illiquid--See Note 6 of Notes to Financial Statements. 9. Affiliated company. Represents ownership of at least 5% of the voting securities of the issuer and is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended February 28, 1997. The aggregate fair value of all securities of affiliated companies as of February 28, 1997 amounted to $8,955,625. Transactions during the period in which the issuer was an affiliate are as follows:
BALANCE BALANCE AUGUST 31, 1996 GROSS ADDITIONS GROSS REDUCTIONS FEBRUARY 28, 1997 ----------------- ---------------- ---------------- ------------------- DIVIDEND SHARES COST SHARES COST SHARES COST SHARES COST INCOME - ----------------------------------------------------------------------------------------------------------------------------------- Santa Fe Energy Resources, Inc., 8.25% Dividend Enhanced Convertible Stock 805,000 $7,144,375 -- $-- -- $-- 805,000 $7,144,375 $294,630
10. 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. See accompanying Notes to Financial Statements. 12 Oppenheimer Equity Income Fund 13 STATEMENT OF ASSETS AND LIABILITIES February 28, 1997 (Unaudited) =============================================================================================================== ASSETS Investments, at value--see accompanying statement: Unaffiliated companies (cost $2,004,527,422) $2,817,001,496 Affiliated companies (cost $7,144,375) 8,955,625 ------------------------------------------------------------------------------------------------- Receivables: Interest and dividends 13,935,601 Investments sold 5,797,027 Shares of beneficial interest sold 2,657,999 ------------------------------------------------------------------------------------------------- Other 34,560 -------------- Total assets 2,848,382,308 =============================================================================================================== LIABILITIES Bank overdraft 31,586 ------------------------------------------------------------------------------------------------- Options written, at value (premiums received $85,100)--see accompanying statement--Note 5 67,525 ------------------------------------------------------------------------------------------------- Payables and other liabilities: Shares of beneficial interest redeemed 5,733,098 Distribution and service plan fees 892,830 Transfer and shareholder servicing agent fees 265,323 Shareholder reports 199,189 Trustees' fees 2,606 Other 344,087 -------------- Total liabilities 7,536,244 =============================================================================================================== NET ASSETS $2,840,846,064 ============== =============================================================================================================== COMPOSITION OF NET ASSETS Paid-in capital $1,981,233,497 ------------------------------------------------------------------------------------------------- Undistributed net investment income 13,330,241 ------------------------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions 31,998,574 ------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 814,283,752 -------------- Net assets $2,840,846,064 ============== =============================================================================================================== NET ASSET VALUE PER SHARE Class A Shares: Net asset value and redemption price per share (based on net assets of $2,470,873,233 and 190,747,297 shares of beneficial interest outstanding) $12.95 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $13.74 ------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price and offering price per share (based on net assets of $347,628,498 and 27,022,556 shares of beneficial interest outstanding) $12.86 ------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price and offering price per share (based on net assets of $22,344,333 and 1,735,267 shares of beneficial interest outstanding) $12.88
See accompanying Notes to Financial Statements. 13 Oppenheimer Equity Income Fund 14 STATEMENT OF OPERATIONS For the Six Months Ended February 28, 1997 (Unaudited) =============================================================================================================== INVESTMENT INCOME Interest $ 34,676,970 ------------------------------------------------------------------------------------------- Dividends: Unaffiliated companies (net of foreign withholding taxes of $38,038) 29,423,798 Affiliated companies 294,630 ------------ Total income 64,395,398 =============================================================================================================== EXPENSES Management fees--Note 4 6,875,552 ------------------------------------------------------------------------------------------- Distribution and service plan fees--Note 4: Class A 2,198,945 Class B 1,498,831 Class C 57,296 ------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees--Note 4 1,449,706 ------------------------------------------------------------------------------------------- Shareholder reports 400,227 ------------------------------------------------------------------------------------------- Custodian fees and expenses 60,444 ------------------------------------------------------------------------------------------- Legal and auditing fees 38,455 ------------------------------------------------------------------------------------------- Trustees' fees and expenses 36,419 ------------------------------------------------------------------------------------------- Registration and filing fees: Class B 17,441 Class C 4,005 ------------------------------------------------------------------------------------------- Insurance expenses 16,119 ------------------------------------------------------------------------------------------- Other 82,098 ------------ Total expenses 12,735,538 =============================================================================================================== NET INVESTMENT INCOME 51,659,860 =============================================================================================================== REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investments 38,152,652 Foreign currency transactions (219,268) ------------ Net realized gain 37,933,384 ------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation on: Investments 385,892,714 Translation of assets and liabilities denominated in foreign currencies 340 ------------ Net change 385,893,054 ------------ Net realized and unrealized gain 423,826,438 =============================================================================================================== NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $475,486,298 ============
See accompanying Notes to Financial Statements. 14 Oppenheimer Equity Income Fund 15 STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED FEBRUARY 28, 1997 PERIOD ENDED YEAR ENDED (UNAUDITED) AUGUST 31, 1996(1) JUNE 30, 1996 ================================================================================================================================== OPERATIONS Net investment income $ 51,659,860 $ 17,326,356 $ 100,321,496 --------------------------------------------------------------------------------------------------------------- Net realized gain 37,933,384 14,519,814 71,806,904 --------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation 385,893,054 (39,753,931) 206,616,780 -------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations 475,486,298 (7,907,761) 378,745,180 ================================================================================================================================== DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income: Class A (44,557,819) -- (88,933,508) Class B (4,546,407) -- (7,653,335) Class C (158,629) -- (81,369) --------------------------------------------------------------------------------------------------------------- Distributions from net realized gain: Class A (74,844,866) -- (45,033,840) Class B (9,969,879) -- (4,472,521) Class C (386,132) -- (15,717) ================================================================================================================================== BENEFICIAL INTEREST TRANSACTIONS Net increase (decrease) in net assets resulting from beneficial interest transactions--Note 2: Class A 59,710,991 (23,541,609) 35,013,412 Class B 49,070,349 8,288,875 70,965,886 Class C 13,625,604 1,564,603 5,782,628 ================================================================================================================================== NET ASSETS Total increase (decrease) 463,429,510 (21,595,892) 344,316,816 --------------------------------------------------------------------------------------------------------------- Beginning of period 2,377,416,554 2,399,012,446 2,054,695,630 -------------- -------------- -------------- End of period (including undistributed net investment income of $13,330,241, $10,933,236 and $2,274,563, respectively) $2,840,846,064 $2,377,416,554 $2,399,012,446 ============== ============== ==============
1. The Fund changed its fiscal year end from June 30 to August 31. See accompanying Notes to Financial Statements. 15 Oppenheimer Equity Income Fund 16 FINANCIAL HIGHLIGHTS
CLASS A ---------------------------------------------------------------------------------- SIX MONTHS ENDED PERIOD FEBRUARY 28, ENDED 1997 AUGUST 31, YEAR ENDED JUNE 30, (UNAUDITED) 1996(2) 1996 1995 1994 ==================================================================================================================================== PER SHARE OPERATING DATA: Net asset value, beginning of period $ 11.36 $ 11.39 $ 10.25 $ 9.44 $ 10.01 - ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income .19 .09 .50 .50 .47 Net realized and unrealized gain (loss) 2.04 (.12) 1.36 .92 (.39) ------- ------- ------- ------- ------- Total income (loss) from investment operations 2.23 (.03) 1.86 1.42 .08 - ----------------------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.24) -- (.48) (.48) (.47) Dividends in excess of net investment income -- -- -- -- (.01) Distributions from net realized gain (.40) -- (.24) (.13) (.12) Distributions in excess of capital gain -- -- -- -- (.05) ------- ------- ------- ------- ------- Total dividends and distributions to shareholders (.64) -- (.72) (.61) (.65) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 12.95 $ 11.36 $ 11.39 $ 10.25 $ 9.44 ======= ======= ======= ======= ======= =================================================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(4) 20.14% (0.26)% 18.61% 15.66% 0.65% =================================================================================================================================== RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in millions) $ 2,471 $ 2,110 $ 2,141 $ 1,893 $ 1,773 - ----------------------------------------------------------------------------------------------------------------------------------- Average net assets (in millions) $ 2,315 $ 2,109 $ 2,054 $ 1,798 $ 1,832 - ----------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 4.06%(5) 3.28%(5) 4.51% 5.15% 4.72% Expenses 0.88%(5) 0.94%(5) 0.89% 0.96% 0.90% - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(6) 7.9% 13.5% 42.9% 45.7% 30.4% Average brokerage commission rate(7) $0.0588 $0.0587 $0.0592 -- --
1. For the period from November 1, 1995 (inception of offering) to June 30, 1996. 2. 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 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. 16 Oppenheimer Equity Income Fund 17
CLASS B CLASS C - ------------------------- --------------------------------------------------------------- ---------------------------------------- SIX MONTHS SIX MONTHS ENDED PERIOD ENDED PERIOD PERIOD FEBRUARY 28, ENDED FEBRUARY 28, ENDED ENDED 1997 AUGUST 31, YEAR ENDED JUNE 10, 1997 AUGUST 31, JUNE 30, 1993 1992 (UNAUDITED) 1996(2) 1996 1995 1994(3) (UNAUDITED) 1996(2) 1996(1) ==================================================================================================================================== $ 9.15 $ 8.86 $ 11.29 $ 11.33 $ 10.21 $ 9.40 $ 10.22 $ 11.30 $ 11.35 $ 10.76 - ------------------------------------------------------------------------------------------------------------------------------------ .50 .50 .14 .07 .41 .43 .36 .16 .07 .28 .99 .39 2.02 (.11) 1.35 .91 (.58) 2.01 (.12) .88 - ------- ------- ------- ------- -------- ------ ------- ------- ------- ------- 1.49 .89 2.16 (.04) 1.76 1.34 (.22) 2.17 (.05) 1.16 - ------------------------------------------------------------------------------------------------------------------------------------ (.48) (.48) (.19) -- (.40) (.40) (.42) (.19) -- (.33) -- -- -- -- -- -- (.01) -- -- -- (.15) (.12) (.40) -- (.24) (.13) (.12) (.40) -- (.24) -- -- -- -- -- -- (.05) -- -- -- - ------- ------- ------- ------- -------- ------- ------- ------- ------- ------- (.63) (.60) (.59) -- (.64) (.53) (.60) (.59) -- (.57) - ------------------------------------------------------------------------------------------------------------------------------------ $ 10.01 $ 9.15 $ 12.86 $ 11.29 $ 11.33 $ 10.21 $ 9.40 $ 12.88 $ 11.30 $ 11.35 ======= ======= ======= ======= ======== ======= ======= ======= ======= ======= ==================================================================================================================================== 16.76% 10.26% 19.58% (0.35)% 17.58% 14.87% (2.35)% 19.70% (0.44)% 10.50% ==================================================================================================================================== $ 1,790 $ 1,556 $ 348 $ 260 $ 252 $ 161 $ 88 $ 22 $ 7 $ 6 - ------------------------------------------------------------------------------------------------------------------------------------ $ 1,658 $ 1,526 $ 304 $ 255 $ 208 $ 122 $ 47 $ 12 $ 7 $ 3 - ------------------------------------------------------------------------------------------------------------------------------------ 5.12% 5.33% 3.24%(5) 2.48%(5) 3.68% 4.34% 3.99%(5) 3.26%(5) 2.55%(5) 3.53%(5) 0.79% 0.82% 1.70%(5) 1.76%(5) 1.72% 1.79% 1.82%(5) 1.75%(5) 1.79%(5) 1.81%(5) - ------------------------------------------------------------------------------------------------------------------------------------ 59.0% 37.0% 7.9% 13.5% 42.9% 45.7% 30.4% 7.9% 13.5% 42.9% -- -- $0.0588 $0.0587 $0.0592 -- -- $0.0588 $0.0587 $0.0592
5. Annualized. 6. 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, 1997 were $346,524,283 and $191,639,805, respectively. 7. Total brokerage commissions paid on applicable purchases and sales of portfolio securities for the period, divided by the total number of related shares purchased and sold. See accompanying Notes to Financial Statements. 17 Oppenheimer Equity Income Fund 18 NOTES TO FINANCIAL STATEMENTS (Unaudited) ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Equity Income Fund (the Fund) is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The Fund's investment objective is to seek as much current income as is compatible with prudent investment. The Fund's investment adviser is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B and Class C shares. Class A shares are sold with a front-end sales charge. Class B and Class C shares may be subject to a contingent deferred sales charge. All classes of shares have identical rights to earnings, assets and voting privileges, except that each class has its own distribution and/or service plan, expenses directly attributable to a particular class and exclusive voting rights with respect to matters affecting a single class. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. -------------------------------------------------------------------------- INVESTMENT VALUATION. Portfolio securities are valued at the close of the New York Stock Exchange on each trading day. Listed and unlisted securities for which such information is regularly reported are valued at the last sale price of the day or, in the absence of sales, at values based on the closing bid or the last sale price on the prior trading day. Long-term and short-term ``non-money market'' debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Such securities which cannot be valued by the approved portfolio pricing service are valued using dealer-supplied valuations provided the Manager is satisfied that the firm rendering the quotes is reliable and that the quotes reflect current market value, or are valued under consistently applied procedures established by the Board of Trustees to determine fair value in good faith. Short-term ``money market type'' debt securities having a remaining maturity of 60 days or less are valued at cost (or last determined market value) adjusted for amortization to maturity of any premium or discount. -------------------------------------------------------------------------- FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. -------------------------------------------------------------------------- REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited. -------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class) and gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. -------------------------------------------------------------------------- FEDERAL TAXES. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by loss carryovers, to shareholders. Therefore, no federal income or excise tax provision is required. -------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders are recorded on the ex-dividend date. -------------------------------------------------------------------------- CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes primarily because of the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes. The character of the distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gain (loss) was recorded by the Fund. 18 Oppenheimer Equity Income Fund 19 ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) OTHER. Investment transactions are accounted for on the date the investments are purchased or sold (trade date) and dividend income is recorded on the ex-dividend date. Discount on securities purchased is amortized over the life of the respective securities, in accordance with federal income tax requirements. Interest on payment-in-kind debt instruments is accrued as income at the coupon rate and a market adjustment is made on the ex-date. Realized gains and losses on investments and unrealized appreciation and depreciation are determined on an identified cost basis, which is the same basis used for federal income tax purposes. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. ================================================================================ 2. SHARES OF BENEFICIAL INTEREST The Fund has authorized an unlimited number of no par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED FEBRUARY 28, 1997 PERIOD ENDED AUGUST 31, 1996(2) YEAR ENDED JUNE 30, 1996(1) ---------------------------------- ---------------------------------- ---------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------------------------------------ Class A: Sold 9,933,432 $122,373,778 3,550,795 $ 40,479,520 20,146,940 $223,283,409 Dividends and distributions reinvested 9,387,055 112,892,538 -- -- 11,433,753 125,568,723 Redeemed (14,313,942) (175,555,325) (5,703,125) (64,021,129) (28,310,542) (313,838,720) ----------- ------------ ---------- ------------ ----------- ------------ Net increase (decrease) 5,006,545 $ 59,710,991 (2,152,330) $(23,541,609) 3,270,151 $ 35,013,412 =========== ============ ========== ============ =========== ============ - ------------------------------------------------------------------------------------------------------------------------------------ Class B: Sold 4,304,231 $ 52,733,010 1,234,485 $ 13,913,799 8,424,677 $ 92,863,112 Dividends and distributions reinvested 1,133,548 13,579,960 -- -- 1,014,528 11,086,597 Redeemed (1,413,739) (17,242,621) (503,549) (5,624,924) (2,987,292) (32,983,823) ----------- ------------ ---------- ------------ ----------- ------------ Net increase 4,024,040 $ 49,070,349 730,936 $ 8,288,875 6,451,913 $ 70,965,886 =========== ============ ========== ============ =========== ============ - ------------------------------------------------------------------------------------------------------------------------------------ Class C: Sold 1,112,758 $ 14,015,707 153,840 $ 1,732,419 523,531 $ 5,887,218 Dividends and distributions reinvested 44,100 530,055 -- -- 8,456 94,181 Redeemed (74,619) (920,158) (14,976) (167,816) (17,823) (198,771) ----------- ------------ ---------- ------------ ----------- ------------ Net increase 1,082,239 $ 13,625,604 138,864 $ 1,564,603 514,164 $ 5,782,628 =========== ============ ========== ============ =========== ============
1. For the year ended June 30, 1996 for Class A and Class B shares and for the period from November 1, 1995 (inception of offering) to June 30, 1996 for Class C shares. 2. The Fund changed its fiscal year end from June 30 to August 31. ================================================================================ 3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS At February 28, 1997, net unrealized appreciation on investments of $814,302,899 was composed of gross appreciation of $827,374,302, and gross depreciation of $13,071,403. 19 Oppenheimer Equity Income Fund 20 NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) ================================================================================ 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 net assets, 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 net assets in excess of $500 million. The Manager has agreed to reimburse the Fund if aggregate expenses (with specified exceptions) exceed 1.5% of the first $30 million of average annual net assets of the Fund, plus 1% of average annual net assets in excess of $30 million. For the six months ended February 28, 1997, commissions (sales charges paid by investors) on sales of Class A shares totaled $2,258,361, of which $721,164 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the Manager, as general distributor, and by an affiliated broker/dealer. Sales charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and Class C shares totaled $1,724,663 and $134,753, of which $140,252 and $3,513, respectively, was paid to an affiliated broker/dealer. During the six months ended February 28, 1997, OFDI received contingent deferred sales charges of $216,229 and $2,343 upon redemption of 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 for other registered investment companies. OFS's total costs of providing such services are allocated ratably to these companies. 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 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 period ended February 28, 1997, OFDI paid $146,153 to an affiliated broker/dealer as reimbursement for Class A personal service and maintenance expenses. The Fund has adopted a reimbursement type Distribution and Service Plan for Class B shares to reimburse OFDI for its services and costs in distributing Class B shares and servicing accounts. Under the Plan, the Fund pays OFDI an annual asset-based sales charge of 0.75% per year on Class B shares. OFDI also receives a service fee of 0.25% per year to reimburse dealers for providing personal services for accounts that hold Class B shares. Both fees are computed on the average annual net assets of Class B shares, determined as of the close of each regular business day. During the six months ended February 28, 1997, OFDI paid $24,909 to an affiliated broker/dealer as reimbursement for Class B personal service and maintenance expenses and retained $1,231,106 as reimbursement for Class B sales commissions and service fee advances, as well as financing costs. If the 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 certain expenses it incurred before the Plan was terminated. As of February 28, 1997, OFDI had incurred unreimbursed expenses of $7,933,570 for Class B. The Fund has adopted a compensation type Distribution and Service Plan for Class C shares to compensate OFDI for its services and costs in distributing Class C shares and servicing accounts. Under the Plan, the Fund pays OFDI an annual asset-based sales charge of 0.75% per year on Class C shares. If the 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 certain expenses it incurred before the Plan was terminated. OFDI also receives a service fee of 0.25% per year to compensate dealers for providing personal services for accounts that hold Class C shares. Both fees are computed on the average annual net assets of Class C shares, determined as of the close of each regular business day. During the period ended February 28, 1997, OFDI retained $50,491 as compensation for Class C sales commissions and service fee advances, as well as financing costs. As of February 28, 1997, OFDI had incurred unreimbursed expenses of $171,033 for Class C. 20 Oppenheimer Equity Income Fund 21 ================================================================================ 5. OPTION ACTIVITY The Fund may buy and sell put and call options, or write put and covered call options on portfolio securities in order to produce incremental earnings or protect against changes in the value of portfolio securities. The Fund generally purchases put options or writes covered call options to hedge against adverse movements in the value of portfolio holdings. When an option is written, the Fund receives a premium and becomes obligated to sell or purchase the underlying security at a fixed price, upon exercise of the option. Options are valued daily based upon the last sale price on the principal exchange on which the option is traded and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss upon the expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. Securities designated to cover outstanding call options are noted in the Statement of Investments where applicable. Shares subject to call, expiration date, exercise price, premium received and market value are detailed in a footnote to the Statement of Investments. Options written are reported as a liability in the Statement of Assets and Liabilities. Gains and losses are reported in the Statement of Operations. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Written option activity for the six months ended February 28, 1997 was as follows:
CALL OPTIONS PUT OPTIONS -------------------------------- ------------------------------ NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF OPTIONS PREMIUMS OPTIONS PREMIUMS ------------------------------------------------------------------------------------------------------------ Options outstanding at August 31, 1996 -- $ -- -- $ -- Options written 1,850 29,600 1,850 55,500 ------------- ------------- ------------- ------------- Options outstanding at February 28, 1997 1,850 $ 29,600 1,850 $ 55,500 ============= ============= ============= =============
================================================================================ 6. ILLIQUID AND RESTRICTED SECURITIES At February 28, 1997, 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 from time to time) 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 at February 28, 1997 was $5,076,243, which represents 0.18% of the Fund's net assets.
VALUATION PER UNIT AS OF SECURITY ACQUISITION DATE COST PER UNIT FEBRUARY 28, 1997 ------------------------------------------------------------------------------------------------------------ BONDS ----- CS First Boston Corp. Argentina Structured Product Asset Return Trust Certificates, 9.40%, 9/1/97 9/7/94 100.00% 97.95% ------------------------------------------------------------------------------------------------------------ STOCKS ------ Fidelity Federal Bank, 12% Non-Cum. Exchangeable Perpetual Preferred Stock, Series A 11/6/95--11/9/95 $25.00 $28.375
21 Oppenheimer Equity Income Fund 22 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, 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 ADVISER OppenheimerFunds, Inc. ================================================================================ DISTRIBUTOR OppenheimerFunds Distributor, Inc. ================================================================================ TRANSFER AND SHAREHOLDER SERVICING AGENT OppenheimerFunds Services ================================================================================ CUSTODIAN OF PORTFOLIO SECURITIES The Bank of New York ================================================================================ INDEPENDENT AUDITORS Deloitte & Touche LLP ================================================================================ LEGAL COUNSEL Myer, Swanson, Adams & Wolf, P.C. The financial statements included herein have been taken from the records of the Fund without examination by the independent auditors. This is a copy of a report to shareholders of Oppenheimer Equity Income Fund. This report must be preceded or accompanied by a Prospectus of Oppenheimer Equity Income Fund. For material information concerning the Fund, see the Prospectus. Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, and are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested. 22 Oppenheimer Equity Income Fund 23 OPPENHEIMERFUNDS FAMILY ================================================================================ OppenheimerFunds offers over 50 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 35 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 3 million shareholder accounts and more than $60 billion under OppenheimerFunds' management and that of our affiliates. At OppenheimerFunds we don't charge a fee to exchange shares. And you can exchange shares easily by mail or by telephone.(1) For more information on Oppenheimer funds, please contact your financial adviser or call us at 1-800-525-7048 for a prospectus. You may also write us at the address shown on the back cover. As always, please read the prospectus carefully before you invest. ==================================================================================================================================== STOCK FUNDS Developing Markets Fund Quest Capital Value Fund Global Emerging Growth Fund Growth Fund Enterprise Fund(2) Global Fund International Growth Fund Quest Global Value Fund Discovery Fund Disciplined Value Fund Quest Small Cap Value Fund Oppenheimer Fund Gold & Special Minerals Fund Value Stock Fund Capital Appreciation Fund(3) Quest Value Fund ==================================================================================================================================== STOCK & BOND FUNDS Main Street Income & Growth Fund Equity Income Fund Quest Opportunity Value Fund Disciplined Allocation Fund Total Return Fund Multiple Strategies Fund(4) Quest Growth & Income Value Fund Strategic Income & Growth Fund Global Growth & Income Fund Bond Fund for Growth ==================================================================================================================================== BOND FUNDS International Bond Fund Bond Fund High Yield Fund U.S. Government Trust Champion Income Fund Limited-Term Government Fund Strategic Income Fund ==================================================================================================================================== MUNICIPAL FUNDS California Municipal Fund(5) Insured Municipal Fund Florida Municipal Fund(5) Intermediate Municipal Fund New Jersey Municipal Fund(5) New York Municipal Fund(5) Rochester Division Pennsylvania Municipal Fund(5) Rochester Fund Municipals Municipal Bond Fund Limited Term New York Municipal Fund ==================================================================================================================================== MONEY MARKET FUNDS6 Money Market Fund Cash Reserves ==================================================================================================================================== LIFESPAN Growth Fund Income Fund Balanced Fund
1. Exchange privileges are subject to change or termination. Shares may be exchanged only for shares of the same class of eligible funds. 2. Effective 4/1/96, the Fund is closed to new investors. 3. On 12/18/96, the Fund's name was changed from "Target Fund." 4. On 3/6/97, the Fund's name was changed from "Asset Allocation Fund." 5. Available only to investors in certain states. 6. An investment in money market funds is neither insured nor guaranteed by the U.S. government and there can be no assurance that a money market fund will be able to maintain a stable net asset value of $1.00 per share. Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two World Trade Center, New York, NY 10048-0203. (C) Copyright 1997 OppenheimerFunds, Inc. All rights reserved. 23 Oppenheimer Equity Income Fund 24 INFORMATION GENERAL INFORMATION Monday-Friday 8:30 a.m.-9 p.m. ET Saturday 10 a.m.-2 p.m. ET 1-800-525-7048 TELEPHONE TRANSACTIONS Monday-Friday 8:30 a.m.-8 p.m. ET 1-800-852-8457 PHONELINK 24 hours a day, automated information and transactions 1-800-533-3310 TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD) Monday-Friday 8:30 a.m.-8 p.m. ET 1-800-843-4461 OPPENHEIMERFUNDS INFORMATION HOTLINE 24 hours a day, timely and insightful messages on the economy and issues that affect your investments 1-800-835-3104 RS0300.001.0297 April 30, 1997 [PHOTO] CUSTOMER SERVICE REPRESENTATIVE OPPENHEIMERFUNDS SERVICES "How may I help you?" As an Oppenheimer fund shareholder, you have some special privileges. Whether it's automatic investment plans, informative newsletters and hotlines, or ready account access, you can benefit from services designed to make investing simple. And when you need help, our Customer Service Representatives are only a toll-free phone call away. They can provide information about your account and handle administrative requests. You can reach them at our General Information number. When you want to make a transaction, you can do it easily by calling our toll-free Telephone Transactions number. And, by enrolling in AccountLink, a convenient service that ''links'' your Oppenheimer funds accounts and your bank checking or savings account, you can use the Telephone Transactions number to make investments. For added convenience, you can get automated information with OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week. PhoneLink gives you access to a variety of fund, account, and market information. Of course, you can always speak with a Customer Service Representative during the General Information hours shown at the left. You can count on us whenever you need assistance. That's why the International Customer Service Association, an independent, nonprofit organization made up of over 3,200 customer service management professionals from around the country, honored the Oppenheimer funds' transfer agent, OppenheimerFunds Services, with their Award of Excellence in 1993. So call us today--we're here to help. [OPPENHEIMERFUNDS LOGO] OppenheimerFunds Distributor, Inc. P.O. Box 5270 Denver, CO 80217-5270 - ----------------- Bulk Rate U.S. Postage PAID Permit No. 130 Torrington, CT - ----------------- -----END PRIVACY-ENHANCED MESSAGE-----