UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-4576
Oppenheimer Convertible Securities Fund
(Exact name of registrant as specified in charter)
6803 South Tucson Way, Centennial, Colorado 80112-3924
(Address of principal executive offices)
(Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
498 Seventh Avenue, New York, New York 10018
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
--------------
Date of fiscal year end: December 31
Date of reporting period: January 1, 2003 - June 30, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
STATEMENT OF INVESTMENTS June 30, 2003 / Unaudited
Principal Market Value
Amount See Note 1
- --------------------------------------------------------------------------------------------------------------
Convertible Corporate Bonds and Notes--55.2%
- --------------------------------------------------------------------------------------------------------------
Consumer Discretionary--12.7%
- --------------------------------------------------------------------------------------------------------------
Hotels, Restaurants & Leisure--2.8%
Carnival Corp., 2% Cv. Sr. Unsec. Unsub. Debs., 4/15/21 $ 4,000,000 $ 4,460,000
- --------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 3.375% Cv. Sr. Unsec. Nts., 4/15/23 1 4,000,000 3,925,000
- --------------------------------------------------------------------------------------------------------------
International Game Technology, Zero Coupon Cv. Bonds, 1.57%,
1/29/33 1,2 5,000,000 3,237,500
- --------------------------------------------------------------------------------------------------------------
Royal Carribean Cruises Ltd.:
Zero Coupon Cv. Sr. Unsec. Unsub. Liquid Yield Option Nts.,
5.73%, 2/2/21 2 5,000,000 2,168,750
Zero Coupon Cv. Sr. Unsec. Unsub. Bonds, 4.48%, 5/18/21 2 5,000,000 2,325,000
-----------------
16,116,250
- --------------------------------------------------------------------------------------------------------------
Internet & Catalog Retail--0.7%
Amazon.com, Inc., 4.75% Cv. Sub. Debs., 2/1/09 1 4,000,000 3,805,000
- --------------------------------------------------------------------------------------------------------------
Media--7.2%
America Online, Inc., Zero Coupon Cv. Nts., 4.09%, 12/6/19 2 5,000,000 3,062,500
- --------------------------------------------------------------------------------------------------------------
Charter Communications, Inc., 5.75% Cv. Sr. Unsec. Nts., 10/15/05 4,000,000 2,800,000
- --------------------------------------------------------------------------------------------------------------
EchoStar Communications Corp.:
4.875% Cv. Nts., 1/1/07 1 4,500,000 4,488,750
4.875% Cv. Sub. Nts., 1/1/07 1,000,000 997,500
- --------------------------------------------------------------------------------------------------------------
Interpublic Group of Cos., Inc. (The):
1.80% Cv. Unsec. Sub. Nts., 9/16/04 2,000,000 1,915,000
4.50% Cv. Sr. Unsec. Nts., 3/15/23 1 3,000,000 4,196,250
- --------------------------------------------------------------------------------------------------------------
Liberty Media Corp.:
0.75% Cv. Sr. Unsec. Debs., 3/30/23 1 7,000,000 7,962,500
3.25% Exchangeable Sr. Sec. Debs., 3/15/31
(exchangeable for Viacom, Inc., Cl. B common stock) 1 6,000,000 6,270,000
4% Exchangeable Sr. Unsec. Debs., 11/15/29
(exchangeable for Sprint Corp. PCS, Series 1 common
stock or cash based on the value of that stock) 6,000,000 3,907,500
- --------------------------------------------------------------------------------------------------------------
Walt Disney Co. (The), 2.125% Cv. Sr. Nts., 4/15/23 6,000,000 6,262,500
-----------------
41,862,500
- --------------------------------------------------------------------------------------------------------------
Specialty Retail--2.0%
Gap, Inc. (The), 5.75% Cv. Sr. Nts., 3/15/09 1 4,000,000 5,395,000
- --------------------------------------------------------------------------------------------------------------
Lowe's Cos., Inc., 0.861% Cv. Sr. Bonds, 10/19/21 3 3,000,000 2,925,000
- --------------------------------------------------------------------------------------------------------------
TJX Cos., Inc. (The), Zero Coupon Cv. Unsec. Sub. Liquid Yield
Option Nts., 1.66%, 2/13/21 1,2 4,000,000 3,115,000
-----------------
11,435,000
- --------------------------------------------------------------------------------------------------------------
Consumer Staples--0.5%
- --------------------------------------------------------------------------------------------------------------
Food & Staples Retailing--0.5%
Roche Holdings, Inc., Zero Coupon Cv. Nts., 4.78%, 7/25/21 2 5,000,000 2,919,000
- --------------------------------------------------------------------------------------------------------------
Energy--4.3%
- --------------------------------------------------------------------------------------------------------------
Energy Equipment & Services--2.1%
Grey Wolf, Inc., 3.75% Cv. Sr. Unsec. Bonds, 5/7/23 1 3,500,000 3,482,500
- --------------------------------------------------------------------------------------------------------------
Halliburton Co., 3.125% Cv. Sr. Nts., 7/15/23 1 4,000,000 4,050,000
- --------------------------------------------------------------------------------------------------------------
Schlumberger Ltd., 2.125% Cv. Sr. Unsec. Debs., Series B, 6/1/23 1 5,000,000 4,843,750
-----------------
12,376,250
7 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
Principal Market Value
Amount See Note 1
- ---------------------------------------------------------------------------------------------------------
Oil & Gas--2.2%
Devon Energy Corp., 4.95% Cv. Sr. Unsec. Debs., 8/15/08
(cv. into Chevron Corp. common stock) $ 6,000,000 $ 6,165,000
- ---------------------------------------------------------------------------------------------------------
Kerr-McGee Corp., 5.25% Cv. Unsec. Sub. Nts., 2/15/10 6,000,000 6,450,000
----------------
12,615,000
- ---------------------------------------------------------------------------------------------------------
Financials--4.1%
- ---------------------------------------------------------------------------------------------------------
Diversified Financial Services--1.7%
E*TRADE Group, Inc., 6% Cv. Unsec. Sub. Nts., 2/1/07 4,500,000 4,387,500
- ---------------------------------------------------------------------------------------------------------
GATX Corp., 7.50% Cv. Sr. Unsec. Nts., 2/1/07 1 2,000,000 1,985,000
- ---------------------------------------------------------------------------------------------------------
Providian Financial Corp., 3.25% Cv. Sr. Unsec. Nts., 8/15/05 4,000,000 3,675,000
----------------
10,047,500
- ---------------------------------------------------------------------------------------------------------
Insurance--1.3%
USF&G Corp., Zero Coupon Cv. Sub. Nts., 4.94%, 3/3/09 2 5,000,000 4,025,000
- ---------------------------------------------------------------------------------------------------------
XL Capital Ltd., Zero Coupon Cv. Sr. Unsec. Debs., 2.64%,
5/23/21 1,2 5,000,000 3,187,500
----------------
7,212,500
- ---------------------------------------------------------------------------------------------------------
Real Estate--1.1%
EOP Operating LP, 7.25% Cv. Sr. Nts., 11/15/08 1 6,000,000 6,382,500
- ---------------------------------------------------------------------------------------------------------
Health Care--7.2%
- ---------------------------------------------------------------------------------------------------------
Biotechnology--3.9%
Affymetrix, Inc., 4.75% Cv. Sub. Nts., 2/15/07 2,000,000 1,817,500
- ---------------------------------------------------------------------------------------------------------
Amgen, Inc., Zero Coupon Cv. Sr. Unsec. Unsub. Liquid Yield
Option Nts., 0.86%, 3/1/32 2 8,000,000 6,320,000
- ---------------------------------------------------------------------------------------------------------
Celgene Corp., 1.75% Cv. Sr. Nts., 6/1/08 1 2,500,000 2,400,000
- ---------------------------------------------------------------------------------------------------------
Genzyme Corp., 3% Cv. Unsec. Sub. Debs., 5/15/21 4,000,000 4,010,000
- ---------------------------------------------------------------------------------------------------------
ImClone Systems, Inc., 5.50% Cv. Unsec. Sub. Nts., 3/1/05 2,000,000 1,992,500
- ---------------------------------------------------------------------------------------------------------
Invitrogen Corp., 5.50% Cv. Unsec. Sub. Nts., 3/1/07 4,000,000 4,030,000
- ---------------------------------------------------------------------------------------------------------
Sepracor, Inc., 5.75% Cv. Unsec. Sub. Nts., 11/15/06 2,000,000 1,825,000
----------------
22,395,000
- ---------------------------------------------------------------------------------------------------------
Health Care Equipment & Supplies--0.9%
Medtronic, Inc., 1.25% Cv. Nts., 9/15/21 1 5,000,000 5,212,500
- ---------------------------------------------------------------------------------------------------------
Health Care Providers & Services--0.5%
Quest Diagnostics, Inc., 1.75% Cv. Sr. Unsec. Debs., 11/30/21 3,000,000 3,097,500
- ---------------------------------------------------------------------------------------------------------
Pharmaceuticals--1.9%
Ivax Corp., 5.50% Cv. Sr. Unsec. Sub. Nts., 5/15/07 3,500,000 3,539,375
- ---------------------------------------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd., 1.50% Cv. Nts., 10/15/05 1 3,000,000 4,050,000
- ---------------------------------------------------------------------------------------------------------
Watson Pharmaceuticals, Inc., 1.75% Cv. Sr. Unsec. Debs.,
3/15/23 1 3,000,000 3,641,250
----------------
11,230,625
8 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
Principal Market Value
Amount See Note 1
- ----------------------------------------------------------------------------------------------------------------------
Industrials--4.2%
- ----------------------------------------------------------------------------------------------------------------------
Construction & Engineering--0.3%
Shaw Group, Inc. (The), Zero Coupon Cv. Sr. Unsec. Liquid Yield
Option Nts., 0.88%, 5/1/21 2,4 $ 3,000,000 $ 1,946,250
- ----------------------------------------------------------------------------------------------------------------------
Industrial Conglomerates--2.5%
Tyco International Group SA:
2.75% Cv. Sr. Nts., Series A, 1/15/18 1 3,000,000 3,247,500
3.125% Cv. Sr. Nts., Series B, 1/15/23 1 10,000,000 11,000,000
---------------
14,247,500
- ----------------------------------------------------------------------------------------------------------------------
Machinery--1.4%
Danaher Corp., Zero Coupon Cv. Sr. Unsec. Unsub. Liquid Yield
Option Nts., 2.46%, 1/22/21 2 5,000,000 3,356,250
- ----------------------------------------------------------------------------------------------------------------------
Navistar Financial Corp., 4.75% Cv. Sub. Nts., 4/1/09 3,000,000 2,846,250
- ----------------------------------------------------------------------------------------------------------------------
SystemOne Technologies, Inc.:
8.25% Cv. Sub. Nts., 12/31/05 4 2,947,809 1,031,733
8.25% Cv. Sub. Nts., 12/31/05 4 2,947,809 1,031,733
---------------
8,265,966
- ----------------------------------------------------------------------------------------------------------------------
Information Technology--17.2%
- ----------------------------------------------------------------------------------------------------------------------
Communications Equipment--3.6%
Commscope, Inc., 4% Cv. Unsec. Sub. Nts., 12/15/06 4,000,000 3,640,000
- ----------------------------------------------------------------------------------------------------------------------
Corning, Inc., 3.50% Cv. Sr. Nts., 11/1/08 4,000,000 4,315,000
- ----------------------------------------------------------------------------------------------------------------------
Juniper Networks, Inc., 4.75% Cv. Unsec. Sub. Nts., 3/15/07 4,000,000 3,795,000
- ----------------------------------------------------------------------------------------------------------------------
Lucent Technologies, Inc., 2.75% Cv. Sr. Unsec. Debs.,
Series B, 6/15/25 4,000,000 3,725,000
- ----------------------------------------------------------------------------------------------------------------------
Nortel Networks Corp.:
4.25% Cv. Sr. Nts., 9/1/08 1 4,000,000 3,390,000
4.25% Cv. Sr. Unsec. Nts., 9/1/08 2,000,000 1,695,000
---------------
20,560,000
- ----------------------------------------------------------------------------------------------------------------------
Computers & Peripherals--0.3%
Quantum Corp., 7% Cv. Sub. Nts., 8/1/04 2,000,000 2,025,000
- ----------------------------------------------------------------------------------------------------------------------
Electronic Equipment & Instruments--3.2%
Agilent Technologies, Inc.:
3% Cv. Sr. Debs., 12/1/21 3 1,000,000 977,500
3% Cv. Sr. Unsec. Nts., 12/1/21 1 3,000,000 2,932,500
- ----------------------------------------------------------------------------------------------------------------------
Celestica, Inc., Zero Coupon Cv. Nts., 4.42%, 8/1/20 2 8,000,000 4,220,000
- ----------------------------------------------------------------------------------------------------------------------
Sanmina-SCI Corp., 4.25% Cv. Unsec. Nts., 5/1/04 2,500,000 2,512,500
- ----------------------------------------------------------------------------------------------------------------------
Solectron Corp., Zero Coupon Cv. Sr. Unsec. Unsub.
Liquid Yield Option Nts., 4.21%, 11/20/20 2 7,000,000 3,920,000
- ----------------------------------------------------------------------------------------------------------------------
Thermo Electron Corp., 4% Cv. Unsec. Sub. Nts., Series RG, 1/15/05 4,000,000 4,005,000
---------------
18,567,500
- ----------------------------------------------------------------------------------------------------------------------
IT Services--0.8%
Electronic Data Systems Corp., 3.875% Cv. Sr. Nts., 7/15/23 1 3,000,000 3,093,750
- ----------------------------------------------------------------------------------------------------------------------
Safeguard Scientifics, Inc., 5% Cv. Unsec. Sub. Nts., 6/15/06 2,000,000 1,580,000
---------------
4,673,750
9 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
Principal Market Value
Amount See Note 1
- ------------------------------------------------------------------------------------------------------------
Semiconductor & Semiconductor Equipment--6.5%
Advanced Micro Devices, Inc.:
4.75% Cv. Sr. Debs., 2/1/22 $ 2,000,000 $ 1,512,500
4.75% Cv. Sr. Unsec. Nts., 2/1/22 1,3 3,000,000 2,268,750
- ------------------------------------------------------------------------------------------------------------
Agere Systems, Inc., 6.50% Cv. Sub. Nts., 12/15/09
(cv. into Agere Systems, Inc., Cl. A common stock) 3,000,000 3,450,000
- ------------------------------------------------------------------------------------------------------------
Analog Devices, Inc., 4.75% Cv. Sub. Nts., 10/1/05 5,000,000 5,112,500
- ------------------------------------------------------------------------------------------------------------
ASML Holding NV, 4.25% Cv. Nts., 11/30/04 1 4,000,000 3,975,200
- ------------------------------------------------------------------------------------------------------------
International Rectifier Corp., 4.25% Cv. Sub. Nts., 7/15/07 1 4,000,000 3,915,000
- ------------------------------------------------------------------------------------------------------------
Lam Research Corp., 4% Cv. Unsec. Sub. Nts., 6/1/06 4,500,000 4,393,125
- ------------------------------------------------------------------------------------------------------------
LSI Logic Corp., 4% Cv. Sub. Nts., 5/15/10 1 5,000,000 4,956,250
- ------------------------------------------------------------------------------------------------------------
Micron Technology, Inc., 2.50% Cv. Sub. Nts., 2/1/10 1 4,000,000 4,795,000
- ------------------------------------------------------------------------------------------------------------
RF Micro Devices, Inc., 3.75% Cv. Nts., 8/15/05 3,000,000 2,977,500
----------------
37,355,825
- ------------------------------------------------------------------------------------------------------------
Software--2.8%
BEA Systems, Inc., 4% Cv. Nts., 12/15/06 4,000,000 3,875,000
- ------------------------------------------------------------------------------------------------------------
Computer Associates International, Inc., 5% Cv. Sr. Nts.,
3/15/07 1 4,000,000 4,825,000
- ------------------------------------------------------------------------------------------------------------
Mentor Graphics Corp., 6.875% Cv. Sub. Nts., 6/15/07 1 2,000,000 2,220,000
- ------------------------------------------------------------------------------------------------------------
Mercury Interactive Corp., 4.75% Cv. Nts., 7/1/07 1 4,000,000 3,965,000
- ------------------------------------------------------------------------------------------------------------
Symantec Corp., 3% Cv. Sub. Nts., 11/1/06 1 1,000,000 1,410,000
----------------
16,295,000
- ------------------------------------------------------------------------------------------------------------
Materials--1.7%
- ------------------------------------------------------------------------------------------------------------
Containers & Packaging--0.5%
Sealed Air Corp., 3% Cv. Bonds, 6/30/33 1 3,000,000 2,988,750
- ------------------------------------------------------------------------------------------------------------
Metals & Mining--1.2%
Freeport-McMoRan Cooper & Gold, Inc., 7% Cv. Sr. Unsec.
Unsub. Nts., 2/11/11 4,000,000 4,800,000
- ------------------------------------------------------------------------------------------------------------
Inco Ltd., 3.50% Cv. Nts., 3/14/52 1 2,000,000 2,090,000
----------------
6,890,000
- ------------------------------------------------------------------------------------------------------------
Telecommunication Services--0.6%
- ------------------------------------------------------------------------------------------------------------
Wireless Telecommunication Services--0.6%
Nextel Communications, Inc., 4.75% Cv. Nts., 7/1/07 3,500,000 3,508,750
- ------------------------------------------------------------------------------------------------------------
Utilities--2.7%
- ------------------------------------------------------------------------------------------------------------
Electric Utilities--1.8%
Calpine Corp., 4% Cv. Sr. Nts., 12/26/06 3,000,000 2,715,000
- ------------------------------------------------------------------------------------------------------------
CenterPoint Energy, Inc., 3.75% Cv. Sr. Bonds, 5/15/23 1 4,500,000 4,680,000
- ------------------------------------------------------------------------------------------------------------
Duke Energy Corp., 1.75% Cv. Sr. Bonds, 5/15/23 3,000,000 3,146,250
----------------
10,541,250
- ------------------------------------------------------------------------------------------------------------
Gas Utilities--0.9%
El Paso Corp., Zero Coupon Cv. Debs., 6.10%, 2/28/21 2 12,000,000 5,310,000
----------------
Total Convertible Corporate Bonds and Notes (Cost $307,392,061) 319,882,666
10 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
Principal Market Value
Amount See Note 1
- ---------------------------------------------------------------------------------------------------------------
Non-Convertible Corporate Bonds and Notes--0.4%
Orbital Sciences Corp., 12% Sr. Unsec. Sub. Nts., Series B, 8/15/06 4
(Cost $1,704,581) $ 2,000,000 $ 2,090,500
Shares
- ---------------------------------------------------------------------------------------------------------------
Preferred Stocks--30.8%
- ---------------------------------------------------------------------------------------------------------------
Consumer Discretionary--3.2%
- ---------------------------------------------------------------------------------------------------------------
Automobiles--2.1%
Ford Motor Co. Capital Trust II, 6.50% Cum. Cv. Trust Preferred
Securities, Non-Vtg. 135,000 5,865,750
- ---------------------------------------------------------------------------------------------------------------
General Motors Corp., 4.50% Cv. Sr. Debs., Series A 250,000 6,112,500
----------------
11,978,250
- ---------------------------------------------------------------------------------------------------------------
Hotels, Restaurants & Leisure--0.3%
Six Flags, Inc., 7.25% Cum. Cv. Preferred Income Equity Redeemable
Shares, Non-Vtg. 100,000 1,970,000
- ---------------------------------------------------------------------------------------------------------------
Media--0.5%
Equity Securities Trust I/Cablevision Systems Corp., 6.50% Cv.,
Series CVC 125,000 2,918,750
- ---------------------------------------------------------------------------------------------------------------
Specialty Retail--0.3%
Toys R Us, Inc., 6.25% Cv. Equity Units (each unit has a stated amount
of $50 and consists of a contract to purchase Toys R Us, Inc. common
stock and $50 principal amount of Toys R Us, Inc., 6.25% sr. nts.,
8/16/07) 5 40,000 1,556,000
- ---------------------------------------------------------------------------------------------------------------
Energy--1.9%
- ---------------------------------------------------------------------------------------------------------------
Energy Equipment & Services--0.8%
Weatherford International Ltd., 5% Cv. Sub. Preferred
Equivalent Debs., Vtg. 100,000 5,000,000
- ---------------------------------------------------------------------------------------------------------------
Oil & Gas--1.1%
Teekay Shipping Corp., 7.25% Cv. 80,000 2,320,800
- ---------------------------------------------------------------------------------------------------------------
Unocal Capital Trust, 6.25% Cum. Cv., Non-Vtg. 80,000 4,010,000
----------------
6,330,800
- ---------------------------------------------------------------------------------------------------------------
Financials--8.8%
- ---------------------------------------------------------------------------------------------------------------
Commercial Banks--1.4%
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 of the Bank) 5 50,000 1,942,000
- ---------------------------------------------------------------------------------------------------------------
Washington Mutual Capital Trust I, 5.375% Cum. Cv. Units (each unit
consists of one preferred stock and one warrant to purchase Washington
Mutual, Inc.), Non-Vtg. 1,5 100,000 5,925,000
----------------
7,867,000
- ---------------------------------------------------------------------------------------------------------------
Diversified Financial Services--1.7%
Capital One Financial Corp., 6.25% Cv. Upper DECS (each upper DECS
has a stated amount of $50 and consists of a forward purchase contract
to purchase Capital One Financial Corp. common stock and $50 principal
amount of Capital One Financial Corp., 6.25% sr. nts., 5/17/07) 5 50,000 2,044,000
- ---------------------------------------------------------------------------------------------------------------
Household International, Inc., 8.875% Cv. Adjustable Conversion-Rate
Equity Security Units (each unit has a stated amount of $25 and
consists of a contract to purchase Household International, Inc.
common stock and $25 principal amount of Household Finance Corp.,
8.875% sr. unsec. nts., 2/15/08), Non-Vtg. 5 50,000 1,746,000
11 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
Market Value
Shares See Note 1
- ----------------------------------------------------------------------------------------------------------------------
Diversified Financial Services Continued
Regency Centers Corp., 2% Cv. 6 110,000 $ 3,740,000
- ----------------------------------------------------------------------------------------------------------------------
State Street Corp., 6.75% Cv. Nts. 12,000 2,484,720
-----------------
10,014,720
- ----------------------------------------------------------------------------------------------------------------------
Insurance--4.1%
Chubb Corp., 7% Cv. 140,000 3,647,000
- ----------------------------------------------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The), 7% Cv. Equity Units [each
equity unit has a stated amount of $50 and consists of a purchase contract
to purchase $1,000 principal amount of Hartford Financial Services Group,
Inc. (The), 2.56% sr. nts., 8/16/08 and Hartford Financial Services Group, Inc.
(The) common stock] 5,6 80,000 4,371,200
- ----------------------------------------------------------------------------------------------------------------------
Prudential Financial, Inc./Prudential Financial Capital Trust I, 6.75% Cum.
Cv. Equity Security Units (each unit consists of a contract to purchase
Prudential Financial, Inc. common stock and a redeemable capital security
of Prudential Financial Capital Trust I), Non-Vtg. 5 100,000 5,595,000
- ----------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., 4.50% Cv. Jr. Unsec. Sub. Nts. 250,000 6,000,000
- ----------------------------------------------------------------------------------------------------------------------
UnumProvident Corp., 8.25% Cv. 6 140,000 4,179,000
-----------------
23,792,200
- ----------------------------------------------------------------------------------------------------------------------
Real Estate--1.6%
Equity Residential Properties Trust, 7.25% Cum. Cv., Series G 150,000 3,823,500
- ----------------------------------------------------------------------------------------------------------------------
General Growth Properties, Inc., 7.25% Cv. Preferred Income Equity
Redeemable Stock, Series A 50,000 1,964,000
- ----------------------------------------------------------------------------------------------------------------------
Host Marriott Financial Trust, 6.75% Cv. Quarterly Income
Preferred Securities 90,000 3,757,500
-----------------
9,545,000
- ----------------------------------------------------------------------------------------------------------------------
Health Care--1.8%
- ----------------------------------------------------------------------------------------------------------------------
Health Care Equipment & Supplies--0.8%
Baxter International, Inc., 7% Cv. Equity Units (each equity unit has a
stated value of $50 and consists of a purchase contract to purchase
Baxter International, Inc. common stock and $50 principal amount of
Baxter International, Inc., 3.60% sr. nts., 2/16/08), Non-Vtg. 5 90,000 4,411,800
- ----------------------------------------------------------------------------------------------------------------------
Health Care Providers & Services--1.0%
Anthem, Inc., 6% Cv. Equity Security Units (each unit has a stated amount
of $50 and consists of a contract to purchase Anthem, Inc. common stock
and $50 principal amount of Anthem, Inc., 5.95% sub. debs.,
11/15/04) 5 20,000 1,871,600
- ----------------------------------------------------------------------------------------------------------------------
McKesson Financing Trust, 5% Cv., Non-Vtg. 80,000 4,110,000
-----------------
5,981,600
- ----------------------------------------------------------------------------------------------------------------------
Industrials--4.8%
- ----------------------------------------------------------------------------------------------------------------------
Aerospace & Defense--1.8%
Coltec Capital Trust, 5.25% Cv. Term Income Deferrable Equity Securities
(cv. into common stock of Coltec Industries, Inc.) 80,000 2,676,000
- ----------------------------------------------------------------------------------------------------------------------
Northrop Grumman Corp., 7.25% Cv. Equity Security Units (each unit
has a stated amount of $100 and consists of a contract to purchase
Northrop Grumman Corp. common stock and $100 principal amount
of Northrop Grumman Corp., 5.25% sr. unsec. nts., 11/16/04), Non-Vtg. 5 35,000 3,561,250
12 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
Market Value
Shares See Note 1
- ---------------------------------------------------------------------------------------------------------------
Aerospace & Defense Continued
Raytheon Co./RC Trust I, 8.25% Cum. Cv. Equity Security Units (each unit
consists of a contract to purchase Raytheon Co., cl. b common stock and
a trust preferred security of RC Trust I), Non-Vtg. 5 75,000 $ 4,293,000
----------------
10,530,250
- ---------------------------------------------------------------------------------------------------------------
Commercial Services & Supplies--2.1%
Allied Waste Industries, Inc., 6.25% Cv. Sr., Non-Vtg. 75,000 4,402,500
- ---------------------------------------------------------------------------------------------------------------
Cendant Corp., 7.75% Cv. Upper DECS (each upper DECS has a stated
value of $50 and consists of a forward purchase contract to purchase
Cendant Corp. common stock and $50 principal amount of Cendant
Corp., 6.75% sr. nts., 8/17/07), Non-Vtg. 5 110,000 4,976,400
- ---------------------------------------------------------------------------------------------------------------
United Rentals Trust I, 6.50% Cv. Quarterly Income Preferred Securities,
Non-Vtg. 75,000 2,868,750
----------------
12,247,650
- ---------------------------------------------------------------------------------------------------------------
Road & Rail--0.9%
Union Pacific Capital Trust, 6.25% Cum. Cv. Term Income Deferrable
Equity Securities, Non-Vtg. 100,166 5,045,862
- ---------------------------------------------------------------------------------------------------------------
Information Technology--2.0%
- ---------------------------------------------------------------------------------------------------------------
Communications Equipment--1.3%
Lucent Technologies Capital Trust I, 7.75% Cum. Cv., Non-Vtg. 4,000 3,244,520
- ---------------------------------------------------------------------------------------------------------------
Motorola, Inc., 7% Cv. Equity Security Units (each unit has a stated
amount of $50 and consists of a contract to purchase Motorola, Inc.
common stock and $50 principal amount of Motorola, Inc., 6.50% sr.
unsec. nts., 11/16/07) 5 120,000 3,912,000
----------------
7,156,520
- ---------------------------------------------------------------------------------------------------------------
Office Electronics--0.7%
Xerox Corp., 6.25% Cv. 6 40,000 4,194,000
- ---------------------------------------------------------------------------------------------------------------
Materials--1.4%
- ---------------------------------------------------------------------------------------------------------------
Paper & Forest Products--1.4%
International Paper Capital Trust, 5.25% Cum. Cv., Non-Vtg.
(cv. into International Paper Co. common stock) 160,000 7,880,000
- ---------------------------------------------------------------------------------------------------------------
Telecommunication Services--2.0%
- ---------------------------------------------------------------------------------------------------------------
Diversified Telecommunication Services--2.0%
Alltel Corp., 7.75% Cv. Equity Units (each equity unit consists of units
referred to as corporate units, each with a stated value of $50 and
includes a purchase contract to purchase Alltel Corp. common stock
and $50 principal amount of Alltel Corp., 6.25% sr. nts., 5/17/07), Non-Vtg. 5 100,000 4,975,000
- ---------------------------------------------------------------------------------------------------------------
CenturyTel, Inc., 6.875% Cv. Equity Units (each unit consists of units
referred to as corporate units, each with a stated amount of $25 and
includes a purchase contract to purchase CenturyTel, Inc. common
stock and $25 principal amount of CenturyTel, Inc., 6.02% sr. nts.,
series j, due 2007), Non-Vtg. 5 160,000 4,544,000
13 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
Market Value
Shares See Note 1
- ----------------------------------------------------------------------------------------------------------------------
Diversified Telecommunication Services Continued
Sprint Corp., Cv. Unsec. Equity Units [each equity unit consists of units
referred to as corporate units which consist of $25 principal amount of
Sprint Capital Corp., 6% sr. nts., 8/17/06 and a purchase contract to
purchase Sprint Corp. (PCS Group) common stock] 5 250,000 $ 1,987,500
-----------------
11,506,500
- ----------------------------------------------------------------------------------------------------------------------
Utilities--4.9%
- ----------------------------------------------------------------------------------------------------------------------
Electric Utilities--3.6%
Cinergy Corp., 9.50% Cv. Flexible Equity Linked Exchangeable Preferred
Redeemable Increased Dividend Equity Securities (each feline prides
consists of units referred to as income prides, each with a stated amount
of $50, each income pride will include a purchase contract to purchase
Cinergy Corp. common stock; each income prides also includes a 6.90%
preferred trust security due 2007 issued by CC Funding Trust I) 5 65,000 3,850,600
- ----------------------------------------------------------------------------------------------------------------------
DTE Energy Co., 8.75% Cv. Equity Units (each unit has a stated value of
$25 and consists of a contract to purchase DTE Energy Co. common stock
and $25 principal amount of DTE Energy Co., 4.15% sr. unsec. nts., 8/16/07) 5 135,000 3,549,150
- ----------------------------------------------------------------------------------------------------------------------
Duke Energy Corp., 8.25% Cv. Equity Units (each equity unit consists of
units referred to as corporate units which consist of $25 principal amount
of a 5.87% sr. nts., due 2006 and a contract to purchase Duke Energy Corp.
common stock), Non-Vtg. 5 100,000 1,586,000
- ----------------------------------------------------------------------------------------------------------------------
FPL Group, Inc., 8.50% Cv. Equity Units (each unit consists of corporate
units, each with a stated amount of $50 and includes a purchase contract
to purchase FPL Group, Inc. common stock and $50 principal amount of
FPL Group Capital, Inc., 4.75% debs., series a, 2/16/07) 5 120,000 7,155,600
- ----------------------------------------------------------------------------------------------------------------------
Newell Financial Trust I, 5.25% Cum. Quarterly Income Preferred
Securities, Non-Vtg. 100,000 4,762,500
-----------------
20,903,850
- ----------------------------------------------------------------------------------------------------------------------
Gas Utilities--0.6%
Sempra Energy, 8.50% Cv. Equity Units (each equity unit consists of income
equity units, each has a stated value of $25 and consists of a purchase
contract to purchase Sempra Energy common stock and $25 principal
amount of Sempra Energy, 5.60% sr. nts., 5/17/07) 5 135,000 3,704,400
- ----------------------------------------------------------------------------------------------------------------------
Multi-Utilities &Unregulated Power--0.7%
Williams Cos., Inc. (The), 5.50% Cv. Sub. Nts. 1,6 75,000 4,068,750
-----------------
Total Preferred Stocks (Cost $166,555,831) 178,603,902
- ----------------------------------------------------------------------------------------------------------------------
Common Stocks--1.5%
Danskin, Inc., Restricted Common Shares 4,6,7 2,015,119 --
- ----------------------------------------------------------------------------------------------------------------------
Johnson & Johnson 50,000 2,585,000
- ----------------------------------------------------------------------------------------------------------------------
Pfizer, Inc. 120,000 4,098,000
- ----------------------------------------------------------------------------------------------------------------------
SystemOne Technologies, Inc. 6 197,142 110,400
- ----------------------------------------------------------------------------------------------------------------------
U.S. Bancorp 75,000 1,837,500
-----------------
Total Common Stocks (Cost $8,521,069) 8,630,900
14 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
Market Value
Units See Note 1
- -----------------------------------------------------------------------------------------------------------------------
Rights, Warrants and Certificates--0.0%
Danskin, Inc. Wts., Exp. 10/8/04 4,6,7 367,801 $ --
- -----------------------------------------------------------------------------------------------------------------------
Portion of Danskin, Inc. Promissory Nt. to be used to purchase 53,309
shares of restricted common stock in rights offering 4,6,7 -- 15,993
-------------
Total Rights, Warrants and Certificates (Cost $15,993) 15,993
Principal
Amount
- -----------------------------------------------------------------------------------------------------------------------
U.S. Government Obligations--4.4%
U.S. Treasury Nts., 3.625%, 3/31/04 (Cost $25,009,570) $25,000,000 25,501,000
- -----------------------------------------------------------------------------------------------------------------------
Structured Notes--5.0%
Bank of America Corp., Linked Sr. Nts., Series RTY, 7%, 3/3/04
(redemption linked to Russell 2000 Index) 6,500,000 7,212,880
- -----------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Corp. (New York Branch), Comcast Corp.
Cv. Equity Linked Nts., 8%, 12/23/03 153,000 4,437,000
- -----------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., Capped Appreciation Linked Nts., 6%, 10/7/03
(linked to the performance of the Standard & Poor's 500 Index) 15,000,000 17,283,750
-------------
Total Structured Notes (Cost $25,195,493) 28,933,630
- -----------------------------------------------------------------------------------------------------------------------
Joint Repurchase Agreements--2.2%
Undivided interest of 4.88% in joint repurchase agreement (Principal
Amount/Market Value $259,526,000, with a maturity value of $259,533,642)
with Banc One Capital Markets, Inc., 1.06%, dated 6/30/03, to be repurchased
at $12,656,373 on 7/1/03, collateralized by U.S. Treasury Nts., 4.75%--5.875%,
2/15/04, with a value of $117,973,141 and U.S. Treasury Bonds, 1.75%--3.375%,
4/30/04--12/31/04, with a value of $146,937,726 (Cost $12,656,000) 12,656,000 12,656,000
- ---------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $547,050,598) 99.5% 576,314,591
- ---------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.5 2,869,151
-------------------------------
Net Assets 100.0% $579,183,742
===============================
15 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
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 $157,376,450 or 27.17% of the Fund's net
assets as of June 30, 2003.
2. Zero coupon bond reflects effective yield on the date of purchase.
3. Represents the current interest rate for a variable or increasing rate
security.
4. Identifies issues considered to be illiquid or restricted--See Note 6 of
Notes to Financial Statements.
5. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units, which
represent debt securities, principal amount disclosed represents total
underlying principal.
6. Non-income producing security.
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 June 30, 2003. The
aggregate fair value of securities of affiliated companies held by the Fund as
of June 30, 2003 amounts to $15,993. Transactions during the period in which the
issuer was an affiliate are as follows:
Shares/Units Gross Gross Shares/Units Unrealized Realized
December 31, 2002 Additions Reductions June 30, 2003 Depreciation Loss
- -----------------------------------------------------------------------------------------------------------------------------------
Stocks and/or Warrants
Danskin, Inc. 2,610,710 -- 2,610,710 -- $ -- $ 3,047,417
Danskin, Inc., Restricted
Common Shares 2,015,119 -- -- 2,015,119 528,136 --
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 -- -- -- -- -- --
--------------------------------
$ 528,136 $ 3,047,417
================================
See accompanying Notes to Financial Statements.
16 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited
June 30, 2003
- ------------------------------------------------------------------------------------------
Assets
Investments, at value--see accompanying statement:
Unaffiliated companies (cost $546,506,469) $ 576,298,598
Affiliated companies (cost $544,129) 15,993
---------------
576,314,591
- ------------------------------------------------------------------------------------------
Cash 542,888
- ------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 7,682,534
Interest and dividends 4,066,742
Shares of beneficial interest sold 1,901,865
Other 24,470
---------------
Total assets 590,533,090
- ------------------------------------------------------------------------------------------
Liabilities
Payables and other liabilities:
Investments purchased 8,236,173
Dividends 1,467,200
Shares of beneficial interest redeemed 1,014,815
Distribution and service plan fees 338,853
Trustees' compensation 101,904
Transfer and shareholder servicing agent fees 82,109
Shareholder reports 71,837
Other 36,457
----------------
Total liabilities 11,349,348
- ------------------------------------------------------------------------------------------
Net Assets $ 579,183,742
===============
- ------------------------------------------------------------------------------------------
Composition of Net Assets
Paid-in capital $ 704,690,846
- ------------------------------------------------------------------------------------------
Overdistributed net investment income (2,108,934)
- ------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (152,662,163)
- ------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 29,263,993
---------------
Net Assets $ 579,183,742
===============
17 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited / Continued
- -------------------------------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$251,851,536 and 20,454,447 shares of beneficial interest outstanding) $12.31
Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price) $13.06
- -------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $144,808,534
and 11,743,136 shares of beneficial interest outstanding) $12.33
- -------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $70,306,331
and 5,713,216 shares of beneficial interest outstanding) $12.31
- -------------------------------------------------------------------------------------------------------
Class M Shares:
Net asset value and redemption price per share (based on net assets of
$111,525,916 and 9,063,179 shares of beneficial interest outstanding) $12.31
Maximum offering price per share (net asset value plus sales charge of
3.25% of offering price) $12.72
- -------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $691,425
and 56,159 shares of beneficial interest outstanding) $12.31
See accompanying Notes to Financial Statements.
18 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF OPERATIONS Unaudited
For the Six Months Ended June 30, 2003
- ----------------------------------------------------------------------------
Investment Income
Interest $ 9,876,403
- ----------------------------------------------------------------------------
Dividends 6,228,747
- ----------------------------------------------------------------------------
Other income 122,231
------------
Total investment income 16,227,381
- ----------------------------------------------------------------------------
Expenses
Management fees 1,302,578
- ----------------------------------------------------------------------------
Distribution and service plan fees:
Class A 267,049
Class B 714,927
Class C 316,347
Class M 367,532
Class N 1,209
- ----------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 210,659
Class B 154,015
Class C 57,553
Class M 42,308
Class N 1,066
- ----------------------------------------------------------------------------
Accounting service fees 82,305
- ----------------------------------------------------------------------------
Shareholder reports 51,456
- ----------------------------------------------------------------------------
Trustees' compensation 24,354
- ----------------------------------------------------------------------------
Custodian fees and expenses 4,328
- ----------------------------------------------------------------------------
Other 25,744
------------
Total expenses 3,623,430
Less reduction to custodian expenses (1,000)
Less voluntary waiver of transfer and shareholder
servicing agent fees--Class N (244)
------------
Net expenses 3,622,186
- ----------------------------------------------------------------------------
Net Investment Income 12,605,195
- ----------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments:
Unaffiliated companies 11,597,195
Affiliated companies (3,047,417)
Closing and expiration of option contracts written 96,305
------------
Net realized gain 8,646,083
- ----------------------------------------------------------------------------
Net change in unrealized appreciation on investments 39,177,960
- ----------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $60,429,238
============
See accompanying Notes to Financial Statements.
19 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Year
Ended Ended
June 30, 2003 December 31,
(Unaudited) 2002
- -------------------------------------------------------------------------------------------------------------------
Operations
Net investment income $ 12,605,195 $ 25,383,283
- -------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 8,646,083 (85,635,374)
- -------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 39,177,960 12,007,604
------------------------------------
Net increase (decrease) in net assets resulting from operations 60,429,238 (48,244,487)
- -------------------------------------------------------------------------------------------------------------------
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Class A (5,703,922) (10,356,782)
Class B (3,108,194) (9,416,327)
Class C (1,374,358) (3,014,487)
Class M (2,582,205) (5,875,935)
Class N (11,157) (11,341)
- -------------------------------------------------------------------------------------------------------------------
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest
transactions:
Class A 28,808,351 38,583,437
Class B (21,990,274) (103,076,509)
Class C 3,703,828 (7,317,685)
Class M (6,409,301) (20,269,990)
Class N 259,161 381,879
- -------------------------------------------------------------------------------------------------------------------
Net Assets
Total increase (decrease) 52,021,167 (168,618,227)
- -------------------------------------------------------------------------------------------------------------------
Beginning of period 527,162,575 695,780,802
------------------------------------
End of period [including overdistributed net investment
income of $2,108,934 and $1,934,293, respectively] $579,183,742 $ 527,162,575
====================================
See accompanying Notes to Financial Statements.
20 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS
Six Months Year
Ended Ended
June 30, 2003 Dec. 31,
(Unaudited) 2002 2001 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 11.29 $ 12.76 $ 13.85 $ 16.36 $ 14.84 $ 15.32
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .30 .57 .48 .72 .70 .70
Net realized and unrealized gain (loss) 1.02 (1.41) (.94) (1.45) 2.66 (.08)
----------------------------------------------------------------
Total from investment operations 1.32 (.84) (.46) (.73) 3.36 .62
- --------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.30) (.63) (.63) (.72) (.70) (.70)
Distributions from net realized gain -- -- -- (1.06) (1.14) (.40)
----------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.30) (.63) (.63) (1.78) (1.84) (1.10)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.31 $11.29 $12.76 $13.85 $16.36 $14.84
================================================================
- --------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 11.79% (6.59)% (3.30)% (4.81)% 23.37% 4.08%
- --------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $251,852 $202,968 $187,458 $210,903 $220,671 $221,693
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $226,319 $190,677 $197,514 $225,938 $207,008 $220,423
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 5.02% 4.77% 3.58% 4.42% 4.55% 4.55%
Expenses, gross 0.98% 0.99% 0.95% 0.90% 0.95% 0.93% 3
Expenses, net 0.98% 4 0.99% 4 0.95% 4 0.90% 4 0.95% 4 0.93%
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 36% 52% 69% 127% 95% 90%
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.
4. Reduction to custodian expenses less than 0.01%.
See accompanying Notes to Financial Statements.
21 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS Continued
Six Months Year
Ended Ended
June 30, 2003 Dec. 31,
Class B (Unaudited) 2002 2001 2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 11.30 $ 12.79 $ 13.87 $ 16.38 $ 14.87 $ 15.35
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .24 .43 .38 .59 .59 .58
Net realized and unrealized gain (loss) 1.04 (1.38) (.93) (1.45) 2.65 (.08)
-----------------------------------------------------------------
Total from investment operations 1.28 (.95) (.55) (.86) 3.24 .50
- ------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.25) (.54) (.53) (.59) (.59) (.58)
Distributions from net realized gain -- -- -- (1.06) (1.14) (.40)
-----------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.25) (.54) (.53) (1.65) (1.73) (.98)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.33 $11.30 $12.79 $13.87 $16.38 $14.87
=================================================================
- ------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 11.45% (7.44)% (3.97)% (5.55)% 22.35% 3.30%
- ------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $144,809 $154,350 $286,829 $373,860 $431,370 $445,544
- ------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $144,111 $213,259 $330,806 $418,592 $414,611 $441,677
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 4.28% 3.95% 2.75% 3.62% 3.79% 3.79%
Expenses, gross 1.77% 1.77% 1.71% 1.70% 1.71% 1.69% 3
Expenses, net 1.77% 4 1.77% 4 1.71% 4 1.70% 4 1.71% 4 1.69%
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 36% 52% 69% 127% 95% 90%
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.
4. Reduction to custodian expenses less than 0.01%.
See accompanying Notes to Financial Statements.
22 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
Six Months Year
Ended Ended
June 30, 2003 Dec. 31,
Class C (Unaudited) 2002 2001 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 11.28 $ 12.76 $ 13.84 $ 16.35 $ 14.84 $ 15.32
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .25 .46 .38 .59 .59 .58
Net realized and unrealized gain (loss) 1.03 (1.40) (.93) (1.45) 2.65 (.08)
---------------------------------------------------------------------
Total from investment operations 1.28 (.94) (.55) (.86) 3.24 .50
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.25) (.54) (.53) (.59) (.59) (.58)
Distributions from net realized gain -- -- -- (1.06) (1.14) (.40)
---------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.25) (.54) (.53) (1.65) (1.73) (.98)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.31 $11.28 $12.76 $13.84 $16.35 $14.84
=====================================================================
- ---------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 11.48% (7.39)% (3.98)% (5.56)% 22.41% 3.32%
- ---------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $70,306 $61,031 $76,846 $91,567 $94,352 $108,339
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $63,842 $66,391 $85,774 $96,574 $94,329 $105,974
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 4.28% 3.97% 2.80% 3.62% 3.80% 3.81%
Expenses, gross 1.73% 1.76% 1.71% 1.70% 1.70% 1.68% 3
Expenses, net 1.73% 4 1.76% 4 1.71% 4 1.70% 4 1.70% 4 1.68%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 36% 52% 69% 127% 95% 90%
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.
4. Reduction to custodian expenses less than 0.01%.
See accompanying Notes to Financial Statements.
23 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS Continued
Six Months Year
Ended Ended
June 30, 2003 Dec. 31,
Class M (Unaudited) 2002 2001 2000 1999 1998
- -------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $11.28 $12.76 $13.84 $16.35 $14.84 $15.32
- -------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .27 .49 .41 .64 .63 .62
Net realized and unrealized gain (loss) 1.04 (1.40) (.93) (1.45) 2.65 (.08)
--------------------------------------------------------------------
Total from investment operations 1.31 (.91) (.52) (.81) 3.28 .54
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.28) (.57) (.56) (.64) (.63) (.62)
Distributions from net realized gain -- -- -- (1.06) (1.14) (.40)
--------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.28) (.57) (.56) (1.70) (1.77) (1.02)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.31 $11.28 $12.76 $13.84 $16.35 $14.84
--------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 11.71% (7.16)% (3.72)% (5.30)% 22.74% 3.58%
- -------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $111,526 $108,426 $144,612 $181,521 $234,023 $263,716
- -------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $108,752 $122,897 $160,919 $213,617 $235,419 $288,953
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 4.72% 4.24% 3.04% 3.90% 4.06% 4.02%
Expenses, gross 1.31% 1.51% 1.45% 1.42% 1.45% 1.43% 3
Expenses, net 1.31% 4 1.51% 4 1.45% 4 1.42% 4 1.45% 4 1.43%
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 36% 52% 69% 127% 95% 90%
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods less than one full
year. Returns do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Expense ratio has been calculated without adjustment for the reduction to
custodian expenses.
4. Reduction to custodian expenses less than 0.01%.
See accompanying Notes to Financial Statements.
24 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
Six Months Year
Ended Ended
June 30, 2003 Dec. 31,
Class N (Unaudited) 2002 2001 1
- ------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $11.29 $12.76 $13.68
- ------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .26 .55 .42
Net realized and unrealized gain (loss) 1.03 (1.43) (.84)
------------------------------------
Total from investment operations 1.29 (.88) (.42)
- ------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.27) (.59) (.50)
Distributions from net realized gain -- -- --
------------------------------------
Total dividends and/or distributions to shareholders (.27) (.59) (.50)
- ------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.31 $11.29 $12.76
------------------------------------
- ------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 11.57% (6.92)% (3.02)%
- ------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $691 $388 $36
- ------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $489 $205 $10
- ------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.55% 4.38% 5.45%
Expenses, gross 1.49% 1.43% 1.22%
Expenses, net 1.39% 4,5 1.38% 4,5 1.22% 4
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate 36% 52% 69%
1. For the period from March 1, 2001 (inception of offering) to December 31,
2001.
2. Assumes an 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. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
5. Net of voluntary waiver of transfer agent fees.
See accompanying Notes to Financial Statements.
25 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer Convertible Securities Fund (the Fund), a portfolio of the Bond
Fund Series, is registered under the Investment Company Act of 1940, as
amended, as an openend management investment company. The Fund's investment
objective is to seek a high level of total return on its assets through a
combination of current income and capital appreciation. The Fund's investment
advisor is OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B, Class C, Class M and Class N shares. Class
A shares are sold at their offering price, which is normally net asset value
plus a front-end sales charge. Class B, Class C and Class N shares are sold
without a front-end sales charge but may be subject to a contingent deferred
sales charge (CDSC). Class M shares are sold with a reduced front-end sales
charge. Class N shares are sold only through retirement plans. Retirement plans
that offer Class N shares may impose charges on those accounts. All classes of
shares have identical rights and voting privileges. Earnings, net assets and
net asset value per share may differ by minor amounts due to each class having
its own expenses directly attributable to that class. Classes A, B, C, M and N
have separate distribution and/or service plans. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Securities listed or traded on National Stock Exchanges
or other domestic or foreign exchanges are valued based on the last sale price
of the security traded on that exchange prior to the time when the Fund's
assets are valued. Securities traded on NASDAQ are valued based on the closing
price provided by NASDAQ prior to the time when the Fund's assets are valued.
In the absence of a sale, the security is valued at the last sale price on the
prior trading day, if it is within the spread of the closing bid and asked
prices, and if not, at the closing bid price. Securities (including restricted
securities) for which quotations are not readily available are valued primarily
using dealer-supplied valuations, a portfolio pricing service authorized by the
Board of Trustees, or at their fair value. Fair value is determined in good
faith using consistently applied procedures under the supervision of the Board
of Trustees. Short-term "money market type" debt securities with remaining
maturities of sixty days or less are valued at amortized cost (which
approximates market value).
- --------------------------------------------------------------------------------
Structured Notes. The Fund invests in structured notes whose market values and
redemption prices are linked to the market value of specific securities. The
structured notes are leveraged, which increases the Fund's exposure to changes
in prices of the underlying securities and increases the volatility of each
note's market value relative to the change in the underlying security prices.
Fluctuations in value of these securities are recorded as unrealized gains and
losses in the accompanying financial statements. The Fund records a realized
gain or loss when a structured note is sold or matures. As of June 30, 2003,
the market value of these securities comprised 5.0% of the Fund's net assets,
and resulted in unrealized gains in the current period of $3,738,137.
26 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
- --------------------------------------------------------------------------------
Joint Repurchase Agreements. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint
trading accounts on a daily basis. Secured by U.S. government securities, these
balances are invested in one or more repurchase agreements. Securities pledged
as collateral for repurchase agreements are held by a custodian bank until the
agreements mature. Each agreement requires that the market value of the
collateral be sufficient to cover payments of interest and principal. In the
event of default by the other party to the agreement, retention of the
collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis 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 comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
As of June 30, 2003, the Fund had available for federal income tax purposes
an estimated unused capital loss carryforward of $149,520,300. This estimated
capital loss carryforward represents carryforward as of the end of the last
fiscal year, increased for losses deferred under tax accounting rules to the
current fiscal year and increased or decreased by capital losses or gains
realized in the first six months of the current fiscal year. During the six
months ended June 30, 2003, the Fund used $8,646,083 of carryforward to offset
capital gains realized. During the year ended December 31, 2002, the Fund did
not use carryforward to offset capital gains realized.
As of December 31, 2002, the Fund had available for federal income tax purposes
unused capital loss carryforwards as follows:
Expiring
----------------------
2009 $ 63,029,288
2010 90,466,996
------------
Total $153,496,284
============
- --------------------------------------------------------------------------------
Trustees' Compensation. The Fund has adopted a nonfunded retirement plan for
the Fund's independent trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service. During the six months
ended June 30, 2003, the Fund's projected benefit obligations were increased by
$9,556 and payments of $2,372 were made to retired trustees, resulting in an
accumulated liability of $98,299 as of June 30, 2003.
27 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / 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
the annual compensation they are entitled to receive from the Fund. Under the
plan, deferred amounts are treated as though equal dollar amounts had been
invested in shares of the Fund or are invested in other selected Oppenheimer
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. Amounts will be deferred until distributed in
accordance to the Plan.
- --------------------------------------------------------------------------------
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. Capital gain distributions, if any, are
declared and paid annually.
- --------------------------------------------------------------------------------
Classification of Dividends and Distributions to Shareholders. Net investment
income (loss) and net realized gain (loss) may differ for financial statement
and tax purposes. The character of dividends and distributions made during the
fiscal year from net investment income or net realized gains may differ from
their ultimate characterization for federal income tax purposes. Also, due to
timing of dividends and distributions, the fiscal year in which amounts are
distributed may differ from the fiscal year in which the income or net realized
gain was recorded by the Fund.
The tax character of distributions paid during the six months ended June 30,
2003 and the year ended December 31, 2002 was as follows:
Six Months Ended Year Ended
June 30, 2003 December 31, 2002
-----------------------------------------------------------
Distributions paid from:
Ordinary income $12,779,836 $28,674,872
- --------------------------------------------------------------------------------
Investment Income. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and
amortization of premium, is accrued as earned.
- --------------------------------------------------------------------------------
Expense Offset Arrangement. The reduction of custodian fees represents earnings
on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Security Transactions. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
Other. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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
28 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
- --------------------------------------------------------------------------------
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
Six Months Ended June 30, 2003 Year Ended December 31, 2002
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------
Class A
Sold 4,831,043 $ 56,517,828 8,236,543 $ 96,210,339
Dividends and/or
distributions reinvested 374,518 4,434,695 712,104 8,199,709
Redeemed (2,735,634) (32,144,172) (5,651,194) (65,826,611)
------------------------------------------------------------------------
Net increase 2,469,927 $ 28,808,351 3,297,453 $ 38,583,437
------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Class B
Sold 1,467,918 $ 17,341,605 1,455,217 $ 17,209,549
Dividends and/or
distributions reinvested 182,647 2,158,625 550,830 6,406,897
Redeemed (3,562,388) (41,490,504) (10,784,316) (126,692,955)
------------------------------------------------------------------------
Net decrease (1,911,823) $(21,990,274) (8,778,269) $(103,076,509)
------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Class C
Sold 990,599 $ 11,757,194 947,643 $ 10,925,314
Dividends and/or
distributions reinvested 79,037 933,648 173,843 2,006,345
Redeemed (767,149) (8,987,014) (1,734,724) (20,249,344)
------------------------------------------------------------------------
Net increase (decrease) 302,487 $ 3,703,828 (613,238) $ (7,317,685)
------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Class M
Sold 101,734 $ 1,199,499 169,391 $ 1,991,974
Dividends and/or
distributions reinvested 153,319 1,809,582 344,816 3,977,838
Redeemed (804,903) (9,418,382) (2,237,918) (26,239,802)
------------------------------------------------------------------------
Net decrease (549,850) $ (6,409,301) (1,723,711) $ (20,269,990)
------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Class N
Sold 29,644 $ 349,188 37,735 $ 451,651
Dividends and/or
distributions reinvested 808 9,625 855 9,599
Redeemed (8,632) (99,652) (7,108) (79,371)
------------------------------------------------------------------------
Net increase 21,820 $ 259,161 31,482 $ 381,879
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the six months ended June 30, 2003, were
$183,237,053 and $168,982,631, respectively.
29 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with
the investment advisory agreement with the Fund which provides for a fee at an
annual rate of 0.625% of the first $50 million of average annual net assets of
the Fund, 0.50% of the next $250 million and 0.4375% of average annual net
assets over $300 million.
- --------------------------------------------------------------------------------
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. During the six months ended, the Fund
paid $82,305 to the Manager for accounting and pricing services.
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the
Manager, acts as the transfer and shareholder servicing agent for the Fund. The
Fund pays OFS a $19.75 per account fee.
OFS has voluntarily agreed to limit transfer and shareholder servicing agent
fees for all classes, up to an annual rate of 0.35% of average net assets per
class. This undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
Distribution and Service Plan (12b-1) Fees. Under its General Distributor's
Agreement with the Manager, OppenheimerFunds Distributor, Inc. (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.
Aggregate Aggregate Class A Class M
Front-End Front-End Front-End Front-End
Sales Charges Sales Charges Sales Charges Sales Charges
on Class A on Class M Retained by Retained by
Six Months Ended Shares Shares Distributor Distributor
- ------------------------------------------------------------------------------------------------------
June 30, 2003 $187,902 $22,600 $177,722 $1,733
Concessions Concessions Concessions Concessions Concessions
on Class A on Class B on Class C on Class M on Class N
Shares Shares Shares Shares Shares
Advanced by Advanced by Advanced by Advanced by Advanced by
Six Months Ended Distributor 1 Distributor 1 Distributor 1 Distributor 1 Distributor 1
- ------------------------------------------------------------------------------------------------------------------------
June 30, 2003 $14,756 $323,033 $38,678 $108 $1,879
1. The Distributor advances concession payments to dealers for certain sales of
Class A shares and for sales of Class B, Class C, Class M and Class N shares
from its own resources at the time of sale.
Class A Class B Class C Class M Class N
Contingent Contingent Contingent Contingent Contingent
Deferred Deferred Deferred Deferred Deferred
Sales Charges Sales Charges Sales Charges Sales Charges Sales Charges
Retained by Retained by Retained by Retained by Retained by
Six Months Ended Distributor Distributor Distributor Distributor Distributor
- -------------------------------------------------------------------------------------------------------------------
June 30, 2003 $6,691 $191,223 $2,326 $-- $197
30 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
- --------------------------------------------------------------------------------
Service Plan for Class A Shares. The Fund has adopted a Service Plan for Class
A Shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. For the six months ended June 30, 2003, expense
under the Class A Plan totaled $267,049, all of which were paid by the
Distributor to recipients, which includes $1,830 retained by the Distributor
and $7,394 which was 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.
- --------------------------------------------------------------------------------
Distribution and Service Plans for Class B, Class C, Class M and Class N
Shares. The Fund has adopted Distribution and Service Plans for Class B, Class
C, Class M and Class N shares. Under the plans, the Fund pays the Distributor
an annual asset-based sales charge of 0.75% per year on Class B shares and on
Class C shares and the Fund pays an annual asset-based sales charge of 0.50% on
Class M shares and the Fund pays the Distributor an annual asset-based sales
charge of 0.25% per year on Class N shares. The Distributor also receives a
service fee of 0.25% per year under each of the Class B, Class C, Class M and
Class N plans.
Distribution fees paid to the Distributor for the six months ended June 30,
2003, were as follows:
Distributor's
Distributor's Aggregate
Aggregate Unreimbursed
Unreimbursed Expenses as %
Total Payments Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
- ---------------------------------------------------------------------------------------------
Class B Plan $714,927 $453,078 $3,470,946 2.40%
Class C Plan 316,347 92,340 1,899,256 2.70
Class M Plan 367,532 117,579 -- --
Class N Plan 1,209 995 9,770 1.41
- --------------------------------------------------------------------------------
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.
31 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
5. Option Activity Continued
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a note
to the Statement of Investments. Options written are reported as a liability in
the Statement of Assets and Liabilities. Realized gains and losses are reported
in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the opportunity
for profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Fund may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the Fund pays a premium whether or not the
option is exercised. The Fund also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not exist.
Written option activity for the six months ended June 30, 2003 was as follows:
Call Options
---------------------------
Number of Amount of
Contracts Premiums
- --------------------------------------------------------------------
Options outstanding as of
December 31, 2002 -- $ --
Options written 1,800 446,093
Options closed or expired (1,800) (446,093)
---------------------------
Options outstanding as of
June 30, 2003 -- $ --
---------------------------
- --------------------------------------------------------------------------------
6. Illiquid or Restricted Securities
As of June 30, 2003, investments in securities included issues that are
illiquid or restricted. Restricted securities are purchased in private
placement transactions, are not registered under the Securities Act of 1933,
may have contractual restrictions on resale, and are valued under methods
approved by the Board of Trustees as reflecting fair value. A security may also
be considered illiquid if it lacks a readily available market or if its
valuation has not changed for a certain period of time. The Fund intends to
invest no more than 15% of its net assets (determined at the time of purchase
and reviewed periodically) in illiquid or restricted securities. Certain
restricted securities, eligible for resale to qualified institutional
investors, are not subject to that limitation. The aggregate value of illiquid
or restricted securities subject to this limitation as of June 30, 2003 was
$6,116,209, which represents 1.06% of the Fund's net assets, of which $15,993
is considered restricted. Information concerning restricted securities is as
follows:
Acquisition Valuation as of Unrealized
Security Dates Cost June 30, 2003 Depreciation
- ------------------------------------------------------------------------------------------------------------------------
Stocks and/or Warrants
Danskin, Inc., Restricted
Common Shares 8/14/95 $528,136 $ -- $528,136
Danskin, Inc. Wts., Exp. 10/8/04 8/14/95 -- -- --
Portion of Danskin, Inc. Promissory Nt.
to be used to purchase 53,309 shares of
restricted common stock in rights offering 8/14/95 15,993 15,993 --
32 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
- --------------------------------------------------------------------------------
7. Bank Borrowings
The Fund may borrow up to a certain percentage of its total assets from a bank
to purchase portfolio securities, or for temporary and emergency purposes. The
purchase of securities with borrowed funds creates leverage in the Fund. The
Fund has entered into an agreement which enables it to participate with certain
other Oppenheimer funds in a committed, unsecured line of credit with a bank,
which permits borrowings up to $350 million, collectively. Interest is charged
to each fund, based on its borrowings, at a rate equal to the Federal Funds
Rate plus 0.625%. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.09% per annum.
The Fund had no borrowings outstanding for the six months ended or at June
30, 2003.
- --------------------------------------------------------------------------------
Portfolio Proxy Voting Policies and Procedures
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and
Procedures is available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.225.5677, (ii) on the Fund's website at
www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In
addition, the Fund will be required to file new Form N-PX, with its complete
proxy voting record for the 12 months ended June 30th, no later than August
31st of each year. The first such filing is due no later than August 31, 2004,
for the twelve months ended June 30, 2004. Once filed, the Fund's Form N-PX
filing will be available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.225.5677, and (ii) on the SEC's website at www.sec.gov.
33 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
ITEM 2. CODE OF ETHICS - NOT REQUIRED
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT - NOT REQUIRED
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES - NOT REQUIRED
ITEM 5. RESERVED
ITEM 6. RESERVED
ITEM 7. NOT APPLICABLE
ITEM 8. RESERVED
ITEM 9. CONTROLS AND PROCEDURES
(a) Based on their evaluation of registrant's disclosure controls and
procedures (as defined in rule 30a-2(c) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(c)) as of June 30, 2003, registrant's
principal executive officer and principal financial officer found
registrant's disclosure controls and procedures to be appropriately
designed to ensure that information required to be disclosed by
registrant in the reports that it files under the Securities Exchange
Act of 1934 (a) is accumulated and communicated to registrant's
management, including its principal executive officer and principal
financial officer, to allow timely decisions regarding required
disclosure, and (b) is recorded, processed, summarized and reported,
within the time periods specified in the rules and forms adopted by the
U.S. Securities and Exchange Commission.
(b) There have been no significant changes in registrant's internal
controls or in other factors that could significantly affect
registrant's internal controls subsequent to the date of the most
recent evaluation as indicated, including no significant deficiencies
or material weaknesses that required corrective action.
ITEM 10. EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)