<PAGE>
[GRAPHIC]
Annual Report December 31, 1999
Oppenheimer
Convertible Securities Fund
[LOGO] OppenheimerFunds(R)
The Right Way to Invest
<PAGE>
REPORT HIGHLIGHTS
The Fund performed well during the year, particularly relative to the broad
equity and fixed income markets, which both suffered setbacks late in the second
quarter and early in the third quarter.
Technology, telecommunications and energy largely drove the favorable
performance of the Fund.
CONTENTS
1 President's Letter
4 An Interview with Your Fund's Manager
8 Fund Performance
14 Financial Statements
41 Report of Independent Accountants
42 Federal Income Tax Information
43 Officers and Trustees
44 OppenheimerFunds Family
- -----------------------------
Average Annual
Total Returns*
For the 1-Year Period
Ended 12/31/99
Class A
Without With
Sales Chg. Sales Chg.
- -----------------------------
23.37% 16.28%
Class B
Without With
Sales Chg. Sales Chg.
- -----------------------------
22.35% 17.35%
Class C
Without With
Sales Chg. Sales Chg.
- -----------------------------
22.41% 21.41%
Class M
Without With
Sales Chg. Sales Chg.
- -----------------------------
22.74% 18.75%
- -----------------------------
- -------------------
Not FDIC Insured.
No Bank Guarantee.
May Lose Value.
- -------------------
*See page 12 for further details.
<PAGE>
PRESIDENT'S LETTER
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
Convertible
Securities Fund
Dear shareholder,
Whenever a new year begins-let alone a new decade or century-it makes sense
to pause a moment to assess where we've been and where we're going.
In retrospect, U.S. stocks and bonds in 1999 were subject to sudden and
substantial swings in investor sentiment because of economic uncertainty. When
the year began, investors were concerned that growth in the United States might
slow in response to economic weakness overseas. At mid-year, investors were
concerned that the economy was too strong, potentially rekindling inflationary
pressures. Yet, by year end, it became clearer that while the U.S. economy
grew robustly in 1999, inflation remained at low levels. Indeed, investors
appeared more comfortable with the economy after the Federal Reserve Board
demonstrated its inflation-fighting resolve by raising interest rates three
times between June and November.
As is normal in a rising-interest-rate environment, bond prices generally
declined in 1999, led lower by U.S. Treasury bonds. In the stock market, while
most major indices advanced, strong performance was mostly limited to a handful
of capitalization growth companies, principally in the technology arena. Smaller
and value-oriented stocks provided particularly lackluster returns, and overall,
foreign stocks outperformed U.S. stocks in 1999.
Looking forward, we expect the U.S. economy to remain on a
moderate-growth, low-inflation course. As recent revisions of 1999's economic
statistics demonstrated, the economy has
1 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
PRESIDENT'S LETTER
defied many analysts' forecasts by growing at a strong rate, which should be
positive for the bond market. Similarly, positive economic forces could help
the stock market's performance broaden to include value-oriented and smaller
stocks.
We see particularly compelling opportunities outside of the U.S. market.
Many foreign stocks also ended 1999 more attractively valued than large-cap
U.S. stocks, and economic trends in overseas markets could lead to higher stock
prices. In Europe, corporate restructuring has just begun, giving companies
there the same potential for cost-cutting and productivity improvements that
U.S. companies enjoyed ten years ago. In Japan and Asia, economic recovery is
expected to gain strength, which could allow stocks to rally from relatively low
levels.
Another 1999 trend that should remain in force in 2000 is the growth of
businesses related to the Internet. The rise of e-commerce has been good for
consumers and the economy because of greater price competition, which has helped
keep inflation under control. The Internet has also been good for investors, as
even companies with no earnings have seen their stock prices soar. Clearly,
while the Internet is here to stay, not all "dot-com" companies will survive,
and many of these high-flying Internet stocks will eventually -- and perhaps
very
2 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
suddenly-return to more reasonable levels. The long-term winners are most likely
to be companies that support the Internet's growth with content or
infrastructure.
What else is in store for investors in 2000? While we do not have an
infallible crystal ball, we believe that in almost any investment
environment, consistent success stems from an unwavering focus on fundamental
investment principles such as maintaining a long-term perspective, using
diversification to manage risks, and availing oneself of the services of a
knowledgeable financial advisor. Indeed, these principles serve as the
foundation for every investment we offer, helping to make OppenheimerFunds The
Right Way to Invest in 2000 and beyond.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
January 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.
3 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGER
Q How did the Fund perform over the fiscal year that ended December 31, 1999?
A. During the year, Oppenheimer Convertible Securities Fund performed well
compared to the broad stock and bond markets. Equally significant, the Fund
generally experienced less volatility than the equity markets, keeping in
line with the Fund's investment objective.
[PHOTO] [PHOTO]
Portfolio Management
Team (l to r)
Ted Everett
(Portfolio Management)
Mike Rosen
While technology has generally been a key factor in the favorable
performance of the Fund, you took positions in Internet companies sparingly and
cautiously. Why?
The Fund did hold significant positions in semiconductor and wireless
communications companies this year, however we were not as aggressive, relative
to some of our competitors, with Internet companies. In fact, this decision
somewhat detracted from the Fund's performance. However, for us to fully
participate in the returns offered by some Internet stocks this year we would
have had to endure significantly more volatility, which is contrary to the
Fund's objective. Achieving good returns is only half the picture -- we believe
managing volatility is equally essential.
We decided that the optimum way to strike a balance between high total
return potential and extreme volatility was to seek to benefit secondarily from
the returns generated by Internet stocks. We achieved this through our holdings
in telecommunications services and equipment, in particular, wireless
technology. These industries, including local phone and long distance companies,
performed well this year, largely due to Internet commerce. Our holdings in
these areas helped us derive returns from these stocks with far less volatility
than if we purchased Internet convertibles directly.
4 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
"Achieving good returns is only half the picture-we believe managing volatility
is equally essential."
Did any sectors hurt the Fund's performance?
We maintained our distance from the healthcare sector, which continued to be
weak due to tension in recent years regarding government regulation and profit
versus quality of care. However, we did have some exposure to the
pharmaceuticals industry, which retreated after several years of strong returns.
We anticipate that we'll continue to regard pharmaceuticals cautiously in the
months ahead and adjust our position there accordingly.
Similarly, returns from consumer goods companies were strained under
continued pricing pressures. While this has not traditionally been a focus for
us, we did have a small exposure that slightly diluted our returns.
Dividends for the Fund have been consistently strong over the last few years. Is
this part of your strategy in managing the portfolio?
The Fund does not target a specified dividend yield, yet, on a per-share basis,
dividend payments have been comparatively high. The favorable dividend history
of the Fund is more a result of the asset class in which the portfolio invests,
as opposed to an intentional effort to achieve a targeted payout. We're much
more comfortable with this approach, particularly since it has enabled us to
become one of the very few convertible securities funds in the mutual fund
universe with more than a nominal dividend.
How did market events, such as the actions of the Federal Reserve, affect the
Fund over the year?
While price fluctuations in stocks impacted performance somewhat during the
first half of the year, convertibles dampened much of the underlying price
movements of equities, thus positively contributing to the Fund's performance.
In October, convertibles fared well as stocks recovered, with most convertible
indices showing returns of between 3% to 4% for
5 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGER
the month. New issuance was fairly strong throughout the year, gaining momentum
during the summer months and accelerating after August. In general, there was
strength in the convertible market this year, particularly in technology,
telecommunications and energy, all of which comprised a large part of the
portfolio and therefore contributed positively to the Fund's performance for
the period.
- --------------------------------------
Average Annual
Total Returns
For the Periods Ended 12/31/99(1)
<TABLE>
<CAPTION>
Class A Since
1-Year 5-Year Inception
- ------------------------------
<S> <C> <C>
16.28% N/A 13.81%
Class B Since
1-Year 5-Year Inception
- ------------------------------
17.35% N/A 14.15%
Class C Since
1-Year 5-Year Inception
- ------------------------------
21.41% N/A 13.26%
Class M
1-Year 5-Year 10-Year
- ------------------------------
18.75% 14.95% 14.05%
</TABLE>
- --------------------------------------
Although the Federal Reserve raised interest rates on three occasions in
1999, interest rates remain relatively low, a fact that has supported equities.
The economy has been strong, with continued low inflation and with consumer
spending remaining robust. Profit margins are tightening somewhat due to
increased pricing pressures, but we reduced positions in sectors that are more
sensitive to this, such as consumer goods. At the beginning of the year,
consumers were concerned about the potential impact the onset of the new
millennium could have on the markets, particularly technology, but many of these
fears have dissipated as companies publicized their Y2K preparation efforts.
Toward the end of the year, the Fund participated in the equity markets'
recovery in October.
What is your outlook for the Fund in the coming months?
We believe that the Fund will continue to deliver competitive
returns, particularly if we remain loyal to our investment discipline, which we
fully intend to do. Our strategy worked well for us during 1999. In the event
consumer spending tightens and the overall economy slows down, Oppenheimer
Convertible Securities Fund enables investors to remain comfortably invested
because we have reduced some of the volatility of the market for them. We
believe this is one reason the Fund has a much lower shareholder turnover than
many other funds. Investors seeking to participate in long-term growth potential
with current income and less volatility than
1. See page 12 for further details.
6 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------
<TABLE>
<CAPTION>
Portfolio Allocation(2)
<S> <C>
[PIE CHART]
o Convertible
Corporate 55.2%
o Preferred Stocks 28.8
o Cash Equivalents 7.6
o Structured Instruments 7.4
o Common Stocks 1.0
</TABLE>
- --------------------------------------------
that of the equity market may find convertible securities appropriate. This is
why we believe Oppenheimer Convertible Securities Fund remains a part of The
Right Way to Invest.
Convertible Corporate Bonds and Notes
Sector Breakdown(3)
- --------------------------------------------
Technology 32.0%
- --------------------------------------------
Communication Services 18.4
- --------------------------------------------
Basic Materials 13.1
- --------------------------------------------
Healthcare 10.6
- --------------------------------------------
Consumer Cyclical 8.4
- --------------------------------------------
Consumer Staples 6.1
- --------------------------------------------
Energy 5.8
- --------------------------------------------
Financial 3.3
- --------------------------------------------
Utililites 1.9
- --------------------------------------------
Transportation 0.4
Top Five Holdings By Issuer(2)
- --------------------------------------------
NationsBank NA 2.4%
- --------------------------------------------
Merrill Lynch & Co. 2.3
- --------------------------------------------
Liberty Media Group 1.6
- --------------------------------------------
QUALCOMM, Inc. 1.5
- --------------------------------------------
Clear Channel Communications, Inc. 1.4
2. Portfolio is subject to change. Percentages are as of December 31, 1999, and
are based on total market value of investments.
3. Portfolio is subject to change. Percentages are as of December 31, 1999, and
are based on market value of convertible corporate bonds and notes.
7 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
FUND PERFORMANCE
How has the Fund performed?
Below is a discussion, by the Manager, of the Fund's performance during its
fiscal year ended December 31, 1999, followed by a graphical comparison of the
Fund's performance to an appropriate sector index and two broad-based market
indices.
Management's discussion of performance. During the Fund's fiscal year that ended
December 31, 1999, Oppenheimer Convertible Securities Fund's performance was
largely fueled by the overall strength in the convertibles market. Sectors such
as technology, telecommunications and energy performed well against a backdrop
of strong U.S. economic conditions, low inflation and brisk consumer spending in
the first half of the year. However, by July, the Federal Reserve's bias toward
tightening interest rates, growing inflationary fears and shrinking profit
margins had contributed to increased volatility in both the equity and fixed
income markets in the third quarter. In October, the Fund recovered along with
the equity markets while remaining comparatively less volatile than either the
equity or straight fixed income markets in general. The Fund's portfolio
holdings, allocations and management strategies are subject to change.
Comparing the Fund's performance to the market. The graphs that follow show the
performance of a hypothetical $10,000 investment in each Class of the Fund held
until December 31, 1999. In the case of Class A and B shares, performance is
measured from the inception of the classes on May 1, 1995. In the case of Class
C shares, performance is measured from the inception of the class on March 11,
1996. In the case of Class M shares, performance is measured for a ten-year
period. The Fund's performance reflects the deduction of the maximum initial
sales charge on Class A and Class M shares, the applicable contingent deferred
sales charge on Class B and Class C shares, and reinvestments of all dividends
and capital gains distributions.
8 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
The Fund's performance is compared to the performance of the Goldman Sachs
Convertible Bond 100 Index, the Lehman Brothers Aggregate Bond Index and the S&P
500 Index. The Goldman Sachs Convertible Bond 100 Index is an unmanaged index of
convertible securities. The Lehman Brothers Aggregate Bond Index is a
broad-based, unmanaged index of U.S. corporate bond issues, U.S. government
securities and mortgage-backed securities, widely recognized as a measure of the
performance of the domestic debt securities market. The S&P 500 Index is a
broad-based index of equity securities widely regarded as a general measurement
of the performance of the U.S. equity securities market. Index performance
reflects the reinvestment of income but does not consider the effect of
transaction costs, and none of the data in the graphs shows the effect of
taxes. The Fund's performance reflects the effects of the Fund's business and
operating expenses. While index comparisons may be useful to provide a benchmark
for the Fund's performance, it must be noted that the Fund's investments are
not limited to the investments in the indices.
9 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
FUND PERFORMANCE
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Convertible Securities Fund (Class A), Goldman Sachs Convertible
Bond 100 Index, Lehman Brothers Aggregate Bond Index, and S&P 500 Index
[LINE GRAPH]
<TABLE>
<CAPTION>
Class A
Date Oppenheimer Convertible S&P 500 Index Goldman Sachs Convertible Lehman Brothers Aggregate
Securities Fund Class A Bond 100 Index Bond Index
<S> <C> <C> <C> <C>
5/1/95 9425 10000 10000 10000
12/31/95 10890 12175 11480 11123
12/31/96 11992 14966 13054 11527
12/31/97 14243 19956 15599 12640
12/31/98 14825 25660 16805 13738
12/31/99 18289 31054 20261 13625
</TABLE>
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Convertible Securities Fund (Class B), Goldman Sachs Convertible
Bond 100 Index, Lehman Brothers Aggregate Bond Index, and S&P 500 Index
[LINE GRAPH]
<TABLE>
<CAPTION>
Class B
Date Oppenheimer Convertible S&P 500 Index Goldman Sachs Convertible Lehman Brothers Aggregate
Securities Fund Class B Bond 100 Index Bond Index
<S> <C> <C> <C> <C>
5/1/95 10000 10000 10000 10000
12/31/95 11509 12175 11480 11123
12/31/96 12577 14966 13054 11527
12/31/97 14832 19956 15599 12640
12/31/98 15322 25660 16805 13738
12/31/99 18547 31054 20261 13625
</TABLE>
10 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Convertible Securities Fund (Class C), Goldman Sachs Convertible
Bond 100 Index, Lehman Brothers Aggregate Bond Index, and S&P 500 Index
[LINE GRAPH]
<TABLE>
<CAPTION>
Class C
Date Oppenheimer Convertible S&P 500 Index Goldman Sachs Convertible Lehman Brothers Aggregate
Securities Fund Class C Bond 100 Index Bond Index
<S> <C> <C> <C> <C>
3/11/96 10000 10000 10000 10000
12/31/96 10775 11778 10871 10477
12/31/97 12701 15705 12989 11488
12/31/98 13121 20194 13993 12486
12/31/99 16062 24440 16871 12384
</TABLE>
Class M Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Convertible Securities Fund (Class M), Goldman Sachs Convertible
Bond 100 Index, Lehman Brothers Aggregate Bond Index, and S&P 500 Index
[LINE GRAPH]
<TABLE>
<CAPTION>
Class M
Date Oppenheimer Convertible S&P 500 Index Goldman Sachs Convertible Lehman Brothers Aggregate
Securities Fund Class M Bond 100 Index Bond Index
<S> <C> <C> <C> <C>
12/31/89 9675 10000 10000 10000
12/31/90 8887 9690 8972 10896
12/31/91 11420 12635 11457 12640
12/31/92 14981 13597 13480 13575
12/31/93 18164 14966 15788 14899
12/31/94 17947 15162 15020 14464
12/31/95 22614 20851 19150 17136
12/31/96 24780 25630 21777 17759
12/31/97 29287 34176 26022 19473
12/31/98 30334 43944 28033 21165
12/31/99 37234 53181 33799 20991
</TABLE>
The performance information for all three indices begins on 4/30/95 for Class
A and Class B, 2/29/96 for Class C and 12/31/89 for Class M.
1. See page 12 for further details.
Past performance is not predictive of future performance. Graphs are not drawn
to same scale.
11 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 maybe subject to substantial
short-term changes. For updates on the Fund's performance, please contact your
financial advisor, call us at 1.800.525.7048 or visit our website,
www.oppenheimerfunds.com.
Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown.
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). The ending account value shown in the graph is net of
the applicable 2% contingent deferred sales charge. 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 different performance calculations is in the Fund's
prospectus.
12 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
Financials
13 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
========================================================================================
<S> <C> <C>
Convertible Corporate Bonds and Notes--54.9%
- ----------------------------------------------------------------------------------------
Basic Materials--0.4%
- ----------------------------------------------------------------------------------------
Gold & Precious Minerals--0.4%
Homestake Mining Co., 5.50% Cv. Sub. Nts., 6/23/00 $ 4,000,000 $ 3,895,000
- ----------------------------------------------------------------------------------------
Capital Goods--6.9%
- ----------------------------------------------------------------------------------------
Aerospace/Defense--0.5%
Orbital Sciences Corp., 5% Cv. Unsec. Sub. Nts., 10/1/02 6,000,000 5,137,500
- ----------------------------------------------------------------------------------------
Electrical Equipment--0.8%
Commscope, Inc., 4% Cv. Nts., 12/15/06/1/ 3,000,000 3,258,750
- ----------------------------------------------------------------------------------------
Sanmina Corp., 4.25% Cv. Nts., 5/1/04/1/ 3,500,000 4,628,750
-----------
7,887,500
- ----------------------------------------------------------------------------------------
Industrial Services--4.3%
ASM Lithography Holding NV, 4.25% Cv. Nts., 11/30/04/1/ 3,500,000 4,086,250
- ----------------------------------------------------------------------------------------
Cendant Corp., 3% Cv. Sub. Nts., 2/15/02 10,000,000 10,100,000
- ----------------------------------------------------------------------------------------
Danka Business Systems plc, 6.75% Cv. Sub. Nts., 4/1/02 3,550,000 2,915,437
- ----------------------------------------------------------------------------------------
DSC Communications Corp., 7% Cv. Unsec. Sub. Nts., 8/1/04 5,000,000 5,250,000
- ----------------------------------------------------------------------------------------
EMCOR Group, Inc., 5.75% Cv. Sub. Nts., 4/1/05 3,000,000 2,666,250
- ----------------------------------------------------------------------------------------
Lam Research Corp., 5% Cv. Sub. Nts., 9/1/02 4,000,000 5,495,000
- ----------------------------------------------------------------------------------------
Mail-Well, Inc., 5% Cv. Sub. Nts., 11/1/02 4,000,000 3,765,000
- ----------------------------------------------------------------------------------------
Mansur Industries, Inc., 8.25% Cv. Sub. Nts., 2/18/03/2/ 4,515,699 3,928,659
- ----------------------------------------------------------------------------------------
Thermo Ecotek Corp., 4.875% Cv. Sub. Debs., 4/15/04/1/ 5,000,000 3,743,750
-----------
41,950,346
- ----------------------------------------------------------------------------------------
Manufacturing--1.3%
Hexcel Corp., 7% Cv. Unsec. Sub. Nts., 8/1/03 4,250,000 3,086,562
- ----------------------------------------------------------------------------------------
Mark IV Industries, Inc., 4.75% Cv. Sub. Nts., 11/1/04 7,000,000 5,713,750
- ----------------------------------------------------------------------------------------
Robbins & Myers, Inc., 6.50% Unsec. Sub. Nts., 9/1/03 3,500,000 3,373,125
-----------
12,173,437
- ----------------------------------------------------------------------------------------
Communication Services--10.1%
- ----------------------------------------------------------------------------------------
Telecommunications--Long Distance--4.6%
Aspect Telecommunications, Inc., Zero Coupon Unsec. Sub. Nts.,
8.75%, 8/10/18/3/ 6,000,000 2,400,000
- ----------------------------------------------------------------------------------------
Exodus Communications, Inc., 4.75% Cv. Nts., 7/15/08/1/ 4,000,000 5,545,000
- ----------------------------------------------------------------------------------------
Global Telesystems Group, Inc., 5.75% Cv. Nts., 7/1/10 7,200,000 9,666,000
- ----------------------------------------------------------------------------------------
Level 3 Communications, Inc., 6% Cv. Unsec. Sub. Nts., 9/15/09 6,000,000 8,430,000
- ----------------------------------------------------------------------------------------
NTL, Inc., 5.75% Cv. Sub. Nts., 12/15/09/1/ 10,000,000 10,800,000
- ----------------------------------------------------------------------------------------
Telefonos de Mexico SA, 4.25% Cv. Sr. Unsec. Debs., 6/15/04 5,000,000 6,518,750
- ----------------------------------------------------------------------------------------
World Access, Inc., 4.50% Cv. Unsec. Sub. Nts., 10/1/02 2,000,000 1,630,000
-----------
44,989,750
</TABLE>
14 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount see Note 1
- ----------------------------------------------------------------------------------------------------
Telephone Utilities--2.2%
<S> <C> <C> <C> <C> <C>
France Telecom, Series ADN, 2% Unsec. Unsub. Bonds, 1/1/04/1/ $ 4,432,000 $ 5,923,368
- ----------------------------------------------------------------------------------------------------
Liberty Media Group, 4% Sr. Unsec. Debs., 11/15/29 (converts into
common stock of Sprint Corp. (PCS Group))/1/ 12,500,000 15,750,000
-------------
21,673,368
- ----------------------------------------------------------------------------------------------------
Telecommunications-Wireless--3.3%
American Tower Corp., 6.25% Cv. Unsec. Nts., 10/15/09/1/ 5,000,000 7,018,750
- ----------------------------------------------------------------------------------------------------
Bell Atlantic Financial Services Corp., 4.25% Sr. Exchangeable
Bonds, 9/15/05 (exchangeable for shares of Cable & Wireless
Communications or cash)/1/ 5,000,000 6,206,250
- ----------------------------------------------------------------------------------------------------
Bell Atlantic Financial Services Corp., 5.75% Cv. Sr. Unsec. Nts., 4/1/03
(cv. into Common Stock of Telecom Corp. of New Zealand)/1/ 5,000,000 5,075,000
- ----------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 4.75% Cv. Nts, 7/1/07/1/ 3,500,000 7,940,625
- ----------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 4.75% Cv. Nts, 7/1/07 1,000,000 2,268,750
- ----------------------------------------------------------------------------------------------------
U.S. Cellular Corp., Zero Coupon Cv. Sub. Liquid Yield Option Nts.,
6.02%, 6/15/15/3/ 4,000,000 3,855,000
-------------
32,364,375
- ----------------------------------------------------------------------------------------------------
Consumer Cyclicals--4.6%
- ----------------------------------------------------------------------------------------------------
Autos & Housing--1.2%
Magna International, Inc., 5% Cv. Sub. Debs., 10/15/02 6,500,000 6,272,500
- ----------------------------------------------------------------------------------------------------
MascoTech, Inc., 4.50% Cv. Sub. Debs., 12/15/03 7,000,000 5,127,500
-------------
11,400,000
- ----------------------------------------------------------------------------------------------------
Leisure & Entertainment--0.1%
Hudson Hotels Corp., 7.50% Cv. Sub. Debs., 7/1/01/2/ 3,000,000 1,145,820
- ----------------------------------------------------------------------------------------------------
Media--1.2%
Interpublic Group of Cos., Inc., 1.87% Cv. Unsec. Sub. Nts., 6/1/06 7,000,000 7,953,750
- ----------------------------------------------------------------------------------------------------
Omnicom Group, Inc, 2.25% Cv. Unsec. Sub. Debs., 1/6/13 2,000,000 4,092,500
-------------
12,046,250
- ----------------------------------------------------------------------------------------------------
Retail: General--1.0%
Costco Cos., Inc., Zero Coupon Cv. Sub. Nts., 1.96% 8/19/17/3//4/ 9,000,000 9,585,000
- ----------------------------------------------------------------------------------------------------
Retail: Specialty--1.1%
Central Garden & Pet Co., 6% Cv. Unsec. Sub. Nts., 11/15/03 3,000,000 2,276,250
- ----------------------------------------------------------------------------------------------------
Office Depot, Inc., Zero Coupon Cv. Nts.:
4.63%, 11/1/08/3/ 8,000,000 5,440,000
4.72%, 12/11/07/3/ 5,000,000 3,268,750
-------------
10,985,000
</TABLE>
15 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
- -------------------------------------------------------------------------------------------------------
Consumer Staples--3.3%
- -------------------------------------------------------------------------------------------------------
Broadcasting--2.1%
<S> <C> <C>
Clear Channel Communications, Inc., 1.50% Cv. Nts., 12/1/02 $12,950,000 $13,306,125
- -------------------------------------------------------------------------------------------------------
Echostar Communications Corp., 4.875% Cv. Nts., 1/1/07(1) 6,000,000 7,387,500
-------------
20,693,625
- -------------------------------------------------------------------------------------------------------
Entertainment--0.3%
Imax Corp., 5.75% Cv. Debs., Series Reg. S, 4/1/03 2,000,000 2,707,500
- -------------------------------------------------------------------------------------------------------
Food--0.9%
Nestle Holding, Inc., 6.30% Cv. Unsub. Bonds, 6/17/02 8,000,000 9,210,400
- -------------------------------------------------------------------------------------------------------
Energy--3.1%
- -------------------------------------------------------------------------------------------------------
Energy Services--1.9%
Diamond Offshore Drilling, Inc., 3.75% Cv. Unsec. Sub. Nts., 2/15/07 7,500,000 7,612,500
- -------------------------------------------------------------------------------------------------------
Key Energy Group, Inc., 5% Cv. Unsec. Sub. Nts., 9/15/04 2,000,000 1,377,500
- -------------------------------------------------------------------------------------------------------
Pride International, Inc., Zero Coupon Cv. Sub. Debs., 6.47% 4/24/18(3) 15,000,000 5,043,750
- -------------------------------------------------------------------------------------------------------
Valhi, Inc., Zero Coupon Sr. Sec. Liquid Yield Option Nts., 7.26%, 10/20/07
(converts into common stock of Halliburton Co.)(3) 8,000,000 4,930,000
-------------
18,963,750
- -------------------------------------------------------------------------------------------------------
Oil-Domestic--1.2%
Devon Energy Corp., 4.95% Cv. Sr. Unsec. Debs., 8/15/08
(converts into common stock of Chevron Corp.) 12,378,000 12,130,440
- -------------------------------------------------------------------------------------------------------
Financial--1.8%
- -------------------------------------------------------------------------------------------------------
Diversified Financial--1.8%
Ameritrade Holding Corp., 5.75% Cv. Sub. Nts., 8/1/04(1) 4,000,000 3,380,000
- -------------------------------------------------------------------------------------------------------
Berkshire Hathaway, Inc., 1% Sr. Exchangeable Nts., 12/2/01
(exchangeable into common stock of Citigroup, Inc.) 2,500,000 6,275,000
- -------------------------------------------------------------------------------------------------------
Phoenix Investment Partners Corp., 6% Cv. Unsec. Sub. Debs., 11/1/15 7,817,500 7,983,622
-------------
17,638,622
- -------------------------------------------------------------------------------------------------------
Healthcare--5.8%
- -------------------------------------------------------------------------------------------------------
Healthcare/Drugs--4.8%
ALZA Corp., Zero Coupon Cv. Unsec. Sub. Liquid Yield Option Nts.,
5.32%, 7/14/14(3) 14,000,000 7,087,500
- -------------------------------------------------------------------------------------------------------
Athena Neurosciences, Inc., 4.75% Gtd. Cv. Nts., 11/15/04 10,000,000 10,200,000
- -------------------------------------------------------------------------------------------------------
Centocor, Inc., 4.75% Cv. Unsec Sub. Debs., 2/15/05 7,000,000 9,353,750
- -------------------------------------------------------------------------------------------------------
Chiron Corp, 1.90% Cv. Sub. Nts., 11/17/00(1) 3,000,000 4,402,500
- -------------------------------------------------------------------------------------------------------
Human Genome, 5% Cv. Sr. Nts., 12/15/06(1) 3,000,000 3,615,000
- -------------------------------------------------------------------------------------------------------
Roche Holdings, Inc., Zero Coupon Exchangeable Liquid Yield
Option Nts., 5.36%, 5/6/12(1)(3) 24,500,000 12,357,307
-------------
47,016,057
</TABLE>
16 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount see Note 1
- ----------------------------------------------------------------------------------------------
Healthcare/Supplies & Services--1.0%
<S> <C> <C>
Affymetrix, Inc., 5% Cv. Unsec Nts., 10/1/06/1/ $ 2,500,000 $ 3,737,500
- ----------------------------------------------------------------------------------------------
St. Jude Medical, Inc., 5.75% Cv Sub. Nts., 8/15/01 6,000,000 6,165,000
---------
9,902,500
- ----------------------------------------------------------------------------------------------
Technology--17.6%
- ----------------------------------------------------------------------------------------------
Computer Hardware--3.3%
Adaptec, Inc., 4.75% Cv. Sub. Nts., 2/1/04 4,000,000 4,345,000
- ----------------------------------------------------------------------------------------------
Comverse Technology, Inc., 4.50% Cv. Unsec. Sub. Nts., 7/1/05 1,000,000 3,411,250
- ----------------------------------------------------------------------------------------------
EMC Corp., 6% Cv. Unsec. Sub. Nts., 5/15/04 7,000,000 9,616,250
- ----------------------------------------------------------------------------------------------
Hewlett-Packard Co., Zero Coupon Cv. Sr. Liquid Yield Option Nts.,
2.4296, 10/14/17/3/ 17,000,000 11,708,750
- ----------------------------------------------------------------------------------------------
Telxon Corp., 5.75% Cv. Sub. Nts., 1/1/03 3,750,000 3,140,625
----------
32,221,875
- ----------------------------------------------------------------------------------------------
Computer Services--0.6%
Checkfree Holdings Corp., 6.50% Cv. Sub. Nts., 12/1/06/1/ 2,000,000 3,185,000
- ----------------------------------------------------------------------------------------------
Internet Capital Group, Inc., 5.50% Cv. Unsec. Sub. Nts., 12/21/04 2,000,000 2,927,500
---------
6,112,500
- ----------------------------------------------------------------------------------------------
Computer Software--7.0%
Amazon.com, Inc.:
4.75% Cv. Sub. Debs., 2/1/09/3/ 5,000,000 5,681,250
4.75% Cv. Sub. Debs., 2/1/09 1,000,000 1,136,250
- ----------------------------------------------------------------------------------------------
America Online, Inc., Zero Coupon Cv. Nts., 2.83%, 12/6/19/3/ 13,000,000 7,410,000
- ----------------------------------------------------------------------------------------------
Aspen Technology, Inc., 5.25% Cv. Unsec. Sub. Debs., 6/15/05 3,600,000 2,835,000
- ----------------------------------------------------------------------------------------------
BEA Systems, Inc., 4% Cv. Nts., 12/15/06 4,000,000 4,685,000
- ----------------------------------------------------------------------------------------------
Citrix Systems, Inc., Zero Coupon Cv. Unsec. Debs., 4.27%, 3/22/19/3/ 6,000,000 5,325,000
- ----------------------------------------------------------------------------------------------
DoubleClick, Inc., 4.75% Cv. Sub. Nts., 3/15/06 1,000,000 3,107,500
- ----------------------------------------------------------------------------------------------
Excite@Home, 4.75% Cv. Sr. Nts., 12/15/06/1/ 5,000,000 4,775,000
- ----------------------------------------------------------------------------------------------
12 Technologies, Inc., 5.25% Cv. Sr. Nts., 12/15/06/1/ 1,000,000 1,436,250
- ----------------------------------------------------------------------------------------------
Mindspring Enterprises, Inc., 5% Cv. Unsec. Sub. Nts., 4/15/06 4,000,000 3,850,000
- ----------------------------------------------------------------------------------------------
MSC Software Corp., 7.875% Cv. Unsec. Sub. Debs., 8/15/04 1,967,000 1,762,924
- ----------------------------------------------------------------------------------------------
Network Associates, Inc., Zero Coupon Cv. Unsec. Sub. Debs.,
6.3796, 2/13/18/3/ 17,000,000 6,417,500
- ----------------------------------------------------------------------------------------------
Siebel Systems, Inc., 5.50% Cv. Nts., 9/15/06/1/ 2,500,000 4,846,875
- ----------------------------------------------------------------------------------------------
Tecnomatix Technologies Ltd., 5.25% Cv. Sub. Nts., 8/15/04 5,000,000 4,318,750
- ----------------------------------------------------------------------------------------------
Veritas Software Corp., 1.865% Cv. Unsec. Sub. Disc. Nts., 8/13/06 2,500,000 6,740,625
- ----------------------------------------------------------------------------------------------
Wind River Systems, Inc., 5% Unsec. Sub. Nts., 8/1/02 3,000,000 3,802,500
----------
68,130,424
</TABLE>
17 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
- ----------------------------------------------------------------------------------------------------------
Electronics--6.7%
<S> <C> <C>
Advanced Micro Devices, Inc., 6% Cv. Sub. Nts., 5/15/05 $ 4,000,000 $ 3,835,000
- ----------------------------------------------------------------------------------------------------------
Checkpoint Systems, Inc., 5.25% Cv. Unsec. Sub. Debs., 11/1/05 6,100,000 4,308,125
- ----------------------------------------------------------------------------------------------------------
Cirrus Logic, Inc., 6% Cv. Sub. Nts., 12/15/03 4,000,000 3,365,000
- ----------------------------------------------------------------------------------------------------------
Conexant Systems, Inc.:
4.25% Cv. Unsec. Sub. Nts., 5/1/06/1/ 1,000,000 2,933,750
4.25% Cv. Unsec. Sub. Nts., 5/1/06 500,000 1,466,875
- ----------------------------------------------------------------------------------------------------------
Itron, Inc., 6.75% Unsec. Sub. Nts., 3/31/04 3,000,000 1,713,750
- ----------------------------------------------------------------------------------------------------------
Lattice Semicondutor Corp., 4.75% Cv. Nts., 11/1/06/1/ 3,000,000 3,933,750
- ----------------------------------------------------------------------------------------------------------
LSI Logic Corp., 4.25% Cv. Sub. Nts., 3/15/04 1,500,000 3,406,875
- ----------------------------------------------------------------------------------------------------------
Micron Technology, Inc., 7% Cv. Sub. Nts., 7/1/04 5,000,000 6,456,250
- ----------------------------------------------------------------------------------------------------------
S3, Inc., 5.75% Cv. Unsec. Sub. Nts., 10/1/03 3,000,000 2,801,250
- ----------------------------------------------------------------------------------------------------------
Solectron Corp., Zero Coupon Cv. Liquid Yield Option Nts,
3.35%, 1/27/19/3/ 10,000,000 7,562,500
- ----------------------------------------------------------------------------------------------------------
STMicroelectronics NV, Zero Coupon Nts., Series DTC, 0.30%, 9/22/09/3/ 3,100,000 4,254,750
- ----------------------------------------------------------------------------------------------------------
Thermo Instrument Systems, Inc., 4% Cv. Gtd. Nts., Series RG, 1/15/05 5,000,000 3,956,250
- ----------------------------------------------------------------------------------------------------------
Thermo Optek Corp., 5% Cv. Sub. Debs., 10/15/00/1/ 6,535,000 6,453,312
- ----------------------------------------------------------------------------------------------------------
ThermoQuest Corp., 5% Gtd. Cv. Sub. Debs., 8/15/00/1/ 9,775,000 9,603,938
-----------
66,051,375
- ----------------------------------------------------------------------------------------------------------
Transportation--0.2%
- ----------------------------------------------------------------------------------------------------------
Air Transportation--0.2%
Offshore Logistics, Inc., 6% Cv. Unsec. Sub. Nts., 12/15/03 2,500,000 2,059,375
- ----------------------------------------------------------------------------------------------------------
Utilities--1.1%
- ----------------------------------------------------------------------------------------------------------
Electric Utilities--1.1%
AES Corp. (The), 4.50% Cv. Jr. Sub. Nts., 8/15/05 7,000,000 10,316,250
-----------
Total Convertible Corporate Bonds and Notes (Cost $469,202,085) 538,388,039
==========================================================================================================
Preferred Stocks--28.7%
- ----------------------------------------------------------------------------------------------------------
Basic Materials--1.5%
- ----------------------------------------------------------------------------------------------------------
Chemicals--0.7%
Monsanto Co., 6.50% Cv. Adjustable Conversion-Rate Equity Security 201,500 6,674,687
- ----------------------------------------------------------------------------------------------------------
Paper--0.8%
Georgia-Pacific Corp., 7.50% Cv. Premium Equity Participating Security Units/6/ 100,000 5,112,500
- ----------------------------------------------------------------------------------------------------------
International Paper Capital Trust, 5.25% Cum. Cv., Non-Vtg.
(cv. into common stock of International Paper Co.) 50,000 2,725,000
---------
7,837,500
- ----------------------------------------------------------------------------------------------------------
Capital Goods--3.3%
- ----------------------------------------------------------------------------------------------------------
Aerospace/Defense--1.2%
Loral Space & Communications Ltd., 6% Cv., Series C 175,000 11,309,375
</TABLE>
18 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------
Industrial Services--0.8%
<S> <C> <C>
Owens-Illinois, Inc., 4.75% Cv. 126,400 $ 3,950,000
- -----------------------------------------------------------------------------------------------
Sensormatic Electronics Corp., 6.50% Cv.(1) 150,000 3,693,750
---------
7,643,750
- -----------------------------------------------------------------------------------------------
Manufacturing--1.3%
Sealed Air Corp., $2.00 Cv., Series A 250,000 12,625,000
- -----------------------------------------------------------------------------------------------
Communication Services--7.4%
- -----------------------------------------------------------------------------------------------
Telecommunications: Long Distance--5.9%
Broadwing, Inc., 6.75% Cv., Series B 80,000 4,680,000
- -----------------------------------------------------------------------------------------------
Global Crossing Holdings Ltd., 7% Cv.(1) 29,300 8,255,275
- -----------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 7% Cv., Series E, Non-Vt. 150,000 5,100,000
- -----------------------------------------------------------------------------------------------
MCI WorldCom, Inc., $2.25 Cv. 156,100 8,009,881
- -----------------------------------------------------------------------------------------------
PSINet, Inc., 6.75% Cv., Series C, Non-Vtg. 80,000 4,670,000
- -----------------------------------------------------------------------------------------------
QUALCOMM Financial Trust I, 5.75% Cum. Cv., Non-Vtg. 15,000 14,746,875
- -----------------------------------------------------------------------------------------------
Qwest Trends Trust, 5.75% Cv.(1) 100,000 7,062,500
- -----------------------------------------------------------------------------------------------
Winstar Communications, Inc., 7% Cv. Cum., Series D, Non-Vtg. 70,000 5,556,250
----------
58,080,781
- -----------------------------------------------------------------------------------------------
Telecommunications: Telephone Utilities--1.0%
MediaOne Group, Inc.
6.25% Cv. Premium Income Exchangeable Securities for
Vodaphone AirTouch plc Common Stock 70,000 7,560,000
7% Cv. (converts into common stock of Vodaphone AirTouch plc) 50,000 2,400,000
---------
9,960,000
- -----------------------------------------------------------------------------------------------
Telecommunications: Wireless--0.5%
McLeodUSA, Inc., 6.75% Cv., Series A 9,000 4,635,000
- -----------------------------------------------------------------------------------------------
Consumer Cyclicals--2.6%
- -----------------------------------------------------------------------------------------------
Autos & Housing--1.7%
Equity Office Properties Trust, 5.25% Cum. Cv. Series B, Non-Vtg. 150,000 5,850,000
- -----------------------------------------------------------------------------------------------
General Growth Properties, Inc., 7.25% Cv. Preferred Income Equity
Redeemable Stock 250,000 5,000,000
- -----------------------------------------------------------------------------------------------
Owens Corning Capital LLC, 6.50% Cv. Monthly Income Preferred
Securities, Non-Vtg.(1) 175,000 6,059,375
---------
16,909,375
- -----------------------------------------------------------------------------------------------
Retail: General--0.8%
K-Mart Financing I, 7.75% Cum. Cv., Non-Vtg. 175,000 7,656,250
- -----------------------------------------------------------------------------------------------
Textile/Apparel & Home Furnishings--0.1%
Danskin, Inc., $88.2722 Cv., Series D (cv. into 1,471,203 restricted
common shares)(2,5,7) 88 772,382
</TABLE>
19 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- -------------------------------------------------------------------------------------------------------------
Consumer Staples--5.8%
- -------------------------------------------------------------------------------------------------------------
Broadcasting--2.7%
<S> <C> <C>
Adelphia Communications Corp.,5.50% Cv., Series D, Non-Vtg. 35,000 $ 6,593,125
- -------------------------------------------------------------------------------------------------------------
Cox Communications,Inc.,7% Cv. Preferred Redeemable Increased
Dividend Equity Securities, Non-Vtg. 100,000 6,800,000
- -------------------------------------------------------------------------------------------------------------
Emmis Communications Corp.,6.25% Cv., Cl.A 50,000 3,975,000
- -------------------------------------------------------------------------------------------------------------
News Corp. Exchange Trust, Cum. Units (units of one trust originated
preferred securities and one warrant exchangeable into common shares
or ADS of British Sky Broadcasting Corp.)(6) 25,000 3,578,125
- -------------------------------------------------------------------------------------------------------------
UnitedGlobalCom,Inc.,7% Cv., Series D 78,000 5,060,250
----------
26,006,500
- -------------------------------------------------------------------------------------------------------------
Entertainment--1.5%
Reliant Energy,Inc.,7% Automatic Common Exchange
Securities for
Time Warner, Inc. Common Stock 65,000 7,832,500
- -------------------------------------------------------------------------------------------------------------
Seagram Co.Ltd. (The),7.50% Automatic Common Exchangeable Securities 150,000 6,750,000
14,582,500
- -------------------------------------------------------------------------------------------------------------
Food--0.5%
Suiza Capital Trust II/Suiza Foods Corp.,5.50% Cv. Cum., Non-Vtg. 150,000 5,175,000
- -------------------------------------------------------------------------------------------------------------
Household Goods--1.1%
Estee Lauder Automatic Common Exchange Security Trust II,$5.40 Cv.
Trust Automatic Common Exchange Securities, Non-Vtg. (exchangeable
to common stock of Estee Lauder Cos., Cl.A) 55,000 5,211,250
- -------------------------------------------------------------------------------------------------------------
Newell Financial Trust I,5.25% Cv. Quarterly Income Preferred
Securities,
Non-Vtg 150,000 5,718,750
----------
10,930,000
- -------------------------------------------------------------------------------------------------------------
Energy--1.5%
- -------------------------------------------------------------------------------------------------------------
Energy Services--0.4%
Weatherford International,Inc.,5% Cv. 100,000 4,012,500
- -------------------------------------------------------------------------------------------------------------
Oil: Domestic--1.1%
Apache Corp.,6.50% Cv. Automatic Common Exchange Securities 145,000 5,147,500
- -------------------------------------------------------------------------------------------------------------
Unocal Capital Trust,6.25% Cum.Cv., Non-Vtg. 125,000 6,093,750
----------
11,241,250
- -------------------------------------------------------------------------------------------------------------
Financial--3.8%
- -------------------------------------------------------------------------------------------------------------
Banks--0.8%
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)(6) 297,900 8,229,488
</TABLE>
20 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Diversified Finance--2.0%
CVS Automatic Common Exchange Security Trust,6% Cv. Trust
Automatic Common Exchange Securities 60,000 $ 4,275,000
- ----------------------------------------------------------------------------------------
DECS Trust IV,6.25% Cv., (exchangeable for common stock of
Metromedia Fiber Network, Inc., Cl.A) 100,000 4,650,000
- ----------------------------------------------------------------------------------------
Equity Residential Properties Trust,7.25% Cv., Series G 300,000 5,925,000
- ----------------------------------------------------------------------------------------
IFT Financial Group, Inc.,6.50% Cum. Cv. 107,500 4,609,063
----------
19,459,063
- ----------------------------------------------------------------------------------------
Insurance--0.6%
American General Corp.,7% Cv. 100,000 6,100,000
- ----------------------------------------------------------------------------------------
Savings & Loans--0.4%
Sovereign Captial Trust II,7.50% Cv. Preferred Income Equity
Redeemable Stock 80,000 3,900,000
- ----------------------------------------------------------------------------------------
Healthcare--0.4%
- ----------------------------------------------------------------------------------------
Healthcare/Supplies & Services--0.4%
McKesson Financial Trust, 5% Cv., Non-Vtg. 100,000 3,687,500
- ----------------------------------------------------------------------------------------
Technology--0.4%
- ----------------------------------------------------------------------------------------
Computer Software--0.4%
L & H Capital Trust, Inc.,4.75% Cv. Preferred Income Equity
Redeemable Stock(1) 100,000 4,075,000
- ----------------------------------------------------------------------------------------
Transportation--0.9%
- ----------------------------------------------------------------------------------------
Railroads & Truckers--0.9%
Union Pacific Capital Trust,6.25% Cum. Term Income
Deferrable Equity Securities, Non-Vtg. 200,000 8,325,000
- ----------------------------------------------------------------------------------------
Utilities--1.1%
- ----------------------------------------------------------------------------------------
Electric Utilities--0.5%
Calpine Capital Trust,$5.75 Cv. Term Income Deferrable 75,000 4,921,875
Equity Securities
- ----------------------------------------------------------------------------------------
Gas Utilities--0.6%
El Paso Energy Corp. Capital Trust I,4.75% Cv. 125,000 6,296,875
----------
Total Preferred Stocks (Cost $251,345,699) 281,046,651
- ----------------------------------------------------------------------------------------
Common Stocks--0.9%
- ----------------------------------------------------------------------------------------
American Home Products Corp. 40,080 1,580,655
- ----------------------------------------------------------------------------------------
Danskin,Inc.(5,7) 3,408,210 3,585,437
- ----------------------------------------------------------------------------------------
Danskin, Inc. Restricted Common Shares(2,5,7) 289,251 151,857
- ----------------------------------------------------------------------------------------
Intermedia Communications, Inc.(5) 2,056 79,798
- ----------------------------------------------------------------------------------------
McLeodUSA,Inc.,Cl.A(5) 47 2,767
- ----------------------------------------------------------------------------------------
Philip Morris Cos., Inc.(4) 126,000 2,921,625
- ----------------------------------------------------------------------------------------
United States Cellular Corp.(5) 10,000 1,009,375
----------
Total Common Stocks (Cost $8,352,042) 9,331,514
</TABLE>
21 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Units See Note 1
=============================================================================================================================
<S> <C> <C>
Rights, Warrants and Certificates--0.0%
Portion of Danskin, Inc. Promissory Nt., to be used to purchase 53,309
shares of restricted common stock in rights offering(2,7) -- $ 15,993
- -----------------------------------------------------------------------------------------------------------------------------
Danskin, Inc. Wts., Exp. 10/8/04(2,7) 367,801 80,916
- -----------------------------------------------------------------------------------------------------------------------------
Submicron Systems Corp. Wts., Exp. 1/15/01(2) 27,000 --
------------
Total Rights, Warrants and Certificates (Cost $15,993) 96,909
Face
Amount
=============================================================================================================================
Structured Instruments--7.4%
Deutsche Bank AG Linked Nts., 3.10%, 11/5/02 (AT&TCorp.)(2) $ 8,000,000 11,970,000
- -----------------------------------------------------------------------------------------------------------------------------
J.P. Morgan & Co., Inc. Mandatory Exchangeable Debt Securities,
5%, 7/21/00 (exchangeable into Ethan Allen common stock) 14,060,000 6,886,588
- -----------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., Principal-Protected Technology Basket
Performance Linked Nts.:
Series B, 7%, 8/18/00 10,000,000 15,781,250
Zero Coupon, 2/2/05 (based on the performance of Microsoft Corp.
and Hewlett-Packard Co.)(3,5) 3,000,000 6,661,875
- -----------------------------------------------------------------------------------------------------------------------------
NationsBank NA/Frontier Corp. Linked Certificates of Deposits,
6%, 5/22/00(2) 10,000,000 14,416,270
- -----------------------------------------------------------------------------------------------------------------------------
Nations Bank NA/The Boeing Co. BA Enhanced Yield Equity-Linked
Certificates of Deposits, 5%, 7/15/00 10,000,000 8,913,790
- -----------------------------------------------------------------------------------------------------------------------------
Tribune Co., 2% Unsec. Exchangeable Nts., 5/15/29 (exchangeable for
shares of America Online, Inc.) 50,690 8,059,710
------------
Total Structured Instruments (Cost $53,553,774) 72,689,483
=============================================================================================================================
Repurchase Agreements--7.6%
Repurchase agreement with Banc One Capital Markets, Inc., 2.75%, dated 12/31/99, to
be repurchased at $74,217,004 on 1/3/00, collateralized by U.S. Treasury Bonds,
5.25%-12%, 2/15/01-11/15/28, with a value of $29,122,736 and U.S. Treasury Nts.,
5%-7.50%, 12/31/00-2/15/07, with a value of $46,604,328 (Cost $74,200,000) 74,200,000 74,200,000
- -----------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $856,669,593) 99.5% 975,752,596
- -----------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.5 4,663,837
---------------------------------------------
Net Assets 100.0% $980,416,433
=============================================
</TABLE>
22 OPPENHEIMER CONVERTIBLE SECURITIES FUND
w
<PAGE>
- --------------------------------------------------------------------------------
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 $191,536,325 or 19.54% of the Fund's net
assets as of December 31,1999.
2. Identifies issues considered to be illiquid or restricted--See Note 6 of
Notes to Financial Statements.
3. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
4. A sufficient amount of liquid assets has been designated to cover outstanding
written call options, as follows:
<TABLE>
<CAPTION>
Shares Expiration Exercise Premium Market Value
Subject to Call Date Price Received See Note 1
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Costco Cos., Inc. 70,000 1/24/00 $95 $ 470,400 $201,250
Philip Morris Cos., Inc. 120,000 1/18/00 55 401,387 --
-------------------
$ 871,787 $201,250
===================
</TABLE>
5. Non-income producing security.
6. Units maybe comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, face amount disclosed represents total underlying
principal.
7. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer, and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the period ended December
31,1999. The aggregate fair value of securities of affiliated companies held by
the Fund as of December 31,1999 amounts to $4,606,585. Transactions during the
period in which the issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
Shares Shares
December 31, Gross Gross December 31,
1998 Additions Reductions 1999
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Danskin, Inc. 3,557,210 -- 149,000 3,408,210
- ---------------------------------------------------------------------------------------------------------
Danskin, Inc. Restricted Common Shares 289,251 -- -- 289,251
- ---------------------------------------------------------------------------------------------------------
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 -- -- -- --
</TABLE>
See accompanying Notes to Financial Statements.
23 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
==================================================================================
Assets
Investments, at value--see accompanying statement:
<S> <C>
Unaffiliated companies (cost $851,878,454) $ 971,146,011
Affiliated companies (cost $4,791,139) 4,606,585
- ----------------------------------------------------------------------------------
Cash 1,462,620
- ----------------------------------------------------------------------------------
Receivables and other assets:
Interest and dividends 6,333,905
Investments sold 964,445
Shares of beneficial interest sold 740,450
Other 13,330
-------------
Total assets 985,267,346
==================================================================================
Liabilities
Options written, at value (premiums received $871,787)--
see accompanying statement 201,250
- ----------------------------------------------------------------------------------
Payables and other
liabilities:
Investments purchased 1,581,413
Shares of beneficial interest redeemed 1,346,225
Distribution and service plan fees 639,250
Accrued taxes 531,724
Transfer and shareholder servicing agent fees 190,969
Trustees' compensation 80,452
Dividends 36,050
Other 243,580
-------------
Total liabilities 4,850,913
==================================================================================
Net Assets $ 980,416,433
=============
==================================================================================
Composition of Net Assets
Paid-in capital $ 860,634,269
- ----------------------------------------------------------------------------------
Undistributed net investment income 1,602,392
- ----------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency
transactions (1,573,768)
- ----------------------------------------------------------------------------------
Net unrealized appreciation on investments 119,753,540
-------------
Net assets $ 980,416,433
=============
</TABLE>
See accompanying Notes to Financial Statements.
24 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================
<S> <C>
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$220,671,078 and 13,490,076 shares of beneficial interest outstanding) $ 16.36
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering price) $ 17.36
- ----------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $431,370,477 and
26,329,471 shares of beneficial interest outstanding) $ 16.38
- ----------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $94,351,720
and 5,771,140 shares of beneficial interest outstanding) $ 16.35
- ----------------------------------------------------------------------------------------------
Class M Shares:
Net asset value and redemption price price per share (based on net assets
of $234,023,158 and 14,313,380 shares of beneficial interest outstanding) $ 16.35
Maximum offering price per share (net asset value plus sales charge of
3.25% of offering price) $ 16.90
</TABLE>
See accompanying Notes to Financial Statements.
25 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Year Ended December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
=================================================================================
Investment Income
<S> <C>
Interest $ 38,348,446
- ---------------------------------------------------------------------------------
Dividends 13,984,977
----------
Total income 52,333,423
=================================================================================
Expenses
Management fees 4,436,407
- ---------------------------------------------------------------------------------
Distribution and service plan
fees:
Class A 517,478
Class B 4,146,098
Class C 943,574
Class M 1,766,073
- ---------------------------------------------------------------------------------
Transfer and shareholder
servicing agent fees:
Class A 285,334
Class B 607,004
Class C 130,399
Class M 310,695
- ---------------------------------------------------------------------------------
Accounting service fees 272,339
- ---------------------------------------------------------------------------------
Trustees' compensation 76,304
- ---------------------------------------------------------------------------------
Custodian fees and expenses 57,753
- ---------------------------------------------------------------------------------
Other 527,518
----------
Total expenses 14,076,976
Less expenses paid indirectly (35,768)
----------
Net expenses 14,041,208
=================================================================================
Net Investment Income 38,292,215
=================================================================================
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investments:
Unaffiliated companies (including premiums on options exercised) 75,809,188
Affiliated companies (42,689)
Closing and expiration of option contracts written (5,506,962)
Foreign currency transactions (187,764)
----------
Net realized gain 70,071,773
- ---------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 86,533,925
-----------
Net realized and unrealized gain 156,605,698
=================================================================================
Net Increase in Net Assets Resulting from Operations $ 194,897,913
=============
</TABLE>
See accompanying Notes to Financial Statements.
26 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31, 1999 1998
=====================================================================================================
Operations
<S> <C> <C>
Net investment income $ 38,292,215 $ 42,446,713
- -----------------------------------------------------------------------------------------------------
Net realized gain 70,071,773 20,491,709
- -----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 86,533,925 (35,159,142)
----------------------------------
Net increase in net assets resulting from operations 194,897,913 27,779,280
=====================================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Class A (9,741,207) (10,037,164)
Class B (15,529,379) (16,743,718)
Class C (3,532,239) (4,038,450)
Class M (9,489,390) (11,627,381)
- -----------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (14,347,902) (5,790,061)
Class B (28,098,374) (11,634,294)
Class C (6,147,578) (2,833,142)
Class M (15,305,909) (6,896,262)
=====================================================================================================
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A (21,379,419) 38,763,260
Class B (54,697,711) 79,998,589
Class C (23,083,766) 27,838,755
Class M (52,420,296) (24,143,434)
=====================================================================================================
Net Assets
Total increase (decrease) (58,875,257) 80,635,978
- -----------------------------------------------------------------------------------------------------
Beginning of period 1,039,291,690 958,655,712
----------------------------------
End of period [including undistributed (over distributed)
net investment income of $1,602,392 and $(14,718),respectively] $ 980,416,433 $ 1,039,291,690
==================================
</TABLE>
See accompanying Notes to Financial Statements.
27 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Year Ended December 31, 1999 1998 1997 1996(1) 1995(2)
==========================================================================================================================
Per Share Operating Data
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.84 $ 15.32 $ 14.27 $ 13.96 $ 13.11
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .70 .70 .71/3/ .73/3/ .54/3/
Net realized and unrealized gain (loss) 2.66 (.08) 1.93/3/ .65/3/ 1.48/3/
------------------------------------------------------------------------------
Total income from investment operations 3.36 .62 2.64 1.38 2.02
==========================================================================================================================
Dividends and/or distributions to
shareholder:
Dividends from net investment income (.70) (.70) (.72) (.72) (.68)
Distributions from net realized gain (1.14) (.40) (.87) (.35) (.49)
------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.84) (1.10) (1.59) (1.07) (1.17)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 16.36 $ 14.84 $ 15.32 $ 14.27 $ 13.96
==============================================================================
==========================================================================================================================
Total Return, at Net Asset Value/4/ 23.37% 4.08% 18.77% 10.13% 15.54%
==========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $ 220,671 $ 221,693 $192,212 $93,518 $ 2,502
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 207,008 $ 220,423 $145,929 $41,627 $ 1,799
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:/5/
Net investment income 4.55% 4.55% 4.58% 5.11% 5.63%
Expenses 0.95% 0.93%/6/ 0.95%/6/ 0.98%/6/ 1.05%/6/
Expenses, net of interest expense/7/ N/A 0.93%/6/ 0.95%/6/ 0.97%/6/ 1.01%/6/
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate/8/ 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.
8. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1999 were $838,915,114 and $1,041,339,087, respectively.
See accompanying Notes to Financial Statements.
28 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
<TABLE>
<CAPTION>
Class B Year Ended December 31, 1999 1998 1997 1996(1) 1995(2)
====================================================================================================================
Per Share Operating Data
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.87 $ 15.35 $ 14.29 $ 13.98 $ 13.11
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .59 .58 .59/3/ .62/3/ .45/3/
Net realized and unrealized gain (loss) 2.65 (.08) 1.94/3/ .65/3/ 1.51/3/
------------------------------------------------------------------------
Total income from investment operations 3.24 .50 2.53 1.27 1.96
- --------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholder:
Dividends from net investment income (.59) (.58) (.60) (.61) (.60)
Distributions from net realized gain (1.14) (.40) (.87) (.35) (.49)
------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.73) (.98) (1.47) (.96) (1.09)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 16.38 $ 14.87 $ 15.35 $ 14.29 $ 13.98
========================================================================
====================================================================================================================
Total Return, at Net Asset Value/4/ 22.35% 3.30% 17.93% 9.28% 15.09%
Ratios/Supplemental Data
Net assets, end of period (in thousands) $ 431,370 $ 445,544 $ 383,755 $ 211,176 $ 34,465
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 414,611 $ 441,677 $ 296,426 $ 113,784 $ 15,184
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(5)
Net investment income 3.79% 3.79% 3.80% 4.31% 4.82%
Expenses 1.71% 1.69%(6) 1.72%(6) 1.75%(6) 1.69%(6)
Expenses, net of interest expense(7) N/A 1.69%(6) 1.72%(6) 1.73%(6) 1.64%(6)
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 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.
8. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1999 were $838,915,114 and $1,041,339,087, respectively.
See accompanying Notes to Financial Statements.
29 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C Year Ended December 31, 1999 1998 1997 1996(1,9)
========================================================================================================================
Per Share Operating Data
<S> <C> <C> <C> <C>
Net asset value, beginning of period $14.84 $15.32 $14.27 $14.03
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .59 .58 .59(3) .50(3)
Net realized and unrealized gain (loss) 2.65 (.08) 1.93(3) .59(3)
---------------------------------------------------------------
Total income from investment operations 3.24 .50 2.52 1.09
- ------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.59) (.58) (.60) (.50)
Distributions from net realized gain (1.14) (.40) (.87) (.35)
---------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.73) (.98) (1.47) (.85)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.35 $14.84 $15.32 $14.27
===============================================================
========================================================================================================================
Total Return, at Net Asset Value(4) 22.41% 3.32% 17.88% 7.74%
========================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $94,352 $108,339 $85,397 $38,312
- ------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $94,329 $105,974 $62,343 $18,550
- ------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(5)
Net investment income 3.80% 3.81% 3.82% 4.32%
Expenses 1.70% 1.68%(6) 1.70%(6) 1.68%(6)
Expenses, net of interest expense(7) N/A 1.68%(6) 1.70%(6) 1.67%(6)
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 95% 90% 79% 53%
</TABLE>
1. On January 4, 1996, OppenheimerFunds,Inc. became the investment advisor to
the Fund.
2. For the period from May 1, 1995 (inception of offering) to
December 31, 1995.
3. Per share information has been determined based on average shares
outstanding for the period.
4. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
5. Annualized for periods of less than one full year.
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.
8. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1999 were $838,915,114 and $1,041,339,087, respectively.
9. For the period from March 11, 1996 (inception of offering) to
December 31, 1996.
See accompanying Notes to Financial Statements.
30 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
<TABLE>
<CAPTION>
Class M Year Ended December 31, 1999 1998 1997 1996/1/ 1995
=============================================================================================================================
Per Share Operating Data
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.84 $ 15.32 $ 14.27 $ 13.96 $ 12.20
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .63 .62 .62/3/ .65/3/ .70/3/
Net realized and unrealized gain (loss) 2.65 (.08) 1.94/3/ .66/3/ 2.42/3/
----------------------------------------------------------------------------------
Total income from investment operations 3.28 .54 2.56 1.31 3.12
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment income (.63) (.62) (.64) (.65) (.87)
Distributions from net realized gain (1.14) (.40) (.87) (.35) (.49)
----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (1.77) (1.02) (1.51) (1.00) (1.36)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 16.35 $ 14.84 $ 15.32 $ 14.27 $ 13.96
==================================================================================
==============================================================================================================================
Total Return, at Net Asset Value/4/ 22.74% 3.58% 18.19% 9.58% 26.00%
==============================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $ 234,023 $ 263,716 $ 297,292 $ 274,043 $ 239,341
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 235,419 $ 288,953 $ 285,621 $ 264,936 $ 181,719
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:/5/
Net investment income 4.06% 4.02% 4.05% 4.59% 5.12%
Expenses 1.45% 1.43%/6/ 1.46%/6/ 1.58%/6/ 1.58%/6/
Expenses, net of interest expense/7/ N/A 1.43%/6/ 1.46%/6/ 1.55%/6/ 1.56%/6/
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate/8/ 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.
8. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1999 were $838,915,114 and $1,041,339,087, respectively.
See accompanying Notes to Financial Statements.
31 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Convertible Securities Fund (the Fund), a portfolio of the Bond Fund
Series, is registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Fund's investment
objective is to seek a high level of total return on its assets through a
combination of current income and capital appreciation. The Fund intends to seek
its objective by investing primarily in convertible fixed income securities. The
Fund's investment advisor is OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B, Class C and Class M shares. Class A shares are
sold at their offering price, which is normally net asset value plus an initial
sales charge. Class B and Class C shares are sold without an initial sales
charge but may be subject to a contingent deferred sales charge (CDSC). Class M
shares are sold with a front-end sales charge. All classes of shares have
identical rights to earnings, assets and voting privileges, except that each
class has its own expenses directly attributable to that class and exclusive
voting rights with respect to matters affecting that class. Classes A, B, C and
M shares 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. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term "non-
money market" debt securities are valued by a portfolio pricing service approved
by the Board of Trustees. Such securities which cannot be valued by an approved
portfolio pricing service are valued using dealer-supplied valuations provided
the Manager is satisfied that the firm rendering the quotes is reliable and that
the quotes reflect current market value, or are valued under consistently
applied procedures established by the Board of Trustees to determine fair value
in good faith. Short-term "money market type" debt securities having a remaining
maturity of 60 days or less are valued at cost (or last determined market value)
adjusted for amortization to maturity of any premium or discount. Foreign
currency exchange contracts are valued based on the closing prices of the
foreign currency contract rates in the London foreign exchange markets on a
daily basis as provided by a reliable bank or dealer. Options are valued based
upon the last sale price on the principal exchange on which the option is traded
or, in the absence of any transactions that day, the value is based upon the
last sale price on the prior trading date if it is within the spread between the
closing bid and asked prices. If the last sale price is outside the spread, the
closing bid is used.
32 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. During 1995, the Fund
acquired all of the assets and liabilities of another investment company which
did not distribute its net investment income or realized gains and was taxed as
a C corporation. Accordingly, an accrued tax liability was assumed by the Fund
on the date of the acquisition. As of December 31, 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
year ended December 31, 1999, a provision of $45,325 was made for the Fund's
projected benefit obligations, resulting in an accumulated liability of $76,808
as of December 31, 1999.
33 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies Continued
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.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of distributions made during the year from net
investment income or net realized gains may differ from its ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the fiscal year in which the income or realized gain was recorded by
the Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended December 31, 1999, amounts have been reclassified to reflect an
increase in paid-in capital of $169,260,a decrease in over distributed net
investment income of $1,617,110,and a decrease in accumulated net realized gain
on investments of $1,786,370.
- --------------------------------------------------------------------------------
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.
34 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
================================================================================
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>
Year Ended December 31, 1999 Year Ended December 31, 1998
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------
Class A
<S> <C> <C> <C> <C>
Sold 1,839,242 $ 28,451,586 5,704,233 $ 89,040,791
Dividends and/or distributions
reinvested 1,245,687 19,795,587 919,205 13,833,726
Redeemed (4,530,563) (69,626,592) (4,231,755) (64,111,257)
---------------------------------------------------------------
Net increase (decrease) (1,445,634) $ (21,379,419) 2,391,683 $ 38,763,260
===============================================================
Class B
Sold 2,027,260 $ 31,242,213 7,980,117 $ 125,356,682
Dividends and/or distributions
reinvested 2,239,180 35,741,741 2,002,880 30,266,988
Redeemed (7,908,649) (121,681,665) (5,015,731) (75,625,081)
---------------------------------------------------------------
Net increase (decrease) (3,642,209) $ (54,697,711) 4,967,266 $ 79,998,589
===============================================================
Class C
Sold 666,790 $ 10,271,657 2,882,218 $ 45,258,884
Dividends and/or distributions
reinvested 499,994 7,958,464 504,006 7,600,723
Redeemed (2,698,276) (41,313,887) (1,658,804) (25,020,852)
---------------------------------------------------------------
Net increase (decrease) (1,531,492) $ (23,083,766) 1,727,420 $ 27,838,755
===============================================================
Class M
Sold 253,587 $ 3,881,769 1,011,033 $ 16,005,467
Dividends and/or distributions
reinvested 1,228,639 19,534,574 1,254,634 18,971,816
Redeemed (4,938,225) (75,836,639) (3,898,845) (59,120,717)
---------------------------------------------------------------
Net decrease (3,455,999) $ (52,420,296) (1,633,178) $ (24,143,434)
===============================================================
</TABLE>
================================================================================
3.Unrealized Gains and Losses on Securities
As of December 31, 1999, net unrealized appreciation on securities and options
written of $119,753,540 was composed of gross appreciation of $150,822,956, and
gross depreciation of $31,069,416.
35 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of 0.625%
on the first $50 million of average net assets of the Fund, 0.50% of the next
$250 million and 0.4375% on average annual net assets over $300 million. The
Fund's management fee for year ended December 31, 1999 was 0.47% of average
annual net assets for each class of shares.
- --------------------------------------------------------------------------------
Accounting Fees. Accounting fees paid to the Manager were in accordance with the
accounting services agreement with the Fund which provides for an annual fee of
$12,000 for the first $30 million of net assets and $9,000 for each additional
$30 million of net assets.
- --------------------------------------------------------------------------------
Transfer Agent Fees. Oppenheimer Funds Services (OFS), a division of the
Manager, is the transfer and shareholder servicing agent for the Fund and other
Oppenheimer funds. The Fund pays OFS an annual maintenance fee of $24.12 for
each Class A and Class M shareholder account and $26.02 for each Class B and
Class C shareholder account.
- --------------------------------------------------------------------------------
Distribution and Service Plan Fees. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the period
indicated.
<TABLE>
<CAPTION>
Class A Class M
Aggregate Aggregate Front-End Front-End Commissions Commissions Commissions
Front-End Front-End Sales Sales on Class A on Class B on Class C
Sales Charges Sales Charges Charges Charges Shares Shares Shares
on Class A on Class M Retained by Retained by Advanced by Advanced by Advanced by
Year Ended Shares Shares Distributor Distributor Distributor(1) Distributor(1) Distributor(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1999 $353,830 $85,944 $104,804 $10,458 $36,458 $960,277 $86,566
</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
Contingent Deferred Contingent Deferred Contingent Deferred Contingent Deferred
Sales Charges Retained Sales Charges Retained Sales Charges Retained Sales Charges Retained
Year Ended By Distributor By Distributor By Distributor By Distributor
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1999 $4,533 $1,693,693 $24,673 $--
</TABLE>
The Fund has adopted a Service Plan for Class A shares and Distribution and
Service Plans for Class B, Class C and Class M shares under Rule 12b-1 of the
Investment Company Act. Under those plans the Fund pays the Distributor for all
or a portion of its costs incurred in connection with the distribution and/or
servicing of the shares of the particular class.
36 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
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 fiscal year ended December
31, 1999, payments under the Class A Plan totaled $517,478,all of which was paid
by the Distributor to recipients. That included $49,201 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.
- --------------------------------------------------------------------------------
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 year ended December 31, 1999
were as follows:
<TABLE>
<CAPTION>
Distributor's Distributor's
Aggregate Aggregate
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 $4,146,098 $3,386,142 $9,555,997 2.22%
Class C Plan 943,574 298,813 1,101,182 1.17
Class M Plan 1,766,073 653,494 -- --
</TABLE>
37 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
================================================================================
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. 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 year ended December 31, 1999 was as follows:
Call Options
---------------------------
Number of Amount of
Options Premiums
- --------------------------------------------------------------------------------
Options outstanding as of December 31, 1998 15,600 $ 7,066,607
Options written 16,426 10,558,117
Options closed or expired (29,460) (16,385,018)
Options exercised (666) (367,919)
---------------------------
Options outstanding as of December 31, 1999 1,900 $ 871,787
===========================
38 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
================================================================================
6. Illiquid or Restricted Securities
As of December 31, 1999, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. The Fund intends to invest no more
than 15% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of December 31, 1999 was $32,481,897,
which represents 3.31% of the Fund's net assets, of which $14,136,968 is
considered restricted. Information concerning restricted securities is as
follows:
<TABLE>
<CAPTION>
Valuation
Acquisition Cost Per Unit as of
Security Date Per Unit December 31,1999
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bonds and Other Securities
Deutsche Bank AG Linked Nts., 3.10%, 11/5/02
(AT&T Corp.) 10/29/97 100.00 149.625%
- -----------------------------------------------------------------------------------------------
Hudson Hotels Corp., 7.50% Cv. Sub. Debs., 7/1/01 7/23/99 65.97 38.194
Stocks, Warrants and Other Securities
Danskin, Inc.:
$88.2722 Cv. Preferred, Series D 8/14/95 $5,000.00 $8,750.00
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 0.53
Wts., Exp. 10/8/04 8/14/95 -- 0.22
- -----------------------------------------------------------------------------------------------
Submicron Systems Corp. Wts., Exp. 1/15/01 12/11/95 -- --
</TABLE>
39 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
7. Bank Borrowings
The Fund may borrow up to 5% of its total assets from a bank to purchase
portfolio securities, or for temporary and emergency purposes. The Fund has
entered into an agreement which enables it to participate with 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 commitment fee allocated to the Fund for the year ended December
31,1999 was $11,244.
The Fund had no borrowings outstanding for the year ended December 31,
1999.
40 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS REPORT
- --------------------------------------------------------------------------------
================================================================================
To the Board of Trustees and Shareholders of Bond Fund Series
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statement of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Oppenheimer Convertible Securities
Fund (the sole portfolio constituting Bond Fund Series, hereafter referred to as
the Fund) at December 31, 1999, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the periods indicated, in
conformity with accounting principles generally accepted in the United States.
These financial statements and financial highlights (hereafter referred to as
financial statements) are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
presentation. We believe that our audits, which included confirmation of
securities at December 31, 1999 by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Denver, Colorado
January 24, 2000
41 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
In early 2000 shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1999. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
Distributions of $1.3212,$1.2910,$1.2755 and $1.3011 per share were paid to
Class A, Class B, Class C and Class M shareholders on December 30,1999,of which
$0.3533 was designated as a "capital gain distribution" for federal income tax
purposes. Whether received in stock or in cash, the capital gain distribution
should be treated by shareholders as a gain from the sale of capital assets held
for more than one year (long-term capital gains).
Dividends paid by the Fund during the fiscal year ended December 31, 1999
which are not designated as capital gain distributions should be multiplied by
11.70% to arrive at the net amount eligible for the corporate dividend-received
deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
42 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
OPPENHEIMER CONVERTIBLE SECURITIES FUND
- --------------------------------------------------------------------------------
Officers and Trustees Bridget A. Macaskill, 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 G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Adele A. Campbell, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
================================================================================
Investment Advisor OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
================================================================================
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
================================================================================
Custodian of The Bank of New York
Portfolio Securities
================================================================================
Independent Accountants PricewaterhouseCoopers LLP
================================================================================
Legal Counsel Kirkpatrick & Lockhart LLP
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.
43 OPPENHEIMER CONVERTIBLE SECURITIES FUND
<PAGE>
- --------------------------------------------------------------------------------
OPPENHEIMERFUNDS FAMILY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
=====================================================================================================
<S> <C> <C>
Global Equity
Developing Markets Fund Global Fund
International Small Company Quest Global Value Fund
Fund
Europe Fund Global Growth & Income Fund
International Growth Fund
=====================================================================================================
Equity
Stock Stock & Bond
Enterprise Fund/1/ Main Street(R) Growth & Income Fund
Discovery Fund Quest Opportunity Value Fund
Main Street(R) Small Cap Fund Total Return Fund
Quest Small Cap Value Fund Quest Balanced Value Fund
MidCap Fund Capital Income Fund(2)
Capital Appreciation Fund Multiple Strategies Fund
Growth Fund Disciplined Allocation Fund
Disciplined Value Fund Convertible Securities Fund
Quest Value Fund
Trinity Growth Fund Specialty
Trinity Core Fund Real Asset Fund
Trinity Value Fund Gold & Special Minerals Fund
=====================================================================================================
Fixed Income
Taxable Municipal
International Bond Fund California Municipal Fund(3)
World Bond Fund Main Street(R) California Municipal Fund
High Yield Fund Florida Municipal Fund(3)
Champion Income Fund New Jersey Municipal Fund(3)
Strategic Income Fund New York Municipal Fund(3)
Bond Fund Pennsylvania Municipal Fund(3)
Senior Floating Rate Fund Municipal Bond Fund
U.S. Government Trust Insured Municipal Fund
Limited-Term Government Fund Intermediate Municipal Fund
Rochester Division
Rochester Fund Municipals
Limited Term New York Municipal Fund
=====================================================================================================
Money Market(4)
Money Market Fund Cash Reserves
</TABLE>
1. Effective July 1, 1999, this fund is closed to new investors. See prospectus
for details.
2. On 4/1/99, the Fund's name was changed from "Oppenheimer Equity Income
Fund."
3. Available to investors only in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds may seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in these funds.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc.,
Two World Trade Center, New York, NY 10048-0203.
(C) Copyright 1999 OppenheimerFunds, Inc. All rights reserved.
44 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
www.oppenheimerfunds.com
- --------------------------------------------------------------------------------
General Information
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
1.800.525.7048
- --------------------------------------------------------------------------------
Telephone Transactions
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
1.800.852.8457
- --------------------------------------------------------------------------------
PhoneLink
24-hr automated information and automated transactions
1.800.533.3310
- --------------------------------------------------------------------------------
Telecommunications Device for the Deaf (TDD)
Mon-Fri 8:30am-7pm ET
1.800.843.4461
- --------------------------------------------------------------------------------
OppenheimerFunds Information 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
- --------------------------------------------------------------------------------
[LOGO] OppenheimerFunds(R)
Distributor, Inc.
