-------------------------------
Semiannual Report June 30, 1998
-------------------------------
OPPENHEIMER
Convertible
Securities Fund
[GRAPHIC OMITTED]
[LOGO]
OppenheimerFunds(R)
THE RIGHT WAY TO INVEST
<PAGE>
Contents
3 President's Letter
4 Fund Performance
6 An Interview
with the Fund's Managers
10 Statement of Investments
20 Statement of
Assets and
Liabilities
22 Statement of Operations
23 Statements of Changes in
Net Assets
24 Financial Highlights
28 Notes to Financial
Statements
37 Officers and
Trustees
40 Information and Services
Report highlights
- --------------------------------------------------------------------------------
o A strong U.S. economy and stock market supported price gains in the
convertible securities market.
o Low interest rates and inflation helped convertible securities compete
favorably with yields of high-quality bonds and dividend-paying stocks.
- -----------------------------------
Cumulative Total Returns
- -----------------------------------
For the 6-Month Period
Ended 6/30/98
Class A
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------------
5.56% (0.51)%
- -----------------------------------
Class B
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------------
5.09% 0.09%
- -----------------------------------
Class C
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------------
5.10% 4.10%
- -----------------------------------
Class M
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------------
5.30% 5.30%
- -----------------------------------
Total returns include changes 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.
1. Includes changes in net asset value per share without deducting any sales
charges. This performance is not annualized.
2. Class A return includes the current maximum initial sales charge of 5.75%.
Class B return includes the applicable contingent deferred sales charge of 5%
(1-year) and 3% (since inception on 5/1/95). Class C return includes the
applicable contingent deferred sales charge of 1%. Class C shares have an
inception date of 3/11/96. Class M return includes the current maximum initial
sales charge of 3.25%. An explanation of the different performance calculations
is in the Fund's prospectus. Class B and C shares are subject to an annual 0.75%
asset-based sales charge and Class M shares are subject to an annual 0.50%
asset-based sales charge.
2 Oppenheimer Convertible Securities Fund
<PAGE>
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
Convertible
Securities Fund
Dear shareholder,
- --------------------------------------------------------------------------------
As we move further into 1998, we remain impressed by the strength of the U.S.
economy, despite the volatility in the world's financial markets. While we've
seen a decline in stock prices this summer, taking a wider perspective of the
markets reveals that, over the long term, U.S. and many world markets have
continued to serve investors well.
At OppenheimerFunds, we are pleased to help our shareholders seek the
rewards of rising markets, but we also recognize that increasing levels of
return cannot last forever. In fact, we've already begun to see signs of change.
Because no one can predict exactly how the markets will react tomorrow or the
next day, we feel it is prudent to continually identify, evaluate and manage the
risks that may affect our fund shareholders.
One of the leading risks facing investors today is rooted in the fact that
stock valuations remain at the high end of their historical range, while U.S.
corporate earnings growth is slowing. Given these circumstances, we believe,
regardless of daily fluctuations in the markets, it is unlikely that stocks will
sustain the unprecedented growth rate of the past three years. However, we also
believe that any market corrections we may see would be only temporary pauses on
the way to potential long-term gains.
We are also examining the potential economic effects of the "millennium
problem" that will render many computer systems unable to recognize the year
2000 when it arrives. Solving this problem may require some companies to divert
substantial human and financial resources from their core businesses, possibly
constraining global economic growth during 1999 and 2000.
For our part, we can report that OppenheimerFunds has made solid progress
toward ensuring that our shareholder accounting systems are fully "year 2000
compliant," and that all shareholder accounts will make a seamless transition
into the 21st century.
We encourage you to meet with your financial advisor to discuss how
today's uncertain markets or the millennium problem may affect your investments.
Together, you can prepare your investment portfolio for the challenges and
opportunities of the new century.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
July 22, 1998
3 Oppenheimer Convertible Securities Fund
<PAGE>
- ------------------------------------
Avg Annual Total Returns
- ------------------------------------
For the Periods Ended 6/30/98(1)
Class A
Since
1 year 5 year Inception
- ------------------------------------
7.33% N/A 13.76%
- ------------------------------------
Class B
Since
1 year 5 year Inception
- ------------------------------------
7.99% N/A 14.36%
- ------------------------------------
Class C
Since
1 year 5 year Inception
- ------------------------------------
12.02% N/A 13.36%
- ------------------------------------
Class M
1 year 5 year 10 year
- ------------------------------------
9.70% 12.94% 12.32%
- ------------------------------------
- ------------------------------------
Cumulative Total Return
- ------------------------------------
For the Period Ended 6/30/98(1)
Class M
(formerly Class A)
5 year
- ------------------------------------
83.74% $18,374(3)
- ------------------------------------
Performance update
- --------------------------------------------------------------------------------
Oppenheimer Convertible Securities Fund performed very strongly over the past
six months. The Fund's Class A shares generated a cumulative total return of
5.56% without deducting sales charges.(2) That's primarily because convertible
securities provided participation in the potential gains of the stock market
while providing higher yields than most dividend-paying stocks.
Growth of $10,000
Over five years(3)
(without sales charges)
Oppenheimer Goldman &
Convertible Sachs 100
Securities Fund Convertible Fund
Class M Shares
6/93 10000 10000
9/93 10878.6 10264.6
12/93 11189.8 10545.1
3/94 11356.6 10434.3
6/94 11081.4 10176.5
9/94 11622.5 10524.1
12/94 11064 10033.2
3/95 11817.3 10882.4
6/95 12762.5 11848.5
9/95 13794.4 12509.6
12/95 13943.6 12795.1
3/96 14203.5 13569.5
6/96 14479.1 13844.7
9/96 14767.1 14260.8
12/96 15279.2 14548.9
3/97 15556.6 14745.3
6/97 16771.5 16117.1
9/97 18060 17797.1
12/97 18058.5 17387.4
3/98 19550.5 18859.5
6/98 18992 18691.6
1. Total returns include changes in share price and reinvestment of dividends
and capital gains distributions in a hypothetical investment for the periods
shown. Class A returns include the current maximum initial sales charge of
5.75%. Class A shares were first publicly offered on 5/1/95. The Fund's maximum
sales charge for Class A shares was lower prior to 3/11/96, so actual
performance may have been higher. Class B returns include the applicable
contingent deferred sales charge of 5% (1-year) and 3% (since inception on
5/1/95). Class C returns for the one-year result include the applicable
contingent deferred sales charge of 1%. Class C shares have an inception date of
3/11/96. Class M returns include the current maximum initial sales charge of
3.25%. Class M shares have an inception date of 6/3/86. Prior to 3/11/96, Class
M shares were designated as Class A shares. An explanation of the different
performance calculations is in the Fund's prospectus. Class B and C shares are
subject to an annual 0.75% asset-based sales charge and Class M shares are
subject to an annual 0.50% asset-based sales charge.
4 Oppenheimer Convertible Securities Fund
<PAGE>
Portfolio Allocation(4)
[PIE CHART OMITTED]
o Convertible
Corporate
Bonds & Notes 60.8%
o Other Securites 15.4
o Cash Equivalents 8.5
o Structured Notes 6.7
o Preferred Stocks 6.2
o Common Stock 2.4
Portfolio review
- --------------------------------------------------------------------------------
Oppenheimer Convertible Securities Fund is for investors looking for income plus
built-in growth potential.
What We Look For
o Convertible securities with both good upside potential and reduced downside
risk.
o Companies with strong balance sheets, anticipated strong cash flow, and
interest or dividend coverage at good values.
o Smaller companies that often provide better values.
o Securities that can provide equity-like returns, without excessive volatility.
Sector Breakdown(5)
- --------------------------------------------------------------------------------
Technology 28.9% Financial 8.0%
- --------------------------------------------------------------------------------
Industrial 18.4 Energy 2.5
- --------------------------------------------------------------------------------
Consumer Cyclicals 15.0 Utilities 2.4
- --------------------------------------------------------------------------------
Consumer Non-Cyclicals 14.0 Basic Materials 1.6
- --------------------------------------------------------------------------------
2. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
3. Results of a hypothetical $10,000 investment in Class M shares on June 30,
1993. The Goldman Sachs 100 Convertible Index is a broad-based unmanaged index
of convertible securities, and cannot be purchased directly by investors.
Convertible securities are subject to credit risks described in the prospectus,
and may not perform as well as stocks in rising markets. Past performance does
not guarantee future results.
4. Portfolio is subject to change. Percentages are as of June 30, 1998 and are
based on total market value of investments.
5. Portfolio is subject to change. Percentages are as of June 30, 1998 and are
based on net assets.
5 Oppenheimer Convertible Securities Fund
<PAGE>
"The convertible securities market has done exceptionally well compared to other
fixed-income alternatives."
An interview with your Fund's managers
- --------------------------------------------------------------------------------
Why did the Fund change its name?
The name of the Fund was changed from Oppenheimer Bond Fund for Growth to
Oppenheimer Convertible Securities Fund. We believe that the new name provides a
more accurate description of the Fund and its holdings.
How has Oppenheimer Convertible Securities Fund performed over the past six
months?
The Fund's Class A shares provided a cumulative total return, without deducting
sales charges, of 5.56% for the six-month period ended June 30, 1998.(1)
How has the convertible securities market performed so far in 1998?
Convertible securities are debt instruments that may be converted at some future
date into shares of the issuer's common stock. Therefore, their performance is
linked both to the interest rate environment and conditions in the stock market.
Accordingly, the convertible securities market has done well over the past six
months, comparing favorably to most fixed-income alternatives. Convertible
securities also provided higher returns than small-capitalization stocks, as
measured by the Russell 2000 index.
In our view, two different types of investors benefited most from
convertible securities' recent performance. First, for investors seeking a
fixed-income alternative that provides a hedge against potential inflation,
convertible securities generally outperformed comparable income-producing
alternatives on a total return basis. Second, for those wanting to protect some
of their assets from the risks of a highly valued stock market, convertible
securities helped provide participation in much of the stock market's gains, but
with reduced risk.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account.
6 Oppenheimer Convertible Securities Fund
<PAGE>
[PHOTO]
Portfolio Management
Team (l to r)
Ted Everett
Mike Rosen
(Portfolio Managers)
Why have convertibles performed so well?
Economic conditions so far this year have provided a healthy environment for
convertible securities. That's because a strong economy has supported the growth
of corporate profits, which is good for convertible securities' equity
component. Yet, inflation remained quite low, helping to keep convertible
securities' income component competitive with bonds and dividend-paying stocks.
Furthermore, convertible securities have a fixed maturity date on which the
issuer promises to repay principal in full. This combination of potential growth
and high income attracted investors in droves.
How were the Fund's assets allocated among the various market sectors?
As of June 30, 1998, about 60% of the Fund's assets were invested in convertible
bonds, and another 20% were invested in convertible stocks. About 10% was
invested in foreign equities, approximately 1% in U.S. corporate bonds and 9% in
cash and cash equivalents.
While these proportions were not appreciably different from the Fund's
allocations at the beginning of the year, there has been a considerable amount
of activity within each market segment. Most significantly, we sold securities
that either reached our price targets or were considered too risky in a
potentially volatile stock market. We replaced those investments with
convertible securities that, in our opinion, featured a more attractive
risk/reward profile.
7 Oppenheimer Convertible Securities Fund
<PAGE>
"The Fund's name was changed... to more accurately describe its holdings."
An interview with your Fund's managers
- --------------------------------------------------------------------------------
In what industries did you find the most attractive opportunities?
Although we select investments for the Fund on a security-by-security basis,
during the past six months the portfolio's industry allocations generally
reflected those of the broad convertible securities market. For example, about
one third of our convertible positions were from a broadly diversified array of
companies in the technology industry.
Convertible securities issued by companies in stable industries with
predictable revenues and cash flows generally performed best. For example,
well-known pharmaceutical and entertainment companies benefited from investors'
preference for large, well-known companies with histories of consistent earnings
growth. In part, this is the result of a "flight to quality" among overseas
investors in the wake of the Asian financial crisis. Just as most U.S.-based
investors look to large, household names for their overseas investments, foreign
investors have tended to choose the best-known companies when investing in the
United States.
In addition, we found a number of attractive opportunities in the
telecommunications sector, particularly among local telephone exchange
carriers. We also increased our exposure to information technology services
companies, focusing on firms that provide outsourcing and computer programming
services to corporations. Finally, we established a number of new positions in
convertible securities issued by real estate investment trusts (REITs).
8 Oppenheimer Convertible Securities Fund
<PAGE>
"We look for... stable industries with predictable revenues and cash flows."
Have any industries disappointed you since the beginning of the year?
Convertible securities issued by healthcare services companies have provided
relatively lackluster performance. That's because the entire managed care
industry--ranging from Preferred Provider Organizations (PPOs) to Health
Maintenance Organizations (HMOs)suffered from a poor pricing environment and the
risks of potential government regulation.
What is your outlook for the convertible market over the next six months?
We believe convertible securities will perform competitively, relative to other
types of fixed-income securities. But we don't expect the same magnitude of
returns as we achieved during the first half of the year. In our opinion,
convertible securities' income component will comprise a larger portion of their
total returns over the foreseeable future. That's because we expect U.S.
economic growth to moderate during the second half of 1998, which may reduce
corporate earnings growth. If that occurs, it is unlikely that equity prices
will rise dramatically over the next several months.
Even if stocks pause, we do not expect bonds to provide much competition
for convertible securities. We believe that inflation will remain low, and
slower economic growth should reduce the likelihood of higher interest rates and
bond yields. Accordingly, we expect yields on convertible securities to continue
to rival those of high-quality bonds.
9 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
===========================================================================================================
<S> <C> <C>
Convertible Corporate Bonds and Notes--60.3%
- -----------------------------------------------------------------------------------------------------------
Basic Materials--0.3%
- -----------------------------------------------------------------------------------------------------------
Metals--0.3%
Homestake Mining Co., 5.50% Cv. Sub. Nts., 6/23/00(1) $ 4,000,000 $ 3,850,000
- -----------------------------------------------------------------------------------------------------------
Consumer Cyclicals--10.8%
- -----------------------------------------------------------------------------------------------------------
Autos & Housing--4.7%
Magna International, Inc., 4.875% Cv. Sub. Debs., 2/15/05(1) 11,000,000 12,155,000
- -----------------------------------------------------------------------------------------------------------
MascoTech, Inc., 4.50% Cv. Sub. Debs., 12/15/03 13,000,000 12,171,250
- -----------------------------------------------------------------------------------------------------------
Rouse Co., 5.75% Cv. Sub. Nts., 7/23/02 9,450,000 10,773,000
- -----------------------------------------------------------------------------------------------------------
Security Capital U.S. Realty, 2% Cv. Sr. Unsec. Bonds, 5/22/03(2) 14,500,000 12,225,312
- -----------------------------------------------------------------------------------------------------------
Sunbeam Corp., Zero Coupon Cv. Sub. Debs., 5.96%, 3/25/18(1)(3) 27,500,000 6,393,750
-------------
53,718,312
- -----------------------------------------------------------------------------------------------------------
Leisure & Entertainment--1.0%
Hudson Hotels Corp., 7.50% Cv. Sub. Debs., 7/1/01(2) 7,500,000 7,020,000
- -----------------------------------------------------------------------------------------------------------
Speedway Motorsports, Inc., 5.75% Cv. Sub. Debs., 9/30/03 4,000,000 4,265,000
-------------
11,285,000
- -----------------------------------------------------------------------------------------------------------
Media--1.5%
Hollinger, Inc., Zero Coupon Cv. Sub. Liquid Yield Option Nts.,
6.33%, 10/5/13(3) 10,000,000 4,225,000
- -----------------------------------------------------------------------------------------------------------
Interpublic Group Cos., 1.80% Cv. Sub. Debs., 9/16/04(1) 9,000,000 8,415,000
- -----------------------------------------------------------------------------------------------------------
Thomas Nelson, Inc., 5.75% Cv. Nts., 11/30/99(1) 4,000,000 3,985,000
-------------
16,625,000
- -----------------------------------------------------------------------------------------------------------
Retail: General--0.2%
Travel Ports of America, Inc., 8.50% Cv. Sr. Sub. Debs.,
1/15/05 (Reg S)(2) 2,407,000 2,813,518
- -----------------------------------------------------------------------------------------------------------
Retail: Specialty--3.4%
Cendant Corp., 3% Cv. Sub. Nts., 2/15/02(4) 7,000,000 6,851,250
- -----------------------------------------------------------------------------------------------------------
Corporate Express, Inc., 4.50% Cv. Sub. Nts., 7/1/00 12,150,000 11,238,750
- -----------------------------------------------------------------------------------------------------------
Costco Cos., Inc., Zero Coupon Cv. Sub. Nts., 3.50%, 8/19/17(1)(3)(4) 8,000,000 6,130,000
- -----------------------------------------------------------------------------------------------------------
Costco Cos., Inc., Zero Coupon Cv. Sub. Nts., 2.01%, 8/19/17(3)(4) 5,000,000 3,831,250
- -----------------------------------------------------------------------------------------------------------
Nine West Group, Inc., 5.50% Cv. Sub. Nts., 7/15/03(1) 7,800,000 6,493,500
- -----------------------------------------------------------------------------------------------------------
Nine West Group, Inc., 5.50% Cv. Sub. Nts., 7/15/03 1,200,000 999,000
- -----------------------------------------------------------------------------------------------------------
Rite Aid Corp., 5.25% Cv. Unsec. Sub. Nts., 9/15/02(1) 2,000,000 2,480,000
-------------
38,023,750
</TABLE>
10 Oppenheimer Convertible Securities Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Non-Cyclicals--11.2%
- -----------------------------------------------------------------------------------------------------------
Beverages--0.1%
Chock Full O'Nuts Corp., 8% Cv. Sub. Debs., 9/15/06 $ 1,242,000 $ 1,260,630
- -----------------------------------------------------------------------------------------------------------
Healthcare/Drugs--4.3%
Athena Neurosciences, Inc., 4.75% Cv. Nts., 11/15/04(1) 5,000,000 5,781,250
- -----------------------------------------------------------------------------------------------------------
Chiron Corp., 1.90% Cv. Sub. Nts., 11/17/00(1) 17,000,000 15,618,750
- -----------------------------------------------------------------------------------------------------------
Dura Pharmaceuticals, Inc., 3.50% Cv. Sub. Nts., 7/15/02 7,000,000 5,862,500
- -----------------------------------------------------------------------------------------------------------
Fuisz Technologies Ltd., 7% Cv. Sub. Debs., 10/15/04(1) 6,850,000 6,909,937
- -----------------------------------------------------------------------------------------------------------
Fuisz Technologies Ltd., 7% Cv. Sub. Debs., 10/15/04 150,000 151,312
- -----------------------------------------------------------------------------------------------------------
Roche Holdings, Inc., Zero Coupon Cv. Liquid Yield Option Nts.,
5.49%, 4/20/10(1)(3) 12,000,000 6,870,000
- -----------------------------------------------------------------------------------------------------------
Roche Holdings, Inc., Zero Coupon Exchangeable Liquid Yield
Option Nts., 6.38%, 5/6/12(1)(3) 15,000,000 7,246,950
-------------
48,440,699
- -----------------------------------------------------------------------------------------------------------
Healthcare/Supplies & Services--6.4%
Concentra Managed Care, Inc., 4.50% Cv. Sub. Nts., 3/15/03(1) 13,000,000 11,732,500
- -----------------------------------------------------------------------------------------------------------
Genzyme Corp. (General Division), 5.25% Cv. Sub. Nts., 6/1/05(1) 5,000,000 4,725,000
- -----------------------------------------------------------------------------------------------------------
HealthSouth Corp., 3.25% Cv. Sub. Nts., 4/1/03(1) 4,500,000 4,494,375
- -----------------------------------------------------------------------------------------------------------
NovaCare, Inc., 5.50% Cv. Sub. Debs., 1/15/00 5,000,000 4,750,000
- -----------------------------------------------------------------------------------------------------------
Omnicare, Inc., 5% Cv. Sub. Debs., 12/1/07(1) 8,000,000 9,270,000
- -----------------------------------------------------------------------------------------------------------
PhyCor, Inc., 4.50% Cv. Sub. Debs., 2/15/03 15,000,000 12,581,250
- -----------------------------------------------------------------------------------------------------------
St. Jude Medical, Inc., 5.75% Cv. Sub. Nts., 8/15/01 6,000,000 7,387,500
- -----------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 6% Exchangeable Sub. Nts., 12/1/05
(Exchangeable into Common Stock of Vencor, Inc.) 11,000,000 9,432,500
- -----------------------------------------------------------------------------------------------------------
ThermoTrex Corp., 3.25% Cv. Gtd. Bonds, 11/1/07 4,000,000 3,575,000
- -----------------------------------------------------------------------------------------------------------
Veterinary Centers of America, Inc., 5.25% Cv. Sub. Debs., 5/1/06 4,050,000 3,543,750
- -----------------------------------------------------------------------------------------------------------
Veterinary Centers of America, Inc., 5.25% Cv. Unsec. Sub. Debs.,
Series REGS, 5/1/06 570,000 498,750
-------------
71,990,625
- -----------------------------------------------------------------------------------------------------------
Tobacco--0.4%
Standard Commercial Corp., 7.25% Cv. Sub. Debs., 3/31/07 4,984,000 4,180,330
- -----------------------------------------------------------------------------------------------------------
Energy--1.8%
- -----------------------------------------------------------------------------------------------------------
Oil-Integrated--1.8%
Loews Corp., 3.125% Cv. Sub. Nts., 9/15/07 10,000,000 9,287,500
- -----------------------------------------------------------------------------------------------------------
Pennzoil Co., 4.75% Exchangeable Sr. Debs., 10/1/03
(Exchangeable into Common Stock of Chevron Corp.)(4) 8,000,000 11,520,000
-------------
20,807,500
</TABLE>
11 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Financial--2.6%
- -----------------------------------------------------------------------------------------------------------
Diversified Financial--2.0%
Bell Atlantic Financial Services Corp.,
5.75% Cv. Sr. Unsec. Nts., 4/1/03(1) $ 20,000,000 $ 20,525,000
- -----------------------------------------------------------------------------------------------------------
Meditrust Cos., 6.875% Cv. Debs., 11/15/98 2,000,000 2,005,000
-------------
22,530,000
- -----------------------------------------------------------------------------------------------------------
Insurance--0.6%
Penn Treaty American Corp., 6.25% Cv. Sub. Nts., 12/1/03(1) 4,250,000 5,429,375
- -----------------------------------------------------------------------------------------------------------
Westbridge Capital Corp., 7.50% Cv. Sub. Nts., 5/1/04(5) 2,500,000 825,000
-------------
6,254,375
- -----------------------------------------------------------------------------------------------------------
Industrial--12.7%
- -----------------------------------------------------------------------------------------------------------
Industrial Materials--0.5%
Empresas Ica Sociedad Controladora, SA de CV,
5% Cv. Sub. Debs., 3/15/04 7,500,000 5,606,250
- -----------------------------------------------------------------------------------------------------------
Industrial Services--9.5%
Corestaff, Inc., 2.94% Cv. Sub. Nts., 8/15/04 7,000,000 6,781,250
- -----------------------------------------------------------------------------------------------------------
Danka Business Systems plc, 6.75% Cv. Sub. Nts., 4/1/02 10,000,000 8,800,000
- -----------------------------------------------------------------------------------------------------------
Getty Images, Inc., 4.75% Cv. Sub. Nts., 6/1/03(1) 5,000,000 4,825,000
- -----------------------------------------------------------------------------------------------------------
Interpublic Group Cos., 13.386% Cv. Sub. Nts., 9/16/04 2,000,000 1,870,000
- -----------------------------------------------------------------------------------------------------------
Kent Electronics Corp., 4.50% Cv. Sub. Nts., 9/1/04 5,000,000 3,975,000
- -----------------------------------------------------------------------------------------------------------
Lam Research Corp., 5% Cv. Sub. Nts., 9/1/02 5,000,000 4,050,000
- -----------------------------------------------------------------------------------------------------------
Mansur Industries, Inc., 8.25% Cv. Sub. Nts., 2/18/03(2) 4,000,000 4,720,000
- -----------------------------------------------------------------------------------------------------------
May & Speh, Inc., 5.25% Cv. Sub. Nts., 4/1/03 5,000,000 6,906,250
- -----------------------------------------------------------------------------------------------------------
Phoenix Duff & Phelps Corp., 6% Cv. Sub. Debs., 11/1/15 7,817,500 9,273,509
- -----------------------------------------------------------------------------------------------------------
Pride International, Inc., Zero Coupon Cv. Sub. Debs.,
4.66%, 4/24/18(3) 16,000,000 5,960,000
- -----------------------------------------------------------------------------------------------------------
Thermo Ecotek Corp., 4.875% Cv. Sub. Debs., 4/15/04(1) 5,000,000 4,968,750
- -----------------------------------------------------------------------------------------------------------
Thermo Fibertek, Inc., 4.50% Cv. Sub. Debs., 7/15/04(1) 5,000,000 5,068,750
- -----------------------------------------------------------------------------------------------------------
Thermo Instrument Systems, Inc., 4% Cv. Gtd. Nts.,
Series RG, 1/15/05 3,999,999 4,010,000
- -----------------------------------------------------------------------------------------------------------
Thermo Instrument Systems, Inc., 4.50% Cv. Debs.,
Series REGS, 10/15/03 3,500,000 3,508,750
- -----------------------------------------------------------------------------------------------------------
Thermo TerraTech, Inc., 4.625% Cv. Sub. Nts., 5/1/03 1,798,000 1,620,448
- -----------------------------------------------------------------------------------------------------------
Thermo TerraTech, Inc., 4.625% Cv. Sub. Debs., 5/1/03(1) 1,500,000 1,351,875
- -----------------------------------------------------------------------------------------------------------
U.S. Filter Corp., 4.50% Cv. Sub. Nts., 12/15/01 10,000,000 10,212,500
- -----------------------------------------------------------------------------------------------------------
USA Waste Services, Inc., 4% Cv. Sub. Debs., 2/1/02 4,737,000 5,885,723
- -----------------------------------------------------------------------------------------------------------
WMX Technologies, Inc., 2% Cv. Sub. Nts., 1/24/05 13,000,000 13,032,500
-------------
106,820,305
</TABLE>
12 Oppenheimer Convertible Securities Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Manufacturing--2.7%
Hexcel Corp., 7% Cv. Sub. Debs., 8/1/11 $ 4,000,000 $ 3,960,000
- -----------------------------------------------------------------------------------------------------------
Mark IV Industries, Inc., 4.75% Cv. Sub. Nts., 11/1/04(1) 19,000,000 17,598,750
- -----------------------------------------------------------------------------------------------------------
Mark IV Industries, Inc., 4.75% Cv. Sub. Nts., 11/1/04 4,000,000 3,705,000
- -----------------------------------------------------------------------------------------------------------
Synetic, Inc., 5% Cv. Sub. Debs., 2/15/07 5,000,000 5,381,250
-------------
30,645,000
- -----------------------------------------------------------------------------------------------------------
Technology--20.0%
- -----------------------------------------------------------------------------------------------------------
Aerospace/Defense--0.2%
Kellstrom Industries, Inc., 5.50% Cv. Unsec. Sub. Nts., 6/15/03 2,000,000 2,125,000
- -----------------------------------------------------------------------------------------------------------
Computer Hardware--3.0%
Adaptec, Inc., 4.75% Cv. Sub. Nts., 2/1/04 15,000,000 11,400,000
- -----------------------------------------------------------------------------------------------------------
Micron Technology, Inc., 7% Cv. Sub. Nts., 7/1/04 4,000,000 3,735,000
- -----------------------------------------------------------------------------------------------------------
Quantum Corp., 7% Cv. Sub. Nts., 8/1/04 4,500,000 4,320,000
- -----------------------------------------------------------------------------------------------------------
Telxon Corp., 5.75% Cv. Sub. Nts., 1/1/03(1) 2,250,000 2,680,313
- -----------------------------------------------------------------------------------------------------------
Telxon Corp., 5.75% Cv. Sub. Nts., 1/1/03 4,500,000 5,360,625
- -----------------------------------------------------------------------------------------------------------
Xerox Corp., 0.57% Cv. Sub. Nts., 4/21/18(1) 12,000,000 6,870,000
-------------
34,365,938
- -----------------------------------------------------------------------------------------------------------
Computer Software/Services--3.2%
Arbor Software Corp., 4.50% Cv. Sub. Nts., 3/15/05(1) 4,500,000 3,943,125
- -----------------------------------------------------------------------------------------------------------
HNC Software, Inc., 4.75% Cv. Unsec. Sub. Nts., 3/1/03 6,500,000 7,206,875
- -----------------------------------------------------------------------------------------------------------
MacNeal-Schwendler Corp., 7.875% Cv. Sub. Debs., 8/18/04 4,017,000 4,052,149
- -----------------------------------------------------------------------------------------------------------
National Data Corp., 5% Cv. Sub. Nts., 11/1/03 8,100,000 8,353,125
- -----------------------------------------------------------------------------------------------------------
Network Associates, Inc., Zero Coupon Cv. Sub. Debs.,
4.53%, 2/13/18(1)(3) 14,000,000 6,545,000
- -----------------------------------------------------------------------------------------------------------
Tecnomatix Technologies Ltd., 5.25% Cv. Sub. Nts., 8/15/04(1) 7,700,000 6,237,000
-------------
36,337,274
</TABLE>
13 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Electronics--8.9%
Advanced Micro Devices, Inc., 6% Cv. Sub. Nts., 5/15/05 $ 5,000,000 $ 4,125,000
- -----------------------------------------------------------------------------------------------------------
California Microwave, Inc., 5.25% Cv. Sub. Nts., 12/15/03 9,645,000 8,487,600
- -----------------------------------------------------------------------------------------------------------
Checkpoint Systems, Inc., 5.25% Cv. Sub. Debs., 11/1/05 2,300,000 2,187,875
- -----------------------------------------------------------------------------------------------------------
Motorola, Inc., Zero Coupon Cv. Sub. Liquid Yield Option Nts.,
1.44%, 9/27/13(3) 20,000,000 14,675,000
- -----------------------------------------------------------------------------------------------------------
Park Electrochemical Corp., 5.50% Cv. Sub. Nts., 3/1/06 9,000,000 7,751,250
- -----------------------------------------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co. Ltd., Zero Coupon
- -----------------------------------------------------------------------------------------------------------
Credit Enhanced Debt Indexed to Stock, 4.93%, 7/3/02(1)(3) 6,250,000 6,921,875
- -----------------------------------------------------------------------------------------------------------
Thermo Electron Corp., 4.25% Cv. Sub. Nts., 1/1/03(1) 15,500,000 16,565,625
- -----------------------------------------------------------------------------------------------------------
Thermo Instrument Systems, Inc., 4.50% Gtd. Cv. Sr. Debs., 10/15/03(1) 6,000,000 6,015,000
- -----------------------------------------------------------------------------------------------------------
Thermo Optek Corp., 5% Cv. Sub. Debs., 10/15/00(1) 9,535,000 10,750,713
- -----------------------------------------------------------------------------------------------------------
Thermo Voltek Corp., 3.75% Cv. Sub. Debs., 11/15/00 2,470,000 2,468,456
- -----------------------------------------------------------------------------------------------------------
ThermoQuest Corp., 5% Cv. Sub. Debs., 8/15/00 1,500,000 1,653,750
- -----------------------------------------------------------------------------------------------------------
ThermoQuest Corp., 5% Cv. Sub. Debs., 8/15/00(1) 9,775,000 10,776,938
- -----------------------------------------------------------------------------------------------------------
Xilinx, Inc., 5.25% Cv. Sub. Nts., 11/1/02(1) 7,000,000 6,545,000
- -----------------------------------------------------------------------------------------------------------
Xilinx, Inc., 5.25% Cv. Sub. Nts., 11/1/02 2,000,000 1,870,000
-------------
100,794,082
- -----------------------------------------------------------------------------------------------------------
Telecommunications/Technology--4.7%
Clear Channel Communications, Inc., 2.625% Cv. Sr. Nts., 4/1/03 5,000,000 5,362,500
- -----------------------------------------------------------------------------------------------------------
Comverse Technology, Inc., 5.75% Cv. Sub. Debs., 10/1/06 8,000,000 10,260,000
- -----------------------------------------------------------------------------------------------------------
Gilat Satellite Networks Ltd., 6.50% Cv. Sub. Nts., 6/3/04(1) 7,250,000 7,521,875
- -----------------------------------------------------------------------------------------------------------
Premiere Technologies, Inc., 5.75% Cv. Sub. Nts., 7/1/04 7,000,000 7,382,500
- -----------------------------------------------------------------------------------------------------------
SmarTalk TeleServices, Inc., 5.75% Cv. Sub. Nts., 9/15/04(1) 11,000,000 9,226,250
- -----------------------------------------------------------------------------------------------------------
SmarTalk TeleServices, Inc., 5.75% Cv. Sub. Nts., 9/15/04 4,000,000 3,355,000
- -----------------------------------------------------------------------------------------------------------
U.S. Cellular Corp., Zero Coupon Cv. Sub. Liquid Yield Option Nts.,
5.82%, 6/15/15(3) 26,000,000 9,782,500
-------------
52,890,625
- -----------------------------------------------------------------------------------------------------------
Utilities--0.9%
- -----------------------------------------------------------------------------------------------------------
Telephone Utilities--0.9%
BBN Corp., 6% Cv. Sub. Debs., 4/1/12 11,004,000 10,178,700
-------------
Total Convertible Corporate Bonds and Notes (Cost $679,341,857) 681,542,913
</TABLE>
14 Oppenheimer Convertible Securities Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
===========================================================================================================
<S> <C> <C>
Preferred Stocks--6.1%
- -----------------------------------------------------------------------------------------------------------
7th Level, Inc., Preferred Stock, Series A(2)(6) 2,500 $ 2,500,000
- -----------------------------------------------------------------------------------------------------------
Aetna, Inc., $4.75 Cv. Preferred Stock 100,000 7,512,500
- -----------------------------------------------------------------------------------------------------------
Budget Group, Inc., 6.25% Cv.(1) 104,000 6,045,000
- -----------------------------------------------------------------------------------------------------------
CVS Corp., 6% Cv. Preferred Stock 60,000 4,578,750
- -----------------------------------------------------------------------------------------------------------
Danskin, Inc., $88.272 Cv. Preferred, Series D(2)(6) 88 1,820,614
- -----------------------------------------------------------------------------------------------------------
Estee Lauder Co., 6.25% Cv. Preferred Stock 100,000 6,700,000
- -----------------------------------------------------------------------------------------------------------
EVI, Inc., 5% Cv. Preferred Stock(1) 100,000 4,100,000
- -----------------------------------------------------------------------------------------------------------
Microsoft Corp., $2.196 Cv., Series A 80,000 7,600,000
- -----------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 6.50% Cv. Preferred Stock(1) 100,000 4,925,000
- -----------------------------------------------------------------------------------------------------------
Owens-Illinois, Inc., 4.75% Cv. Preferred Stock 121,400 6,327,975
- -----------------------------------------------------------------------------------------------------------
Sensormatic Electronics Corp., 6.50% Cv. Preferred Stock(1) 225,000 5,428,125
- -----------------------------------------------------------------------------------------------------------
Skytel Communications, Inc., $2.25 Cv. Sub. Debs. 171,100 6,074,050
- -----------------------------------------------------------------------------------------------------------
WinStar Communications, Inc., 7% Cv. Preferred Stock(1) 100,000 5,437,500
-------------
Total Preferred Stocks (Cost $64,632,881) 69,049,514
<CAPTION>
Shares or
Face Amount
===========================================================================================================
<S> <C> <C>
Other Securities--15.4%
- -----------------------------------------------------------------------------------------------------------
Basic Materials--1.3%
- -----------------------------------------------------------------------------------------------------------
Metals--0.3%
USX Capital Trust, 6.75% Cv. Preferred Stock 80,200 3,859,625
- -----------------------------------------------------------------------------------------------------------
Paper--1.0%
International Paper Capital Trust, 5.25% Cv. Preferred Securities, 7/20/25 225,000 10,884,375
- -----------------------------------------------------------------------------------------------------------
Consumer Cyclicals--3.8%
- -----------------------------------------------------------------------------------------------------------
Autos & Housing--1.7%
Daimler Benz AG, American Deposit Nts. representing
5.75% Sub. Mandatory Cv. Nts., 6/14/02 27,988 2,546,908
- -----------------------------------------------------------------------------------------------------------
Equity Office Properties Trust, 5.25% Cv. Preferred Stock(1)(6) 250,000 10,875,000
- -----------------------------------------------------------------------------------------------------------
Fleetwood Enterprises Capital Trust I, 6% Cv. Preferred Stock(1) 100,000 5,300,000
-------------
18,721,908
- -----------------------------------------------------------------------------------------------------------
Food--0.4%
Suiza Capital Trust II/Suiza Foods Corp., 5.50% Cv. Preferred Stock(1) 100,000 5,000,000
- -----------------------------------------------------------------------------------------------------------
Leisure & Entertainment--0.9%
Houston Industries, Inc., 7% Automatic Common Exchange Securities,
7/1/00 (Time Warner, Inc.) 50,000 3,725,000
- -----------------------------------------------------------------------------------------------------------
Wendy's Financing Trust I, $2.50 Term Convertible Securities,
Series A, 9/15/26 113,500 6,242,500
-------------
9,967,500
</TABLE>
15 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares or Market Value
Face Amount See Note 1
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Media--0.8%
News Corp. Ltd., 5% Exchangeable Trust Originated Preferred Securities,
1/2/16 (British Sky Broadcasting Group plc)(1) 100,000 $ 8,612,500
- -----------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--0.9%
- -----------------------------------------------------------------------------------------------------------
Household Goods--0.9%
Newell Financial Trust I, 5.25% Cv. Preferred Stock, 12/1/27(1) 175,000 10,215,625
- -----------------------------------------------------------------------------------------------------------
Energy--0.7%
- -----------------------------------------------------------------------------------------------------------
Energy Services & Products--0.7%
El Paso Energy Corp. Capital Trust I, 4.75% Cv. Preferred Stock 150,000 7,950,000
- -----------------------------------------------------------------------------------------------------------
Financial--1.5%
- -----------------------------------------------------------------------------------------------------------
Banks--1.0%
National Australia Bank Ltd., Exchangeable Capital Units (each ExCap
consists of $25 principal amount of 7.875% Perpetual Capital Security
and a purchase contract entitling the holder to exchange ExCaps for
ordinary shares of the bank)(7) 372,900 10,697,568
- -----------------------------------------------------------------------------------------------------------
Diversified Financial--0.5%
SunAmerica, Inc., 8.5% Premium Equity Redemption
Cumulative Securities, 10/31/99 125,000 6,000,000
- -----------------------------------------------------------------------------------------------------------
Industrial--4.8%
- -----------------------------------------------------------------------------------------------------------
Industrial Materials--1.8%
Corning Delaware LP, 6% Cv. Monthly Income Preferred Securities(4) 133,600 7,548,400
- -----------------------------------------------------------------------------------------------------------
Owens Corning Capital LLC, 6.50% Cv. Monthly Income
Preferred Securities, Non-Vtg.(1) 250,000 13,343,750
-------------
20,892,150
- -----------------------------------------------------------------------------------------------------------
Industrial Services--0.6%
Owens & Miner Trust I, 5.375% Cv. Preferred Stock(1) 160,000 6,320,000
- -----------------------------------------------------------------------------------------------------------
Manufacturing--0.5%
Elsag Bailey Financing Trust, 5.50% Cv. Trust Originated
Preferred Securities, 12/31/35 125,000 5,296,875
- -----------------------------------------------------------------------------------------------------------
Transportation--1.9%
CNF Trust I, $2.50 Term Convertible Securities, Series A, 6/1/12 150,000 9,525,000
- -----------------------------------------------------------------------------------------------------------
Union Pacific Capital Trust, 6.25% Cv. Preferred Stock(1) 250,000 11,531,250
-------------
21,056,250
- -----------------------------------------------------------------------------------------------------------
Technology--0.9%
- -----------------------------------------------------------------------------------------------------------
Aerospace/Defense--0.5%
Coltec Capital Trust, 5.25% Cv. Preferred Stock(1) 120,000 5,625,000
</TABLE>
16 Oppenheimer Convertible Securities Fund
<PAGE>
<TABLE>
<CAPTION>
Shares or Market Value
Face Amount See Note 1
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Computer Software--0.4%
Vanstar Financing Trust, 6.75% Trust Cv. Preferred Securities, 12/31/49(1) 35,000 $ 1,435,000
- -----------------------------------------------------------------------------------------------------------
Vanstar Financing Trust, 6.75% Trust Cv. Preferred Securities, 12/31/49 75,000 3,075,000
-------------
4,510,000
- -----------------------------------------------------------------------------------------------------------
Utilities--1.5%
- -----------------------------------------------------------------------------------------------------------
Electric Utilities--0.8%
AES Trust II, 5.50% Cv. Preferred Stock, Series B(1) 135,000 7,695,000
- -----------------------------------------------------------------------------------------------------------
AES Trust II, 5.50% Cv. Preferred Stock, Series B 25,000 1,425,000
-------------
9,120,000
- -----------------------------------------------------------------------------------------------------------
Gas Utilities--0.3%
MCN Energy Group, Inc., 8% Cv. Preferred Redeemable Increased
Dividend Equity Securities, 5/16/00 30,000 1,376,250
- -----------------------------------------------------------------------------------------------------------
MCN Energy Group, Inc., 8.75% Cv. Preferred Redeemable Increased
Dividend Equity Securities, 4/30/99 90,100 2,134,244
-------------
3,510,494
- -----------------------------------------------------------------------------------------------------------
Telephone Utilities--0.4%
SBC Communications, Inc., 7.75% Debt Exchangeable for
Common Stock, 3/15/01, (ADS of Telefonos de Mexico) 100,000 4,537,500
-------------
Total Other Securities (Cost $169,636,275) 172,777,370
<CAPTION>
Shares
===========================================================================================================
<S> <C> <C>
Common Stocks--2.4%
- -----------------------------------------------------------------------------------------------------------
7th Level, Inc.(6) 625,000 1,298,828
- -----------------------------------------------------------------------------------------------------------
American Home Products Corp. 40,080 2,074,140
- -----------------------------------------------------------------------------------------------------------
Danskin, Inc. 2,951,832 5,995,909
- -----------------------------------------------------------------------------------------------------------
Danskin, Inc., Restricted Common Shares(2)(6) 289,251 357,948
- -----------------------------------------------------------------------------------------------------------
Orion Capital Corp. 60,002 3,352,612
- -----------------------------------------------------------------------------------------------------------
Philip Morris Cos., Inc. 66,000 2,598,750
- -----------------------------------------------------------------------------------------------------------
Sensormatic Electronics Corp.(1) 6,176 84,446
- -----------------------------------------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA, Sponsored ADR(4) 100,000 10,918,750
- -----------------------------------------------------------------------------------------------------------
Travel Ports of America, Inc.(6) 111,831 342,482
-------------
Total Common Stocks (Cost $17,548,649) 27,023,865
</TABLE>
17 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Units See Note 1
===========================================================================================================
<S> <C> <C>
Rights, Warrants and Certificates--0.0%
- -----------------------------------------------------------------------------------------------------------
Danskin, Inc.:
Escrow deposit to be used to purchase 686,237 shares of Restricted
Common Stock in Rights Offering(5) -- $ 205,871
Portion of Promissory Note to be used to purchase 53,309 shares
of Restricted Common Stock in Rights Offering(5) -- 15,992
Wts., Exp. 10/04(5) 367,801 264,817
- -----------------------------------------------------------------------------------------------------------
Submicron Systems Corp. Wts., Exp. 12/00(5) 27,000 486
-------------
Total Rights, Warrants and Certificates (Cost $221,864) 487,166
<CAPTION>
Face
Amount
===========================================================================================================
<S> <C> <C>
Structured Instruments--6.6%
- -----------------------------------------------------------------------------------------------------------
Bankers Trust Corp., 3.10%, Common Stock Linked Nts.,
11/5/02 (ACC Corp.)(2) $ 8,000,000 9,880,000
- -----------------------------------------------------------------------------------------------------------
Bankers Trust Corp., 7%, Common Stock Linked Nts.,
8/16/99 (Sitel Corp.)(2) 6,000,000 3,960,000
- -----------------------------------------------------------------------------------------------------------
Bear Stearns Cos., Inc., 3% Equity Linked Participation Securities,
9/17/02 (McAfee Associates)(2) 8,000,000 8,555,200
- -----------------------------------------------------------------------------------------------------------
Bear Stearns Cos., Inc., 6% Equity Linked Participation Securities,
11/25/98 (ACC Corp.)(2) 5,000,004 7,116,006
- -----------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 6% Enhanced Yield Equity Linked
Debt Securities, 8/31/98 (Black & Decker Corp.)(2) 126,646 6,622,320
- -----------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 5% PREP, 6/26/00 (Travelers Group, Inc.) 158,259 9,792,276
- -----------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.25% Structured Yield Product
Exchangeable for Common Stock (IMC Global, Inc.) 78,000 2,457,000
- -----------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 7.25% Structured Yield Product
Exchangeable for Common Stock, 6/15/99 (SunAmerica, Inc.) 145,000 10,512,500
- -----------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., Principal-Protected Technology
Basket Performance Linked Nts., 2/2/05 5,000,000 5,781,250
- -----------------------------------------------------------------------------------------------------------
Nations Bank NA, Enhanced Yield Equity Linked Certificate of
Deposits, 6%, 5/22/00 (Frontier Corp.)(2) 10,000,000 9,906,000
-------------
Total Structured Instruments (Cost $68,301,681) 74,582,552
</TABLE>
18 Oppenheimer Convertible Securities Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
=============================================================================================================
<S> <C> <C>
Repurchase Agreements--8.4%
- -------------------------------------------------------------------------------------------------------------
Repurchase agreement with Salomon Smith Barney Holdings, Inc., 5.90%, dated
6/30/98, to be repurchased at $95,615,668 on 7/1/98, collateralized by U.S.
Treasury Bonds, 8.75%-10.625%, 2/15/15-2/15/19,
with a value of $98,141,879 (Cost $95,600,000) $ 95,600,000 $ 95,600,000
- -------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $1,095,283,207) 99.2% 1,121,063,380
- -------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.8 9,926,705
------------- ---------------
Net Assets 100.0% $ 1,130,990,085
============= ===============
</TABLE>
1. 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 $394,890,421 or 34.92% of the Fund's net
assets as of June 30, 1998.
2. Identifies issues considered to be illiquid or restricted--See Note 6 of
Notes to Financial Statements.
3. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
4. A sufficient amount of liquid assets has been designated to cover outstanding
written call options, as follows:
<TABLE>
<CAPTION>
Shares
Subject Expiration Exercise Premium Market Value
to Call Date Price Received See Note 1
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cendant Corp. 100,000 8/98 $ 40.00 $ 403,246 $ 6,250
- ---------------------------------------------------------------------------------------------
Chevron Corp. 60,000 9/98 80.00 305,690 307,500
Chevron Corp. 60,000 9/98 85.00 155,695 187,500
- ---------------------------------------------------------------------------------------------
Corning, Inc. 75,000 8/98 40.00 288,365 14,063
Corning, Inc. 75,000 8/98 42.50 171,182 9,375
- ---------------------------------------------------------------------------------------------
Costco Cos., Inc. 50,000 10/98 60.00 251,625 350,000
Costco Cos., Inc. 20,000 7/98 55.00 101,897 160,000
Costco Cos., Inc. 30,000 7/98 60.00 81,597 112,500
- ---------------------------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA,
Sponsored ADR 10,000 1/00 125.00 2,534,415 2,025,000
--------- ------------
$4,293,712 $ 3,172,188
========== ============
</TABLE>
5. Non-income producing--issuer is in default of interest payment.
6. Non-income producing security.
7. 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.
19 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
========================================================================================
<S> <C>
Assets
Investments, at value (cost $1,095,283,207)--see accompanying statement $1,121,063,380
- ----------------------------------------------------------------------------------------
Cash 79,811
- ----------------------------------------------------------------------------------------
Receivables:
Investments sold 16,274,903
Interest and dividends 8,656,128
Shares of beneficial interest sold 3,369,426
- ----------------------------------------------------------------------------------------
Other 11,932
--------------
Total assets 1,149,455,580
========================================================================================
Liabilities
Options written, at value (premiums received $4,293,712)--
see accompanying statement--Note 5 3,172,188
- ----------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 10,111,348
Dividends 1,952,699
Shares of beneficial interest redeemed 1,676,370
Distribution and service plan fees 701,394
Accrued taxes--Note 1 693,569
Trustees' fees 3,758
Other 154,169
--------------
Total liabilities 18,465,495
========================================================================================
Net Assets $1,130,990,085
==============
========================================================================================
Composition of Net Assets
Paid-in capital $1,031,137,357
- ----------------------------------------------------------------------------------------
Undistributed net investment income 18,940
- ----------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 72,932,091
- ----------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 26,901,697
--------------
Net assets $1,130,990,085
==============
</TABLE>
20 Oppenheimer Convertible Securities Fund
<PAGE>
<TABLE>
==============================================================================================
<S> <C>
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$237,525,987 and 14,998,117 shares of beneficial interest outstanding) $15.84
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $16.81
- ----------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of
$474,423,173 and 29,908,872 shares of beneficial interest outstanding) $15.86
- ----------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of
$116,139,155 and 7,336,324 shares of beneficial interest outstanding) $15.83
- ----------------------------------------------------------------------------------------------
Class M Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $302,901,770 and 19,127,082 shares of beneficial interest outstanding) $15.84
Maximum offering price per share (net asset value plus sales charge
of 3.25% of offering price) $16.37
</TABLE>
See accompanying Notes to Financial Statements.
21 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Six Months Ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
===================================================================================
Investment Income
Interest $ 20,617,300
- -----------------------------------------------------------------------------------
Dividends 6,907,614
------------
Total income 27,524,914
===================================================================================
Expenses
Distribution and service plan fees--Note 4:
Class A 258,644
Class B 2,197,738
Class C 516,820
Class M 1,140,603
- -----------------------------------------------------------------------------------
Management fees--Note 4 2,456,412
- -----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4:
Class A 123,955
Class B 252,712
Class C 53,469
Class M 163,116
- -----------------------------------------------------------------------------------
Accounting service fees--Note 4 161,424
- -----------------------------------------------------------------------------------
Shareholder reports 94,562
- -----------------------------------------------------------------------------------
Custodian fees and expenses 50,472
- -----------------------------------------------------------------------------------
Legal, auditing and other professional fees 30,592
- -----------------------------------------------------------------------------------
Trustees' fees and expenses 17,362
- -----------------------------------------------------------------------------------
Registration and filing fees 85,235
- -----------------------------------------------------------------------------------
Other 109,423
------------
Total expenses 7,712,539
===================================================================================
Net Investment Income 19,812,375
===================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain on:
Investments (including premiums on options exercised) 70,945,935
Closing and expiration of options written--Note 5 1,300,269
------------
Net realized gain 72,246,204
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (41,477,060)
------------
Net realized and unrealized gain 30,769,144
===================================================================================
Net Increase in Net Assets Resulting from Operations $ 50,581,519
============
</TABLE>
See accompanying Notes to Financial Statements.
22 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1998 December 31,
(Unaudited) 1997
==========================================================================================
<S> <C> <C>
Operations
Net investment income $ 19,812,375 $ 31,909,758
- ------------------------------------------------------------------------------------------
Net realized gain 72,246,204 54,059,260
- ------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (41,477,060) 43,452,225
--------------- ---------------
Net increase in net assets resulting from operations 50,581,519 129,421,243
==========================================================================================
Dividends and Distributions to Shareholders
Dividends from net investment
income:
Class A (4,648,132) (6,865,016)
Class B (7,641,077) (11,617,988)
Class C (1,805,568) (2,462,263)
Class M (5,698,658) (11,859,099)
- ------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A -- (10,306,904)
Class B -- (20,590,978)
Class C -- (4,572,611)
Class M -- (16,003,763)
==========================================================================================
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting
from beneficial interest transactions--Note 2:
Class A 39,361,638 91,206,809
Class B 78,491,573 157,527,088
Class C 28,054,794 44,261,278
Class M (4,361,716) 3,408,746
==========================================================================================
Net Assets
Total increase 172,334,373 341,546,542
- ------------------------------------------------------------------------------------------
Beginning of period 958,655,712 617,109,170
--------------- ---------------
End of period (including undistributed net investment
income of $18,940 for the period ended 6/30/98) $ 1,130,990,085 $ 958,655,712
=============== ===============
</TABLE>
See accompanying Notes to Financial Statements.
23 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------
Six Months
Ended June 30, Year Ended December 31,
1998 (Unaudited) 1997 1996(1) 1995(3)
======================================================================================================================
<S> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $15.32 $14.27 $13.96 $13.11
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .33 .70(4) .73(4) .54(4)
Net realized and unrealized gain (loss) .53 1.94(4) .65(4) 1.48(4)
-------- -------- ------- ------
Total income (loss) from investment operations .86 2.64 1.38 2.02
- ----------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.34) (.72) (.72) (.68)
Distributions from net realized gain -- (.87) (.35) (.49)
-------- -------- ------- ------
Total dividends and distributions to shareholders (.34) (1.59) (1.07) (1.17)
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.84 $15.32 $14.27 $13.96
======== ======== ======= ======
======================================================================================================================
Total Return, at Net Asset Value(5) 5.56% 18.77% 10.13% 15.54%
======================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $237,526 $192,212 $93,578 $2,502
- ----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $220,776 $145,929 $41,617 $1,799
- ----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.25%(6) 4.58% 5.11% 5.63%(6)
Expenses 0.91%(6) 0.95% 0.98%(7) 1.05%(6)(7)
Expenses (excluding interest)(7)(8) 0.91%(6) 0.95% 0.97% 1.01%(6)
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 48.6% 78.5% 52.7% 57.5%
</TABLE>
1. On January 4, 1996, OppenheimerFunds, Inc. became the investment advisor to
the Fund.
2. For the period from March 11, 1996 (inception of offering) to December 31,
1996.
3. For the period from May 1, 1995 (inception of offering) to December 31, 1995.
4. Per share information has been determined based on average shares outstanding
for the period.
5. 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.
6. Annualized.
24 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------------------
Six Months
Ended June 30, Year Ended December 31,
1998 (Unaudited) 1997 1996(1) 1995(3)
======================================================================================================================
<S> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $15.35 $14.29 $13.98 $13.11
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .27 .58(4) .62(4) .45(4)
Net realized and unrealized gain (loss) .51 1.95(4) .65(4) 1.51(4)
-------- -------- -------- -------
Total income (loss) from investment operations .78 2.53 1.27 1.96
- ----------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.27) (.60) (.61) (.60)
Distributions from net realized gain -- (.87) (.35) (.49)
-------- -------- -------- -------
Total dividends and distributions to shareholders (.27) (1.47) (.96) (1.09)
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.86 $15.35 $14.29 $13.98
======== ======== ======== =======
======================================================================================================================
Total Return, at Net Asset Value(5) 5.09% 17.93% 9.28% 15.09%
======================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $474,423 $383,755 $211,176 $34,465
- ----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $442,895 $296,426 $113,784 $15,184
- ----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.48%(6) 3.80% 4.31% 4.82%(6)
Expenses 1.68%(6) 1.72% 1.75%(7) 1.69%(6)(7)
Expenses (excluding interest)(7)(8) 1.68%(6) 1.72% 1.73% 1.64%(6)
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 48.6% 78.5% 52.7% 57.5%
</TABLE>
7. The expense ratios reflect the effect of gross expenses paid indirectly by
the Fund.
8. During the periods shown above, the Fund's interest expense was substantially
offset by the incremental interest income generated on bonds purchased with
borrowed funds.
9. 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 June 30, 1998 were $588,871,219 and $485,798,703, respectively.
25 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
----------------------------------------------------
Six Months
Ended June 30, Year Ended December 31,
1998 (Unaudited) 1997 1996(1)(2)
===========================================================================================================
<S> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $15.32 $14.27 $14.03
- -----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .27 .59(4) .50(4)
Net realized and unrealized gain (loss) .52 1.93(4) .59(4)
-------- ------- -------
Total income (loss) from investment operations .79 2.52 1.09
- -----------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.28) (.60) (.50)
Distributions from net realized gain -- (.87) (.35)
-------- ------- -------
Total dividends and distributions to shareholders (.28) (1.47) (.85)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.83 $15.32 $14.27
======== ======= =======
===========================================================================================================
Total Return, at Net Asset Value(5) 5.10% 17.88% 7.74%
===========================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $116,139 $85,397 $38,312
- -----------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $104,183 $62,343 $18,550
- -----------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.50%(6) 3.82% 4.32%(6)
Expenses 1.66%(6) 1.70% 1.68%(6)(7)
Expenses (excluding interest)(7)(8) 1.66%(6) 1.70% 1.67%(6)
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 48.6% 78.5% 52.7%
</TABLE>
1. On January 4, 1996, OppenheimerFunds, Inc. became the investment advisor to
the Fund.
2. For the period from March 11, 1996 (inception of offering) to December 31,
1996.
3. For the period from May 1, 1995 (inception of offering) to December 31, 1995.
4. Per share information has been determined based on average shares outstanding
for the period.
5. 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.
6. Annualized.
26 Oppenheimer Convertible Securities Fund
<PAGE>
<TABLE>
<CAPTION>
Class M
---------------------------------------------------------------------------------
Six Months
Ended June 30, Year Ended December 31,
1998 (Unaudited) 1997 1996(1) 1995 1994 1993
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $15.32 $14.27 $13.96 $12.20 $13.16 $11.43
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .30 .62(4) .65(4) .70(4) .68(4) .59(4)
Net realized and unrealized gain (loss) .52 1.94(4) .66(4) 2.42(4) (.81)(4) 1.79(4)
-------- -------- -------- -------- -------- -------
Total income (loss) from investment operations .82 2.56 1.31 3.12 (.13) 2.38
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.30) (.64) (.65) (.87) (.69) (.65)
Distributions from net realized gain -- (.87) (.35) (.49) (.14) --
-------- -------- -------- -------- -------- -------
Total dividends and distributions to shareholders (.30) (1.51) (1.00) (1.36) (.83) (.65)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.84 $15.32 $14.27 $13.96 $12.20 $13.16
======== ======== ======== ======== ======== =======
====================================================================================================================================
Total Return, at Net Asset Value(5) 5.30% 18.19% 9.58% 26.00% (1.12)% 21.23%
====================================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $302,902 $297,292 $274,043 $239,341 $126,691 $69,375
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $308,439 $285,621 $264,936 $181,719 $106,829 $36,923
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.73%(6) 4.05% 4.59% 5.12% 5.24% 4.70%
Expenses 1.42%(6) 1.46% 1.58%(7) 1.58%(7) 1.66% 1.78%
Expenses (excluding interest)(7)(8) 1.42%(6) 1.46% 1.55% 1.56% 1.65% 1.75%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 48.6% 78.5% 52.7% 57.5% 52.8% 88.7%
</TABLE>
7. The expense ratios reflect the effect of gross expenses paid indirectly by
the Fund.
8. During the periods shown above, the Fund's interest expense was substantially
offset by the incremental interest income generated on bonds purchased with
borrowed funds.
9. 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 June 30, 1998 were $588,871,219 and $485,798,703, respectively.
See accompanying Notes to Financial Statements.
27 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Convertible Securities Fund (the Fund), a portfolio of the Bond Fund
Series, is registered under the Investment Company Act of 1940, as amended, as a
non-diversified, open-end management investment company. The Fund's investment
objective is to seek a high level of total return on its assets through a
combination of current income and capital appreciation. The Fund intends to seek
its objective by investing primarily in convertible fixed income securities. The
Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund
offers Class A, Class B, Class C and Class M shares. Class A and Class M 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 that particular class and exclusive voting rights with respect
to matters affecting that 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 equity 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 debt securities are
valued by a portfolio pricing service approved by the Board of Trustees. Such
securities which cannot be valued by an approved portfolio pricing service are
valued using dealer-supplied valuations provided the Manager is satisfied that
the firm rendering the quotes is reliable and that the quotes reflect current
market value. 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. Options are
valued based upon the last sale price on the principal exchange on which the
option is traded or, in the absence of any transactions that day, the value is
based upon the last sale price on the prior trading date if it is within the
spread between the closing bid and asked prices. If the last sale price is
outside the spread, the closing bid is used. Securities for which market
quotations are not readily-available are valued at fair value under consistently
applied procedures established by the Board of Trustees to determine fair value
in good faith.
28 Oppenheimer Convertible Securities Fund
<PAGE>
================================================================================
Security Credit Risk. The Fund invests in high yield securities, which may be
subject to a greater degree of credit risk, greater market fluctuations and risk
of loss of income and principal, and may be more sensitive to economic
conditions than lower yielding, higher rated fixed income securities. The Fund
may not invest in securities with bond ratings of less than C at the time of
purchase nor may it invest in securities in default at the time of purchase. At
June 30, 1998, securities with an aggregate market value of $825,000,
representing 0.07% of the Fund's net assets, were in default.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. During 1995, the Fund
acquired all of the assets and liabilities of another investment company which
did not distribute its net investment income or realized gains and was taxed as
a C corporation. Accordingly, an accrued tax liability was assumed by the Fund
on the date of the acquisition. As of June 30, 1998, the remaining accrued tax
liability for net unrealized gains on investments at the time of the acquisition
was $693,569.
29 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
Distributions to Shareholders. The Fund intends to declare dividends separately
for Class A, Class B, Class C and Class M shares from net investment income each
day the New York Stock Exchange is open for business and pay such dividends
quarterly. Distributions from net realized gains on investments, if any, will be
declared at least once each year.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of the distributions made during the year from net
investment income or net realized gains may differ from its ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the fiscal year in which the income or realized gain was recorded by
the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Cost is determined and realized gains and losses are based
upon the specific identification method for both financial statement and federal
income tax purposes. Interest income is recorded on the accrual basis. In
computing net investment income, the Fund accretes original issue discount.
Market discount is accreted at the time of sale (to the extent of the lesser of
the accrued market discount or the disposition gain) and is treated as income,
rather than capital gain.
Expenses paid indirectly represent a reduction of custodian fees for
earnings on cash balances maintained by the Fund.
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.
30 Oppenheimer Convertible Securities Fund
<PAGE>
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of shares of beneficial interest of
each class, par value $.01 per share. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
Six Months Ended June 30, 1998 Year Ended December 31, 1997
------------------------------ -----------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 3,873,557 $ 61,855,404 7,279,999 $ 111,599,725
Dividends and distributions
reinvested 264,517 4,240,045 932,388 14,314,572
Redeemed (1,683,984) (26,733,811) (2,225,551) (34,707,488)
------------- ------------- ------------- -------------
Net increase 2,454,090 $ 39,361,638 5,986,836 $ 91,206,809
============= ============= ============= =============
- -------------------------------------------------------------------------------------------------------------------
Class B:
Sold 5,630,241 $ 90,356,133 10,397,158 $ 160,305,660
Dividends and distributions
reinvested 799,339 12,572,597 1,506,208 23,000,990
Redeemed (1,525,122) (24,437,157) (1,674,594) (25,779,562)
------------- ------------- ------------- -------------
Net increase 4,904,458 $ 78,491,573 10,228,772 $ 157,527,088
============= ============= ============= =============
- -------------------------------------------------------------------------------------------------------------------
Class C:
Sold 2,112,768 $ 33,766,338 3,123,899 $ 47,976,523
Dividends and distributions
reinvested 207,046 3,242,931 309,297 4,711,704
Redeemed (558,702) (8,954,475) (543,468) (8,426,949)
------------- ------------- ------------- -------------
Net increase 1,761,112 $ 28,054,794 2,889,728 $ 44,261,278
============= ============= ============= =============
- -------------------------------------------------------------------------------------------------------------------
Class M:
Sold 704,681 $ 11,407,710 1,920,434 $ 29,581,986
Dividends and distributions
reinvested 537,292 8,455,109 1,354,464 20,607,753
Redeemed (1,517,448) (24,224,535) (3,076,456) (46,780,993)
------------- ------------- ------------- -------------
Net increase (decrease) (275,475) $ (4,361,716) 198,442 $ 3,408,746
============= ============= ============= =============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Investments
At June 30, 1998, net unrealized appreciation on investments and options written
of $26,901,697 was composed of gross appreciation of $67,044,669, and gross
depreciation of $40,142,972.
31 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
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 0.625% on the first
$50 million of net assets, 0.50% of the next $250 million of net assets and
0.4375% on net assets in excess of $300 million.
Accounting fees paid to the Manager were in accordance with the
accounting services agreement with the Fund which provides for an annual fee of
$12,000 for the first $30 million of net assets and $9,000 for each additional
$30 million of net assets.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund and for other registered
investment companies. The Fund pays OFS an annual maintenance fee of $24.12 for
each Class A and Class M shareholder account and $26.02 for each Class B and
Class C shareholder account.
For the six months ended June 30, 1998, commissions (sales charges
paid by investors) on sales of Class A and Class M shares totaled $1,125,971 and
$372,583, of which $298,895 and $41,335, respectively, was retained by
OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the Manager, as
general distributor, and by affiliated broker/dealers. Sales charges advanced to
broker/dealers by OFDI on sales of the Fund's Class B and Class C shares totaled
$3,520,565 and $317,910, respectively, of which $91,202 and $3,729,
respectively, were paid to an affiliated broker/dealer. During the six months
ended June 30, 1998, OFDI received contingent deferred sales charges of $448,415
and $14,820, respectively, 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.
The Fund has adopted a Service Plan for Class A shares to reimburse
OFDI for a portion of its costs incurred in connection with the personal service
and maintenance of shareholder accounts that hold Class A shares. Reimbursement
is made quarterly at an annual rate that may not exceed 0.25% of the average
annual net assets of Class A shares of the Fund. OFDI uses the service fee to
reimburse brokers, dealers, banks and other financial institutions quarterly for
providing personal service and maintenance of accounts of their customers that
hold Class A shares. During the six months ended June 30, 1998, OFDI paid
$26,413 to an affiliated broker/dealer as reimbursement for Class A personal
service and maintenance expenses.
32 Oppenheimer Convertible Securities Fund
<PAGE>
================================================================================
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its costs in distributing Class B and Class C
shares and servicing accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B and Class C shares for its
services rendered in distributing Class B and Class C shares. OFDI also receives
a service fee of 0.25% per year to compensate dealers for providing personal
services for accounts that hold Class B and Class C shares. Each fee is computed
on the average annual net assets of Class B and Class C shares, determined as of
the close of each regular business day. During the six months ended June 30,
1998, OFDI paid $4,866 and $6,364, respectively, to an affiliated broker/dealer
as reimbursement for Class B and Class C personal service and maintenance
expenses and retained $1,852,971 and $284,964, respectively, as compensation for
Class B and Class C sales commissions and service fee advances, as well as
financing costs. If either Plan is terminated by the Fund, the Board of Trustees
may allow the Fund to continue payments of the asset-based sales charge to OFDI
for distributing shares before the Plan was terminated. At June 30, 1998, OFDI
had incurred unreimbursed expenses of $13,527,074 for Class B and $1,219,279 for
Class C.
The Fund has adopted a Distribution and Service Plan for Class M
shares to reimburse OFDI for its services and costs in distributing Class M
shares and servicing accounts. Under the Plan, the Fund pays OFDI an annual
asset-based sales charge of 0.50% per year on Class M shares. OFDI also receives
a service fee of 0.25% per year to reimburse dealers for providing personal
services for accounts that hold Class M shares. OFDI may pay a portion of the
asset-based sales charge which it receives from the Fund to provide additional
compensation to broker/dealers who sell Class M shares. Each fee is computed on
the average annual net assets of Class M shares, determined as of the close of
each regular business day. During the six months ended June 30, 1998, OFDI paid
$6,927 to an affiliated broker/dealer as reimbursement for Class M personal
service and maintenance expenses and retained $515,331 as reimbursement for
certain Class M sales-related distribution expenses.
33 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
================================================================================
5. Option Activity
The Fund may buy put options, or write 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 or the cost of the security for
a purchased put 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 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 June 30, 1998 was as follows:
Call Options
----------------------
Number of Amount of
Options Premiums
- --------------------------------------------------------------------------------
Options outstanding at December 31, 1997 10,752 $ 3,935,024
Options written 14,627 10,093,757
Options closed or expired (16,050) (8,519,127)
Options exercised (3,629) (1,215,942)
------- ------------
Options outstanding at June 30, 1998 5,700 $ 4,293,712
======= ============
34 Oppenheimer Convertible Securities Fund
<PAGE>
================================================================================
6. Illiquid and Restricted Securities
At June 30, 1998, 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
15% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid or restricted securities
subject to this limitation at June 30, 1998 was $77,984,084, which represents
6.90% of the Fund's net assets, of which $32,961,566 is considered restricted.
Information concerning restricted securities is as follows:
<TABLE>
<CAPTION>
Valuation
Cost Per Unit as of
Security Acquisition Date Per Unit June 30, 1998
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bonds and Other Securities
- --------------------------
Bankers Trust Corp.:
3.10% Common Stock Linked Nts., 11/5/02 (ACC Corp.) 10/29/97 100.00% 123.50%
7% Common Stock Linked Nts., 11/5/02 (Sitel Corp.) 8/12/97 100.00 66.00
- ------------------------------------------------------------------------------------------------------
Hudson Hotels Corp., 7.50% Cv. Sub. Debs. 7/1/01 7/8/96 100.00 93.80
- ------------------------------------------------------------------------------------------------------
Travel Ports of America, Inc. 8.50% Cv. Sr. Sub Debs.,
1/15/05 (Reg. S) 2/13/98-8/13/96 103.84 116.89
Stocks, Warrants and Other Securities
- -------------------------------------
Danskin, Inc.:
Escrow deposit to be used to purchase 686,237 shares
of Restricted Common Stock in Rights Offering 8/14/95 $ .30 $ .30
$88.2722 Cv. Preferred Stock, Series D 8/14/95 5,000.00 20,625.00
Portion of Promissory Note to be used to purchase
53,309 shares of Restricted Common Stock in
Rights Offering 8/14/95 .30 .30
Restricted Common Shares 8/14/95 .30 .30
Wts., Exp. 10/04 8/14/95 -- .72
- ------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 6% Yield
Enhanced Equity-Linked Debt Securities, 8/31/98
(Black & Decker Corp.) 9/5/98 39.48 52.29
- ------------------------------------------------------------------------------------------------------
SubMicron Systems Corp. Wts., Exp. 12/00 12/11/95 -- .02
</TABLE>
35 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
================================================================================
7. Bank Borrowings
The Fund may borrow up to 5% of its total assets from a bank to purchase
portfolio securities, or for temporary and emergency purposes. The Fund has
entered into an agreement which enables it to participate with two other funds
managed by the Manager in an unsecured line of credit with a bank, which permits
borrowings up to $75 million, collectively. Interest is charged to each fund,
based on its borrowings, at a rate equal to the Federal Funds Rate plus 0.625%.
In addition, a commitment fee of 0.07% is allocated among the three
participating funds at the end of each quarter, based on the average daily
unused portion of the committed line. The commitment fee is allocated among the
three funds based upon their respective average net assets for the period. The
commitment fee allocated to the Fund for the six months ended June 30, 1998 was
$2,729.
The Fund had no borrowings outstanding during the six months ended
June 30, 1998.
36 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer Convertible Securities Fund
- --------------------------------------------------------------------------------
================================================================================
Officers and Trustees Bridget A. Macaskill, Chairman of the Board of
Trustees and President
John Cannon, Trustee
Paul Y. Clinton, Trustee
Thomas W. Courtney, Trustee
Lacy B. Herrmann, Trustee
George Loft, Trustee
Robert G. Galli, Trustee
Michael S. Rosen, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Adele A. Campbell, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
================================================================================
Investment Advisor OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
================================================================================
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
================================================================================
Custodian of The Bank of New York
Portfolio Securities
================================================================================
Independent Accountants PricewaterhouseCoopers LLP
================================================================================
Legal Counsel Kirkpatrick & Lockhart LLP
The financial statements included herein have been
taken from the records of the Fund without
examination of the independent accountants.
This is a copy of a report to shareholders of
Oppenheimer Convertible Securities Fund. This report
must be preceded or accompanied by a Prospectus of
Oppenheimer Convertible Securities Fund. For
material information concerning the Fund, see the
Prospectus.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any
bank, are not insured by the FDIC or any other
agency, and involve investment risks, including
possible loss of the principal amount invested.
37 Oppenheimer Convertible Securities Fund
<PAGE>
- --------------------------------------------------------------------------------
OppenheimerFunds Family
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
===========================================================================================================
<S> <C> <C>
Real Asset Funds
- -----------------------------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
===========================================================================================================
Global Stock Funds
- -----------------------------------------------------------------------------------------------------------
Developing Markets Fund International Growth Fund Quest Global Value Fund
International Small Global Fund Global Growth & Income Fund
Company Fund
===========================================================================================================
Stock Funds
- -----------------------------------------------------------------------------------------------------------
Enterprise Fund MidCap Fund Growth Fund
Discovery Fund Capital Appreciation Fund Disciplined Value Fund
Quest Small Cap Value Fund Quest Capital Value Fund Quest Value Fund
===========================================================================================================
Stock & Bond Funds
- -----------------------------------------------------------------------------------------------------------
Main Street Income & Total Return Fund Disciplined Allocation Fund
Growth Fund Quest Balanced Multiple Strategies Fund
Quest Opportunity Value Fund(1) Convertible Securities Fund(2)
Value Fund Equity Income Fund
===========================================================================================================
Taxable Bond Funds
- -----------------------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
World Bond Fund Strategic Income Fund Limited-Term Government Fund
High Yield Fund Bond Fund
===========================================================================================================
Municipal Funds
- -----------------------------------------------------------------------------------------------------------
California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division:
Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York
New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund
===========================================================================================================
Money Market Funds(4)
- -----------------------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
</TABLE>
1. On 5/18/98, the Fund's name was changed from "Quest Growth & Income Value
Fund."
2. On 4/28/98, the Fund's name was changed from "Bond Fund for Growth."
3. Available only to investors in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds may seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in these funds. Oppenheimer
funds are distributed by OppenheimerFunds Distributor, Inc., Two World Trade
Center, New York, NY 10048-0203.
(C) Copyright 1998 OppenheimerFunds, Inc. All rights reserved.
38 Oppenheimer Convertible Securities Fund
<PAGE>
Internet
24-hr access to account
information. Online
trans actions now available
- ---------------------------------
www.oppenheimerfunds.com
- ---------------------------------
General Information
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
- ---------------------------------
1-800-525-7048
- ---------------------------------
Account Transactions
Mon-Fri 8:30am-8pm ET
- ---------------------------------
1-800-852-8457
- ---------------------------------
PhoneLink
24-hr automated information
and automated transactions
- ---------------------------------
1-800-533-3310
- ---------------------------------
Telecommunication Device
for the Deaf (TDD)
Mon-Fri 8:30am-2pm 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
- ---------------------------------
Information and services
- --------------------------------------------------------------------------------
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 or by visiting our website. 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 or website 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 assis- tance. 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, or visit us at our website at
www.oppenheimerfunds.com--we're here to help.
[LOGO]OppenheimerFunds(R)
Distributor, Inc.
RS0345.001.0698 August 29, 1998
