<PAGE> 1
SEMIANNUAL REPORT JUNE 30, 1999
OPPENHEIMER
CONVERTIBLE SECURITIES FUND
[PHOTO]
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
CONTENTS
3 President's Letter
5 An Interview
with Your Fund's
Managers
10 Financial
Statements
37 Officers and
Trustees
40 Information and
Services
REPORT HIGHLIGHTS
- -------------------------------------------------------------------------------
- - OUR STRATEGY OF INVESTING IN ATTRACTIVELY PRICED SECURITIES WORKED WELL
DURING THE REPORTING PERIOD, as many previously out-of-favor industries
provided above-average returns.
- - THE FUND PROVIDED SHAREHOLDERS WITH A CONSISTENTLY HIGH DIVIDEND YIELD during
the first half of 1999.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURNS
For the 6-Month Period Ended 6/30/99
<S> <C>
CLASS A
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------
8.22% 2.00%
- -----------------------------
CLASS B
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------
7.75% 2.75%
- -----------------------------
CLASS C
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------
7.76% 6.76%
- -----------------------------
CLASS M
Without With
Sales Chg.(1) Sales Chg.(2)
- -----------------------------
7.92% 4.42%
- -----------------------------
</TABLE>
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. IN REVIEWING PERFORMANCE AND
RANKINGS, PLEASE REMEMBER THAT PAST PERFORMANCE DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. BECAUSE THE STOCK MARKET CAN BE VOLATILE, THE FUND'S
PERFORMANCE MAY BE SUBJECT TO SUBSTANTIAL SHORT-TERM CHANGES. FOR UPDATES ON THE
FUND'S PERFORMANCE, PLEASE CONTACT YOUR FINANCIAL ADVISOR, CALL US AT
1-800-525-7048 OR VISIT OUR WEBSITE, WWW.OPPENHEIMERFUNDS.COM.
1. Includes changes in net asset value per share without deducting any sales
charges.
2. Class A returns include the current maximum initial sales charge of 5.75%.
Class B returns include the applicable contingent deferred sales charge of 5%.
Class C returns include the contingent deferred sales charge of 1%. Class M
return includes the current maximum initial sales charge of 3.25%. 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. An explanation
of the different performance calculations is in the Fund's prospectus.
2 Oppenheimer Convertible Securities Fund
<PAGE> 3
[PHOTO]
BRIDGET A. MACASKILL
President
Oppenheimer
Convertible Securities Fund
DEAR SHAREHOLDER,
- -------------------------------------------------------------------------------
According to popular belief, the last six months have been particularly
favorable for the financial markets.
The truth of the matter is that it's been a long, uphill struggle for the
diversified investor. That's because the stock market's dramatic rise reflects
the performance of the Dow Jones Industrial Average, which has been fueled by
only a small number of large-capitalization growth stocks and technology
companies. In the bond market this year, while many corporate and foreign bonds
have provided relatively attractive returns, the first quarter of 1999 was the
worst quarter in history for U.S. Treasury securities.(1)
Recently, though, signs of change have been emerging that confirm the
importance of a well-diversified portfolio. While investors focusing on
large-cap growth and technology stocks may have achieved superior short-term
returns, they may have also dramatically increased their exposure to potential
risks. If recent economic and market trends persist, previously out-of-favor
stocks may continue to rise.
Specifically, U.S. economic growth has continued to surpass most analysts'
expectations and the breadth of the market's positive performance has begun to
widen. This has raised concerns that inflationary pressures may re-emerge.
Looking outside of the United States, many foreign economies also appear to be
on the mend. The impact of these changes, as it applies to your fund, is
discussed more fully inside by your portfolio manager.
(over, please)
1. Foreign investing entails higher expenses and risks, such as foreign
currency fluctuations, economic and political instability, and differences in
accounting standards.
3 Oppenheimer Convertible Securities Fund
<PAGE> 4
You may also have wondered about the impact of the Year 2000 problem on your
investments. While we cannot predict the final outcome, we are pleased that
many companies and governments appear to be making progress toward avoiding a
major disruption. For our part, OppenheimerFunds is in the advanced stages of
our Y2K project, and we have successfully participated in industry-wide tests.
Meanwhile, we intend to maintain the disciplined investment approach that
has been helping Oppenheimer funds shareholders for more than 40 years as they
pursue their financial goals. Our longstanding experience has taught us that
while investment fads come and go, prudent diversification remains key to
successful investing. In fact, it is an essential part of what makes
OppenheimerFunds The Right Way to Invest.
Sincerely,
/s/ BRIDGET A. MACASKILL
Bridget A. Macaskill
July 22, 1999
4 Oppenheimer Convertible Securities Fund
<PAGE> 5
[PHOTO]
PORTFOLIO MANAGEMENT
TEAM (L TO R)
Ted Everett
Mike Rosen
AN INTERVIEW WITH YOUR FUND'S MANAGERS
- -------------------------------------------------------------------------------
HOW DID OPPENHEIMER CONVERTIBLE SECURITIES FUND PERFORM OVER THE SIX-MONTH
PERIOD THAT ENDED JUNE 30, 1999?
The Fund performed reasonably well for the period. We are particularly
gratified that the Fund achieved this level of performance with very low
volatility. We attribute this performance to our emphasis on dividend yield. In
fact, the Fund offered shareholders a consistently higher yield over the past
six months. As the convertible market recovered from its declines during the
second half of 1998, the higher yielding securities in which the Fund primarily
invests provided attractive total returns. In addition, unlike many of our
peers, we did not invest heavily in convertible securities issued by highly
volatile Internet companies, which helped reduce short-term price fluctuations.
WHY DID THE CONVERTIBLE SECURITIES MARKET RECOVER SO SHARPLY DURING THE FIRST
HALF OF 1999?
Convertible securities--basically, equities that have bond-like
characteristics--generally pay dividends that are competitive with bond yields,
and their prices tend to rise and fall with their issuers' stocks. Therefore,
the convertible securities market fell in the third quarter of last year along
with most sectors of the fixed income and common stock markets. Investors were
concerned that economic weakness overseas might adversely affect the U.S.
economy and the growth of corporate profits.
5 Oppenheimer Convertible Securities Fund
<PAGE> 6
"WE FOUND GOOD OPPORTUNITIES AT LOW PRICES IN THE HEALTHCARE INDUSTRY,
AS WELL AS COMPUTER SOFTWARE COMPANIES AND ENERGY COMPANIES."
AN INTERVIEW WITH YOUR FUND'S MANAGERS
- -------------------------------------------------------------------------------
As it turned out, many of those fears were largely unfounded. Most
international economies have performed better than many analysts expected,
including the troubled economies of Southeast Asia and Latin America. In the
United States, economic growth was quite robust in the fourth quarter of 1998
and the first quarter of 1999, prompting investors to shift their assets back
into the equity markets. As a result of this shift, many equity securities
prices rose, including convertible securities.
DID YOU FIND COMPELLING VALUES FOR THE FUND AFTER THE MARKET'S TEMPORARY
DECLINE?
Yes, we took advantage of relatively low prices to invest in a number of
different companies in a variety of industries. For example, in the healthcare
industry, we found good values in many securities issued by long-term care
facilities such as nursing homes. These securities were available at especially
low prices because of concerns related to new federal regulations that have the
potential to reduce revenues. However, we believe that most well-managed
long-term care facilities have been successful in handling these issues.
Therefore, we were comfortable making investments in this area.
Computer software companies provided another example of, in our opinion, a
temporarily troubled industry that offered compelling values. In January, many
investors were concerned that software sales would suffer in 1999 if corporate
customers focused on solving the Y2K problem, instead of upgrading other
systems. Because we believed that many of those fears were unjustified, early in
the year we bought a number of convertible securities issued by software
companies. Many of those securities have recently rallied.
6 Oppenheimer Convertible Securities Fund
<PAGE> 7
<TABLE>
<CAPTION>
STANDARDIZED YIELDS(1)
For the 30 Days Ended 6/30/99
- -----------------------------
<S> <C>
CLASS A 4.42%
- -----------------------------
CLASS B 3.94
- -----------------------------
CLASS C 3.95
- -----------------------------
CLASS M 4.07
- -----------------------------
</TABLE>
WHAT AREAS OF THE CONVERTIBLE SECURITIES MARKET CONTRIBUTED MOST POSITIVELY TO
THE FUND'S PERFORMANCE?
Convertibles issued by telecommunications companies have continued to do very
well. This industry has prospered amid increasing demand for the transmission
of voice, images and data worldwide. In fact, several major telecommunications
companies announced mergers or acquisitions over the past six months, which
helped support equity prices. Our holdings in this area have focused most
intently on telecommunications services providers and manufacturers of
telecommunications equipment.
Energy companies also contributed to the Fund's performance over the
period. In fact, energy is yet another example of what we view as a previously
out-of-favor industry that provided above-average returns on securities
purchased at attractive prices. Towards the end of last year, when oil prices
were near all-time lows, we began to invest more heavily in energy securities.
Oil prices rose in 1999 after Middle Eastern oil producing countries reduced
production, and energy-related securities recovered strongly.
1. Standardized yield is based on net investment income for the 30-day
period ended June 30, 1999. Falling share prices will tend to artificially
raise yields.
7 Oppenheimer Convertible Securities Fund
<PAGE> 8
<TABLE>
<CAPTION>
AVG ANNUAL TOTAL RETURNS
For the Periods Ended 6/30/99(2)
CLASS A Since
1 year 5 year Inception
- ------------------------------------
<S> <C> <C>
0.57% N/A 12.02%
- ------------------------------------
CLASS B Since
1 year 5 year Inception
- ------------------------------------
0.95% N/A 12.47%
- ------------------------------------
CLASS C Since
1 year 5 year Inception
- ------------------------------------
4.94% N/A 11.06%
- ------------------------------------
CLASS M
1 year 5 year 10 year
- ------------------------------------
2.71% 11.96% 12.89%
- ------------------------------------
</TABLE>
AN INTERVIEW WITH YOUR FUND'S MANAGERS
- -------------------------------------------------------------------------------
WHAT IS YOUR OUTLOOK FOR THE CONVERTIBLE SECURITIES MARKET AND THE FUND?
Historically, the convertible securities market has generally tended to move up
or down with the common stock market, but usually with lower short-term
volatility. In our opinion, many common stocks are overvalued, suggesting that
there may be greater potential for price declines than price appreciation in
some of those securities over the near term. This may be especially true if
economic growth moderates, which could reduce the rate of corporate earnings
growth.
In a declining equity market, we believe that convertible securities'
relatively higher yields may pro-vide a measure of protection against falling
prices. If common stock prices continue to rise, however, we would expect
convertible securities to generally participate in much--but not all--of the
advance.
2. 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 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 March 11, 1996, Class M shares
were designated as Class A shares. Class B and C shares are subject to an annual
0.75% asset-based sales charge. Class M shares are subject to an annual 0.50%
asset-based sales charge. An explanation of the different performance
calculations is in the Fund's prospectus.
3. Portfolio is subject to change. Percentages are as of June 30, 1999, and are
based on total market value of investments.
4. Portfolio is subject to change. Percentages are as of June 30, 1999, and are
based on net assets.
8 Oppenheimer Convertible Securities Fund
<PAGE> 9
ASSET ALLOCATION(3)
[PIE CHART]
<TABLE>
<S> <C>
- - Convertible
Corporate
Bonds & Notes 54.8%
- - Other Securities 20.6
- - Cash Equivalents 8.9
- - Structured
Instruments 7.6
- - Preferred Stocks 6.4
- - Common Stocks 1.7
</TABLE>
In our view, the generally higher yields offered by many convertible securities
continue to help provide a defense against declining markets without
sacrificing the potential for gains in rising markets. We believe that these
characteristics make Oppenheimer Convertible Securities Fund an important part
of The Right Way to Invest.
<TABLE>
<CAPTION>
CONVERTIBLE CORPORATE BONDS & NOTES--TOP 10 SECTORS(4)
- ------------------------------------------------------
<S> <C>
Technology 16.9%
- ------------------------------------------------------
Healthcare 7.6
- ------------------------------------------------------
Capital Goods 7.5
- ------------------------------------------------------
Communication Services 7.3
- ------------------------------------------------------
Consumer Cyclicals 6.1
- ------------------------------------------------------
Consumer Staples 2.9
- ------------------------------------------------------
Financial 2.9
- ------------------------------------------------------
Energy 2.2
- ------------------------------------------------------
Utilities 1.0
- ------------------------------------------------------
Basic Materials 0.6
- ------------------------------------------------------
TOP 10 HOLDINGS BY ISSUER(4)
- ------------------------------------------------------
Merrill Lynch & Co., Inc. 2.7%
- ------------------------------------------------------
Bell Atlantic Financial Services Corp. 1.9
- ------------------------------------------------------
WMX Technologies, Inc. 1.6
- ------------------------------------------------------
U.S. Cellular Corp. 1.6
- ------------------------------------------------------
Chiron Corp. 1.5
- ------------------------------------------------------
NationsBank N.A 1.4
- ------------------------------------------------------
QUALCOMM Financial Trust I 1.3
- ------------------------------------------------------
Deutsche Bank 1.3
- ------------------------------------------------------
Roche Holdings, Inc. 1.2
- ------------------------------------------------------
MediaOne Group, Inc. 1.2
- ------------------------------------------------------
</TABLE>
9 Oppenheimer Convertible Securities Fund
<PAGE> 10
STATEMENT OF INVESTMENTS June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
============================================================================================================
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS AND NOTES--55.2%
- ------------------------------------------------------------------------------------------------------------
BASIC MATERIALS--0.6%
- ------------------------------------------------------------------------------------------------------------
GOLD & PRECIOUS MINERALS--0.4%
Homestake Mining Co., 5.50% Cv. Sub. Nts., 6/23/00(1) $ 4,000,000 $ 3,880,000
- ------------------------------------------------------------------------------------------------------------
METALS--0.2%
Coeur D'Alene Mines Corp., 7.25% Cv. Unsec. Sub. Debs., 10/31/05 3,850,000 2,391,812
- ------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--7.5%
- ------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE--0.6%
Orbital Sciences Corp., 5% Cv. Unsec. Sub. Nts., 10/1/02 5,000,000 5,287,500
- ------------------------------------------------------------------------------------------------------------
Spacehab, Inc., 8% Unsec. Sub. Nts., 10/15/07 1,000,000 725,000
------------
6,012,500
- ------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--5.2%
Cendant Corp., 3% Cv. Sub. Nts., 2/15/02 7,000,000 6,667,500
- ------------------------------------------------------------------------------------------------------------
Danka Business Systems plc, 6.75% Cv. Sub. Nts., 4/1/02 3,550,000 2,045,687
- ------------------------------------------------------------------------------------------------------------
EMCOR Group, Inc., 5.75% Cv. Sub. Nts., 4/1/05 4,000,000 4,195,000
- ------------------------------------------------------------------------------------------------------------
Getty Images, Inc., 4.75% Cv. Sub. Nts., 6/1/03(1) 3,000,000 2,748,750
- ------------------------------------------------------------------------------------------------------------
Interim Services, Inc., 4.50% Sub. Nts., 6/1/05 3,000,000 2,576,250
- ------------------------------------------------------------------------------------------------------------
Mail-Well, Inc., 5% Cv. Sub. Nts., 11/1/02 5,000,000 5,387,500
- ------------------------------------------------------------------------------------------------------------
Mansur Industries, Inc., 8.25% Cv. Sub. Nts., 2/18/03(2) 4,336,806 3,773,021
- ------------------------------------------------------------------------------------------------------------
Metamor Worldwide, Inc., 2.94% Cv. Sub. Nts., 8/15/04 3,000,000 2,418,750
- ------------------------------------------------------------------------------------------------------------
Thermo Ecotek Corp., 4.875% Cv. Sub. Debs., 4/15/04(1) 5,000,000 4,350,000
- ------------------------------------------------------------------------------------------------------------
WMX Technologies, Inc., 2% Cv. Sub. Nts., 1/24/05(3) 14,350,000 15,641,500
------------
49,803,958
- ------------------------------------------------------------------------------------------------------------
MANUFACTURING--1.7%
Hexcel Corp., 7% Cv. Unsec. Sub. Nts., 8/1/03 4,250,000 3,878,125
- ------------------------------------------------------------------------------------------------------------
Mark IV Industries, Inc., 4.75% Cv. Sub. Nts., 11/1/04 10,000,000 8,887,500
- ------------------------------------------------------------------------------------------------------------
Robbins & Myers, Inc., 6.50% Unsec. Sub. Nts., 9/1/03 3,500,000 3,478,125
------------
16,243,750
- ------------------------------------------------------------------------------------------------------------
COMMUNICATION SERVICES--7.3%
- ------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS: LONG DISTANCE--2.1%
Aspect Telecommunications, Inc., Zero Coupon Cv. Sub. Debs.,
8.42%, 8/10/18(1)(4) 17,500,000 3,828,125
- ------------------------------------------------------------------------------------------------------------
NTL, Inc., 7% Cv. Sub. Nts., 12/15/08(1) 4,000,000 6,375,000
- ------------------------------------------------------------------------------------------------------------
Premiere Technologies, Inc., 5.75% Cv. Sub. Nts., 7/1/04 2,500,000 1,775,000
- ------------------------------------------------------------------------------------------------------------
Telefonos de Mexico SA, 4.25% Sr. Cv. Nts., 6/15/04 6,500,000 6,638,125
- ------------------------------------------------------------------------------------------------------------
World Access, Inc., 4.50% Cv. Unsec. Sub. Nts., 10/1/02 2,000,000 1,360,000
------------
19,976,250
</TABLE>
10 Oppenheimer Convertible Securities Fund
<PAGE> 11
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
============================================================================================================
<S> <C> <C>
TELEPHONE UTILITIES--1.6%
France Telecom, ADN, 2% Unsub. Nts., 1/1/04(1) $ 5,432,000 $ 4,873,862
- -----------------------------------------------------------------------------------------------------------
Bell Atlantic Financial Services Corp., 5.75% Cv. Sr. Unsec. Nts.,
4/1/03 (cv. into common stock of Telecom Corp. of New Zealand)(1) 10,000,000 10,125,000
------------
14,998,862
- -----------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS: WIRELESS--3.6%
Bell Atlantic Financial Services Corp., 4.25% Sr. Exchangeable Nts.,
9/15/05 (exchangeable for shares of Cable & Wireless
Communications plc or cash)(1) 8,000,000 8,170,000
- -----------------------------------------------------------------------------------------------------------
Gilat Satellite Networks Ltd., 6.50% Cv. Sub. Nts., 6/3/04(1) 3,000,000 4,061,250
- -----------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 4.75% Cv. Nts., 7/1/07(1) 6,000,000 7,140,000
- -----------------------------------------------------------------------------------------------------------
U.S. Cellular Corp., Zero Coupon Cv. Sub. Liquid Yield Option Nts.,
5.66%, 6/15/15(4) 30,000,000 15,487,500
------------
34,858,750
- -----------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--6.1%
- -----------------------------------------------------------------------------------------------------------
AUTOS & HOUSING--3.5%
Lennar Corp., Zero Coupon Cv. Debs., 3.88%, 7/29/18(4) 10,000,000 4,362,500
- -----------------------------------------------------------------------------------------------------------
Magna International, Inc., 4.875% Cv. Unsec. Sub. Debs., 2/15/0 8,000,000 7,870,000
- -----------------------------------------------------------------------------------------------------------
MascoTech, Inc., 4.50% Cv. Sub. Debs., 12/15/03 10,000,000 8,187,500
- -----------------------------------------------------------------------------------------------------------
Security Capital U.S. Realty, 2% Cv. Sr. Unsec. Bonds, 5/22/03(2) 14,500,000 11,155,937
- -----------------------------------------------------------------------------------------------------------
Sunbeam Corp., Zero Coupon Cv. Sub. Debs., 7.63%, 3/25/18(1)(4) 9,500,000 1,638,750
------------
33,214,687
- -----------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT--0.4%
Family Golf Centers, Inc., 5.75% Cv. Sub. Nts., 10/15/04 2,300,000 1,474,875
- -----------------------------------------------------------------------------------------------------------
Hudson Hotels Corp., 7.50% Cv. Sub. Debs., 7/1/01(2) 7,500,000 1,875,000
------------
3,349,875
- -----------------------------------------------------------------------------------------------------------
MEDIA--0.9%
Interpublic Group of Cos., Inc., 1.87% Cv. Nts., 6/1/06(1) 9,000,000 8,178,750
- -----------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY--1.3%
Corporate Express, Inc., 4.50% Cv. Sub. Nts., 7/1/00 4,000,000 3,730,000
- -----------------------------------------------------------------------------------------------------------
Costco Cos., Inc., Zero Coupon Cv. Sub. Nts.:
3.50%, 8/19/17(1)(3)(4) 2,000,000 1,897,500
2.28%, 8/19/17(3)(4) 7,000,000 6,641,250
------------
12,268,750
- -----------------------------------------------------------------------------------------------------------
CONSUMER STAPLES --2.9%
- -----------------------------------------------------------------------------------------------------------
BROADCASTING--0.8%
Clear Channel Communications, Inc., 2.625% Cv. Sr. Nts., 4/1/03(3) 6,000,000 7,627,500
- -----------------------------------------------------------------------------------------------------------
ENTERTAINMENT--0.4%
Imax Corp., 5.75% Cv. Debs., 4/1/03 3,000,000 3,551,250
</TABLE>
11 Oppenheimer Convertible Securities Fund
<PAGE> 12
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
===========================================================================================================
<S> <C> <C>
FOOD--0.9%
Nestle Holding, Inc., 6.30% Cv. Unsub. Nts., 6/17/02 $ 7,000,000 $ 8,330,000
- -----------------------------------------------------------------------------------------------------------
FOOD & DRUG RETAILERS--0.6%
Whole Foods Market, Inc., Zero Coupon Cv. Unsec. Sub.
Debs., 6.11%, 3/2/18(4) 15,000,000 5,531,250
- -----------------------------------------------------------------------------------------------------------
TOBACCO-- 0.2%
Standard Commercial Corp., 7.25% Cv. Sub. Debs., 3/31/07 3,698,000 2,255,780
- -----------------------------------------------------------------------------------------------------------
ENERGY--2.2%
- -----------------------------------------------------------------------------------------------------------
ENERGY SERVICES--1.1%
Diamond Offshore Drilling, Inc., 3.75% Cv. Unsec. Sub. Nts.,
2/15/07 5,000,000 4,937,500
- -----------------------------------------------------------------------------------------------------------
Pride International, Inc., Zero Coupon Cv. Sub. Debs.,
6.86%, 4/24/18(4) 10,000,000 3,125,000
- -----------------------------------------------------------------------------------------------------------
Valhi, Inc., Zero Coupon Sr. Sec. Liquid Yield Option Nts., 8.52%,
10/20/07 (exchangeable to Halliburton Co.)(4) 4,000,000 2,695,000
------------
10,757,500
- -----------------------------------------------------------------------------------------------------------
OIL: DOMESTIC--1.1%
PennzEnergy Co., 4.95% Cv. Sr. Unsec. Debs., 8/15/08
(exchangeable to Chevron Corp.) 10,378,000 10,689,340
- -----------------------------------------------------------------------------------------------------------
FINANCIAL--2.9%
- -----------------------------------------------------------------------------------------------------------
BANKS--0.5%
Deutsche Bank Finance NV, 2% Cv. Nts., 12/22/03
(exchangeable to Allianz) 4,500,000 4,629,128
- -----------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL --2.1%
Berkshire Hathaway, Inc., 1% Sr. Exchangeable Nts., 12/2/01
(exchangeable into common stock of Citigroup, Inc.) 5,000,000 10,862,500
- -----------------------------------------------------------------------------------------------------------
Phoenix Investment Partners Corp., 6% Cv. Unsec. Sub. Debs.,
11/1/15 7,817,500 9,087,844
------------
19,950,344
- -----------------------------------------------------------------------------------------------------------
INSURANCE--0.3%
Penn Treaty American Corp., 6.25% Cv. Sub. Nts., 12/1/03 3,250,000 3,315,000
- -----------------------------------------------------------------------------------------------------------
HEALTHCARE--7.6%
- -----------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS--4.5%
ALZA Corp., 5% Cv. Sub. Debs., 5/1/06 3,000,000 4,162,500
- -----------------------------------------------------------------------------------------------------------
Athena Neurosciences, Inc., 4.75% Cv. Nts., 11/15/04(1) 6,000,000 6,330,000
- -----------------------------------------------------------------------------------------------------------
Centocor, Inc., 4.75% Cv. Unsec. Sub. Debs., 2/15/05 4,000,000 4,425,000
- -----------------------------------------------------------------------------------------------------------
Chiron Corp., 1.90% Cv. Sub. Nts., 11/17/00(1) 15,000,000 14,718,750
- -----------------------------------------------------------------------------------------------------------
Fuisz Technologies Ltd., 7% Cv. Sub. Debs., 10/15/04(1) 4,000,000 1,935,000
- -----------------------------------------------------------------------------------------------------------
Roche Holdings, Inc., Zero Coupon Exchangeable Liquid Yield
Option Nts., 5.36%, 5/6/12(1)(4) 24,500,000 11,959,182
------------
43,530,432
</TABLE>
12 Oppenheimer Convertible Securities Fund
<PAGE> 13
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
===========================================================================================================
<S> <C> <C>
HEALTHCARE/SUPPLIES & SERVICES--3.1%
Concentra Managed Care, Inc., 4.50% Cv. Sub. Nts., 3/15/03(1) $ 2,000,000 $ 1,897,500
- -----------------------------------------------------------------------------------------------------------
Genzyme Corp. General Division, 5.25% Cv. Sub. Unsec. Nts.,
6/1/05 4,000,000 5,580,000
- -----------------------------------------------------------------------------------------------------------
NovaCare, Inc., 5.50% Cv. Sub. Debs., 1/15/00 3,250,000 2,904,687
- -----------------------------------------------------------------------------------------------------------
PhyCor, Inc., 4.50% Cv. Sub. Debs., 2/15/03 3,000,000 2,272,500
- -----------------------------------------------------------------------------------------------------------
Quintiles Transnational Corp., 4.25% Cv. Sub. Nts., 5/31/00(3) 6,000,000 6,697,500
- -----------------------------------------------------------------------------------------------------------
St. Jude Medical, Inc., 5.75% Cv. Sub. Nts., 8/15/01 6,000,000 6,615,000
- -----------------------------------------------------------------------------------------------------------
Sunrise Assisted Living, Inc., 5.50% Cv. Nts., 6/15/02 3,000,000 3,333,750
------------
29,300,937
- -----------------------------------------------------------------------------------------------------------
TECHNOLOGY--16.9%
- -----------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE--3.3%
Adaptec, Inc., 4.75% Cv. Sub. Nts., 2/1/04 4,000,000 3,815,000
- -----------------------------------------------------------------------------------------------------------
Comverse Technology, Inc., 4.50% Cv. Unsec. Sub. Nts., 7/1/05(3) 5,000,000 9,343,750
- -----------------------------------------------------------------------------------------------------------
Data General Corp., 6% Nts., 5/15/04 4,000,000 3,490,000
- -----------------------------------------------------------------------------------------------------------
Micron Technology, Inc., 7% Cv. Sub. Nts., 7/1/04 5,000,000 5,150,000
- -----------------------------------------------------------------------------------------------------------
Quantum Corp., 7% Cv. Sub. Nts., 8/1/04 3,500,000 3,303,125
- -----------------------------------------------------------------------------------------------------------
Telxon Corp.:
5.75% Cv. Sub. Nts., 1/1/03(1) 2,250,000 1,611,563
5.75% Cv. Sub. Nts., 1/1/03 4,500,000 3,223,125
- -----------------------------------------------------------------------------------------------------------
Western Digital Corp., Zero Coupon Cv. Unsec. Sub. Debs., 8.39%,
2/18/18(4) 10,000,000 1,737,500
------------
31,674,063
- -----------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE--5.8%
Amazon.com, Inc., 4.75% Cv. Sub. Debs., 2/1/09(1) 5,883,000 5,588,850
- -----------------------------------------------------------------------------------------------------------
America Online, Inc., 4% Unsec. Nts., 11/15/02(3) 785,000 6,639,138
- -----------------------------------------------------------------------------------------------------------
At Home Corp., 0.525% Nts., 12/28/18(1) 4,000,000 3,190,000
- -----------------------------------------------------------------------------------------------------------
BEA Systems, Inc., 4% Sub. Nts., 6/15/05(1) 4,000,000 4,730,000
- -----------------------------------------------------------------------------------------------------------
Beyond.com Corp., 7.25% Cv. Sub. Nts., 12/1/03(1) 2,000,000 3,337,500
- -----------------------------------------------------------------------------------------------------------
HNC Software, Inc., 4.75% Cv. Unsec. Sub. Nts., 3/1/03 5,000,000 4,868,750
- -----------------------------------------------------------------------------------------------------------
Mindspring Enterprises, Inc., 5% Bonds, 4/15/06 2,000,000 1,897,500
- -----------------------------------------------------------------------------------------------------------
MSC Software Corp., 7.875% Cv. Sub. Debs., 8/18/04 1,967,000 1,652,280
- -----------------------------------------------------------------------------------------------------------
National Data Corp., 5% Cv. Sub. Nts., 11/1/03 4,100,000 4,238,375
- -----------------------------------------------------------------------------------------------------------
Network Associates, Inc., Zero Coupon Cv. Unsec. Sub. Debs.,
6.37%, 2/13/18(4) 17,000,000 5,036,250
- -----------------------------------------------------------------------------------------------------------
PLATINUM Technology, Inc., 6.25% Cv. Unsec. Sub. Nts., 12/15/02 3,000,000 3,018,750
- -----------------------------------------------------------------------------------------------------------
Safeguard Scientific, Inc., 5% Cv. Nts., 6/15/06(1) 4,000,000 4,195,000
- -----------------------------------------------------------------------------------------------------------
Tecnomatix Technologies Ltd., 5.25% Cv. Sub. Nts., 8/15/04 5,000,000 3,418,750
- -----------------------------------------------------------------------------------------------------------
Wind River Systems, Inc., 5% Bonds, 8/1/02 4,000,000 3,480,000
------------
55,291,143
</TABLE>
13 Oppenheimer Convertible Securities Fund
<PAGE> 14
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
FACE MARKET VALUE
AMOUNT SEE NOTE 1
===========================================================================================================
<S> <C> <C>
ELECTRONICS--7.8%
Adaptive Broadband Corp., 5.25% Cv. Sub. Nts., 12/15/03 $ 6,185,000 $ 5,605,156
- -----------------------------------------------------------------------------------------------------------
Advanced Micro Devices, Inc., 6% Cv. Sub. Nts., 5/15/05 5,000,000 3,812,500
- -----------------------------------------------------------------------------------------------------------
Atmel Corp., Zero Coupon Cv. Sub. Debs., 7.25%, 4/21/18(1)(4 10,000,000 4,075,000
- -----------------------------------------------------------------------------------------------------------
Checkpoint Systems, Inc.:
5.25% Cv. Unsec. Sub. Debs., 11/1/05 3,900,000 2,895,750
5.25% Cv. Unsec. Sub. Debs., 11/1/05(1) 2,200,000 1,633,500
- -----------------------------------------------------------------------------------------------------------
Cirrus Logic, Inc., 6% Cv. Sub. Nts., 12/15/03 5,000,000 3,437,500
- -----------------------------------------------------------------------------------------------------------
Conexant Systems, Inc., 4.25% Nts., 5/1/06(1) 3,000,000 4,256,250
- -----------------------------------------------------------------------------------------------------------
Itron, Inc., 6.75% Unsec. Sub. Nts., 3/31/04 3,000,000 2,107,500
- -----------------------------------------------------------------------------------------------------------
National Semiconductor Corp., 6.50% Cv. Sub. Debs., 10/1/02 7,500,000 7,162,500
- -----------------------------------------------------------------------------------------------------------
Sanmina Corp., 4.25% Cv. Nts., 5/1/04(1) 3,500,000 3,863,125
- -----------------------------------------------------------------------------------------------------------
Solectron Corp., Zero Coupon Cv. Debs., 3.47%, 1/27/19(1)(4) 8,000,000 4,670,000
- -----------------------------------------------------------------------------------------------------------
STMicroelectronics NV, Zero Coupon Sub. Nts., Series DTC, 0.56%,
6/10/08(4) 3,000,000 3,828,750
- -----------------------------------------------------------------------------------------------------------
Thermo Instrument Systems, Inc.:
3.75% Cv. Sr. Unsec. Nts., 9/15/00 1,085,000 1,250,463
4% Cv. Gtd. Nts., Series RG, 1/15/05 8,999,999 7,402,500
- -----------------------------------------------------------------------------------------------------------
Thermo Optek Corp., 5% Cv. Sub. Debs., 10/15/00(1) 9,535,000 9,511,163
- -----------------------------------------------------------------------------------------------------------
ThermoQuest Corp., 5% Cv. Sub. Debs., 8/15/00(1) 9,775,000 9,640,594
------------
75,152,251
- -----------------------------------------------------------------------------------------------------------
TRANSPORTATION--0.2%
- -----------------------------------------------------------------------------------------------------------
AIR TRANSPORTATION--0.2%
Offshore Logistics, Inc., 6% Cv. Unsec. Sub. Nts., 12/15/03 2,500,000 2,143,750
- -----------------------------------------------------------------------------------------------------------
UTILITIES--1.0%
- -----------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--1.0%
AES Corp., 4.50% Cv. Jr. Sub. Nts., 8/15/05(3) 7,700,000 9,605,750
-----------
Total Convertible Corporate Bonds and Notes (Cost $517,121,233) 528,513,362
SHARES
===========================================================================================================
PREFERRED STOCKS--6.4%
- -----------------------------------------------------------------------------------------------------------
Adelphia Communications Corp., 5.50% Cv., Series D, Non-Vtg. 25,000 4,928,125
- -----------------------------------------------------------------------------------------------------------
Danskin, Inc., $88.2722 Cv., Series D (cv. into 1,471,203 restricted
common shares)(2)(5) 88 662,041
- -----------------------------------------------------------------------------------------------------------
General Growth Properties, Inc., 7.25% Cv. 144,900 3,477,600
- -----------------------------------------------------------------------------------------------------------
Global TeleSystems Group, Inc., 7.25% Cv.(1) 85,000 5,610,000
- -----------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 7% Cv., Non-Vtg. 150,000 4,312,500
- -----------------------------------------------------------------------------------------------------------
IXC Communications, Inc., $6.75 Cv. 100,000 3,837,500
- -----------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd., 6% Cv., Series C 100,000 5,037,500
- -----------------------------------------------------------------------------------------------------------
Medpartners, Inc., 6.50% Cv., Non-Vtg. 253,700 2,727,275
- -----------------------------------------------------------------------------------------------------------
Owens-Illinois, Inc., 4.75% Cv. 151,400 6,623,750
</TABLE>
14 Oppenheimer Convertible Securities Fund
<PAGE> 15
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
===========================================================================================================
<S> <C> <C>
PREFERRED STOCKS(CONTINUED)
Sealed Air Corp., $2.00 Cv., Series A, Vtg. 125,000 $ 7,812,500
- -----------------------------------------------------------------------------------------------------------
Sensormatic Electronics Corp., 6.50% Cv.(1)(6) 325,000 7,109,375
- -----------------------------------------------------------------------------------------------------------
Skytel Communications, Inc., $2.25 Cv. 106,100 3,846,125
- -----------------------------------------------------------------------------------------------------------
Winstar Communications, Inc., 7% Cv. Cum., Series D, Non-Vtg.(6) 100,000 5,725,000
-----------
Total Preferred Stocks (Cost $56,410,241) 61,709,291
===========================================================================================================
OTHER SECURITIES--20.7%
- -----------------------------------------------------------------------------------------------------------
BASIC MATERIALS--1.2%
- -----------------------------------------------------------------------------------------------------------
CHEMICALS--0.8%
Monsanto Co., 6.50% Cv. Adjustable Conversion-rate Equity Security 191,500 7,683,938
- -----------------------------------------------------------------------------------------------------------
PAPER--0.4%
International Paper Capital Trust, 5.25% Cum. Cv., Non-Vtg. 75,000 3,825,000
- -----------------------------------------------------------------------------------------------------------
CAPITAL GOODS--1.7%
- -----------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE--0.7%
Coltec Capital Trust, 5.25% Cv. Preferred Securities(1) 150,000 6,843,750
- -----------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--1.0%
Owens & Miner Trust I, 5.375% Cv. Preferred Securities(1) 160,000 5,860,000
- -----------------------------------------------------------------------------------------------------------
United Rental Trust I, 6.50% Cv. Quarterly Income
Preferred Securities(1) 75,000 3,468,750
-----------
9,328,750
- -----------------------------------------------------------------------------------------------------------
COMMUNICATION SERVICES--3.0%
- -----------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS: LONG DISTANCE--1.8%
QUALCOMM Financial Trust I, 5.75% Cum. Cv. Preferred Securities,
Non-Vtg. 60,000 12,285,000
- -----------------------------------------------------------------------------------------------------------
Qwest Trends Trust, 5.75% Cv.(1) 80,000 4,580,000
-----------
16,865,000
- -----------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES--1.2%
MediaOne Group, Inc., 6.25% Cv. Premium Income Exchangeable
Securities for Airtouch Communications, Inc. Common Stock 127,900 11,574,950
- -----------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--3.7%
- -----------------------------------------------------------------------------------------------------------
AUTOS & HOUSING--0.8%
Daimler Benz AG, ADNs representing 5.75% Sub. Mandatory Cv. Nts. 37,988 3,077,028
- -----------------------------------------------------------------------------------------------------------
Owens Corning Capital LLC, 6.50% Cv. Monthly Income Preferred
Securities, Non-Vtg.(1) 100,000 4,737,500
-----------
7,814,528
- -----------------------------------------------------------------------------------------------------------
CONSUMER SERVICES--0.8%
Budget Group Capital Trust, Inc., 6.25% Cum. Cv., Non-Vtg.(1) 104,000 3,614,000
- -----------------------------------------------------------------------------------------------------------
Central Parking Financial Trust:
5.25% Cv. Preferred Securities 100,000 2,037,500
5.25% Cv. Preferred Securities(1) 105,000 2,139,375
-----------
7,790,875
</TABLE>
15 Oppenheimer Convertible Securities Fund
<PAGE> 16
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
MARKET VALUE
SHARES SEE NOTE 1
===========================================================================================================
<S> <C> <C>
HOMEBUILDING--0.8%
Fleetwood Capital Trust:
6% Cum. Cv. Preferred Securities, Non-Vtg. 20,000 $ 865,000
6% Cum. Cv. Preferred Securities, Non-Vtg.(1) 100,000 4,325,000
- -----------------------------------------------------------------------------------------------------------
Kaufman & Broad Home Corp., 8.25% Cv. Preferred Redeemable
Increased Dividend Equity Securities 300,000 2,437,500
-----------
7,627,500
- -----------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT--0.4%
Host Marriott Financial Trust, 6.75% Cv. Quarterly Income
Preferred Securities 100,000 4,125,000
- -----------------------------------------------------------------------------------------------------------
MEDIA--0.3%
Big Flower Trust I, 6% Cv., Non-Vtg. 50,000 2,868,750
- -----------------------------------------------------------------------------------------------------------
RETAIL: GENERAL--0.6%
K-Mart Financing I, 7.75% Cum. Cv., Non-Vtg. 100,000 5,850,000
- -----------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--2.9%
- -----------------------------------------------------------------------------------------------------------
BROADCASTING--0.6%
News Corp. Ltd., 5% Exchangeable Trust Originated Preferred
Securities, 1/2/16 (exchangeable for ordinary shares of British
Sky Broadcasting Group plc)(1) 60,000 5,880,000
- -----------------------------------------------------------------------------------------------------------
ENTERTAINMENT--1.0%
Houston Industries, Inc., 7% Automatic Common Exchange
Securities (exchangeable for common stock of Time Warner, Inc.) 40,000 4,770,000
- -----------------------------------------------------------------------------------------------------------
Seagram Co. Ltd., 7.50% Automatic Common
Exchangeable Securities 100,000 4,993,750
-----------
9,763,750
- -----------------------------------------------------------------------------------------------------------
FOOD--0.4%
Suiza Capital Trust II, 5.50% Cv. Cum., Non-Vtg. 110,000 4,221,250
- -----------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS --0.9%
Newell Financial Trust I, 5.25% Cv. Preferred Securities 150,000 8,456,250
- -----------------------------------------------------------------------------------------------------------
ENERGY--1.8%
- -----------------------------------------------------------------------------------------------------------
ENERGY SERVICES--0.9%
Devon Financing Trust, $3.25 Cv. 57,500 3,399,687
- -----------------------------------------------------------------------------------------------------------
Weatherford International, Inc., 5% Cv. Preferred Securities1 25,000 4,859,375
-----------
8,259,062
- -----------------------------------------------------------------------------------------------------------
OIL: DOMESTIC--0.9%
Unocal Capital Trust, 6.25% Cum. Cv., Non-Vtg. 150,000 8,306,250
- -----------------------------------------------------------------------------------------------------------
FINANCIAL--2.0%
- -----------------------------------------------------------------------------------------------------------
BANKS--0.9%
National Australia Bank Ltd., Exchangeable Capital
Units (each unit consists of $25 principal amount of 7.875%
Perpetual Capital Security and a purchase contract entitling the
holder to exchange units for ordinary shares of the bank)(7) 297,900 9,048,713
</TABLE>
16 Oppenheimer Convertible Securities Fund
<PAGE> 17
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
===========================================================================================================
<S> <C> <C>
INSURANCE--0.4%
Conseco Finance Trust IV, 7% Cv. Preferred Redeemable
Increased Dividend Equity Securities, Series F 100,000 $ 4,018,750
- -----------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS--0.7%
Equity Office Properties Trust, 5.25% Cum. Cv. Preferred, Series B,
Non-Vtg. 150,000 6,393,750
- -----------------------------------------------------------------------------------------------------------
HEALTHCARE--0.7%
- -----------------------------------------------------------------------------------------------------------
HEALTHCARE/SERVICES & SUPPLIES--0.7%
McKesson Financial Trust, 5% Cv., Non-Vtg. 130,000 6,743,750
- -----------------------------------------------------------------------------------------------------------
TECHNOLOGY--0.6%
- -----------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE--0.6%
L & H Capital Trust I, 4.75% Cv. Preferred Income Equity
Redeemable Securities(1) 162,700 5,430,112
- -----------------------------------------------------------------------------------------------------------
TRANSPORTATION--1.7%
- -----------------------------------------------------------------------------------------------------------
RAILROADS & TRUCKERS--1.7%
Union Pacific Capital Trust, 6.25% Cum. Term Income Deferrable
Equity Securities, Non-Vtg. 175,000 9,296,875
- -----------------------------------------------------------------------------------------------------------
CNF Trust I, $2.50 Term Convertible Securities, Series A, Non-Vtg. 120,000 6,855,000
----------
16,151,875
- -----------------------------------------------------------------------------------------------------------
UTILITIES--1.4%
- -----------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--0.6%
MidAmerican Capital Trust III, 6.50% Cum. Cv., Non-Vtg. 125,000 5,843,750
- -----------------------------------------------------------------------------------------------------------
GAS UTILITIES--0.8%
El Paso Energy Corp. Capital Trust I, 4.75% Cv. Preferred Securities 150,000 7,425,000
----------
Total Other Securities (Cost $186,265,523) 198,140,303
===========================================================================================================
COMMON STOCKS--1.7%
- -----------------------------------------------------------------------------------------------------------
American Home Products Corp. 40,080 2,304,600
- -----------------------------------------------------------------------------------------------------------
Danskin, Inc.(5)(8) 3,408,210 2,556,158
- -----------------------------------------------------------------------------------------------------------
Danskin, Inc. Restricted Common Shares(2)(5)(8) 289,251 130,163
- -----------------------------------------------------------------------------------------------------------
Disney (Walt) Co. 100,000 3,081,251
- -----------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.(5) 2,873 86,190
- -----------------------------------------------------------------------------------------------------------
Orion Capital Corp. 60,002 2,152,572
- -----------------------------------------------------------------------------------------------------------
Philip Morris Cos., Inc.(3) 126,000 5,063,625
- -----------------------------------------------------------------------------------------------------------
Sensormatic Electronics Corp.(2)(5) 55,820 769,963
----------
Total Common Stocks (Cost $12,059,293) 16,144,522
</TABLE>
17 Oppenheimer Convertible Securities Fund
<PAGE> 18
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
UNITS SEE NOTE 1
===========================================================================================================
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- -----------------------------------------------------------------------------------------------------------
Portion of Danskin, Inc. Promissory Nt., to be used to purchase
53,309 shares of restricted common stock in rights offering(2) -- $ 15,993
- -----------------------------------------------------------------------------------------------------------
Danskin, Inc. Wts., Exp. 10/04(2) 367,801 80,916
- -----------------------------------------------------------------------------------------------------------
Submicron Systems Corp. Wts., Exp. 1/01(2) 27,000 --
----------
Total Rights, Warrants and Certificates (Cost $15,993) 96,909
SHARES/FACE
AMOUNT
===========================================================================================================
STRUCTURED INSTRUMENTS--7.6%
- -----------------------------------------------------------------------------------------------------------
Comcast Corp., 3.35% Cv. (exchangeable for stock of AT&T Corp.) 52,200 4,521,825
- -----------------------------------------------------------------------------------------------------------
Deutsche Bank Linked Nts., 3.10%, 11/5/02 (exchangeable into
AT&T Corp. common stock)(2) 8,000,000 12,100,000
- -----------------------------------------------------------------------------------------------------------
J.P. Morgan & Co., Inc., Mandatory Exchangeable Debt Securities,
5%, 7/21/00 (exchangeable into Ethan Allen common stock) 14,060,000 7,630,362
- -----------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.25% Structured Yield Product
Exchangeable for Stock of IMC Global, Inc. 141,200 2,885,775
- -----------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., Principal-Protected Technology Basket
Performance Linked Nts.:
Series B, 7%, 8/18/00 10,000,000 14,325,000
2/2/05 (based on the performance of Microsoft Corp. and
Hewlett-Packard Co.) 5,000,000 9,062,500
- -----------------------------------------------------------------------------------------------------------
NationsBank N.A./Frontier Corp. Linked Certificates of Deposit,
6%, 5/22/00(2) 10,000,000 13,349,000
- -----------------------------------------------------------------------------------------------------------
NationsBank N.A./The Boeing Co. BA Enhanced Yield
Equity-Linked Certificates of Deposit, 5%, 7/15/00(2) 10,000,000 9,365,000
----------
Total Structured Instruments (Cost $57,168,212) 73,239,462
===========================================================================================================
REPURCHASE AGREEMENTS--9.0%
- -----------------------------------------------------------------------------------------------------------
Repurchase agreement with PaineWebber, Inc., 4.80%,
dated 6/30/99, to be repurchased at $86,111,480 on 7/1/99,
collateralized by U.S. Treasury Nts., 4.625%-9.25%,
11/30/00-2/15/16, with a value of $88,027,063 (Cost $86,100,000) 86,100,000 86,100,000
- -----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $915,140,495) 100.6% 963,943,849
- -----------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.6) (6,064,309)
---------- ------------
NET ASSETS 100.0% $957,879,540
========== ============
</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 $224,007,826 or 23.39% of the Fund's net
assets as of June 30, 1999.
2. Identifies issues considered to be illiquid or restricted--See Note 7
of Notes to Financial Statements.
18 Oppenheimer Convertible Securities Fund
<PAGE> 19
- -------------------------------------------------------------------------------
3. A sufficient amount of liquid assets has been designated to cover outstanding
written call options, as follows:
<TABLE>
<CAPTION>
SHARES MARKET
SUBJECT TO EXPIRATION EXERCISE PREMIUM VALUE
CALL DATE PRICE RECEIVED SEE NOTE 1
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AES Corp. 50,000 8/99 $ 55.000 $ 198,493 $ 275,000
America Online, Inc. 30,000 10/99 175.000 854,071 76,875
America Online, Inc. 30,000 10/99 180.000 992,816 73,125
Clear Channel Communications, Inc. 30,000 7/99 70.000 280,341 45,000
Clear Channel Communications, Inc. 30,000 7/99 75.000 194,094 9,375
Comverse Technology, Inc. 25,000 10/99 63.333 174,244 585,937
Costco Cos., Inc. 60,000 7/99 85.000 350,688 41,250
Costco Cos., Inc. 38,000 7/99 90.000 150,855 11,875
Philip Morris Cos., Inc. 120,000 1/00 55.000 401,387 60,000
Quintiles Transnational Corp. 50,000 7/99 55.000 248,492 3,125
WMX Technologies, Inc. 100,000 7/99 55.000 256,366 93,750
WMX Technologies, Inc. 50,000 10/99 60.000 210,993 103,125
WMX Technologies, Inc. 50,000 10/99 65.000 123,496 40,625
---------- ----------
$4,436,336 $1,419,062
========== ==========
</TABLE>
4. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
5. Non-income-producing security.
6. Interest or dividend is paid in kind.
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.
8. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer, and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the period ended June 30, 1999.
The aggregate fair value of securities of affiliated companies held by the Fund
as of June 30, 1999 amounts to $2,686,321. Transactions during the period in
which the issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
SHARES SHARES
DECEMBER 31, GROSS GROSS JUNE 30,
1998 ADDITIONS REDUCTIONS 1999
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Danskin, Inc. 3,557,210 -- 149,000 3,408,210
- -----------------------------------------------------------------------------------
Danskin, Inc., Restricted
Common Shares 289,251 -- -- 289,251
</TABLE>
See accompanying Notes to Financial Statements.
19 Oppenheimer Convertible Securities Fund
<PAGE> 20
STATEMENT OF ASSETS AND LIABILITIES June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
==================================================================================
ASSETS
<S> <C>
Investments, at value--see accompanying statement:
Unaffiliated companies (cost $910,806,710) $961,257,528
Affiliated companies (cost $4,333,785) 2,686,321
- ----------------------------------------------------------------------------------
Receivables and other assets:
Interest and dividends 6,147,429
Investments sold 1,674,176
Shares of beneficial interest sold 303,547
Other 7,799
------------
Total assets 972,076,800
==================================================================================
LIABILITIES
Bank overdraft 1,050,460
- ----------------------------------------------------------------------------------
Options written, at value (premiums received $4,436,336)--
see accompanying statement--Note 6 1,419,062
- ----------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 6,660,437
Shares of beneficial interest redeemed 1,795,719
Accrued taxes--Note 1 693,723
Dividends 1,688,099
Distribution and service plan fees 637,998
Trustees' compensation--Note 1 70,682
Transfer and shareholder servicing agent fees 40,315
Other 140,765
------------
Total liabilities 14,197,260
==================================================================================
NET ASSETS $957,879,540
============
==================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $874,849,027
- ----------------------------------------------------------------------------------
Undistributed net investment income 14,210
- ----------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions 31,195,675
- ----------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 51,820,628
------------
Net assets $957,879,540
============
</TABLE>
20 Oppenheimer Convertible Securities Fund
<PAGE> 21
<TABLE>
<CAPTION>
==================================================================================
<S> <C>
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$207,708,656 and 13,215,224 shares of beneficial interest outstanding) $15.72
Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price) $16.68
- ----------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net assets
of $417,856,200 and 26,543,598 shares of beneficial interest outstanding) $15.74
- ----------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net assets
of $94,370,440 and 6,006,684 shares of beneficial interest outstanding) $15.71
- ----------------------------------------------------------------------------------
Class M Shares:
Net asset value and redemption price per share (based on net assets of
$237,944,244 and 15,143,553 shares of beneficial interest outstanding) $15.71
Maximum offering price per share (net asset value plus sales charge of
3.25% of offering price) $16.24
</TABLE>
See accompanying Notes to Financial Statements.
21 Oppenheimer Convertible Securities Fund
<PAGE> 22
STATEMENT OF OPERATIONS For the Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
==================================================================================
<S> <C>
INVESTMENT INCOME
Interest $20,026,532
- ----------------------------------------------------------------------------------
Dividends 5,962,951
-----------
Total income 25,989,483
==================================================================================
EXPENSES
Management fees--Note 4 2,278,241
- ----------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 261,455
Class B 2,107,961
Class C 493,175
Class M 916,885
- ----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4:
Class A 129,326
Class B 275,780
Class C 59,202
Class M 141,323
- ----------------------------------------------------------------------------------
Shareholder reports 132,144
- ----------------------------------------------------------------------------------
Accounting service fees--Note 4 131,614
- ----------------------------------------------------------------------------------
Trustees' compensation--Note 1 53,327
- ----------------------------------------------------------------------------------
Registration and filing fees 46,833
- ----------------------------------------------------------------------------------
Custodian fees and expenses 34,794
- ----------------------------------------------------------------------------------
Legal, auditing and other professional fees 17,426
- ----------------------------------------------------------------------------------
Other 44,776
-----------
Total expenses 7,124,262
Less expenses paid indirectly--Note 1 (16,102)
-----------
Net expenses 7,108,160
==================================================================================
NET INVESTMENT INCOME 18,881,323
==================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments (including premiums on options exercised):
Unaffiliated companies 44,350,619
Affiliated companies (42,689)
Closing and expiration of option contracts written--Note 6 (6,965,083)
Foreign currency transactions (187,764)
-----------
Net realized gain 37,155,083
- ----------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 18,601,013
-----------
Net realized and unrealized gain 55,756,096
==================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $74,637,419
===========
</TABLE>
See accompanying Notes to Financial Statements.
22 Oppenheimer Convertible Securities Fund
<PAGE> 23
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
======================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 18,881,323 $ 42,446,713
- ------------------------------------------------------------------------------------------------------
Net realized gain 37,155,083 20,491,709
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 18,601,013 (35,159,142)
-------------- --------------
Net increase in net assets resulting
from operations 74,637,419 27,779,280
======================================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A (4,587,058) (10,037,164)
Class B (7,649,568) (16,743,718)
Class C (1,792,216) (4,038,450)
Class M (4,823,553) (11,627,381)
- ------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A -- (5,790,061)
Class B -- (11,634,294)
Class C -- (2,833,142)
Class M -- (6,896,262)
======================================================================================================
BENEFICIAL INTEREST TRANSACTIONS
Net increase (decrease) in net assets resulting
from beneficial interest transactions--Note 2:
Class A (25,981,843) 38,763,260
Class B (51,922,699) 79,998,589
Class C (19,575,484) 27,838,755
Class M (39,717,148) (24,143,434)
======================================================================================================
NET ASSETS
Total increase (decrease) (81,412,150) 80,635,978
- ------------------------------------------------------------------------------------------------------
Beginning of period 1,039,291,690 958,655,712
-------------- --------------
End of period [including undistributed (overdistributed) net
investment income of $14,210 and $(14,718), respectively] $ 957,879,540 $1,039,291,690
============== ===============
</TABLE>
See accompanying Notes to Financial Statements.
23 Oppenheimer Convertible Securities Fund
<PAGE> 24
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------
SIX MONTHS
ENDED
JUNE 30,
1999 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996(1) 1995(2)
==============================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $14.84 $15.32 $14.27 $13.96 $13.11
- --------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .33 .70 .71(3) .73(3) .54(3)
Net realized and unrealized gain (loss) .88 (.08) 1.93(3) .65(3) 1.48(3)
-------- ------ ---- ------ -----
Total income (loss) from
investment operations 1.21 .62 2.64 1.38 2.02
- --------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.33) (.70) (.72) (.72) (.68)
Distributions from net realized gain -- (.40) (.87) (.35) (.49)
-------- ------ ---- ------ -----
Total dividends and distributions
to shareholders (.33) (1.10) (1.59) (1.07) (1.17)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.72 $14.84 $15.32 $14.27 $13.96
======== ====== ==== ====== =====
==============================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 8.22% 4.08% 18.77% 10.13% 15.54%
==============================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $207,709 $221,693 $192,212 $93,578 $2,502
- --------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $210,851 $220,423 $145,929 $41,617 $1,799
- --------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(5)
Net investment income 4.40% 4.55% 4.58% 5.11% 5.63%
Expenses 0.94%(6) 0.93% 0.95% 0.98%(6) 1.05%(6)
Expenses (excluding interest)(7) 0.94%(6) 0.93% 0.95% 0.97%(6) 1.01%(6)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 40% 90% 79% 53% 58%
</TABLE>
1. On January 4, 1996, OppenheimerFunds, Inc. became the investment advisor to
the Fund.
2. For the period from May 1, 1995 (inception of offering) to December
31, 1995.
3. Per share information has been determined based on average shares
outstanding for the period.
4. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
5. Annualized for periods of less than one full year.
24 Oppenheimer Convertible Securities Fund
<PAGE> 25
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30,
1999 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996(1) 1995(2)
===============================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 14.87 $ 15.35 $ 14.29 $ 13.98 $ 13.11
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .27 .58 .59(3) .62(3) .45(3)
Net realized and unrealized gain (loss) .87 (.08) 1.94(3) .65(3) 1.51(3)
-------- -------- -------- -------- -------
Total income (loss) from
investment operations 1.14 .50 2.53 1.27 1.96
- ---------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.27) (.58) (.60) (.61) (.60)
Distributions from net realized gain -- (.40) (.87) (.35) (.49)
-------- -------- -------- -------- -------
Total dividends and distributions
to shareholders (.27) (.98) (1.47) (.96) (1.09)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 15.74 $ 14.87 $ 15.35 $ 14.29 $ 13.98
======== ======== ======== ======== =======
===============================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 7.75% 3.30% 17.93% 9.28% 15.09%
===============================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $417,856 $445,544 $383,755 $211,176 $34,465
- ---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $424,995 $441,677 $296,426 $113,784 $15,184
- ---------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(5)
Net investment income 3.65% 3.79% 3.80% 4.31% 4.82%
Expenses 1.69%(6) 1.69% 1.72% 1.75%(6) 1.69%(6)
Expenses (excluding interest)(7) 1.69%(6) 1.69% 1.72% 1.73%(6) 1.64%(6)
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 40% 90% 79% 53% 58%
</TABLE>
6. The expense ratio reflects the effect of gross expenses paid indirectly by
the Fund.
7. 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.
8. 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, 1999, were $360,437,283 and $500,851,859, respectively.
25 Oppenheimer Convertible Securities Fund
<PAGE> 26
FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30,
1999 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996(1)(9)
================================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 14.84 $ 15.32 $ 14.27 $ 14.03
- ----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .27 .58 .59(3) .50(3)
Net realized and unrealized gain (loss) .87 (.08) 1.93(3) .59(3)
------- -------- ------- -------
Total income (loss) from
investment operations 1.14 .50 2.52 1.09
- ----------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.27) (.58) (.60) (.50)
Distributions from net realized gain -- (.40) (.87) (.35)
------- -------- ------- -------
Total dividends and distributions
to shareholders (.27) (.98) (1.47) (.85)
- ----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 15.71 $ 14.84 $ 15.32 $ 14.27
======= ======== ======= =======
================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 7.76% 3.32% 17.88% 7.74%
================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $94,370 $108,339 $85,397 $38,312
- ----------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $99,391 $105,974 $62,343 $18,550
- ----------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(5)
Net investment income 3.66% 3.81% 3.82% 4.32%
Expenses 1.68%(6) 1.68% 1.70% 1.68%(6)
Expenses (excluding interest)(7) 1.68%(6) 1.68% 1.70% 1.67%(6)
- ----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 40% 90% 79% 53%
</TABLE>
1. On January 4, 1996, OppenheimerFunds, Inc. became the investment advisor to
the Fund.
2. For the period from May 1, 1995 (inception of offering) to December 31, 1995.
3. Per share information has been determined based on average shares outstanding
for the period.
4. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
5. Annualized for periods of less than one full year.
26 Oppenheimer Convertible Securities Fund
<PAGE> 27
<TABLE>
<CAPTION>
CLASS M
----------------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30,
1999 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996(1) 1995 1994
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 14.84 $ 15.32 $ 14.27 $ 13.96 $ 12.20 $ 13.16
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .30 .62 .62(3) .65(3) .70(3) .68(3)
Net realized and unrealized gain (loss) .87 (.08) 1.94(3) .66(3) 2.42(3) (.81)(3)
-------- -------- -------- -------- -------- ---------
Total income (loss) from
investment operations 1.17 .54 2.56 1.31 3.12 (.13)
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.30) (.62) (.64) (.65) (.87) (.69)
Distributions from net realized gain -- (.40) (.87) (.35) (.49) (.14)
-------- -------- -------- -------- -------- ---------
Total dividends and distributions
to shareholders (.30) (1.02) (1.51) (1.00) (1.36) (.83)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 15.71 $ 14.84 $ 15.32 $ 14.27 $ 13.96 $ 12.20
======== ======== ======== ======== ======== =========
==============================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 7.92% 3.58% 18.19% 9.58% 26.00% (1.12)%
==============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $237,944 $263,716 $297,292 $274,043 $239,341 $ 126,691
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $246,424 $288,953 $285,621 $264,936 $181,719 $ 106,829
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(5)
Net investment income 3.92% 4.02% 4.05% 4.59% 5.12% 5.24%
Expenses 1.43%(6) 1.43% 1.46% 1.58%(6) 1.58%(6) 1.66%
Expenses (excluding interest)(7) 1.43%(6) 1.43% 1.46% 1.55%(6) 1.56%(6) 1.65%
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 40% 90% 79% 53% 58% 53%
</TABLE>
6. The expense ratio reflects the effect of gross expenses paid indirectly by
the Fund.
7. 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.
8. 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, 1999, were $360,437,283 and $500,851,859, respectively.
9. For the period from March 11, 1996 (inception of offering) to December 31,
1996.
See accompanying Notes to Financial Statements.
27 Oppenheimer Convertible Securities Fund
<PAGE> 28
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
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's investment
advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class
B, Class C and Class M shares. Class A shares are sold with a front-end sales
charge on investments up to $1 million. Class B and Class C shares may be
subject to a contingent deferred sales charge. Class M shares are sold with a
front-end 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.
- --------------------------------------------------------------------------------
SECURITIES 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 and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. 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
transaction 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.
- --------------------------------------------------------------------------------
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.
28 Oppenheimer Convertible Securities Fund
<PAGE> 29
================================================================================
FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The effect of changes in foreign currency exchange rates on
investments is separately identified from the fluctuations arising from changes
in market values of securities held and reported with all other foreign currency
gains and losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
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 December 31, 1998, the remaining accrued
tax liability for net unrealized gains on investments at the time of the
acquisition was $693,569.
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted a nonfunded retirement plan for the
Fund's independent trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service. During the six months ended
June 30, 1999, a provision of $38,335 was made for the Fund's projected benefit,
resulting in an accumulated liability of $69,818 as of June 30, 1999.
29 Oppenheimer Convertible Securities Fund
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)
DISTRIBUTIONS TO SHAREHOLDERS. Distributions to shareholders, which are
determined in accordance with income tax regulations, are recorded on the
ex-dividend date.
- --------------------------------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of 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.
- --------------------------------------------------------------------------------
EXPENSE OFFSET ARRANGEMENTS. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Foreign dividend income is often
recorded on the payable date. Realized gains and losses on investments and
unrealized appreciation and depreciation are determined on an identified cost
basis, which is the same basis used for federal income tax purposes. 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.
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> 31
================================================================================
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1999 YEAR ENDED DECEMBER 31, 1998
-------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 836,257 $ 12,648,820 5,704,233 $ 89,040,791
Dividends and
distributions reinvested 243,207 3,722,889 919,205 13,833,726
Redeemed (2,799,950) (42,353,552) (4,231,755) (64,111,257)
---------- ------------ ---------- ------------
Net increase (decrease) (1,720,486) $(25,981,843) 2,391,683 $ 38,763,260
========== ============ ========== ============
- -----------------------------------------------------------------------------------------------------------------
Class B:
Sold 1,161,196 $ 17,569,898 7,980,117 $125,356,682
Dividends and
distributions reinvested 403,015 6,179,346 2,002,880 30,266,988
Redeemed (4,992,293) (75,671,943) (5,015,731) (75,625,081)
---------- ------------ ---------- ------------
Net increase (decrease) (3,428,082) $(51,922,699) 4,967,266 $ 79,998,589
========== ============ ========== ============
- -----------------------------------------------------------------------------------------------------------------
Class C:
Sold 373,073 $ 5,640,510 2,882,218 $ 45,258,884
Dividends and
distributions reinvested 92,008 1,407,409 504,006 7,600,723
Redeemed (1,761,029) (26,623,403) (1,658,804) (25,020,852)
---------- ------------ ---------- ------------
Net increase (decrease) (1,295,948) $(19,575,484) 1,727,420 $ 27,838,755
========== ============ ========== ============
- -----------------------------------------------------------------------------------------------------------------
Class M:
Sold 166,424 $ 2,524,227 1,011,033 $ 16,005,467
Dividends and
distributions reinvested 243,542 3,725,296 1,254,634 18,971,816
Redeemed (3,035,792) (45,966,671) (3,898,845) (59,120,717)
---------- ------------ ---------- ------------
Net decrease (2,625,826) $(39,717,148) (1,633,178) $(24,143,434)
========== ============ ========== ============
</TABLE>
================================================================================
3. UNREALIZED GAINS AND LOSSES ON SECURITIES
As of June 30, 1999, net unrealized appreciation on investments and options
written of $51,820,628 was composed of gross appreciation of $95,697,515, and
gross depreciation of $43,876,887.
31 Oppenheimer Convertible Securities Fund
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. 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. The Fund's
annualized management fee for the six months ended June 30, 1999 was 0.47% of
average annual net assets for each class of shares.
- --------------------------------------------------------------------------------
ACCOUNTING FEES. 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.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer and shareholder servicing agent for the Fund and other
Oppenheimer funds. 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.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN FEES. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor
from the sale of shares or on the redemption of shares is shown in the table
below for the period indicated.
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE CLASS A CLASS M
FRONT-END FRONT-END FRONT-END FRONT-END COMMISSIONS COMMISSIONS COMMISSIONS
SALES SALES SALES SALES ON CLASS A ON CLASS B ON CLASS C
CHARGES CHARGES CHARGES CHARGES SHARES SHARES SHARES
SIX MONTHS ON CLASS A ON CLASS M RETAINED BY RETAINED BY ADVANCED BY ADVANCED BY ADVANCED BY
ENDED SHARES SHARES DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR(1) DISTRIBUTOR(1) DISTRIBUTOR(1)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
June 30, 1999 $182,298 $62,408 $62,007 $8,069 $13,001 $577,634 $50,650
</TABLE>
1. The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B and Class C shares from its own
resources at the time of sale.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS M
CONTINGENT DEFERRED CONTINGENT DEFERRED CONTINGENT DEFERRED CONTINGENT DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY
ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
June 30, 1999 $3,684 $978,822 $18,530 $ --
</TABLE>
The Fund has adopted a Service Plan for Class A shares and Distribution and
Service Plans for Class B, Class C and Class M shares under Rule 12b-1 of the
Investment Company Act. Under those plans the Fund pays the Distributor for all
or a portion of its costs incurred in connection with the distribution and/or
servicing of the shares of the particular class.
32 Oppenheimer Convertible Securities Fund
<PAGE> 33
================================================================================
CLASS A SERVICE PLAN FEES. Under the Class A service plan, the Distributor
currently uses the fees it receives from the Fund to pay brokers, dealers and
other financial institutions. The Class A service plan permits reimbursements to
the Distributor at a rate of up to 0.25% of average annual net assets of Class A
shares. The Distributor makes payments to plan recipients quarterly at an annual
rate not to exceed 0.25% of the average annual net assets consisting of Class A
shares of the Fund. For the six months ended June 30, 1999, payments under the
Class A Plan totaled $261,455, all of which was paid by the Distributor to
recipients. That included $25,614 paid to an affiliate of the Distributor's
parent company. Any unreimbursed expenses the Distributor incurs with respect to
Class A shares in any fiscal year cannot be recovered in subsequent years.
- --------------------------------------------------------------------------------
CLASS B AND CLASS C DISTRIBUTION AND SERVICE PLAN FEES. Under each plan, service
fees and distribution fees are computed on the average of the net asset value of
shares in the respective class, determined as of the close of each regular
business day during the period. The Class B and Class C plans provide for the
Distributor to be compensated at a flat rate, whether the Distributor's
distribution expenses are more or less than the amounts paid by the Fund under
the plan during the period for which the fee is paid.
The Distributor retains the asset-based sales charge on
Class B shares and Class M shares. The Distributor retains the asset-based sales
charge on Class C shares during the first year the shares are outstanding. The
asset-based sales charges on Class B and Class C shares allow investors to buy
shares without a front-end sales charge while allowing the Distributor to
compensate dealers that sell those shares.
The Distributor's actual expenses in selling Class B and
Class C shares may be more than the payments it receives from the contingent
deferred sales charges collected on redeemed shares and from the Fund under the
plans. If either the Class B or the Class C plan is terminated by the Fund, the
Board of Trustees may allow the Fund to continue payments of the asset-based
sales charge to the Distributor for distributing shares before the plan was
terminated. The plans allow for the carry-forward of distribution expenses, to
be recovered from asset-based sales charges in subsequent fiscal periods.
33 Oppenheimer Convertible Securities Fund
<PAGE> 34
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED)
CLASS M DISTRIBUTION AND SERVICE PLAN FEES. Under the Class M plan, service fees
and distribution fees are computed on the average of the net asset value of
Class M shares, determined as of the close of each regular business day during
the period. The Class M plan allows the Distributor to be reimbursed for its
services and costs in distributing Class M shares and servicing accounts. The
Distributor also retains the Class M asset-based sales charge, but may use all
or part of it to pay additional compensation to dealers that sell Class M
shares. If the Class M plan is terminated by the Fund, the Board of Trustees may
allow the Fund to continue payments of the asset-based sales charge to the
Distributor for distributing shares before the plan was terminated.
Distribution fees paid to the Distributor for the six months ended June 30,
1999, were as follows:
<TABLE>
<CAPTION>
DISTRIBUTOR'S
AGGREGATE DISTRIBUTOR'S
UNREIMBURSED UNREIMBURSED
TOTAL PAYMENTS AMOUNT RETAINED EXPENSES EXPENSES AS % OF
CLASS UNDER PLAN BY DISTRIBUTOR UNDER PLAN NET ASSETS OF CLASS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Plan $2,107,961 $1,675,128 $ 11,279,898 2.70%
Class C Plan $ 493,175 $ 127,676 $ 1,150,783 1.22%
Class M Plan $ 916,885 $ 310,535 $ -- N/A
</TABLE>
================================================================================
5. FOREIGN CURRENCY CONTRACTS
A foreign currency exchange contract is a commitment to purchase or sell a
foreign currency at a future date, at a negotiated rate. The Fund may enter into
foreign currency exchange contracts for operational purposes and to seek to
protect against adverse exchange rate fluctuation. Risks to the Fund include the
potential inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates as provided by a reliable bank, dealer or pricing service. Unrealized
appreciation and depreciation on foreign currency contracts are reported in the
Statement of Assets and Liabilities.
The Fund may realize a gain or loss upon the closing or
settlement of the forward transaction. Realized gains and losses are reported
with all other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net
exposure on outstanding foreign currency contracts are noted in the Statement of
Investments where applicable.
34 Oppenheimer Convertible Securities Fund
<PAGE> 35
================================================================================
6. OPTION ACTIVITY
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered
call options to hedge against adverse movements in the value of portfolio
holdings. When an option is written, the Fund receives a premium and becomes
obligated to sell or purchase the underlying security at a fixed price, upon
exercise of the option.
Options are valued daily based upon the last sale price on
the principal exchange on which the option is traded and unrealized appreciation
or depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are
noted in the Statement of Investments where applicable. Shares subject to call,
expiration date, exercise price, premium received and market value are detailed
in a note to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up
the opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Fund may incur
a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
Written option activity for the six months ended June 30, 1999, was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS
-------------------------------------
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding as of December 31, 1998 15,600 $ 7,066,607
Options written 15,526 9,067,797
Options closed or expired (23,830) (11,330,149)
Options exercised (666) (367,919)
------- ------------
Options outstanding as of June 30, 1999 6,630 $ 4,436,336
======= ============
</TABLE>
35 Oppenheimer Convertible Securities Fund
<PAGE> 36
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
================================================================================
7. ILLIQUID OR RESTRICTED SECURITIES
As of June 30, 1999, investments in securities included issues that are illiquid
or restricted. Restricted securities are often purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Trustees as reflecting fair value. A security may also 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 limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of June 30, 1999, was $53,277,034,
which represents 5.56% of the Fund's net assets, of which $15,634,076 is
considered restricted. Information concerning restricted securities is as
follows:
<TABLE>
<CAPTION>
VALUATION PER
ACQUISITION COST PER UNIT AS OF
SECURITY DATES UNIT JUNE 30, 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND STRUCTURED INSTRUMENTS
- --------------------------------
Deutsche Bank Linked Nts., 3.10%,
11/5/02 (exchangeable into
AT&T Corp. common stock) 10/29/97 100% 151.25%
- ----------------------------------------------------------------------------------------------------------------------
Hudson Hotels Corp., 7.50% Cv. Sub. Debs., 7/1/01 7/8/96 100 25.00
STOCKS AND WARRANTS
- -------------------
Danskin, Inc.:
$88.2722 Cv., Series D 8/14/95 $5,000.00 $7,500.00
Portion of Promissory Nt. 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 .45
Wts., Exp. 10/04 8/14/95 -- .22
- ----------------------------------------------------------------------------------------------------------------------
Sensormatic Electronics Corp. 6/17/98-6/17/99 9.11 13.79
- ----------------------------------------------------------------------------------------------------------------------
Submicron Systems Corp. Wts., Exp. 1/01 12/11/95 -- --
</TABLE>
================================================================================
8. 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 other Oppenheimer
funds in an unsecured line of credit with a bank, which permits borrowings up to
$100 million, collectively. Interest is charged to each fund, based on its
borrowings, at a rate equal to the Federal Funds Rate plus 0.625%. The Fund also
pays a commitment fee equal to its pro rata share of the average unutilized
amount of the credit facility at a rate of 0.07% per annum. The commitment fee
allocated to the Fund for the six months ended June 30, 1999, was $1,128.
The Fund had no borrowings outstanding for the six months
ended June 30, 1999.
36 Oppenheimer Convertible Securities Fund
<PAGE> 37
OPPENHEIMER CONVERTIBLE SECURITIES FUND
A Series of Bond Fund Series
================================================================================
<TABLE>
<S> <C>
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
Robert G. Galli, Trustee
Lacy B. Herrmann, Trustee
George Loft, Trustee
Michael S. Rosen, Vice President
Andrew J. Donohue, Secretary
Brian W. Wixted, Treasurer
Robert G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Adele A. Campbell, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
================================================================================
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 L.L.P.
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 the possible loss of the principal amount
invested.
</TABLE>
37 Oppenheimer Convertible Securities Fund
<PAGE> 38
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 Global Growth & Income Fund
International Small Global Fund Europe Fund
Company Fund Quest Global Value Fund
=============================================================================================
STOCK FUNDS
- ---------------------------------------------------------------------------------------------
Enterprise Fund MidCap Fund Growth Fund
Discovery Fund Capital Appreciation Fund Large Cap Growth Fund
Quest Small Cap Value Fund Quest Capital Value Fund Disciplined Value Fund
Quest Value Fund
=============================================================================================
STOCK & BOND FUNDS
- ---------------------------------------------------------------------------------------------
Main Street Growth & Total Return Fund Multiple Strategies Fund
Income Fund(1) Quest Balanced Disciplined Allocation Fund
Quest Opportunity Value Fund Convertible Securities Fund
Value Fund Capital Income Fund(2)
=============================================================================================
TAXABLE BOND FUNDS
- ---------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
World Bond Fund Strategic Income Fund Limited-Term Government Fund
High Yield Fund Bond Fund
=============================================================================================
MUNICIPAL BOND FUNDS
- ---------------------------------------------------------------------------------------------
California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division:
Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York
New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund
=============================================================================================
MONEY MARKET FUNDS(4)
- ---------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
</TABLE>
1. On 12/22/98, the Fund's name was changed from "Oppenheimer Main Street Income
& Growth Fund."
2. On 4/1/99 the Fund's name was changed from "Oppenheimer Equity Income Fund."
3. Available only to investors in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds may seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in these funds. Oppenheimer
funds are distributed by OppenheimerFunds Distributor, Inc., Two World Trade
Center, New York, NY 10048-0203.
(C) Copyright 1999 OppenheimerFunds, Inc. All rights reserved.
38 Oppenheimer Convertible Securities Fund
<PAGE> 39
INFORMATION AND SERVICES
As an Oppenheimer fund shareholder, you can benefit from special services
designed to make investing simple. Whether it's automatic investment plans,
timely market updates, or immediate account access, you can count on us whenever
you need assistance. So call us today, or visit our website--we're here to help.
INTERNET
24-hr access to account information and transactions
WWW.OPPENHEIMERFUNDS.COM
GENERAL INFORMATION
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
1-800-525-7048
TELEPHONE TRANSACTIONS
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm 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-6pm 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
TRANSFER AND SHAREHOLDER SERVICING AGENT
OppenheimerFunds Services,
P.O. Box 5270, Denver, CO 80217-5270
[OPPENHEIMERFUNDS LOGO]
RS0345.001.0699 August 27, 1999
