-----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, NpNLLmdlpbfvmeLlt/hZPaMP6VLsnVNS4/UP6HQmEcLCUKg7mwiBR7+GejpDrdqs wNwBaVakV9kiGLdWyCnEEw== 0000950146-96-000384.txt : 19960306 0000950146-96-000384.hdr.sgml : 19960306 ACCESSION NUMBER: 0000950146-96-000384 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960305 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: 96531225 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 Oppenheimer Equity Income Fund Semiannual Report December 31, 1995 [COVER PHOTO] "We need our investment to do a lot... we want it to provide money to live on and increase in value, too." [LOGO-OPENHEIMER FUNDS(R)] This Fund is for people who want their investment to work two ways: provide both current income and the potential for long-term growth. News "This fund has one of the best payouts in the equity-income group." --Morningstar Mutual Funds September 15, 1995 How Your Fund Is Managed Oppenheimer Equity Income Fund is designed to give you the benefits of a diversified port-folio of stocks, bonds, and other fixed-income investments. We manage your Fund to provide quarterly income from dividend-paying stocks and other income-producing instruments with a secondary objective of capital appreciation by investing in stocks, while maintaining prin-cipal as well. Diversification provides another advantage to shareholders: less risk. Because the Fund's assets are allocated across different types of securities, investment risk is reduced. And to maintain performance while offsetting risks in this year's volatile markets, your managers have increased the holdings of higher quality stocks over their previous levels.1 Performance Total return at net asset value for the six months ended 12/31/95 was 11.34% for Class A shares and 10.86% for Class B shares.2 Your Fund's average annual total returns at maximum offering price for Class A shares for the 1-, 5-, and 10-year periods ended 12/31/95 were 20.56%, 11.01% and 11.00%, respectively. For Class B shares, average annual total returns for the 1-year period ended 12/31/95 and since inception of the Class on 8/17/93 were 21.98% and 8.50%, respectively.3 Outlook "Our outlook is optimistic. We continue to see a lot of positives in the stock market--such as low interest rates and inflation, and the fact that we've been able to find companies that have had good earnings regardless of a slower economy." John Doney, Portfolio Manager December 31, 1995 Total returns include change in share price and reinvestment of dividends and capital gains distributions. Past performance does not guarantee future results. Investment return and principal value of an investment in the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. For more complete information, please review the prospectus carefully before you invest. 1. The Fund's portfolio is subject to change. 2. Based on the change in net asset value per share for the period shown, without deducting any sales charges. Such performance would have been lower if sales charges were taken into account. 3. Class A returns show results of hypothetical investments on 12/31/94, 12/31/90 and 12/31/85, after deducting the current maximum initial sales charge of 5.75%. Class A shares were first publicly offered on 12/1/70. The Fund's maximum sales charge for Class A shares was higher during a portion of some of the periods shown, and actual investment results will be different as a result of the change. Class B returns show results of hypothetical investments on 12/31/94 and 8/17/93 (inception of class), and the deduction of the applicable contingent deferred sales charge of 5% (1-year) and 3% (since inception). Certain Class C performance is not shown above because Class C shares were first publicly offered on 11/1/95. An explanation of the different performance calculations is in the Fund's prospectus. 2 Oppenheimer Equity Income Fund Dear OppenheimerFunds Shareholder, [PHOTO-JAMES C. SWAIN] James C. Swain Chairman Oppenheimer Equity Income Fund [PHOTO-BRIDGET A. MACASKILL] Bridget A. Macaskill President Oppenheimer Equity Income Fund The U.S. stock market put on quite a show in 1995 with the Dow Jones Industrial Average breaking the 5000 barrier. During 1995, conditions were ideal for rising stock prices. The economy grew fast enough to generate strong corporate profits--but not so fast as to rekindle inflation. And intermediate- and long-term interest rates fell sharply, as investors anticipated that the Federal Reserve Board had shifted from its restrictive monetary policy of the prior year. Leading the rally on Wall Street for much of the year were technology stocks. Even after a bumpy Fall, many stocks in semiconductors, computers, software and telecommunications doubled during the year. The global demand for these products--developed and manufactured by American companies--continued unabated. The reduction in the rate of growth of health care expenditures is just one reason why inflation remains moderate. Another reason is the plentiful supply of inexpensive energy. In addition, the emergence of capitalism throughout the world has created a global economy of new markets and new competitors, dampening prices and labor costs. And after many years of promise, technology has finally created efficiencies in the business environment. But the primary fuel to stock prices came from corporate profits, which have been surging in the past few years, due in large part to a rise in U.S. corporate productivity. The determination of Corporate America to be successful in today's highly competitive markets has led to a strategy of tight cost control with an emphasis on efficiency. With a global boom in technology and a weak dollar in the first half of the year--which made U.S. goods more attractive overseas--corporate earnings and profitability have remained very strong, growing about 20% between 1994 and 1995. With the Dow less than 1000 just 15 years ago and only 2500 five years ago, it's clear that the stock market's advance has been tremendous. So the question remains, "Is the case for stocks still strong?" Certainly, market volatility would be expected at this point in a five year bull market, especially since there hasn't been a "normal correction" of 10% or more since 1990. And the slowdown in the economy is likely to translate into soft profit growth this year. But the underlying economic conditions that have driven stocks thus far--moderate growth with low inflation, falling interest rates, and a Corporate America that's committed to increased efficiency--remain in place. Additionally, there is increasing demand for U.S. exports in light of expanding international economies, as well as the increasing belief that U.S. technologies lead the world. As a result, we believe that the stock market continues to offer a good value for investors. But, realistically, we don't expect another year like 1995 any time soon. Your portfolio manager discusses the outlook for your Fund in light of these broad issues on the following pages. Thank you for your confidence in OppenheimerFunds, and we look forward to helping you reach your investment goals in the future. /s/ James C. Swain /s/ Bridget A. Macaskill James C. Swain Bridget A. Macaskill January 22, 1996 3 Oppenheimer Equity Income Fund Q + A [PHOTO-JOHN DONEY] [PHOTO-MARK BINNING AND LAWRENCE APOLITO] An interview with your Fund's managers. Q What helped performance? How has the Fund performed over the past six months? We're very pleased with the Fund's performance. Our strong performance is tied to the fact that both the stock and bond markets have posted extremely favorable performance over the period, benefiting from declining interest rates, continued low inflation, and steady corpo- rate earnings in the face of a slowing economy. Strong markets, in combination with good security selection over the period, allowed us to meet our dual goals of pro- viding quarterly income while capturing the potential for growth. [PHOTO-RICHARD RUBINSTEIN] What investments have made positive contributions to performance? Over the period, we'd been heavily invested in financial stocks, one of the top performing sectors in this year's mar-ket. In particular, we've had a lot of success with bank and insurance stocks. Though these stocks have performed very well, we believe we will continue to see upward earnings progress in 1996, especially when you consider that, even after this year's appreciation, bank stocks are selling at reasonable prices compared to the valuations found in other sectors of the market.1 In terms of income, we have been focusing on long-term bonds and convertible securities. Because bonds rallied, and their performance was so outstanding over the period, we've been selling. Convertibles have also done well, and should continue as we go forward. This is based on their yields being in demand because interest rates are low, and their prices have been strong because of their ties to the underlying common stock. 1. The Fund's portfolio is subject to change. 4 Oppenheimer Equity Income Fund Facing page Top left: John Doney, Portfolio Manager Top right: Mark Binning and Lawrence Apolito, Equity Trading Bottom: Richard Rubinstein, Member of Equity Investments Team This page Top: John Doney Bottom: Diane Sobin and Bruce Bartlett, Members of Equity Investments Team A We found companies that had good earnings regardless of a slower economy. Were there any investments that didn't perform as well as you'd expected? Over the period, we've reduced our holdings in cyclical stocks somewhat, especially in the areas of paper products and chemi-cals. While stocks in this area of the market have not been poor performers per se, they just haven't performed as well as the overall market or our expectations for them. As a result, we've moved out of cyclicals both in convertibles and common stocks. What areas are you currently targeting? Right now we're looking for companies that exhibit reliability in earnings--and while we're looking across all industry sectors, a search like this tends to lead to higher quality stocks that have historically exhibited more stability. [PHOTO-DIANE SOBIN AND BRUCE BARTLETT] We're also interested in companies that have been restructuring, or that have other internal factors that should help make earnings growth more certain. And while some companies in more cyclical businesses may meet our standards, we expect the majority of our investments to be in companies that don't need a push from the economy to achieve their desired sales. Companies in this category include the traditional growth stocks such as brand name consumer goods and phar-maceutical companies. Some other moves we've made recently include increasing our holdings of electrical utilities somewhat, due to their lower than usual valuations and high yield potential, and moving some money into healthcare stocks, with the belief that they will offer reliable earnings over the next year. [PHOTO-JOHN DONEY] What is your outlook for the Fund? Our outlook is optimistic. We continue to see a lot of positives in the stock market--such as low interest rates and inflation, and the fact that we've been able to find companies that have had good earnings regardless of a slower economy. These factors, along with our careful research into the individual stocks we buy, should lead to solid returns for the Fund in the coming year.[ ] 5 Oppenheimer Equity Income Fund Financials Contents Statement of Investments 7 Statement of Assets & Liabilities 15 Statement of Operations 16 Statements of Changes in Net Assets 17 Financial Highlights 18 Notes to Financial Statements 20 6 Oppenheimer Equity Income Fund Statement of Investments December 31, 1995 (Unaudited)
Face Market Value Amount(1) See Note 1 =================================================================================================================================== U.S. Government Obligations--11.6% - ----------------------------------------------------------------------------------------------------------------------------------- Treasury--11.6% U.S. Treasury Nts.: 7.50%, 12/31/96 $146,500,000 $149,796,250 7.625%, 5/31/96 100,000,000 101,000,000 7.875%, 6/30/96 14,200,000 14,386,375 ------------ Total U.S. Government Obligations (Cost $263,167,288) 265,182,625 =================================================================================================================================== Foreign Government Obligations--7.1% - ----------------------------------------------------------------------------------------------------------------------------------- Argentina (Republic of): Par Bonds, 5%, 3/31/23(2) 5,750,000 3,281,094 Past Due Interest Bonds, Series L, 6.812%, 3/31/05(3) 2,500,000 1,787,500 --------------------------------------------------------------------------------------------------------------- Banco Nacional de Comercio Exterior SNC International Finance BV: Bonds, 9.875%, 6/24/96 23,150,000 23,222,344 Gtd. Bonds, 8%, 8/5/03 2,000,000 1,590,000 --------------------------------------------------------------------------------------------------------------- Banco Nacional de Obras y Servicios Publicos SA Nts., 10.75%, 8/16/96 6,000,000 6,030,000 --------------------------------------------------------------------------------------------------------------- Brazil (Federal Republic of) Interest Due and Unpaid Bonds, 6.688%, 1/1/01(3) 9,500,000 8,181,875 --------------------------------------------------------------------------------------------------------------- Canada (Government of) Bonds, Series H62, 9.25%, 10/1/96 CAD 55,800,000 42,047,169 --------------------------------------------------------------------------------------------------------------- Ecuador (Republic of) Disc. Bonds, 6.812%, 2/28/25(3) 6,000,000 3,052,500 --------------------------------------------------------------------------------------------------------------- Nafin Securities Ltd., 6% Gtd. Bonds, 12/19/96 2,000,000 1,942,500 --------------------------------------------------------------------------------------------------------------- New South Wales State Bank Bonds, 9.25%, 2/18/03 AUD 9,900,000 7,681,870 --------------------------------------------------------------------------------------------------------------- Ontario Hydro (Province of) Canada Gtd. Debs., 10.875%, 1/8/96 CAD 16,000,000 11,760,902 --------------------------------------------------------------------------------------------------------------- Panama (Republic of) Debs., 6.75%, 5/10/02(3) 5,000,000 4,284,375 --------------------------------------------------------------------------------------------------------------- Quebec, Canada (Province of) Debs., 10.25%, 4/7/98 CAD 10,000,000 7,959,138 --------------------------------------------------------------------------------------------------------------- Queensland Treasury Corp. Gtd. Nts., 8%, 8/14/01 AUD 33,650,000 25,069,616 --------------------------------------------------------------------------------------------------------------- South Australia (Government of) Bonds, 9%, 9/23/02 AUD 3,000,000 2,302,734 --------------------------------------------------------------------------------------------------------------- Venezuela (Republic of) Collateralized Par Bonds, Series W-A, 6.75%, 3/31/20 20,000,000 11,475,000 ------------ Total Foreign Government Obligations (Cost $172,162,957) 161,668,617 =================================================================================================================================== Non-Convertible Corporate Bonds and Notes--2.8% - ----------------------------------------------------------------------------------------------------------------------------------- Auburn Hills Trust, 12% Gtd. Exchangeable Certificates, 5/1/20 5,000,000 7,822,755 --------------------------------------------------------------------------------------------------------------- Coastal Corp., 11.75% Sr. Debs., 6/15/06 8,946,000 9,512,343 --------------------------------------------------------------------------------------------------------------- Comcast Corp., 10.25% Sr. Sub. Debs., 10/15/01 6,000,000 6,585,000 --------------------------------------------------------------------------------------------------------------- Imo Industries, Inc., 12.25% Sr. Sub. Debs., 8/15/97 4,469,000 4,502,517 --------------------------------------------------------------------------------------------------------------- MagneTek, Inc., 10.75% Sr. Sub. Debs., 11/15/98 3,000,000 3,127,500 --------------------------------------------------------------------------------------------------------------- Reliance Group Holdings, Inc., 9.75% Sr. Sub. Debs., 11/15/03 4,250,000 4,398,750 --------------------------------------------------------------------------------------------------------------- Rowan Cos., Inc., 11.875% Sr. Nts., 12/1/01 7,000,000 7,577,500 --------------------------------------------------------------------------------------------------------------- Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(4) 2,500,000 1,862,500 --------------------------------------------------------------------------------------------------------------- Viacom International, Inc., 10.25% Sr. Sub. Nts., 9/15/01 12,000,000 14,078,555 --------------------------------------------------------------------------------------------------------------- WestPoint Stevens, Inc., 8.75% Sr. Nts., 12/15/01 6,000,000 6,045,000 ------------ Total Non-Convertible Corporate Bonds and Notes (Cost $58,013,190) 65,512,420
7 Oppenheimer Equity Income Fund Statement of Investments (Unaudited) (Continued)
Face Market Value Amount(1) See Note 1 =================================================================================================================================== Convertible Corporate Bonds and Notes--6.1% - ----------------------------------------------------------------------------------------------------------------------------------- AMR Corp., 6.125% Cv. Sub. Debs., 11/1/24 $20,000,000 $ 20,800,000 --------------------------------------------------------------------------------------------------------------- Banco de Galicia y Buenos Aires SA, 7% Cv. Negotiable Obligation Bonds, 8/1/02 3,100,000 2,890,750 --------------------------------------------------------------------------------------------------------------- Bank of New York, Inc. (The), 7.50% Cv. Sub. Debs., 8/15/01 7,750,000 19,297,500 --------------------------------------------------------------------------------------------------------------- Box Energy Corp., 8.25% Cv. Sub. Nts., 12/1/02 5,000,000 4,925,000 --------------------------------------------------------------------------------------------------------------- Cooper Industries, Inc., 7.05% Cv. Unsec. Sub. Bonds, 1/1/15 6,741,000 6,976,935 --------------------------------------------------------------------------------------------------------------- Delta Air Lines, Inc., 3.23% Cv. Sub. Nts., 6/15/03 15,500,000 14,763,750 --------------------------------------------------------------------------------------------------------------- ICN Pharmaceuticals, Inc., 8.50% Cv. Sub. Debs., 11/15/99 4,500,000 4,876,875 --------------------------------------------------------------------------------------------------------------- Inco Ltd.: 5.75% Cv. Debs., 7/1/04 9,700,000 12,755,500 7.75% Cv. Debs., 3/15/16 9,800,000 10,461,500 --------------------------------------------------------------------------------------------------------------- IntelCom Group, Inc.: 7% Cv. Sub. Nts., 10/30/98(5) 5,000,000 3,986,390 7% Cv. Sub. Nts., 10/30/98 700,000 558,095 --------------------------------------------------------------------------------------------------------------- Mutual Risk Management Ltd., Zero Coupon Cv. Exchangeable Sub. Debs., 5.25%, 10/30/15(4)(6) 19,500,000 8,141,250 --------------------------------------------------------------------------------------------------------------- Oryx Energy Co., 7.50% Cv. Sub. Debs., 5/15/14 7,000,000 6,273,750 --------------------------------------------------------------------------------------------------------------- Stone Container Corp., 8.875% Cv. Sr. Sub. Nts., 7/15/00 3,000,000 4,158,750 --------------------------------------------------------------------------------------------------------------- Time Warner, Inc.: 8.75% Cv. Sr. Nts., 1/10/15 1,748,150 1,809,335 Zero Coupon Cv. Liquid Yield Option Nts., 6.245%, 12/17/12(6) 30,000,000 10,350,000 --------------------------------------------------------------------------------------------------------------- U.S. Home Corp., 4.875% Cv. Sub. Debs., 11/1/05 4,350,000 4,186,875 ------------ Total Convertible Corporate Bonds and Notes (Cost $114,285,835) 137,212,255 Shares =================================================================================================================================== Common Stocks--47.8% - ----------------------------------------------------------------------------------------------------------------------------------- Basic Materials--3.2% - ----------------------------------------------------------------------------------------------------------------------------------- Chemicals--1.6% Dexter Corp. 400,000 9,450,000 --------------------------------------------------------------------------------------------------------------- Dow Chemical Co. (The) 200,000 14,075,000 --------------------------------------------------------------------------------------------------------------- Du Pont (E.I.) De Nemours & Co. 200,000 13,975,000 ------------ 37,500,000 - ----------------------------------------------------------------------------------------------------------------------------------- Metals--0.2% Reynolds Metals Co. 100,000 5,662,500 - ----------------------------------------------------------------------------------------------------------------------------------- Paper--1.4% Union Camp Corp. 200,000 9,525,000 --------------------------------------------------------------------------------------------------------------- Westvaco Corp. 375,000 10,406,250 --------------------------------------------------------------------------------------------------------------- Weyerhaeuser Co. 250,000 10,812,500 ------------ 30,743,750
8 Oppenheimer Equity Income Fund
Market Value Shares See Note 1 - ----------------------------------------------------------------------------------------------------------------------------------- Consumer Cyclicals--2.5% - ----------------------------------------------------------------------------------------------------------------------------------- Autos & Housing--1.4% General Motors Corp. 475,000 $25,115,625 --------------------------------------------------------------------------------------------------------------- Snap-On, Inc. 133,900 6,058,975 ----------- 31,174,600 - ----------------------------------------------------------------------------------------------------------------------------------- Retail: General--1.1% Sears, Roebuck & Co. 641,219 25,007,541 - ----------------------------------------------------------------------------------------------------------------------------------- Consumer Non-Cyclicals--5.0% - ----------------------------------------------------------------------------------------------------------------------------------- Healthcare/Drugs--1.6% American Home Products Corp. 100,000 9,700,000 --------------------------------------------------------------------------------------------------------------- Bristol-Myers Squibb Co. 200,000 17,175,000 --------------------------------------------------------------------------------------------------------------- Johnson & Johnson 100,000 8,562,500 ----------- 35,437,500 - ----------------------------------------------------------------------------------------------------------------------------------- Tobacco--3.4% Philip Morris Cos., Inc. 600,000 54,300,000 --------------------------------------------------------------------------------------------------------------- RJR Nabisco Holdings Corp. 240,000 7,410,000 --------------------------------------------------------------------------------------------------------------- UST, Inc. 500,000 16,687,500 ----------- 78,397,500 - ----------------------------------------------------------------------------------------------------------------------------------- Energy--4.3% - ----------------------------------------------------------------------------------------------------------------------------------- Energy Services & Producers--0.2% Pacific Enterprises 50,000 1,412,500 --------------------------------------------------------------------------------------------------------------- Schlumberger Ltd. 50,000 3,462,500 ----------- 4,875,000 - ----------------------------------------------------------------------------------------------------------------------------------- Oil-Integrated--4.1% Mobil Corp. 176,500 19,768,000 --------------------------------------------------------------------------------------------------------------- Occidental Petroleum Corp. 600,000 12,825,000 --------------------------------------------------------------------------------------------------------------- Phillips Petroleum Co. 400,000 13,650,000 --------------------------------------------------------------------------------------------------------------- Royal Dutch Petroleum Co. 201,500 28,436,687 --------------------------------------------------------------------------------------------------------------- Texaco, Inc. 251,500 19,742,750 ----------- 94,422,437 - ----------------------------------------------------------------------------------------------------------------------------------- Financial--22.3% - ----------------------------------------------------------------------------------------------------------------------------------- Banks--17.6% Banc One Corp. 700,000 26,425,000 --------------------------------------------------------------------------------------------------------------- Bank of Boston Corp. 505,636 23,385,665 --------------------------------------------------------------------------------------------------------------- BankAmerica Corp. 600,000 38,850,000 --------------------------------------------------------------------------------------------------------------- Bankers Trust New York Corp. 100,000 6,650,000 --------------------------------------------------------------------------------------------------------------- Chase Manhattan Corp. 550,000 33,343,750 --------------------------------------------------------------------------------------------------------------- Chemical Banking Corp. 550,000 32,312,500 --------------------------------------------------------------------------------------------------------------- Citicorp 193,453 13,009,714 --------------------------------------------------------------------------------------------------------------- Crestar Financial Corp. 275,000 16,259,375 --------------------------------------------------------------------------------------------------------------- First Chicago NBD Corp. 452,500 17,873,750 --------------------------------------------------------------------------------------------------------------- First Fidelity Bancorporation 399,300 30,097,238 --------------------------------------------------------------------------------------------------------------- First Union Corp. 300,000 16,687,500 --------------------------------------------------------------------------------------------------------------- Fleet Financial Group, Inc. 400,000 16,300,000
9 Oppenheimer Equity Income Fund Statement of Investments (Unaudited) (Continued)
Market Value Shares See Note 1 - ----------------------------------------------------------------------------------------------------------------------------------- Banks (continued) Great Western Financial Corp. 600,000 $ 15,300,000 --------------------------------------------------------------------------------------------------------------- KeyCorp 400,000 14,500,000 --------------------------------------------------------------------------------------------------------------- Klamath First Bancorp, Inc.(7) 270,000 3,712,500 --------------------------------------------------------------------------------------------------------------- Magna Group, Inc. 400,000 9,500,000 --------------------------------------------------------------------------------------------------------------- Mellon Bank Corp. 450,000 24,187,500 --------------------------------------------------------------------------------------------------------------- National City Corp. 500,000 16,562,500 --------------------------------------------------------------------------------------------------------------- PNC Bank Corp. 301,600 9,726,600 --------------------------------------------------------------------------------------------------------------- Signet Banking Corp. 400,000 9,500,000 --------------------------------------------------------------------------------------------------------------- U.S. Bancorp, Inc. 245,000 8,238,125 --------------------------------------------------------------------------------------------------------------- UJB Financial Corp. 500,000 17,875,000 ------------ 400,296,717 - ----------------------------------------------------------------------------------------------------------------------------------- Diversified Financial--1.4% American Express Co. 600,000 24,825,000 --------------------------------------------------------------------------------------------------------------- Capital One Financial Corp. 300,000 7,162,500 ------------ 31,987,500 - ----------------------------------------------------------------------------------------------------------------------------------- Insurance--3.3% - ----------------------------------------------------------------------------------------------------------------------------------- Allstate Corp. 724,432 29,792,266 --------------------------------------------------------------------------------------------------------------- GCR Holdings Ltd.(7) 100,000 2,250,000 --------------------------------------------------------------------------------------------------------------- General Re Corp. 50,000 7,750,000 --------------------------------------------------------------------------------------------------------------- Prudential Reinsurance Holdings, Inc. 248,000 5,797,000 --------------------------------------------------------------------------------------------------------------- Reliance Group Holdings, Inc. 2,141,500 18,470,438 --------------------------------------------------------------------------------------------------------------- St. Paul Cos., Inc. 200,000 11,125,000 ------------ 75,184,704 - ----------------------------------------------------------------------------------------------------------------------------------- Industrial--3.4% - ----------------------------------------------------------------------------------------------------------------------------------- Electrical Equipment--0.7% AMP, Inc. 400,000 15,350,000 - ----------------------------------------------------------------------------------------------------------------------------------- Manufacturing--2.7% Keystone International, Inc. 300,000 6,000,000 --------------------------------------------------------------------------------------------------------------- Minnesota Mining & Manufacturing Co. 400,000 26,500,000 --------------------------------------------------------------------------------------------------------------- Tenneco, Inc. 600,000 29,775,000 ------------ 62,275,000 - ----------------------------------------------------------------------------------------------------------------------------------- Technology--2.5% - ----------------------------------------------------------------------------------------------------------------------------------- Aerospace/Defense--1.3% Goodrich (B.F.) Co. 141,000 9,605,625 --------------------------------------------------------------------------------------------------------------- United Technologies Corp. 200,000 18,975,000 ------------ 28,580,625
10 Oppenheimer Equity Income Fund
Market Value Shares See Note 1 - ----------------------------------------------------------------------------------------------------------------------------------- Computer Hardware--0.6% Moore Corp. Ltd. 716,000 $ 13,335,500 - ----------------------------------------------------------------------------------------------------------------------------------- Electronics--0.6% Tektronix, Inc. 275,000 13,509,375 - ----------------------------------------------------------------------------------------------------------------------------------- Utilities--4.6% - ----------------------------------------------------------------------------------------------------------------------------------- Electric Utilities--4.6% Allegheny Power System, Inc. 300,000 8,587,500 --------------------------------------------------------------------------------------------------------------- Central & South West Corp. 400,000 11,150,000 --------------------------------------------------------------------------------------------------------------- Detroit Edison Co. 300,000 10,350,000 --------------------------------------------------------------------------------------------------------------- Entergy Corp. 550,000 16,087,500 --------------------------------------------------------------------------------------------------------------- Florida Progress Corp. 500,000 17,687,500 --------------------------------------------------------------------------------------------------------------- Ohio Edison Co. 400,000 9,400,000 --------------------------------------------------------------------------------------------------------------- Public Service Co. of Colorado 200,000 7,075,000 --------------------------------------------------------------------------------------------------------------- Public Service Enterprise Group, Inc. 604,000 18,497,500 --------------------------------------------------------------------------------------------------------------- SCANA Corp. 200,000 5,725,000 ------------- 104,560,000 ------------- Total Common Stocks (Cost $773,756,189) 1,088,300,249 =================================================================================================================================== Preferred Stocks--16.7% - ----------------------------------------------------------------------------------------------------------------------------------- Basic Materials--2.7% - ----------------------------------------------------------------------------------------------------------------------------------- Metals--1.5% Alumax, Inc., $4.00 Cv., Series A 50,000 6,450,000 --------------------------------------------------------------------------------------------------------------- Armco, Inc., $3.625 Cum. Cv. 200,000 9,950,000 --------------------------------------------------------------------------------------------------------------- Cyprus Amax Minerals Co., $4.00 Cv., Series A 150,000 8,887,500 --------------------------------------------------------------------------------------------------------------- Reynolds Metals Co., 7% Preferred Redeemable Increased Dividend Equity Securities, $3.31 Cv., 12/31/97 160,000 8,100,000 ------------- 33,387,500 - ----------------------------------------------------------------------------------------------------------------------------------- Paper--1.2% Boise Cascade Corp., $1.58 Cum. Cv., Series G 300,000 8,587,500 --------------------------------------------------------------------------------------------------------------- Bowater, 7% Preferred Redeemable Increased Dividend Equity Securities, Series B, $6.58 Cv., 1/1/98 95,000 2,897,500 --------------------------------------------------------------------------------------------------------------- James River Corp. of Virginia, Depositary Shares each representing a one-hundredth interest in a share of Series P, 9% Cum. Cv. Preferred Stock, Dividend Enhanced Convertible Stock 700,000 16,362,500 ------------- 27,847,500
11 Oppenheimer Equity Income Fund Statement of Investments (Unaudited) (Continued)
Market Value Shares See Note 1 - ----------------------------------------------------------------------------------------------------------------------------------- Consumer Cyclicals--1.2% - ----------------------------------------------------------------------------------------------------------------------------------- Leisure & Entertainment--1.2% Continental Airlines Finance Trust, 8.50% Cv. Trust Originated Preferred Securities(4) 250,000 $13,375,000 --------------------------------------------------------------------------------------------------------------- Delta Air Lines, Inc., $3.50 Cv. Depositary Shares, Series C 250,000 14,843,750 ----------- 28,218,750 - ----------------------------------------------------------------------------------------------------------------------------------- Consumer Non-Cyclicals--2.6% - ----------------------------------------------------------------------------------------------------------------------------------- Healthcare/Supplies & Services--0.6% U.S. Surgical Corp., $2.20 Depositary Shares representing one-fiftieth share of Series A Preferred Stock 550,000 13,887,500 - ----------------------------------------------------------------------------------------------------------------------------------- Household Goods--0.8% Westinghouse Electric Corp., Participating Equity Preferred Shares, $12.125 Cv., Series C(4) 1,100,000 17,325,000 - ----------------------------------------------------------------------------------------------------------------------------------- Tobacco--1.2% RJR Nabisco Holdings Corp., $6.50 Cv., Series C 4,315,000 27,508,125 - ----------------------------------------------------------------------------------------------------------------------------------- Energy--2.2% - ----------------------------------------------------------------------------------------------------------------------------------- Energy Services & Producers--0.5% Noble Drilling Corp., $1.50 Cv. Exchangeable 122,000 3,141,500 --------------------------------------------------------------------------------------------------------------- Santa Fe Energy Resources, Inc., Dividend Enhanced Convertible Stock, $.732 Cv. Exchangeable, Series A 805,000 7,949,375 ----------- 11,090,875 - ----------------------------------------------------------------------------------------------------------------------------------- Oil-Integrated--1.7% Atlantic Richfield Co., 9% Exchangeable Notes for Common Stock of Lyondell Petrochemical Co., 9/15/97 400,000 9,400,000 --------------------------------------------------------------------------------------------------------------- Enron Corp., 6.25% Cv. Automatic Common Exchangeable Securities 270,000 6,480,000 --------------------------------------------------------------------------------------------------------------- Occidental Petroleum Corp., $3.875 Cum. Cv.(4) 400,000 22,300,000 ----------- 38,180,000 - ----------------------------------------------------------------------------------------------------------------------------------- Financial--4.4% - ----------------------------------------------------------------------------------------------------------------------------------- Banks--2.7% Citicorp, Cv. Depositary Shares, Series 13 200,000 36,500,000 --------------------------------------------------------------------------------------------------------------- Fidelity Federal Bank, 12% Non-Cum. Exchangeable Perpetual Preferred Stock, Series A(8) 100,000 2,537,500 --------------------------------------------------------------------------------------------------------------- First Chicago NBD Corp., Depositary Shares (each representing a one-hundredth interest in a share of 5.75% cum. cv. preferred stock, series B) 135,000 9,045,000 --------------------------------------------------------------------------------------------------------------- Sovereign Bancorp Inc., 6.25% Cv., Series B 36,500 2,080,500 --------------------------------------------------------------------------------------------------------------- Washington Mutual, Inc., $6.00 Non-Cum. Cv. Perpetual Preferred Stock, Series D 96,800 11,083,600 ----------- 61,246,600
12 Oppenheimer Equity Income Fund
Market Value Shares See Note 1 - ----------------------------------------------------------------------------------------------------------------------------------- Diversified Financial--1.5% Allstate Corp., $2.30 Debt Exchangeable for Common Stock of PMI Group, Inc. 111,000 $ 4,551,000 --------------------------------------------------------------------------------------------------------------- American Express Co., Debt Exchangeable for Common Stock of First Data Corp., 6.25%, 10/15/96 557,000 30,913,500 ------------ 35,464,500 - ----------------------------------------------------------------------------------------------------------------------------------- Insurance--0.2% American General Delaware LLC, $3.00 Cv. Monthly Income Preferred Securities, Series A 75,000 3,928,125 - ----------------------------------------------------------------------------------------------------------------------------------- Industrial--2.1% - ----------------------------------------------------------------------------------------------------------------------------------- Industrial Materials--0.5% Owens-Corning Capital LLC, 6.50% Cv. Monthly Income Preferred Securities(4) 200,000 11,975,000 - ----------------------------------------------------------------------------------------------------------------------------------- Industrial Services--1.1% Browning-Ferris Industries, Inc., 7.25% Cv. Automatic Common Exchangeable Securities(7) 225,000 7,059,375 --------------------------------------------------------------------------------------------------------------- Case Equipment Corp., Cum. Cv., Series A(4) 100,000 11,400,000 --------------------------------------------------------------------------------------------------------------- Corning Delaware LP, 6% Cv. Monthly Income Preferred Securities 150,000 7,556,250 ------------ 26,015,625 - ----------------------------------------------------------------------------------------------------------------------------------- Manufacturing--0.5% Elsag Bailey Financing Trust, 5.50% Cv. Trust Originated Preferred Securities(4) 220,000 11,082,500 - ----------------------------------------------------------------------------------------------------------------------------------- Utilities--1.5% - ----------------------------------------------------------------------------------------------------------------------------------- Gas Utilities--0.5% Valero Energy Corp., Cv. 200,000 10,300,000 - ----------------------------------------------------------------------------------------------------------------------------------- Telephone Utilities--1.0% Compania de Inversiones en Telecomunicaciones SA, Provisionally Redeemable Income Debt Exchangeable for Stock, 7%, 3/3/98(4) 200,000 11,275,000 --------------------------------------------------------------------------------------------------------------- US West, Inc., 7.625% Cv. Debt Exchangeable for Common Stock of Enhanced Financial Services Group 415,000 11,049,375 ------------ 22,324,375 ------------ Total Preferred Stocks (Cost $309,080,296) 379,781,975 Units =================================================================================================================================== Rights, Warrants and Certificates--0.0% - ----------------------------------------------------------------------------------------------------------------------------------- Venezuela Government Wts., Exp. 4/20 (Cost $0) 100,000 -- Face Amount(1) =================================================================================================================================== Structured Instruments--0.2% - ----------------------------------------------------------------------------------------------------------------------------------- CS First Boston Corp. Argentina Structured Product Asset Return Trust Certificates, 9.40%, 9/1/97 [representing debt of Argentina (Republic of) Bonos del Tesoro Bonds, Series II, 5.898%, 9/1/97 and an interest rate swap between Credit Suisse Financial Products and the Trust] (Cost $5,714,285)(4) $5,714,285 5,641,348
13 Oppenheimer Equity Income Fund Statement of Investments (Unaudited) (Continued)
Face Market Value Amount(1) See Note 1 =================================================================================================================================== Repurchase Agreement--7.1% - ----------------------------------------------------------------------------------------------------------------------------------- Repurchase agreement with First Chicago Capital Markets, 5.90%, dated 12/29/95, to be repurchased at $162,906,724 on 1/2/96, collateralized by U.S. Treasury Nts., 5.125%--8.75%, 12/31/96--11/5/04, with a value of $88,369,019, U.S. Treasury Bonds, 6.25%--11.25%, 8/15/03--8/15/23, with a value of $53,553,750, and U.S. Treasury Bills maturing 11/14/96, with a value of $24,285,857 (Cost $162,800,000) $162,800,000 $ 162,800,000 - ----------------------------------------------------------------------------------------------------------------------------------- Total Investments, at Value (Cost $1,858,980,040) 99.4% 2,266,099,489 - ----------------------------------------------------------------------------------------------------------------------------------- Other Assets Net of Liabilities 0.6 13,007,662 ------------ -------------- Net Assets 100.0% $2,279,107,151 ============ ==============
1. Face amount is reported in U.S. Dollars, except for those denoted in the following currencies: AUD--Australian Dollar CAD--Canadian Dollar 2. Represents the current interest rate for an increasing rate security. 3. Represents the current interest rate for a variable rate security. 4. Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended.This security has been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $114,377,598 or 5.02% of the Fund's net assets, at December 31, 1995. 5. Interest or dividend is paid in kind. 6. For zero coupon bonds, the interest rate shown is the effective yield on the date of purchase. 7. Non-income producing security. 8. Affiliated company. Represents ownership of at least 5% of the voting securities of the issuer and is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 1995. The aggregate fair value of all securities of affiliated companies as of December 31, 1995 amounted to $2,537,500. Transactions during the period in which the issuer was an affiliate are as follows:
Balance Gross Balance June 30, 1995 Gross Additions Reductions December 31, 1995 --------------- --------------- -------------- ----------------- Dividend Shares Cost Shares Cost Shares Cost Shares Cost Income - ------------------------------------------------------------------------------------------------------------------------------ Fidelity Federal Bank, 12% Non-Cum. Exchangeable Perpetual Preferred Stock, Series A -- $ -- 100,000 $2,500,000 -- $ -- 100,000 $2,500,000 $ --
See accompanying Notes to Financial Statements. 14 Oppenheimer Equity Income Fund
Statement of Assets and Liabilities December 31, 1995 (Unaudited) =================================================================================================================================== Assets Investments, at value--see accompanying statement: Unaffiliated companies (cost $1,856,480,040) $2,263,561,989 Affiliated companies (cost $2,500,000) 2,537,500 --------------------------------------------------------------------------------------------------------------- Cash 489,070 --------------------------------------------------------------------------------------------------------------- Receivables: Interest and dividends 20,209,664 Investments sold 1,884,999 Shares of beneficial interest sold 1,759,226 --------------------------------------------------------------------------------------------------------------- Other 137,456 -------------- Total assets 2,290,579,904 =================================================================================================================================== Liabilities Payables and other liabilities: Shares of beneficial interest redeemed 7,441,132 Dividends 2,324,383 Distribution and service plan fees 1,094,576 Shareholder reports 406,956 Transfer and shareholder servicing agent fees 100,813 Other 104,893 -------------- Total liabilities 11,472,753 =================================================================================================================================== Net Assets $2,279,107,151 ============== =================================================================================================================================== Composition of Net Assets Paid-in capital $1,851,322,319 --------------------------------------------------------------------------------------------------------------- Undistributed net investment income 1,331,339 --------------------------------------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions 19,344,516 --------------------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 407,108,977 -------------- Net assets $2,279,107,151 ============== =================================================================================================================================== Net Asset Value Per Share Class A Shares: Net asset value and redemption price per share (based on net assets of $2,072,698,051 and 189,753,553 shares of beneficial interest outstanding) $10.92 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $11.59 --------------------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price and offering price per share (based on net assets of $205,553,405 and 18,913,996 shares of beneficial interest outstanding) $10.87 --------------------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price and offering price per share (based on net assets of $855,695 and 78,506 shares of beneficial interest outstanding) $10.90
See accompanying Notes to Financial Statements. 15 Oppenheimer Equity Income Fund
Statement of Operations For the Six Months Ended December 31, 1995 (Unaudited) =================================================================================================================================== Investment Income Interest $ 30,876,400 --------------------------------------------------------------------------------------------------------------- Dividends (net of withholding taxes of $168,761) 29,576,977 ------------ Total income 60,453,377 =================================================================================================================================== Expenses Management fees--Note 4 5,856,934 --------------------------------------------------------------------------------------------------------------- Distribution and service plan fees--Note 4: Class A 1,874,080 Class B 926,427 Class C 511 --------------------------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees--Note 4 1,458,815 --------------------------------------------------------------------------------------------------------------- Shareholder reports 278,425 --------------------------------------------------------------------------------------------------------------- Custodian fees and expenses 109,246 --------------------------------------------------------------------------------------------------------------- Legal and auditing fees 35,644 --------------------------------------------------------------------------------------------------------------- Trustees' fees and expenses 30,314 --------------------------------------------------------------------------------------------------------------- Insurance expenses 23,799 --------------------------------------------------------------------------------------------------------------- Registration and filing fees: Class B 10,633 Class C 294 --------------------------------------------------------------------------------------------------------------- Other 40,374 ------------ Total expenses 10,645,496 =================================================================================================================================== Net Investment Income 49,807,881 =================================================================================================================================== Realized and Unrealized Gain Net realized gain on: Investments 35,415,872 Foreign currency transactions 65,180 ------------ Net realized gain 35,481,052 --------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation on: Investments 143,540,781 Translation of assets and liabilities denominated in foreign currencies 2,040,347 ------------ Net change 145,581,128 ------------ Net realized and unrealized gain 181,062,180 =================================================================================================================================== Net Increase in Net Assets Resulting From Operations $230,870,061 ============
See accompanying Notes to Financial Statements. 16 Oppenheimer Equity Income Fund Statements of Changes in Net Assets
Six Months Ended Year Ended December 31, 1995 June 30, (Unaudited) 1995 =================================================================================================================================== Operations Net investment income $ 49,807,881 $ 97,932,280 --------------------------------------------------------------------------------------------------------------- Net realized gain 35,481,052 33,525,676 --------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation 145,581,128 153,278,187 -------------- -------------- Net increase in net assets resulting from operations 230,870,061 284,736,143 =================================================================================================================================== Dividends and Distributions to Shareholders Dividends from net investment income: Class A (44,024,684) (88,319,907) Class B (3,473,892) (5,380,964) Class C (7,519) -- --------------------------------------------------------------------------------------------------------------- Distributions from net realized gain: Class A (45,032,336) (23,241,171) Class B (4,473,953) (1,584,662) Class C (15,717) -- =================================================================================================================================== Beneficial Interest Transactions Net increase (decrease) in net assets resulting from beneficial interest transactions--Note 2: Class A 56,314,253 (34,706,185) Class B 33,382,260 62,397,726 Class C 873,048 -- =================================================================================================================================== Net Assets Total increase 224,411,521 193,900,980 --------------------------------------------------------------------------------------------------------------- Beginning of period 2,054,695,630 1,860,794,650 -------------- -------------- End of period [including undistributed (overdistributed) net investment income of $1,331,339 and $(970,447), respectively] $2,279,107,151 $2,054,695,630 ============== ==============
See accompanying Notes to Financial Statements. 17 Oppenheimer Equity Income Fund Financial Highlights
Class A ------------------------------------------------------------ Six Months Ended December 31, 1995 Year Ended June 30, (Unaudited) 1995 1994 =================================================================================================================== Per Share Operating Data: Net asset value, beginning of period $10.25 $ 9.44 $10.01 - ------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .25 .50 .47 Net realized and unrealized gain (loss) .90 .92 (.39) ------ ------ ------ Total income (loss) from investment operations 1.15 1.42 .08 - ------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.24) (.48) (.47) Dividends in excess of net investment income -- -- (.01) Distributions from net realized gain (.24) (.13) (.12) Distributions in excess of capital gains -- -- (.05) ------ ------ ------ Total dividends and distributions to shareholders (.48) (.61) (.65) - ------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.92 $10.25 $ 9.44 ====== ====== ====== =================================================================================================================== Total Return, at Net Asset Value(3) 11.34% 15.66% 0.65% =================================================================================================================== Ratios/Supplemental Data: Net assets, end of period (in thousands) $2,072,698 $1,893,249 $1,772,944 - ------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $1,990,738 $1,797,670 $1,831,606 - ------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: Net investment income 4.61%(4) 5.15% 4.72% Expenses .90%(4) .96% .90% - ------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(5) 18.0% 45.7% 30.4% Average brokerage commission rate(6) $0.15 -- --
1. For the period from November 1, 1995 (inception of offering) to December 31, 1995. 2. For the period from August 17, 1993 (inception of offering) to June 30, 1994. 3. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 4. Annualized. 18 Oppenheimer Equity Income Fund
Class B Class C - ------------------------------------------ ------------------------------------------------------ ---------------- Six months Ended Period Ended December 31, 1995 Year Ended June 30, Dec. 31, 1995(1) 1993 1992 1991 (Unaudited) 1995 1994(2) (Unaudited) ============================================================================================================================== $ 9.15 $8.86 $9.18 $10.21 $ 9.40 $10.22 $10.81 - ------------------------------------------------------------------------------------------------------------------------------ .50 .50 .48 .21 .43 .36 .05 .99 .39 (.17) .89 .91 (.58) .40 - ---------- ---------- ---------- -------- -------- ------- ------- 1.49 .89 .31 1.10 1.34 (.22) .45 - ------------------------------------------------------------------------------------------------------------------------------ (.48) (.48) (.48) (.20) (.40) (.42) (.12) -- -- -- -- -- (.01) -- (.15) (.12) (.15) (.24) (.13) (.12) (.24) -- -- -- -- -- (.05) -- - ---------- ---------- ---------- -------- -------- ------- ------- (.63) (.60) (.63) (.44) (.53) (.60) (.36) - ------------------------------------------------------------------------------------------------------------------------------ $10.01 $9.15 $8.86 $10.87 $10.21 $ 9.40 $10.90 ========== ========== ========== ======== ======== ======= ======= ============================================================================================================================== 16.76% 10.26% 3.68% 10.86% 14.87% (2.35)% 4.20% ============================================================================================================================== $1,790,346 $1,555,924 $1,393,303 $205,553 $161,447 $87,850 $856 - ------------------------------------------------------------------------------------------------------------------------------ $1,657,692 $1,525,599 $1,323,858 $184,158 $122,471 $47,414 $320 - ------------------------------------------------------------------------------------------------------------------------------ 5.12% 5.33% 5.31% 3.79%(4) 4.34% 3.99%(4) 3.50%(4) .79% .82% .79% 1.73%(4) 1.79% 1.82%(4) 2.20%(4) - ------------------------------------------------------------------------------------------------------------------------------ 59.0% 37.0% 64.0% 18.0% 45.7% 30.4% 18.0% -- -- -- $0.15 -- -- $0.15
5. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended December 31, 1995 were $426,206,642 and $355,357,135, respectively. 6. Total brokerage commissions paid on purchases and sales of portfolio securities for the period divided by the total number of related shares purchased and sold. See accompanying Notes to Financial Statements. 19 Oppenheimer Equity Income Fund Notes to Financial Statements (Unaudited) =============================================================================== 1. Significant Accounting Policies Oppenheimer Equity Income Fund (the Fund) is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The Fund's investment objective is to seek as much current income as is compatible with prudent investment. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B and Class C shares. Class A shares are sold with a front-end sales charge. Class B and Class C shares may be subject to a contingent deferred sales charge. All classes of shares have identical rights to earnings, assets and voting privileges, except that each class has its own distribution and/or service plan, expenses directly attributable to a particular class and exclusive voting rights with respect to matters affecting a single class. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. - ------------------------------------------------------------------------------- Investment Valuation. Portfolio securities are valued at the close of the New York Stock Exchange on each trading day. Listed and unlisted securities for which such information is regularly reported are valued at the last sale price of the day or, in the absence of sales, at values based on the closing bid or asked price or the last sale price on the prior trading day. Long-term and short-term ``non-money market'' debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Such securities which cannot be valued by the approved portfolio pricing service are valued using dealer-supplied valuations provided the Manager is satisfied that the firm rendering the quotes is reliable and that the quotes reflect current market value, or are valued under consistently applied procedures established by the Board of Trustees to determine fair value in good faith. Short-term ``money market type'' debt securities having a remaining maturity of 60 days or less are valued at cost (or last determined market value) adjusted for amortization to maturity of any premium or discount. - ------------------------------------------------------------------------------- Foreign Currency Translation. The accounting records of the Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. - ------------------------------------------------------------------------------- Repurchase Agreements. The Fund requires the custodian to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited. - ------------------------------------------------------------------------------- Allocation of Income, Expenses, and Gains and Losses. Income, expenses (other than those attributable to a specific class) and gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. - ------------------------------------------------------------------------------- Federal Taxes. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by loss carryovers, to shareholders. Therefore, no federal income or excise tax provision is required. - ------------------------------------------------------------------------------- Distributions to Shareholders. Dividends and distributions to shareholders are recorded on the ex-dividend date. - ------------------------------------------------------------------------------- Classification of Distributions to Shareholders. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes primarily because of paydown gains and losses and the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes. The character of the distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gain (loss) was recorded by the Fund. 20 Oppenheimer Equity Income Fund =============================================================================== 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 December 31, 1995(1) Year Ended June 30, 1995 ------------------------------------- ------------------------------ Shares Amount Shares Amount - -------------------------------------------------------------------------------------------------------------- Class A: Sold 9,382,573 $ 102,178,754 19,327,605 $ 207,336,132 Dividends and distributions reinvested 7,731,840 83,793,589 11,012,028 83,402,034 Redeemed (11,983,791) (129,658,090) (33,557,623) (325,444,351) ------------- ------------- ------------- ------------- Net increase (decrease) 5,130,622 $ 56,314,253 (3,217,990) $ (34,706,185) ============= ============= ============= ============= - -------------------------------------------------------------------------------------------------------------- Class B: Sold 3,649,121 $ 39,355,528 7,529,176 $ 72,586,104 Dividends and distributions reinvested 677,384 7,301,491 670,317 6,342,433 Redeemed (1,228,176) (13,274,759) (1,724,724) (16,530,811) ------------- ------------- ------------- ------------- Net increase 3,098,329 $ 33,382,260 6,474,769 $ 62,397,726 ============= ============= ============= ============= - -------------------------------------------------------------------------------------------------------------- Class C: Sold 76,459 $ 850,947 -- $ -- Dividends and distributions reinvested 2,146 23,222 -- -- Redeemed (99) (1,121) -- -- ------------- ------------- ------------- ------------- Net increase 78,506 $ 873,048 -- $ -- ============= ============= ============= =============
1. For the six months ended December 31, 1995 for Class A shares and Class B shares and for the period from November 1, 1995 (inception of offering) to December 31, 1995 for Class C shares. 21 Oppenheimer Equity Income Fund Notes to Financial Statements (Unaudited) (Continued) =============================================================================== 3. Unrealized Gains and Losses On Investments At December 31, 1995, net unrealized appreciation on investments of $407,119,449 was composed of gross appreciation of $429,418,918, and gross depreciation of $22,299,469. =============================================================================== 4. Management Fees and Other Transactions With Affiliates Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for a fee of .75% on the first $100 million of average annual net assets with a reduction of .05% on each $100 million thereafter, to .50% on net assets in excess of $500 million. The Manager has agreed to reimburse the Fund if aggregate expenses (with specified exceptions) exceed 1.5% of the first $30 million of average annual net assets of the Fund, plus 1% of average annual net assets in excess of $30 million. For the six months ended December 31, 1995, commissions (sales charges paid by investors) on sales of Class A shares totaled $2,162,374, of which $676,570 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the Manager, as general distributor, and by an affiliated broker/dealer. Sales charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and Class C shares totaled $1,251,338 and $7,496, of which $93,130 and $141, respectively, was paid to an affiliated broker/dealer. During the six months ended December 31, 1995, OFDI received contingent deferred sales charges of $178,323 upon redemption of Class B shares as reimbursement for sales commissions advanced by OFDI at the time of sale of such shares. OppenheimerFunds Services (OFS), a division of the Manager, is the transfer and shareholder servicing agent for the Fund, and for other registered investment companies. OFS's total costs of providing such services are allocated ratably to these companies. Under separate approved plans, each class may expend up to .25% of its net assets annually to compensate OFDI for costs incurred in connection with the personal service and maintenance of accounts that hold shares of the Fund, including amounts paid to brokers, dealers, banks and other institutions. In addition, Class B and Class C shares are subject to an asset-based sales charge of .75% of net assets annually, to compensate OFDI for sales commissions paid from its own resources at the time of sale and associated financing costs. In the event of termination or discontinuance of the Class B or Class C plan, the Board of Trustees may allow the Fund to continue payment of the asset-based sales charge to OFDI for distribution expenses incurred on Class B or Class C shares sold prior to termination or discontinuance of the plan. At December 31, 1995, OFDI had incurred unreimbursed expenses of $6,304,461 for Class B and $13,641 for Class C. During the six months ended December 31, 1995, OFDI paid $115,999 and $14,572, respectively, to an affiliated broker/dealer as compensation for Class A and Class B personal service and maintenance expenses, and retained $775,614 and $436, respectively, as compensation for Class B and Class C sales commissions and service fee advances, as well as financing costs. 22 Oppenheimer Equity Income Fund Oppenheimer Equity Income Fund =============================================================================== Officers and Trustees James C. Swain, Chairman and Chief Executive Officer Robert G. Avis, Trustee William A. Baker, Trustee Charles Conrad, Jr., Trustee Jon S. Fossel, Trustee Raymond J. Kalinowski, Trustee C. Howard Kast, Trustee Robert M. Kirchner, Trustee Bridget A. Macaskill, Trustee and President Ned M. Steel, Trustee Andrew J. Donohue, Vice President John P. Doney, Vice President George C. Bowen, Vice President, Secretary and Treasurer Robert J. Bishop, Assistant Treasurer Scott Farrar, Assistant Treasurer Robert G. Zack, Assistant Secretary =============================================================================== Investment Advisor OppenheimerFunds, Inc. =============================================================================== Distributor OppenheimerFunds Distributor, Inc. =============================================================================== Transfer and Shareholder Servicing Agent OppenheimerFunds Services =============================================================================== Custodian of Portfolio Securities The Bank of New York =============================================================================== Independent Auditors Deloitte & Touche LLP =============================================================================== Legal Counsel Myer, Swanson, Adams & Wolf, P.C. The financial statements included herein have been taken from the records of the Fund without examination by the independent auditors. This is a copy of a report to shareholders of Oppenheimer Equity Income Fund. This report must be preceded by a Prospectus of Oppenheimer Equity Income Fund. For material information concerning the Fund, see the Prospectus. Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, and are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested. 23 Oppenheimer Equity Income Fund Information General Information Monday-Friday 8:30 a.m.-8 p.m. ET Saturday 10 a.m.-2 p.m. ET 1-800-525-7048 Telephone Transactions Monday-Friday 8:30 a.m.-8 p.m. ET 1-800-852-8457 PhoneLink 24 hours a day, automated information and transactions 1-800-533-3310 Telecommunications Device for the Deaf (TDD) Monday-Friday 8:30 a.m.-8 p.m. ET 1-800-843-4461 OppenheimerFunds Information Hotline 24 hours a day, timely and insightful messages on the economy and issues that affect your investments 1-800-835-3104 RS0300.001.1295 February 28, 1996 (Picture of Jennifer Leonard) (Caption) Jennifer Leonard, Customer Service Representative OppenheimerFunds Service "How may I help you?" As an Oppenheimer funds shareholder, you have some special privileges. Whether it's automatic investment plans, informative newsletters and hotlines, or ready account access, you can benefit from services designed to make investing simple. And when you need help, our Customer Service Representatives are only a toll-free phone call away. They can provide information about your account and handle administrative requests. You can reach them at our General Information number. When you want to make a transaction, you can do it easily by calling our toll-free Telephone Transactions number. And, by enrolling in AccountLink, a convenient service that "links" your Oppenheimer funds accounts and your bank checking or savings account, you can use the Telephone Transactions number to make investments. For added convenience, you can get automated information with OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week. PhoneLink gives you access to a variety of fund, account, and market information. Of course, you can always speak with a Customer Service Representative during the General Information hours shown at the left. You can count on us whenever you need assistance. That's why the International Customer Service Association, an independent, nonprofit organization made up of over 3,200 customer service management professionals from around the country, honored the Oppenheimer funds' transfer agent, OppenheimerFun ds Services, with their Award of Excellence in 1993. So call us today--we're here to help. (Oppenheimer Logo) OppenheimerFunds Distributor, Inc. P.O. Box 5270 Denver, CO 80217-5270 - -------------- Bulk Rate U.S. Postage PAID Permit No. 469 Denver, CO - -------------- -----END PRIVACY-ENHANCED MESSAGE-----