[picture of mountain peaks]
Semiannual Report June 30, 2000
Oppenheimer
Convertible Securities Fund
[logo]
OppenheimerFunds(R)
The Right Way to Invest
<PAGE>
REPORT HIGHLIGHTS
We helped limit the Fund's vulnerability to much of the volatility in the equity
markets by relying on our long-term strategy.
The energy sector and select pharmaceutical companies were generally the
strongest contributors to the Fund's performance.
The management team currently plans to maintain its focus on the wireless,
technology and pharmaceuticals sectors.
Contents
1 President's Letter
3 An Interview
with Your Fund's
Manager
9 Financial
Statements
33 Officers and Trustees
Cumulative
Total Returns*
For the 6-Month Period
Ended 6/30/00
Class A
Without With
Sales Chg. Sales Chg.
-------------------------
3.57% -2.39%
Class B
Without With
Sales Chg. Sales Chg.
-------------------------
3.18% -1.82%
Class C
Without With
Sales Chg. Sales Chg.
--------------------------
3.18% 2.18%
Class M
Without With
Sales Chg. Sales Chg.
--------------------------
3.31% -0.05%
*See Notes on page 7 for further details.
<PAGE>
PRESIDENT'S LETTER
[photo]
Bridget A. Macaskill
President
Oppenheimer
Convertible
Securities Fund
Dear Shareholder,
The 1990s, although not free of volatility, were distinguished by an
overall bull market. In contrast, the year 2000 has been characterized so far as
a relatively difficult investment environment with high levels of volatility.
As we entered the year, a vital concern weighing on investors' minds was
growing evidence of a trend toward higher inflation. While productivity
improvements and various economic forces helped keep inflation low over the last
decade, the year 2000 has seen upward pressure on wages and some prices. That's
primarily because the U.S. economy has been growing at a vigorous pace, creating
a labor shortage for businesses and high spending levels among consumers. In
response, since the summer of 1999, the Federal Reserve Board raised short-term
interest rates six times through June 30, 2000, in an attempt to forestall
inflationary pressures.
During that period, higher interest rates adversely affected many stocks and
bonds. In a dramatic decline, previously high-flying technology stocks generally
fell to more reasonable valuations. At the same time, long-neglected value
stocks began to attract investor interest. The result: narrowing of the
valuation gap between growth stocks and value stocks. Finally, in the bond
market, higher interest rates caused prices of most fixed income securities to
fall.
At OppenheimerFunds, we were not surprised by these developments, many of
which we anticipated in our recent letters to investors. What did concern us was
that, prior to the April 2000 correction, we began to see disturbing signs that
short-term trading was taking place not just in technology stocks, but also in
mutual funds. Prudent investors will understand our concern: most stock and bond
funds are carefully designed as long-term investments to help individuals and
1 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
PRESIDENT'S LETTER
families progress toward significant financial goals. In general, short-term
trading is risky and may compromise a well planned financial strategy. It may
also result in unforeseen adverse consequences, such as unnecessarily high tax
bills.
We continue to believe that maintaining a long-term perspective and
practicing diversification are the fundamental drivers of consistent performance
over time. These strategies have helped individual investors, as well as
professional investors, weather declining markets and participate in rising
ones. On the following pages, your portfolio manager discusses the long-term
strategies and particular investment decisions that affected your fund during
the reporting period.
You can remain confident that our portfolio managers will continue to monitor
areas of opportunity in the arenas in which your fund invests, as the effects of
today's changing investment environment take hold. Knowing what's going on in
the world's economies, markets and companies--and making investment decisions
designed to try to take advantage of them over the long term--is central to what
makes OppenheimerFunds The Right Way to Invest.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
July 24, 2000
These general market views represent opinions of OppenheimerFunds, Inc. and
are not intended to predict or depict performance of any particular fund.
Specific discussion, as it applies to your Fund, is contained in the pages that
follow. Stocks and bonds have different types of investment risks; stocks are
subject to market volatility and bonds are subject to credit and interest rate
risks.
2 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGER
[photo]
Portfolio Management
Team (l to r)
Robert Young
Edward Everett
(Portfolio Manager)
Q How did the Fund perform during the six-month period that ended
June 30, 2000?
A. Although the portfolio certainly felt the effects of the markets' volatility,
we helped dampen some of those repercussions by selectively investing in
companies with what we believed were strong economic fundamentals and keeping a
close eye on securities with high valuations.
How did you accomplish this?
We are always seeking convertible bonds of companies that we believe are
fundamentally sound (in terms of operations and earnings outlook, for example)
but whose stock prices are otherwise undervalued. When we identify bonds that
are trading at a discount, or below par, we tend to be a bit more aggressive in
adding them to the portfolio. Also, when a bond's yield far exceeds the dividend
of its underlying common stock, we believe it may represent an opportunity to
add to the Fund's income and total return potential.
Conversely, as a way of helping to limit volatility, we typically sell or
reduce our positions in convertible bonds that are trading significantly above
par. This is a vital facet of our strategy: These convertibles tend to be more
volatile, since they're generally more sensitive to the price movements of their
underlying stocks than are convertibles selling at or under par.
Historically, these two tactics have successfully helped enable us to limit
the volatility of the fund and keep the equity sensitivity of the portfolio
within a targeted range. In addition, when the market is experiencing extreme
ups and downs, as it has over the past six months, the convertibles that tend to
be most volatile represent an increasingly smaller component of the portfolio.
3 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGER
Which sectors affected the Fund's performance most significantly?
Our holdings in the energy sector contributed most significantly to the Fund's
good performance. Whether employed in oil drilling, exploration or production,
many companies associated with oil--and more generally, energy--have
benefited from the recent strength in energy prices.
In addition, the stocks of many pharmaceutical companies have performed well
since January. This is a turnaround from last year, during which pharmaceutical
companies had a very tough time as growth investors abandoned this sector to
seek returns in technology- and Internet-related businesses. An observation
relative to our strategy is that we believe that the fundamentals for these
companies remain generally solid. Another important trend is investors' response
to the volatility we've seen this year, and consequent valuation adjustments of
many "new economy" companies to more realistic levels. Many growth investors are
rediscovering the pharmaceutical sector, which is still experiencing healthy
growth, and which, for some time now, we believe has had reasonable valuations.
Within the broad spectrum of the technology sector, although subject to
widespread volatility, some subsectors have continued to produce strong returns.
Semiconductors, for example, have contributed positively to the Fund's
performance since the beginning of the year, but some of these companies' stocks
have dropped considerably in price relative to their previous highs. In
contrast, the portfolio's convertible bonds issued by companies in the wireless
sector continue to perform positively, due to strong growth potential and the
variety of new services these companies are starting to offer, such as Internet
access and expanded data services.
[callout]
"We will continue to focus on industries and companies that we believe represent
good long-term oppportunities, such as wireless communications."
4 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
Overall, the portfolio's holdings in the telecommunications sector detracted
from the Fund's performance during this reporting period, despite a very strong
year in 1999. Similarly, retail has been particularly weak in the last two
months, as consumer spending has cooled, and as interest rates and mortgage
rates have risen.
How are you positioning the portfolio, moving forward?
We will remain focused on industries and companies that we believe fundamentally
represent good long-term opportunities. Currently, in our opinion, such
companies include certain wireless-communications companies, as well as select
companies in healthcare, pharmaceuticals and biotechnology. We will continue to
seek securities that we believe are likely to provide a reasonable rate of
return over time, regardless of what happens in the markets. Remaining true to
our investment discipline of seeking solid returns at good value while striving
to minimize volatility is, we believe, what helps make Oppenheimer Convertible
Securities Fund The Right Way to Invest.
Average Annual
Total Returns
For the Periods Ended 6/30/00(1)
Class A Since
1-Year 5-Year Inception
------------------------
11.27% 12.36% 13.17%
Class B Since
1-Year 5-Year Inception
------------------------
12.17% 12.61% 13.51%
Class C Since
1-Year 5-Year Inception
------------------------
16.21% N/A 12.46%
Class M Since
1-Year 5-Year Inception
------------------------
13.68% 12.42% 14.31%
1. See Notes on page 7 for further details.
5 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
Top Convertible Bond Sectors(3)
...........................................................
Technology 20.4%
...........................................................
Communication Services 10.2
...........................................................
Healthcare 8.5
...........................................................
Capital Goods 4.8
...........................................................
Consumer Cyclicals 4.0
...........................................................
Energy 3.3
...........................................................
Consumer Staples 3.1
...........................................................
Financial 2.1
...........................................................
Utilities 0.9
Top Five Holdings By Issuer(2)
...........................................................
Treasury Repo 10.5%
...........................................................
AT&T Corp./Liberty Media Group 2.8
...........................................................
Roche Holdings, Inc. 2.2
...........................................................
Nextel Communications, Inc. 2.1
...........................................................
Hewlett-Packard Co. 1.9
Portfolio Allocation(2)
[pie chart]
Convertible
Corporate 57.0%
Preferred
Stocks 26.6
Cash
Equivalents 10.5
Structured
Instruments 4.2
Common
Stocks 1.7
2. Portfolio is subject to change. Percentages are as of June 30, 2000, and are
based on total market value of investments.
3. Portfolio is subject to change. Percentages are as of June 30, 2000, and are
based on net assets.
6 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
NOTES
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 of ongoing
market volatility, the Fund's performance may be subject to substantial
short-term changes. For quarterly updates on the Fund's performance, please
contact your financial advisor, call us at 1.800.525.7048 or visit our website
at www.oppenheimerfunds.com.
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. The Fund's total returns shown do
not show the effects of income taxes on an individual's investment. Taxes may
reduce your actual investment returns on income or gains paid by the Fund or any
gains you may realize if you sell your shares.
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 A returns include the current maximum initial sales
charge of 5.75%.
Class B shares of the Fund were first publicly offered on 5/1/95. Class B
returns include the applicable contingent deferred sales charge of 5% (1-year)
and 2% (since inception). Class B shares are subject to an annual 0.75%
asset-based sales charge.
Class C shares of the Fund were first publicly offered on 3/11/96. Class C
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class C shares are subject to an annual 0.75% asset-based sales charge.
Class M shares of the Fund were first publicly offered on 6/3/86. Class M
returns include the current maximum initial sales charge of 3.25%. Prior to
March 11, 1996, Class M shares were designated as Class A shares. Class M shares
are subject to an annual 0.50% asset-based sales charge.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
7 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
Financials
8 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
STATEMENT OF INVESTMENTS June 30, 2000 / Unaudited
<TABLE>
<CAPTION>
Principal Market Value
Amount See Note 1
=================================================================================================
<S> <C> <C>
Convertible Corporate Bonds and Notes--57.2%
-------------------------------------------------------------------------------------------------
Capital Goods--4.8%
-------------------------------------------------------------------------------------------------
Aerospace/Defense--0.4%
Orbital Sciences Corp., 5% Cv. Unsec. Sub. Nts., 10/1/02 $ 6,000,000 $ 4,057,500
-------------------------------------------------------------------------------------------------
Electrical Equipment--0.8%
Commscope, Inc., 4% Cv. Nts., 12/15/06(1) 7,000,000 7,656,250
-------------------------------------------------------------------------------------------------
Industrial Services--2.3%
Cendant Corp., 3% Cv. Sub. Nts., 2/15/02 5,000,000 4,550,000
-------------------------------------------------------------------------------------------------
Danka Business Systems plc, 6.75% Cv. Sub. Nts., 4/1/02 4,000,000 2,740,000
-------------------------------------------------------------------------------------------------
EMCOR Group, Inc., 5.75% Cv. Sub. Nts., 4/1/05 3,000,000 2,925,000
-------------------------------------------------------------------------------------------------
Getty Images, Inc., 5% Cv. Sub. Nts., 3/15/07(1) 5,000,000 4,137,500
-------------------------------------------------------------------------------------------------
Mail-Well, Inc., 5% Cv. Nts., 11/1/02 5,000,000 4,150,000
-------------------------------------------------------------------------------------------------
Mansur Industries, Inc., 8.25% Cv. Sub. Nts., 2/18/03(2) 4,701,972 4,090,716
------------
22,593,216
-------------------------------------------------------------------------------------------------
Manufacturing--1.3%
Hexcel Corp., 7% Cv. Unsec. Sub. Nts., 8/1/03 3,000,000 2,595,000
-------------------------------------------------------------------------------------------------
Mark IV Industries, Inc., 4.75% Cv. Sub. Nts., 11/1/04 7,000,000 6,501,250
-------------------------------------------------------------------------------------------------
Robbins & Myers, Inc., 6.50% Cv. Unsec. Nts., 9/1/03 3,500,000 3,390,625
------------
12,486,875
-------------------------------------------------------------------------------------------------
Communication Services--10.2%
-------------------------------------------------------------------------------------------------
Telecommunications: Long Distance--4.1%
Exodus Communications, Inc., 4.75% Cv. Nts., 7/15/08(1) 4,000,000 5,855,000
-------------------------------------------------------------------------------------------------
Global Telesystems, Inc., 5.75% Cv. Nts., 7/1/10 6,000,000 3,480,000
-------------------------------------------------------------------------------------------------
Level 3 Communications, Inc., 6% Cv. Unsec. Sub. Nts., 3/15/10 15,000,000 13,631,250
-------------------------------------------------------------------------------------------------
NTL, Inc., 5.75% Cv. Nts., 12/15/09(1) 10,000,000 7,987,500
-------------------------------------------------------------------------------------------------
Telefonos de Mexico SA, 4.25% Cv. Sr. Nts., 6/15/04 4,000,000 5,380,000
-------------------------------------------------------------------------------------------------
World Access, Inc., 4.50% Cv. Unsec. Sub. Nts., 10/1/02 5,000,000 3,662,500
------------
39,996,250
-------------------------------------------------------------------------------------------------
Telecommunications: Wireless--6.1%
American Tower Corp., 5% Cv. Nts., 2/15/10(1) 7,000,000 7,113,750
-------------------------------------------------------------------------------------------------
AT&T Corp./Liberty Media Group, 3.75% Cv. Nts., 5/15/30(1) 25,000,000 27,156,25
-------------------------------------------------------------------------------------------------
Gilat Satellite Networks Ltd., 4.25% Cv. Sub. Nts., 3/15/05(1) 7,000,000 4,821,250
-------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 5.25% Cv. Sr. Nts., 1/15/10(1) 20,000,000 20,475,00
------------
59,566,250
-------------------------------------------------------------------------------------------------
Consumer Cyclicals--4.0%
-------------------------------------------------------------------------------------------------
Autos & Housing--1.1%
Magna International, Inc., 5% Cv. Sub. Debs., 10/15/02 6,500,000 6,581,250
-------------------------------------------------------------------------------------------------
MascoTech, Inc., 4.50% Cv. Sub. Debs., 12/15/03 5,000,000 3,750,000
------------
10,331,250
9 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
STATEMENT OF INVESTMENTS Unaudited / Continued
Principal Market Value
Amount See Note 1
-------------------------------------------------------------------------------------------------
Media--2.2%
Interpublic Group of Cos., Inc., 1.87% Cv. Unsec. Nts., 6/1/06 $ 8,000,000 $ 7,760,000
-------------------------------------------------------------------------------------------------
Omnicom Group, Inc., 2.25% Cv. Unsec. Nts., 1/6/13 3,500,000 6,479,375
-------------------------------------------------------------------------------------------------
Young & Rubicam, Inc., 3% Cv. Nts., 1/15/05(1) 7,000,000 7,131,250
------------
21,370,625
-------------------------------------------------------------------------------------------------
Retail: Specialty--0.7%
Amazon.com, Inc.:
4.75% Cv. Sub. Debs., 2/1/09 3,000,000 1,901,250
4.75% Cv. Sub. Debs., 2/1/09(1) 5,000,000 3,168,750
-------------------------------------------------------------------------------------------------
Central Garden & Pet Co., 6% Cv. Nts., 11/15/03 3,000,000 2,036,250
------------
7,106,250
-------------------------------------------------------------------------------------------------
Consumer Staples--3.1%
-------------------------------------------------------------------------------------------------
Broadcasting--2.7%
Clear Channel Communications, Inc.:
1.50% Cv. Nts., 12/1/02 6,000,000 5,880,000
2.625% Cv. Sr. Nts., 4/1/03 7,000,000 9,073,750
-------------------------------------------------------------------------------------------------
Echostar Communications Corp., 4.875% Cv. Nts., 1/1/07(1) 12,000,000 11,430,000
------------
26,383,750
-------------------------------------------------------------------------------------------------
Food & Drug Retailers--0.4%
Costco Cos., Inc., Zero Coupon Cv. Sub. Nts., 1.93%, 8/19/17(3) 4,000,000 3,295,000
-------------------------------------------------------------------------------------------------
Energy--3.3%
-------------------------------------------------------------------------------------------------
Energy Services--2.0%
Diamond Offshore Drilling, Inc., 3.75% Cv. Unsec. Sub. Nts., 2/15/07 4,000,000 4,170,000
-------------------------------------------------------------------------------------------------
Nabors Industries, Inc., Zero Coupon Cv. Sr. Debs.,
2.50%, 6/20/20(1,3) 8,500,000 5,195,625
-------------------------------------------------------------------------------------------------
Pride International, Inc., Zero Coupon Cv. Sub. Debs., 6.16%,
6.16%, 4/24/18(3) 15,000,000 6,168,750
-------------------------------------------------------------------------------------------------
Transocean Sedco Forex, Inc., Zero Coupon Cv. Sr. Unsec. Debs.,
2.75%, 5/24/20(3) 7,000,000 4,200,000
------------
19,734,375
-------------------------------------------------------------------------------------------------
Oil: Domestic--1.3%
Devon Energy Corp., 4.95% Cv. Sr. Unsec. Debs., 8/15/08
(cv. into common stock of Chevron Corp.) 8,000,000 7,670,000
-------------------------------------------------------------------------------------------------
Kerr-McGee Corp., 5.25% Cv. Unsec. Sub. Nts., 2/15/10 4,000,000 4,625,000
------------
12,295,000
10 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
Principal Market Value
Amount See Note 1
-------------------------------------------------------------------------------------------------
Financial--2.0%
-------------------------------------------------------------------------------------------------
Diversified Financial--2.0%
Ameritrade Holding Corp.:
5.75% Cv. Nts., 8/1/04(1) $ 2,000,000 $ 1,215,000
5.75% Cv. Nts., 8/1/04 4,000,000 2,430,000
-------------------------------------------------------------------------------------------------
Bell Atlantic Financial Services Corp.:
4.25% Sr. Exchangeable Nts., 9/15/05 (exchangeable for shares
of Cable & Wireless Communications, Inc. or cash)(1) 3,000,000 3,907,500
5.75% Cv. Sr. Unsec. Nts., 4/1/03 (cv. into common stock of
Telecom Corp. of New Zealand)(1) 5,000,000 4,887,500
-------------------------------------------------------------------------------------------------
Phoenix Investment Partners Corp., 6% Cv. Unsec. Sub. Debs., 11/1/15 5,817,500 7,562,750
------------
20,002,750
-------------------------------------------------------------------------------------------------
Healthcare--8.5%
-------------------------------------------------------------------------------------------------
Healthcare/Drugs--8.5%
Affymetrix, Inc., 4.75% Cv. Sub. Nts., 2/15/07(1) 10,000,000 7,825,000
-------------------------------------------------------------------------------------------------
Alkermes, Inc., 3.75% Cv. Sub. Nts., 2/15/07 5,000,000 4,200,000
-------------------------------------------------------------------------------------------------
ALZA Corp., Zero Coupon Cv. Nts., 5.37%, 7/14/14(3) 10,000,000 7,875,000
-------------------------------------------------------------------------------------------------
Athena Neurosciences, Inc., 4.75% Gtd. Cv. Nts., 11/15/04 8,000,000 11,260,000
-------------------------------------------------------------------------------------------------
Centocor, Inc., 4.75% Cv. Unsec. Sub. Debs., 2/15/05 (cv. into
common stock of Johnson & Johnson) 10,000,000 13,537,500
-------------------------------------------------------------------------------------------------
Human Genome Sciences, Inc., 3.75% Cv. Unsec. Sub., Nts., 3/15/07(1) 7,000,000 5,818,750
-------------------------------------------------------------------------------------------------
Millennium Pharmaceuticals, Inc., 5.50% Cv. Sub. Nts., 1/15/07(1) 3,000,000 4,473,750
-------------------------------------------------------------------------------------------------
Roche Holdings, Inc., Zero Coupon Cv. Liquid Yield Option Nts.:
2.23%, 1/19/15 (cv. into common stock of Genentech, Inc.)(1,3) 15,000,000 13,875,000
4.78%, 4/20/10(1,3) 15,000,000 7,893,750
-------------------------------------------------------------------------------------------------
Sepracor, Inc., 5% Cv. Sub. Nts., 2/15/07(1) 4,000,000 5,875,000
------------
82,633,750
-------------------------------------------------------------------------------------------------
Technology--20.4%
-------------------------------------------------------------------------------------------------
Communications Equipment--1.2%
DSC Communications Corp., 7% Cv. Unsec. Sub. Nts., 8/1/04 6,000,000 6,862,500
-------------------------------------------------------------------------------------------------
Efficient Networks, Inc., 5% Cv. Unsec. Sub. Nts., 3/15/05(1) 6,000,000 4,500,000
------------
11,362,500
-------------------------------------------------------------------------------------------------
Computer Hardware--3.8%
Adaptec, Inc., 4.75% Cv. Sub. Nts., 2/1/04 8,000,000 6,750,000
-------------------------------------------------------------------------------------------------
Hewlett-Packard Co., Zero Coupon Cv. Sr. Liquid Yield
Option Nts., 2.42%, 10/14/17(3) 20,000,000 19,000,000
-------------------------------------------------------------------------------------------------
Juniper Networks, Inc., 4.75% Cv. Unsec. Sub. Nts., 3/15/07 10,000,000 11,100,000
------------
36,850,000
-------------------------------------------------------------------------------------------------
Computer Services--1.5%
Checkfree Holdings Corp., 6.50% Cv. Nts., 12/1/06(1) 5,000,000 4,825,000
-------------------------------------------------------------------------------------------------
Internet Capital Group, Inc., 5.50% Cv. Nts., 12/21/04 8,000,000 5,280,000
-------------------------------------------------------------------------------------------------
Safeguard Scientifics, Inc., 5% Cv. Unsec. Sub. Nts., 6/15/06 3,000,000 4,601,250
------------
14,706,250
11 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
STATEMENT OF INVESTMENTS Unaudited / Continued
Principal Market Value
Amount See Note 1
-------------------------------------------------------------------------------------------------
Computer Software--5.3%
Aspen Technology, Inc., 5.25% Cv. Unsec. Nts., 6/15/05 $ 4,500,000 $ 4,393,125
-------------------------------------------------------------------------------------------------
BEA Systems, Inc., 4% Cv. Nts., 12/15/06(1) 4,000,000 6,280,000
-------------------------------------------------------------------------------------------------
Excite@Home, 4.75% Cv. Sr. Nts., 12/15/06(1) 8,500,000 6,013,750
-------------------------------------------------------------------------------------------------
I2 Technologies, Inc., 5.25% Cv. Sub. Nts., 12/15/06 2,000,000 3,085,000
-------------------------------------------------------------------------------------------------
Mercury Interactive Corp., 4.75% Cv. Nts., 7/1/07(1) 3,000,000 3,234,375
-------------------------------------------------------------------------------------------------
Network Associates, Inc., Zero Coupon Cv. Unsec. Sub. Debs.,
6.37%, 2/13/18(3) 20,000,000 7,125,000
-------------------------------------------------------------------------------------------------
Rational Software Corp., 5% Cv. Sub. Nts., 2/1/07(1) 6,000,000 8,782,500
-------------------------------------------------------------------------------------------------
Redback Networks, Inc., 5% Cv. Bonds, 4/1/07(1) 6,000,000 6,810,000
-------------------------------------------------------------------------------------------------
Tecnomatix Technologies Ltd., 5.25% Cv. Sub. Nts., 8/15/04 5,000,000 3,281,250
-------------------------------------------------------------------------------------------------
Veritas Software Corp., 1.856% Cv. Unsec. Nts., 8/13/06 1,000,000 3,155,000
------------
52,160,000
-------------------------------------------------------------------------------------------------
Electronics--8.6%
-------------------------------------------------------------------------------------------------
Amkor Technologies, Inc., 5% Cv. Nts., 3/15/07(1) 5,000,000 4,556,250
-------------------------------------------------------------------------------------------------
ASM Lithography Holding NV, 4.25% Cv. Nts., 11/30/04(1) 5,000,000 6,687,500
-------------------------------------------------------------------------------------------------
Cirrus Logic, Inc., 6% Cv. Unsec. Sub. Nts., 12/15/03 5,000,000 4,437,500
-------------------------------------------------------------------------------------------------
Conexant Systems, Inc., 4% Cv. Sub. Nts., 2/1/07(1) 10,000,000 7,875,000
-------------------------------------------------------------------------------------------------
Cypress Semiconductor Corp., 3.75% Cv. Bonds, 7/1/05 6,000,000 5,872,500
-------------------------------------------------------------------------------------------------
Lam Research Corp., 5% Cv. Sub. Nts., 9/1/02 3,000,000 4,076,250
-------------------------------------------------------------------------------------------------
LSI Logic Corp., 4% Cv. Unsec. Sub. Nts., 2/15/05 6,000,000 6,337,500
-------------------------------------------------------------------------------------------------
Sanmina Corp., 4.25% Cv. Unsec. Nts., 5/1/04 2,000,000 4,037,500
-------------------------------------------------------------------------------------------------
SCI Systems, Inc., 3% Cv. Sub. Nts., 3/15/07 5,000,000 4,900,000
-------------------------------------------------------------------------------------------------
Semtech Corp., 4.50% Cv. Sub. Nts., 2/1/07(1) 5,000,000 5,462,500
-------------------------------------------------------------------------------------------------
Solectron Corp., Zero Coupon Cv. Liquid Yield Option Nts.,
2.81%, 5/8/20(3) 16,000,000 10,160,000
-------------------------------------------------------------------------------------------------
Thermo Instrument Systems, Inc., 4% Cv. Gtd. Nts.,
Series RG, 1/15/05 11,999,999 10,365,000
-------------------------------------------------------------------------------------------------
Vitesse Semiconductor Corp., 4% Cv. Sub. Nts., 3/15/05(1) 9,000,000 8,347,500
------------
83,115,000
-------------------------------------------------------------------------------------------------
Utilities--0.9%
-------------------------------------------------------------------------------------------------
Electric Utilities--0.9%
AES Corp. (The), 4.50% Cv. Jr. Sub. Nts., 8/15/05 5,000,000 8,756,250
------------
Total Convertible Corporate Bonds and Notes (Cost $534,937,963) 556,459,091
Shares
=================================================================================================
Preferred Stocks--26.7%
-------------------------------------------------------------------------------------------------
Basic Materials--0.5%
-------------------------------------------------------------------------------------------------
Paper--0.5%
International Paper Capital Trust, 5.25% Cum. Cv., Non-Vtg.
(cv. into common stock of International Paper Co.) 140,000 5,267,500
12 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
Market Value
Shares See Note 1
-------------------------------------------------------------------------------------------------
Capital Goods--2.4%
-------------------------------------------------------------------------------------------------
Aerospace/Defense--0.4%
Coltec Capital Trust, 5.25% Cv. 100,000 $ 4,012,500
-------------------------------------------------------------------------------------------------
Industrial Services--0.4%
Sensormatic Electronics Corp.:
6.50% Cv.(1) 150,000 3,562,500
6.50% Cv., Non-Vtg. 25,000 593,750
------------
4,156,250
-------------------------------------------------------------------------------------------------
Manufacturing--1.6%
Ingersoll-Rand Co., 6.75% Cv., Non-Vtg. 250,000 5,093,750
-------------------------------------------------------------------------------------------------
Sealed Air Corp., $2.00 Cv., Series A 200,000 10,125,000
------------
15,218,750
-------------------------------------------------------------------------------------------------
Communication Services--5.2%
-------------------------------------------------------------------------------------------------
Telecommunications: Long Distance--1.9%
Global Crossing Ltd., 6.75% Cv. 35,000 7,717,500
-------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 7% Cv. 155,000 3,448,750
-------------------------------------------------------------------------------------------------
Qwest Trends Trust, 5.75% Cv.(1) 90,000 7,323,750
------------
18,490,000
-------------------------------------------------------------------------------------------------
Telecommunications: Wireless--1.0%
-------------------------------------------------------------------------------------------------
MediaOne Group, Inc.:
6.25% Cv. Premium Income Exchangeable Securities
(exchangeable for Vodafone Airtouch plc) 30,000 2,698,125
7% Cv. Premium Income Exchangeable Securities
(exchangeable for Vodafone Airtouch plc) 170,000 6,885,000
------------
9,583,125
-------------------------------------------------------------------------------------------------
Telephone Utilities--2.3%
Alliant Energy Resources, Inc., 7.25% Cv.(1) 100,000 6,975,000
-------------------------------------------------------------------------------------------------
BroadWing, Inc., 6.75% Cv., Series B 130,000 6,110,000
-------------------------------------------------------------------------------------------------
DECS Trust IV, 6.25% Cv. (exchangeable for common stock of
Metromedia Fiber Network, Inc., Cl. A) 80,000 5,490,000
-------------------------------------------------------------------------------------------------
Winstar Communications, Inc., 7% Cv. Cum., Series D, Non-Vtg. 70,000 3,955,000
------------
22,530,000
-------------------------------------------------------------------------------------------------
Consumer Cyclicals--3.1%
-------------------------------------------------------------------------------------------------
Consumer Services--1.3%
Cox Communications, Inc., 7% Cv. Preferred Redeemable Increased
Dividend Equity Securities, Non-Vtg. 160,000 9,830,000
-------------------------------------------------------------------------------------------------
XM Satellite Radio Holdings, Inc., 8.25% Cum. Cv., Series B 50,000 2,756,250
------------
12,586,250
-------------------------------------------------------------------------------------------------
Media--1.8%
Tribune Co., 2% Unsec. Exchangeable Nts., 5/15/29 (exchangeable
for shares of America Online, Inc.) 150,000 17,662,500
13 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
STATEMENT OF INVESTMENTS Unaudited / Continued
Market Value
Shares See Note 1
-------------------------------------------------------------------------------------------------
Consumer Staples--3.8%
-------------------------------------------------------------------------------------------------
Entertainment--0.9%
Seagram Co. Ltd. (The), 7.50% Automatic Common Exchangeable
Securities 160,000 $ 8,600,000
-------------------------------------------------------------------------------------------------
Food--0.6%
Suiza Capital Trust II/Suiza Foods Corp., 5.50% Cv. Cum., Non-Vtg. 150,000 5,700,000
-------------------------------------------------------------------------------------------------
Food & Drug Retailers--1.2%
CVS Corp. Automatic Common Exchange Security Trust,
6% Cv. Trust Automatic Common Exchange Securities 70,000 4,956,875
-------------------------------------------------------------------------------------------------
IFT Financial Group, Inc., 6.50% Cum. Cv. 160,000 7,140,000
------------
12,096,875
-------------------------------------------------------------------------------------------------
Household Goods--1.1%
Estee Lauder Automatic Common Exchange Security Trust II,
$6.25 Cv. Trust Automatic Common Exchange Securities, Non-Vtg.
(exchangeable for common stock of Estee Lauder Cos., Cl. A) 60,000 5,407,500
-------------------------------------------------------------------------------------------------
Newell Financial Trust I, 5.25% Cv. Quarterly Income Preferred
Securities, Non-Vtg. 150,000 5,643,750
------------
11,051,250
-------------------------------------------------------------------------------------------------
Energy--1.5%
-------------------------------------------------------------------------------------------------
Energy Services--0.5%
Weatherford International, Inc., 5% Cv. 100,000 4,537,500
-------------------------------------------------------------------------------------------------
Oil: Domestic--1.0%
Apache Corp., 6.50% Cv. Automatic Common Exchange Securities 100,000 5,175,000
-------------------------------------------------------------------------------------------------
Kerr-McGee Corp., 5.50% Cv. Unsec. Debt Exchangeable for Common
Stock, 8/2/04 100,000 4,975,000
------------
10,150,000
-------------------------------------------------------------------------------------------------
Financial--6.5%
-------------------------------------------------------------------------------------------------
Banks--0.9%
National Australia Bank Ltd., ExCaps (each ExCap consists of $25 principal
amount of 7.875% Perpetual Capital Security and a purchase contract
entitling the holder to exchange ExCaps for ordinary shares)(4) 297,900 8,434,294
-------------------------------------------------------------------------------------------------
Diversified Financial--1.1%
Lehman Brothers Holdings, Inc., 5% Cum. Cv., Series B 150,000 5,306,250
-------------------------------------------------------------------------------------------------
Wendy's Financing I, $2.50 Term Convertible Securities, Series A,
9/15/26 (cv. into common stock of Wendy's International, Inc.) 100,000 4,500,000
------------
9,806,250
-------------------------------------------------------------------------------------------------
Insurance--1.8%
ACE Ltd., 8.25% Cv. Preferred Redeemable Increased Dividend Equity
Securities, Non-Vtg. 110,000 6,881,875
-------------------------------------------------------------------------------------------------
MetLife Capital Trust I, 8% Cv.(5) 150,000 10,378,125
------------
17,260,000
-------------------------------------------------------------------------------------------------
Real Estate Investment Trusts--2.2%
Equity Residential Properties Trust, 7.25% Cv., Series G 325,000 7,312,500
14 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
Market Value
Shares See Note 1
-------------------------------------------------------------------------------------------------
Real Estate Investment Trusts Continued
General Growth Properties, Inc., 7.25% Cv. Preferred Income Equity
Redeemable Stock 300,000 $ 6,525,000
-------------------------------------------------------------------------------------------------
Vornado Realty Trust, 6.50% Cv., Series A 150,000 7,771,875
------------
21,609,375
-------------------------------------------------------------------------------------------------
Savings & Loans--0.5%
Sovereign Capital Trust II, 7.50% Cv. Preferred Income Equity Redeemable
Stock, Units (each unit consists of one preferred plus one warrant to
purchase 5.3355 shares of Sovereign Bancorp common stock)(4) 100,000 4,900,000
-------------------------------------------------------------------------------------------------
Healthcare--1.5%
-------------------------------------------------------------------------------------------------
Healthcare/Drugs--1.5%
Biovail Corp., 6.75% Cv. 100,000 5,412,500
-------------------------------------------------------------------------------------------------
Monsanto Co., 6.50% Cv. Adjustable Conversion-rate Equity Security 200,000 9,050,000
------------
14,462,500
-------------------------------------------------------------------------------------------------
Transportation--0.8%
-------------------------------------------------------------------------------------------------
Railroads & Truckers--0.8%
Union Pacific Capital Trust, 6.25% Cum. Term Income Deferrable Equity
Securities, Non-Vtg. 200,000 7,725,000
-------------------------------------------------------------------------------------------------
Utilities--1.4%
-------------------------------------------------------------------------------------------------
Electric Utilities--0.4%
Calpine Capital Trust II, 5.50% Cv.(1) 60,000 4,297,500
-------------------------------------------------------------------------------------------------
Gas Utilities--1.0%
-------------------------------------------------------------------------------------------------
El Paso Energy Corp. Capital Trust I, 4.75% Cv. 150,000 9,656,250
------------
Total Preferred Stocks (Cost $246,664,392) 259,793,669
=================================================================================================
Common Stocks--1.7%
American Home Products Corp. 40,080 2,354,700
-------------------------------------------------------------------------------------------------
Citigroup, Inc. 100,000 6,025,000
-------------------------------------------------------------------------------------------------
Danskin, Inc.(5,6) 2,990,710 1,241,144
-------------------------------------------------------------------------------------------------
Danskin, Inc. Restricted Common Shares(2,5,6) 2,015,119 519,901
-------------------------------------------------------------------------------------------------
Hudson Hotels Corp.(2,5,6) 1,666,667 1,406,250
-------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.(5) 2,033 60,482
-------------------------------------------------------------------------------------------------
Learn2.com, Inc.(2,5) 35,704 70,292
-------------------------------------------------------------------------------------------------
News Corp. Ltd. (The), Sponsored ADR, Preference 110,000 5,225,000
-------------------------------------------------------------------------------------------------
Sensormatic Electronics Corp.(5) 4,348 68,753
------------
Total Common Stocks (Cost $14,297,878) 16,971,522
Units
=================================================================================================
Rights, Warrants and Certificates--0.0%
Cash Invested in a Portion of Danskin, Inc.'s $3 Million Promissory
Nts., to be used to purchase 53,3090 restricted common shares in rights
offering(2,6) 53,309 15,993
-------------------------------------------------------------------------------------------------
Danskin, Inc. Wts., Exp. 10/8/04(2,6) 367,801 14,712
-------------------------------------------------------------------------------------------------
Submicron Systems Corp. Wts., Exp. 1/15/01(2) 27,000 --
------------
Total Rights, Warrants and Certificates (Cost $15,993) 30,705
15 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
STATEMENT OF INVESTMENTS Unaudited / Continued
Principal Market Value
Amount See Note 1
=================================================================================================
Structured Instruments--4.3%
-------------------------------------------------------------------------------------------------
Bank of America NA, Lucent Market Indexed Deposits, 6%, 2/9/02 $ 10,000,000 $ 10,411,670
-------------------------------------------------------------------------------------------------
Deutsche Bank AG/AT&T Corp. Linked Nts., 3.10%, 11/5/02(2) 8,000,000 9,180,000
-------------------------------------------------------------------------------------------------
J.P. Morgan & Co., Inc. Mandatory Exchangeable Debt Securities,
5%, 7/21/00 (exchangeable into Ethan Allen common stock) 14,060,000 5,140,336
-------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 0.25% Ten Uncommon Values Index
Linked Nts., 7/8/03 8,000,000 8,060,000
-------------------------------------------------------------------------------------------------
NationsBank NA/The Boeing Co. BA Enhanced Yield Equity-
Linked Certificates of Deposits, 5%, 7/15/00 10,000,000 8,716,930
------------
Total Structured Instruments (Cost $43,000,053) 41,508,936
=================================================================================================
Repurchase Agreements--10.5%
Repurchase agreement with Deutsche Bank Securities Inc., 6.55%,
dated 6/30/00, to be repurchased at $102,283,799 on 7/3/00,
collateralized by U.S. Treasury Bonds, 6%-8.50%, 2/15/20-2/15/26,
with a value of $104,518,966 (Cost $102,228,000) 102,228,000 102,228,000
-------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $941,144,279) 100.4% 976,991,923
-------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Liabilities (0.4) (3,529,291)
--------------------------
Net Assets 100.0% $973,462,632
==========================
</TABLE>
Footnotes to Statement of Investments
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 $263,432,500 or 27.06% of the Fund's net
assets as of June 30, 2000.
2. Identifies issues considered to be illiquid or restricted--See Note 6 of
Notes to Financial Statements.
3. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
4. 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, principal amount disclosed represents total
underlying principal.
5. Non-income-producing security.
6. 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, 2000. The
aggregate fair value of securities of affiliated companies held by the Fund as
of June 30, 2000 amounts to $3,198,000. Transactions during the period in which
the issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
Shares Gross Gross Shares
December 31, 1999 Additions Reductions June 30, 2000
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Danskin, Inc. 3,408,210 -- 417,500 2,990,710
-------------------------------------------------------------------------------------------------
Danskin, Inc., Restricted
Common Shares 289,251 1,725,868 -- 2,015,119
-------------------------------------------------------------------------------------------------
Danskin, Inc., $88.2722 Cv., Series D
(cv. into 1,471,203 restricted
common shares) 88 -- 88 --
-------------------------------------------------------------------------------------------------
Danskin, Inc. Wts., Exp. 10/8/04 367,801 -- -- 367,801
-------------------------------------------------------------------------------------------------
Portion of Danskin, Inc. Promissory Nt.,
to be used to purchase 53,309 shares of
restricted common stock in rights offering -- -- -- --
------------------------------------------------------------------------------------------------
Hudson Hotels Corp. -- 1,666,667 -- 1,666,667
</TABLE>
See accompanying Notes to Financial Statements.
16 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES Unaudited
<TABLE>
<CAPTION>
June 30, 2000
=================================================================================================
<S> <C>
Assets
Investments, at value (including repurchase agreements of $102,228,000)--
see accompanying statement:
Unaffiliated companies (cost $934,981,391) $ 973,793,923
Affiliated companies (cost $6,162,888) 3,198,000
-------------------------------------------------------------------------------------------------
Cash 1,965,959
-------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest and dividends 7,772,185
Investments sold 5,006,855
Shares of beneficial interest sold 2,558,779
Other 56,799
------------
Total assets 994,352,500
=================================================================================================
Liabilities
Payables and other liabilities:
Investments purchased 14,880,674
Dividends 2,941,628
Shares of beneficial interest redeemed 1,726,005
Distribution and service plan fees 672,713
Transfer and shareholder servicing agent fees 144,344
Trustees' compensation 86,263
Other 438,237
------------
Total liabilities 20,889,864
=================================================================================================
Net Assets $973,462,636
============
=================================================================================================
Composition of Net Assets
Paid-in capital $ 840,983,676
-------------------------------------------------------------------------------------------------
Undistributed net investment income 1,715,740
-------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 94,915,576
-------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 35,847,644
------------
Net Assets $973,462,636
============
</TABLE>
17 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES Unaudited / Continued
<TABLE>
=================================================================================================
<S> <C>
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$230,764,682 and 13,921,714 shares of beneficial interest outstanding) $16.58
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering price) $17.59
-------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $427,898,862
and 25,776,187 shares of beneficial interest outstanding) $16.60
-------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $98,482,993
and 5,944,589 shares of beneficial interest outstanding) $16.57
-------------------------------------------------------------------------------------------------
Class M Shares:
Net asset value, redemption price and offering price per share (based
on net assets of $216,316,099 and 13,057,038 shares of beneficial
interest outstanding) $16.57
Maximum offering price per share (net asset value plus
sales charge of 3.25% of offering price) $17.13
</TABLE>
See accompanying Notes to Financial Statements.
18 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
STATEMENT OF OPERATIONS Unaudited
<TABLE>
<CAPTION>
For the Six Months Ended June 30, 2000
==================================================================================
<S> <C>
Investment Income
Interest $ 18,376,927
----------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $13,781) 7,561,159
------------
Total income 25,938,086
==================================================================================
Expenses
Management fees 2,243,841
----------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 280,884
Class B 2,126,393
Class C 476,305
Class M 838,781
----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 133,328
Class B 280,871
Class C 60,912
Class M 138,123
----------------------------------------------------------------------------------
Accounting service fee 146,836
----------------------------------------------------------------------------------
Custodian fees and expenses 32,781
----------------------------------------------------------------------------------
Trustees' compensation 20,071
----------------------------------------------------------------------------------
Other 277,252
------------
Total expenses 7,056,378
Less expenses paid indirectly (26,297)
------------
Net expenses 7,030,081
==================================================================================
Net Investment Income 18,908,005
==================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain on:
Investments:
Unaffiliated companies (including premiums on options exercised) 96,414,397
Affiliated companies (326,440)
Closing and expiration of option contracts written 401,387
------------
Net realized gain 96,489,344
----------------------------------------------------------------------------------
Net change in unrealized depreciation on investments (83,905,896)
------------
Net realized and unrealized gain 12,583,448
==================================================================================
Net Increase in Net Assets Resulting from Operations $ 31,491,453
============
</TABLE>
See accompanying Notes to Financial Statements.
19 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
June 30, 2000 December 31,
(Unaudited) 1999
==================================================================================
<S> <C> <C>
Operations
Net investment income $ 18,908,005 $ 38,292,215
----------------------------------------------------------------------------------
Net realized gain 96,489,344 70,071,773
----------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (83,905,896) 86,533,925
---------------------------
Net increase in net assets resulting from operations 31,491,453 194,897,913
==================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Class A (5,031,675) (9,741,207)
Class B (7,700,359) (15,529,379)
Class C (1,728,466) (3,532,239)
Class M (4,334,157) (9,489,390)
-----------------------------------------------------------------------------------
Distributions from net realized gain:
Class A -- (14,347,902)
Class B -- (28,098,374)
Class C -- (6,147,578)
Class M -- (15,305,909)
==================================================================================
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A 7,393,864 (21,379,419)
Class B (9,106,206) (54,697,711)
Class C 2,825,552 (23,083,766)
Class M (20,763,803) (52,420,296)
==================================================================================
Net Assets
Total decrease (6,953,797) (58,875,257)
----------------------------------------------------------------------------------
Beginning of period 980,416,433 1,039,291,690
---------------------------
End of period (including undistributed net investment
income of $1,715,740 and $1,602,392, respectively) $973,462,636 $ 980,416,433
===========================
</TABLE>
See accompanying Notes to Financial Statements.
20 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
June 30, 2000 Dec. 31,
Class A (Unaudited) 1999 1998 1997 1996(1) 1995(2)
========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $16.36 $14.84 $15.32 $14.27 $13.96 $13.11
-------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .37 .70 .70 .71(3) .73(3) .54(3)
Net realized and unrealized gain (loss) .22 2.66 (.08) 1.93(3) .65(3) 1.48(3)
--------------------------------------------------------
Total income from investment operations .59 3.36 .62 2.64 1.38 2.02
-------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.37) (.70) (.70) (.72) (.72) (.68)
Distributions from net realized gain -- (1.14) (.40) (.87) (.35) (.49)
--------------------------------------------------------
Total dividends and/or distributions
to shareholders (.37) (1.84) (1.10) (1.59) (1.07) (1.17)
-------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.58 $16.36 $14.84 $15.32 $14.27 $13.96
========================================================
=======================================================================================================
Total Return, at Net Asset Value(4) 3.57% 23.37% 4.08% 18.77% 10.13% 15.54%
=======================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $230,765 $220,671 $221,693 $192,212 $93,578 $2,502
-------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $225,987 $207,008 $220,423 $145,929 $41,617 $1,799
-------------------------------------------------------------------------------------------------------
Ratios to average net assets:(5)
Net investment income 4.42% 4.55% 4.55% 4.58% 5.11% 5.63%
Expenses 0.92% 0.95% 0.93%(6) 0.95%(6) 0.98%(6) 1.05%(6)
Expenses, net of interest(7) N/A N/A 0.93%(6) 0.95%(6) 0.97%(6) 1.01%(6)
-------------------------------------------------------------------------------------------------------
Portfolio turnover rate 76% 95% 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.
6. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
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.
See accompanying Notes to Financial Statements.
21 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
FINANCIAL HIGHLIGHTS Continued
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
June 30, 2000 Dec. 31,
Class B (Unaudited) 1999 1998 1997 1996(1) 1995(2)
========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $16.38 $14.87 $15.35 $14.29 $13.98 $13.11
-------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .31 .59 .58 .59(3) .62(3) .45(3)
Net realized and unrealized gain (loss) .21 2.65 (.08) 1.94(3) .65(3) 1.51(3)
--------------------------------------------------------
Total income from investment operations .52 3.24 .50 2.53 1.27 1.96
-------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.30) (.59) (.58) (.60) (.61) (.60)
Distributions from net realized gain -- (1.14) (.40) (.87) (.35) (.49)
--------------------------------------------------------
Total dividends and/or distributions
to shareholders (.30) (1.73) (.98) (1.47) (.96) (1.09)
-------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.60 $16.38 $14.87 $15.35 $14.29 $13.98
========================================================
=======================================================================================================
Total Return, at Net Asset Value(4) 3.18% 22.35% 3.30% 17.93% 9.28% 15.09%
=======================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $427,899 $431,370 $445,544 $383,755 $211,176 $34,465
-------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $427,577 $414,611 $441,677 $296,426 $113,784 $15,184
-------------------------------------------------------------------------------------------------------
Ratios to average net assets:(5)
Net investment income 3.66% 3.79% 3.79% 3.80% 4.31% 4.82%
Expenses 1.68% 1.71% 1.69%(6) 1.72%(6) 1.75%(6) 1.69%(6)
Expenses, net of interest(7) N/A N/A 1.69%(6) 1.72%(6) 1.75%(6) 1.64%(6)
-------------------------------------------------------------------------------------------------------
Portfolio turnover rate 76% 95% 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.
6. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
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.
See accompanying Notes to Financial Statements.
22 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
June 30, 2000 Dec. 31,
Class C (Unaudited) 1999 1998 1997 1996(1,2)
================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $16.35 $14.84 $15.32 $14.27 $14.03
------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .30 .59 .58 .59(3) .50(3)
Net realized and unrealized gain (loss) .22 2.65 (.08) 1.93(3) .59(3)
-------------------------------------------------
Total income from investment operations .52 3.24 .50 2.52 1.09
------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.30) (.59) (.58) (.60) (.50)
Distributions from net realized gain -- (1.14) (.40) (.87) (.35)
-------------------------------------------------
Total dividends and/or distributions
to shareholders (.30) (1.73) (.98) (1.47) (.85)
------------------------------------------------------------------------------------------------
Net asset value, end of period $16.57 $16.35 $14.84 $15.32 $14.27
=================================================
================================================================================================
Total Return, at Net Asset Value(4) 3.18% 22.41% 3.32% 17.88% 7.74%
================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $98,483 $94,352 $108,339 $85,397 $38,312
------------------------------------------------------------------------------------------------
Average net assets (in thousands) $95,803 $94,329 $105,974 $62,343 $18,550
------------------------------------------------------------------------------------------------
Ratios to average net assets:(5)
Net investment income 3.66% 3.80% 3.81% 3.82% 4.32%
Expenses 1.68% 1.70% 1.68%(6) 1.70%(6) 1.68%(6)
Expenses, net of interest(7) N/A N/A 1.68%(6) 1.70%(6) 1.67%(6)
----------------------------------------------------------------------------------------------
Portfolio turnover rate 76% 95% 90% 79% 53%
</TABLE>
1. On January 4, 1996, OppenheimerFunds, Inc. became the investment advisor to
the Fund.
2. For the period from March 11, 1996 (inception of offering) to December 31,
1996.
3. 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.
6. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
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.
See accompanying Notes to Financial Statements.
23 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
FINANCIAL HIGHLIGHTS Continued
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
June 30, 2000 Dec. 31,
Class M (Unaudited) 1999 1998 1997 1996(1) 1995
========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $16.35 $14.84 $15.32 $14.27 $13.96 $12.20
-------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .36 .63 .62 .62(2) .65(2) .70(2)
Net realized and unrealized gain (loss) .19 2.65 (.08) 1.94(2) .66(2) 2.42(2)
--------------------------------------------------------
Total income from investment operations .55 3.28 .54 2.56 1.31 3.12
-------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.33) (.63) (.62) (.64) (.65) (.87)
Distributions from net realized gain -- (1.14) (.40) (.87) (.35) (.49)
--------------------------------------------------------
Total dividends and/or distributions
to shareholders (.33) (1.77) (1.02) (1.51) (1.00) (1.36)
-------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.57 $16.35 $14.84 $15.32 $14.27 $13.96
========================================================
=======================================================================================================
Total Return, at Net Asset Value(3) 3.31% 22.74% 3.58% 18.19% 9.58% 26.00%
=======================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $216,316 $234,023 $263,716 $297,292 $274,043 $239,341
-------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $224,797 $235,419 $288,953 $285,621 $264,936 $181,719
-------------------------------------------------------------------------------------------------------
Ratios to average net assets:(4)
Net investment income 3.91% 4.06% 4.02% 4.05% 4.59% 5.12%
Expenses 1.43% 1.45% 1.43%(5) 1.46%(5) 1.58%(5) 1.58%(5)
Expenses, net of interest(6) N/A N/A 1.43%(5) 1.46%(5) 1.55%(5) 1.56%(5)
-------------------------------------------------------------------------------------------------------
Portfolio turnover rate 76% 95% 90% 79% 53% 58%
</TABLE>
1. On January 4, 1996, OppenheimerFunds, Inc. became the investment advisor to
the Fund.
2. Per share information has been determined based on average shares outstanding
for the period.
3. 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.
4. Annualized for periods of less than one full year.
5. Expense ratio has not been grossed up to reflect the effect of expenses paid
indirectly.
6. 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.
See accompanying Notes to Financial Statements.
24 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Unaudited
================================================================================
1. Significant Accounting Policies
Oppenheimer Convertible Securities Fund (the Fund), a portfolio of the Bond Fund
Series, is registered under the Investment Company Act of 1940, as amended,
as an 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 at their offering price, which is normally net asset value plus a
front-end sales charge. Class B and Class C shares are sold without a front-end
sales charge but may be subject to a contingent deferred sales charge (CDSC).
Class M shares are sold with a reduced front-end sales charge. All classes of
shares have identical rights to earnings, assets and voting privileges, except
that each class has its own expenses directly attributable to that class and
exclusive voting rights with respect to matters affecting that class. Classes
A, B, C and M have separate distribution and/or service plans. 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. Securities listed or traded on National Stock Exchanges
or other domestic or foreign exchanges are valued based on the last sale price
of the security traded on that exchange prior to the time when the Fund's
assets are valued. In the absence of a sale, the security is valued at the last
sale price on the prior trading day, if it is within the spread of the closing
bid and asked prices, and if not, at the closing bid price. Securities
(including restricted securities) for which quotations are not readily
available are valued primarily using dealer-supplied valuations, a portfolio
pricing service authorized by the Board of Trustees, or at their fair value.
Fair value is determined in good faith under consistently applied procedures
under the supervision of the Board of Trustees. Short-term "money market type"
debt securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).
--------------------------------------------------------------------------------
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.
25 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
================================================================================
1. Significant Accounting Policies Continued
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, 1999, the remaining accrued
tax liability for net unrealized gains on investments at the time of the
acquisition was $531,724.
--------------------------------------------------------------------------------
Trustees' Compensation. The Fund has adopted an unfunded retirement plan for
the Fund's independent Board of 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, 2000, a provision of $2,785 was made for the Fund's
projected benefit obligations, resulting in an accumulated liability of $79,593
as of June 30, 2000.
The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or
a portion of annual compensation they are entitled to receive from the Fund.
Under the plan, the compensation deferred is periodically adjusted as though an
equivalent amount had been invested for the Board of Trustees in shares of one
or more Oppenheimer funds selected by the trustee. The amount paid to the Board
of Trustees under the plan will be determined based upon the performance of the
selected funds. Deferral of trustees' fees under the plan will not affect the
net assets of the Fund, and will not materially affect the Fund's assets,
liabilities or net investment income per share.
--------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
26 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
--------------------------------------------------------------------------------
Classification of Dividends and Distributions to Shareholders. Net investment
income (loss) and net realized gain (loss) may differ for financial statement
and tax purposes. The character of dividends and distributions made during the
fiscal 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 dividends and 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. Certain dividends from foreign
securities will be recorded as soon as the Fund is informed of the dividend if
such information is obtained subsequent to the ex-dividend date. Realized gains
and losses on investments and unrealized appreciation and depreciation are
determined on an identified cost basis, which is the same basis used for
federal income tax purposes.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
27 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Six Months Ended June 30, 2000 Year Ended December 31, 1999
Shares Amount Shares Amount
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Sold 2,515,699 $ 42,002,318 1,839,242 $ 28,451,586
Dividends and/or
distributions reinvested 243,065 4,092,180 1,245,687 19,795,587
Redeemed (2,327,126) (38,700,634) (4,530,563) (69,626,592)
---------------------------------------------------------
Net increase (decrease) 431,638 $ 7,393,864 (1,445,634) $(21,379,419)
=========================================================
------------------------------------------------------------------------------------------
Class B
Sold 1,827,494 $ 30,326,878 2,027,260 $ 31,242,213
Dividends and/or
distributions reinvested 334,924 5,656,630 2,239,180 35,741,741
Redeemed (2,715,702) (45,089,714) (7,908,649) (121,681,665)
---------------------------------------------------------
Net decrease (553,284) $ (9,106,206) (3,642,209) $(54,697,711)
=========================================================
------------------------------------------------------------------------------------------
Class C
Sold 805,644 $ 13,290,653 666,790 $ 10,271,657
Dividends and/or
distributions reinvested 73,825 1,244,491 499,994 7,958,464
Redeemed (706,020) (11,709,592) (2,698,276) (41,313,887)
---------------------------------------------------------
Net increase (decrease) 173,449 $ 2,825,552 (1,531,492) $(23,083,766)
=========================================================
------------------------------------------------------------------------------------------
Class M
Sold 195,809 $ 3,235,784 253,587 $ 3,881,769
Dividends and/or
distributions reinvested 186,080 3,136,609 1,228,639 19,534,574
Redeemed (1,638,231) (27,136,196) (4,938,225) (75,836,639)
---------------------------------------------------------
Net decrease (1,256,342) $(20,763,803) (3,455,999) $(52,420,296)
=========================================================
</TABLE>
================================================================================
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the six months ended June 30, 2000, were
$670,472,565 and $706,255,263, respectively.
--------------------------------------------------------------------------------
4. 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 average net assets of the Fund, 0.50% of the
next $250 million and 0.4375% of average annual net assets over $300 million.
The Fund's management fee for six months ended June 30, 2000 was an annualized
rate of 0.46%, before any waiver by the Manager if applicable.
28 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
--------------------------------------------------------------------------------
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, acts as the transfer and shareholder servicing agent for the Fund and
for other Oppenheimer funds. The Fund pays an annual maintenance fee for each
Fund shareholder account and reimburses OFS for its out-of-pocket expenses.
During the six months ended ended June 30, 2000, the Fund paid OFS $644,324.
--------------------------------------------------------------------------------
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 Class A Commissions Commissions Commissions Aggregate Class M
Front-End Front-End on Class A on Class B on Class C Front-End Front-End
Six Sales Charges Sales Charges Shares Shares Shares Sales Charges Sales Charges
Months on Class A Retained by Advanced by Advanced by Advanced by on Class M Retained by
Ended Shares Distributor Distributor(1) Distributor(1) Distributor(1) Shares Distributor
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
June 30, 2000 $306,222 $88,180 $34,460 $831,219 $101,949 $57,950 $8,672
</TABLE>
1. The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B, Class C and Class M shares from its
own resources at the time of sale.
<TABLE>
<CAPTION>
Class A Class B Class C Class M
Six Contingent Deferred Contingent Deferred Contingent Deferred Contingent Deferred
Months Sales Charges Sales Charges Sales Charges Sales Charges
Ended Retained by Distributor Retained by Distributor Retained by Distributor Retained by Distributor
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
June 30, 2000 $4,099 $653,677 $5,647 $--
</TABLE>
The Fund has adopted a Service Plan for Class A shares and Distribution and
Service Plans for Class B and Class C 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.
--------------------------------------------------------------------------------
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 purchased. 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, 2000, payments under the Class A plan totaled $280,884, all of which were
paid by the Distributor to recipients, and included $25,165 paid to an
affiliate of the Manager. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years.
29 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
================================================================================
4. Fees and Other Transactions with Affiliates Continued
Class B, Class C and Class M 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, Class C and Class M
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 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, Class C and Class M
shares may be more than the payments it receives from the contingent deferred
sales charges collected on redeemed shares and asset-based sales charges from
the Fund under the plans. If any 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.
Distribution fees paid to the Distributor for the six months ended June 30,
2000, were as follows:
<TABLE>
<CAPTION>
Distributor's Distributor's
Aggregate Unreimbursed
Unreimbursed Expenses as %
Total Payments Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Plan $2,126,393 $1,778,809 $8,503,564 1.99%
Class C Plan 476,305 35,027 1,344,553 1.37
Class M Plan 838,781 286,581 -- --
</TABLE>
30 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
================================================================================
5. Option Activity
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a
written put option, or the cost of the security for a purchased put or call
option is adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a note
to the Statement of Investments. Options written are reported as a liability in
the Statement of Assets and Liabilities. Realized 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, 2000 was as follows:
<TABLE>
<CAPTION>
Call Options
-------------------------
Number of Amount of
Options Premiums
-----------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding as of
December 31, 1999 1,900 $ 871,787
Options written 1,400 470,400
Options closed or expired (1,900) (871,787)
Options exercised (1,400) (470,400)
-------------------------
Options outstanding as of
June 30, 2000 -- $ --
=========================
</TABLE>
31 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
================================================================================
6. Illiquid or Restricted Securities
As of June 30, 2000, 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, 2000 was
$15,297,864, which represents 1.57% of the Fund's net assets, of which
$11,207,148 is considered restricted. Information concerning restricted
securities is as follows:
<TABLE>
<CAPTION>
Valuation
Per Unit as of
Security Acquisition Date Cost Per Unit June 30, 2000
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bonds
Deutsche Bank AG/AT&T Linked Nts., 10/29/97 100.00% 114.75%
3.10%, 11/5/02
Stocks and Warrants
Danskin, Inc.:
Portion of Promissary Note to be used to
purchase 53,309 shares of restricted common
stock in rights offering 8/14/95 $0.30 $0.30
Restricted Common Shares 8/14/95 0.30 0.26
Wts., Exp. 10/8/04 8/14/95 -- 0.04
------------------------------------------------------------------------------------------------
Hudson Hotels Corp. 4/14/00 1.19 0.84
------------------------------------------------------------------------------------------------
Learn2.com, Inc. 5/5/98 -- 1.97
------------------------------------------------------------------------------------------------
Submicron Systems Corp. Wts.,
Exp. 1/15/01 12/11/98 -- 0.01
</TABLE>
================================================================================
7. Bank Borrowings
The Fund may borrow up to a certain percentage 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 certain
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 0.09% per
annum.
The Fund had no borrowings outstanding for the six months ended
June 30, 2000.
32 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
OPPENHEIMER CONVERTIBLE SECURITIES FUND
<TABLE>
<CAPTION>
A Series of Bond Fund Series
==========================================================================================
<S> <C>
Officers and Trustees Bridget A. Macaskill, Trustee, President and
Chairman of the Board
John Cannon, Trustee
Paul Y. Clinton, Trustee
Thomas W. Courtney, Trustee
Robert G. Galli, Trustee
Lacy B. Herrmann, Trustee
George Loft, Trustee
Edward Everett, Vice President
Michael S. Rosen, Vice President
Andrew J. Donohue, Secretary
Brian W. Wixted, Treasurer
Robert J. Bishop, Assistant Treasurer
Adele A. Campbell, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
==========================================================================================
Investment Advisor OppenheimerFunds, Inc.
==========================================================================================
Distributor OppenheimerFunds Distributor, Inc.
==========================================================================================
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
==========================================================================================
Custodian of The Bank of New York
Portfolio Securities
==========================================================================================
Independent Auditors KPMG LLP
==========================================================================================
Legal Counsel Mayer, Brown & Platt
The financial statements included herein have been
taken from the records of the Fund without
examination of those records by the independent auditors.
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.
Oppenheimer funds are distributed by OppenheimerFunds
Distributor, Inc. Two World Trade Center, New York, NY 10048-0203
(C)Copyright 2000 OppenheimerFunds, Inc. All rights reserved.
</TABLE>
33 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
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(1)
www.oppenheimerfunds.com
--------------------------------------------------------------------------------
General Information
Mon-Fri 8am-9pm ET, Sat 10am-4pm ET
1.800.525.7048
--------------------------------------------------------------------------------
Telephone Transactions
Mon-Fri 8am-9pm ET, Sat 10am-4pm ET
1.800.852.8457
--------------------------------------------------------------------------------
PhoneLink
24-hr automated information and automated transactions
1.800.533.3310
--------------------------------------------------------------------------------
Telecommunications Device for the Deaf (TDD)
Mon-Fri 9am-6:30pm ET
1.800.843.4461
--------------------------------------------------------------------------------
OppenheimerFunds Market Hotline
24 hours a day, timely and insightful messages on the
economy and issues that may affect your investments
1.800.835.3104
--------------------------------------------------------------------------------
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270, Denver, CO 80217-5270
--------------------------------------------------------------------------------
Ticker Symbols
Class A: RCVAX Class B: RCVBX Class C: RCVCX Class Y: RCVGX
--------------------------------------------------------------------------------
1. At times this website may be inaccessible or its transaction feature may
be unavailable.
[LOGO] OppenheimerFunds (R)
Distributor, Inc.
RS0345.001.0600 August 29, 2000
