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.
Two World Financial Center, New York, New York 10281-1008
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(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
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Date of fiscal year end: DECEMBER 31
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Date of reporting period: JANUARY 1, 2003 - DECEMBER 31, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED DECEMBER 31, 2003, FOLLOWED
BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO APPROPRIATE BROAD-BASED
MARKET INDICES.
MANAGEMENT'S DISCUSSION OF PERFORMANCE. Oppenheimer Convertible Securities
Fund's fiscal year, which ended December 31, 2003, was underscored by a steady
rebound in the U.S. equity markets. This, along with the continuation of a
bond-market rally that prevailed through May, helped create a favorable backdrop
for the Fund's performance for the year.
In general, the Fund's broad mix of securities again proved to benefit
performance. This strategy maintained the portfolio's exposure to various
segments of the convertible bond market, which as a whole performed well this
period, buoyed by strong returns in the equity markets. Specifically, the Fund's
exposure to lower-quality convertibles--which somewhat outperformed their
higher-quality counterparts during most of the period--helped add to
performance. Conversely, the Fund's relative underweighting of these bonds
versus many peer funds cost the Fund marginal returns. Had we increased the
Fund's allocation to lower-quality convertibles, we might have added to
performance. However, we believe to do so would not have been in line with the
Fund's long-term strategy of striving for a broad mix of convertible bonds and a
more diversified exposure to the convertible bond market at large.
Another factor that added to performance, specifically during the first few
months of the period, was the fact that bonds continued their prolonged rally
through May. In the early months of the period, investors' appetite for risk
remained muted due to geopolitical tensions and mixed performance in the stock
markets. The overall good performance of many fixed-income securities at that
time boosted investor interest in convertibles and thereby helped support Fund
performance.
As was the case for the first half of the Fund's fiscal year, the Fund's
exposure to the technology sector significantly added to performance. Since
corporate spending on technology generally improved this period, technology
remained a market leader throughout the year, and since it typically represents
one of the portfolio's largest holdings, the Fund's returns benefited
substantially. Likewise, Xerox Corp. was a strong performer for the Fund's
portfolio, as the company began to see the effects of major improvements in
their business model and internal structure come to fruition. Finally, Advanced
Micro Devices, Inc., which also enjoyed a significant turnaround this year
thanks to several new product launches, posted favorable gains, thereby
supporting overall Fund performance. While our technology exposure provided
positive performance across the board, a few of our technology holdings--while
still posting gains--marginally lagged the technology sector at large. For
example, although LSI Logic Corp., a semiconductor company, generated positive
returns, it slightly trailed the bulk of our technology holdings. Given this, we
are pleased with the decision to maintain an overweighted exposure to this
sector.
6 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
Our experience regarding the telecommunications sector remained mixed
throughout the period, as many wireless carriers continue to struggle amid
fierce price competition. However, some of the Fund's best performers came from
the telecommunications equipment providers segment of this sector. For example,
Lucent Technologies, Inc. remained a strong performer throughout the period,
markedly benefiting performance.
The most significant factor detracting from Fund performance this year was
the fact that we held less exposure to lower-quality convertible bonds than many
of our peers. We believe, from a long-term perspective, this represents only a
marginal impact to performance, and we adhere to those strategies that we
believe will lead to favorable and consistent long-term risk-adjusted returns.
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the
performance of a hypothetical $10,000 investment in each class of shares of the
Fund held until December 31, 2003. In the case of Class A and Class B shares,
performance is measured from inception of the Class on May 1, 1995. In the case
of Class C shares, performance is measured from inception of the Class on March
11, 1996. In the case of Class M shares, performance is measured over a 10-year
period. In the case of Class N shares, performance is measured from inception of
the Class on March 1, 2001. The performance information for all three indices in
the graphs begins on 4/30/95 for Class A and Class B, 2/29/96 for Class C,
12/31/93 for Class M and 2/28/01 for Class N shares. The Fund's performance
reflects the deduction of the maximum initial sales charge on Class A and Class
M shares, the applicable contingent deferred sales charge on Class B, Class C
and Class N shares, and reinvestments of all dividends and capital gains
distributions. Past performance cannot guarantee future results.
The Fund's performance is compared to the performance of the Lehman Brothers
Aggregate Bond Index, Goldman Sachs Convertible Bond 100 Index, and the S&P 500
Index. The Lehman Brothers Aggregate Bond Index is a broad-based, unmanaged
index of U.S. corporate bond issues, U.S. government securities and
mortgage-backed securities, widely recognized as a measure of the performance of
the domestic debt securities market. The Goldman Sachs Convertible Bond 100
Index is an unmanaged index of convertible securities. The S&P 500 Index is a
broad-based index of equity securities widely regarded as a general measurement
of the performance of the U.S. equity securities market. Index performance
reflects the reinvestment of income but does not consider the effect of
transaction costs, and none of the data in the graphs shows the effect of taxes.
The Fund's performance reflects the effects of Fund's business and operating
expenses. While index comparisons may be useful to provide a benchmark for the
Fund's performance, it must be noted that the Fund's investments are not limited
to the investments in the indices.
7 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
FUND PERFORMANCE DISCUSSION
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CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Convertible Securities Fund (Class A)
Lehman Brothers Aggregate Bond Index
Goldman Sachs Convertible Bond 100 Index
S&P 500 Index
[LINE GRAPH]
Goldman Sachs
Oppenheimer Convertible Lehman Brothers Convertible Bond
Securities Fund (Class A) Aggregate Bond Index 100 Index S&P 500 Index
05/01/1995 $ 9,425 $10,000 $10,000 $10,000
06/30/1995 9,970 10,463 10,631 10,640
09/30/1995 10,798 10,669 11,224 11,485
12/31/1995 10,890 11,123 11,480 12,176
03/31/1996 11,120 10,926 12,174 12,829
06/30/1996 11,349 10,988 12,423 13,404
09/30/1996 11,592 11,191 12,796 13,819
12/31/1996 11,992 11,527 13,054 14,970
03/31/1997 12,224 11,463 13,231 15,372
06/30/1997 13,203 11,884 14,461 18,053
09/30/1997 14,233 12,278 15,967 19,405
12/31/1997 14,243 12,640 15,599 19,962
03/31/1998 15,438 12,836 16,949 22,745
06/30/1998 15,035 13,136 16,769 23,500
09/30/1998 13,444 13,692 14,778 21,168
12/31/1998 14,824 13,738 16,805 25,671
03/31/1999 15,065 13,670 17,097 26,950
06/30/1999 16,044 13,550 18,517 28,846
09/30/1999 15,677 13,642 17,936 27,049
12/31/1999 18,290 13,625 20,261 31,071
03/31/2000 19,336 13,926 21,507 31,783
06/30/2000 18,941 14,168 21,836 30,938
09/30/2000 19,153 14,595 22,821 30,639
12/31/2000 17,410 15,209 20,742 28,243
03/31/2001 16,781 15,671 19,696 24,897
06/30/2001 17,371 15,759 19,593 26,353
09/30/2001 15,754 16,486 17,801 22,486
12/31/2001 16,836 16,493 19,057 24,889
03/31/2002 16,970 16,509 18,687 24,957
06/30/2002 15,970 17,118 17,254 21,616
09/30/2002 14,608 17,903 15,688 17,884
12/31/2002 15,727 18,185 17,290 19,390
03/31/2003 16,143 18,438 17,599 18,780
06/30/2003 17,581 18,899 19,223 21,669
09/30/2003 18,049 18,871 19,849 22,242
12/31/2003 19,336 18,931 21,316 24,949
<FN>
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES OF THE FUND WITH SALES CHARGE AT 12/31/03
1-Year 15.88% 5-Year 4.22% Since Inception 7.90% Inception Date 5/1/95
</FN>
8 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Convertible Securities Fund (Class B)
Lehman Brothers Aggregate Bond Index
Goldman Sachs Convertible Bond 100 Index
S&P 500 Index
[LINE GRAPH]
Goldman Sachs
Oppenheimer Convertible Lehman Brothers Convertible Bond
Securities Fund (Class B) Aggregate Bond Index 100 Index S&P 500 Index
05/01/1995 $10,000 $10,000 $10,000 $10,000
06/30/1995 10,566 10,463 10,631 10,640
09/30/1995 11,421 10,669 11,224 11,485
12/31/1995 11,509 11,123 11,480 12,176
03/31/1996 11,730 10,926 12,174 12,829
06/30/1996 11,948 10,988 12,423 13,404
09/30/1996 12,180 11,191 12,796 13,819
12/31/1996 12,577 11,527 13,054 14,970
03/31/1997 12,797 11,463 13,231 15,372
06/30/1997 13,796 11,884 14,461 18,053
09/30/1997 14,844 12,278 15,967 19,405
12/31/1997 14,832 12,640 15,599 19,962
03/31/1998 16,045 12,836 16,949 22,745
06/30/1998 15,587 13,136 16,769 23,500
09/30/1998 13,912 13,692 14,778 21,168
12/31/1998 15,322 13,738 16,805 25,671
03/31/1999 15,542 13,670 17,097 26,950
06/30/1999 16,509 13,550 18,517 28,846
09/30/1999 16,112 13,642 17,936 27,049
12/31/1999 18,747 13,625 20,261 31,071
03/31/2000 19,781 13,926 21,507 31,783
06/30/2000 19,343 14,168 21,836 30,938
09/30/2000 19,529 14,595 22,821 30,639
12/31/2000 17,708 15,209 20,742 28,243
03/31/2001 17,033 15,671 19,696 24,897
06/30/2001 17,618 15,759 19,593 26,353
09/30/2001 15,979 16,486 17,801 22,486
12/31/2001 17,076 16,493 19,057 24,889
03/31/2002 17,212 16,509 18,687 24,957
06/30/2002 16,198 17,118 17,254 21,616
09/30/2002 14,816 17,903 15,688 17,884
12/31/2002 15,951 18,185 17,290 19,390
03/31/2003 16,373 18,438 17,599 18,780
06/30/2003 17,832 18,899 19,223 21,669
09/30/2003 18,307 18,871 19,849 22,242
12/31/2003 19,612 18,931 21,316 24,949
<FN>
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES OF THE FUND WITH SALES CHARGE AT 12/31/03
1-Year 17.07% 5-Year 4.33% Since Inception 8.08% Inception Date 5/1/95
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR MORE CURRENT
PERFORMANCE DATA, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800 CALL
OPP (255.5677). FUND RETURNS INCLUDE CHANGES IN SHARE PRICE, REINVESTED
DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES, THE CURRENT
MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE CONTINGENT
DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); FOR CLASS C AND N SHARES,
THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD; AND FOR CLASS M
SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 3.25%. SEE PAGE 13 FOR
FURTHER DETAILS. GRAPHS ARE NOT DRAWN TO SAME SCALE.
</FN>
9 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Convertible Securities Fund (Class C)
Lehman Brothers Aggregate Bond Index
Goldman Sachs Convertible Bond 100 Index
S&P 500 Index
[LINE GRAPH]
Goldman Sachs
Oppenheimer Convertible Lehman Brothers Convertible Bond
Securities Fund (Class C) Aggregate Bond Index 100 Index S&P 500 Index
03/11/1996 $10,000 $10,000 $10,000 $10,000
03/31/1996 10,048 9,930 10,138 10,096
06/30/1996 10,235 9,987 10,344 10,549
09/30/1996 10,426 10,172 10,656 10,875
12/31/1996 10,774 10,477 10,871 11,781
03/31/1997 10,955 10,418 11,017 12,097
06/30/1997 11,811 10,801 12,041 14,207
09/30/1997 12,711 11,160 13,296 15,271
12/31/1997 12,701 11,488 12,989 15,710
03/31/1998 13,742 11,667 14,114 17,899
06/30/1998 13,349 11,939 13,964 18,494
09/30/1998 11,921 12,444 12,306 16,658
12/31/1998 13,122 12,486 13,993 20,202
03/31/1999 13,311 12,424 14,237 21,209
06/30/1999 14,140 12,315 15,420 22,701
09/30/1999 13,812 12,399 14,936 21,287
12/31/1999 16,062 12,384 16,871 24,452
03/31/2000 16,950 12,657 17,909 25,012
06/30/2000 16,573 12,877 18,183 24,347
09/30/2000 16,722 13,265 19,003 24,111
12/31/2000 15,169 13,823 17,272 22,226
03/31/2001 14,591 14,243 16,401 19,593
06/30/2001 15,076 14,323 16,315 20,739
09/30/2001 13,644 14,984 14,823 17,696
12/31/2001 14,566 14,991 15,869 19,587
03/31/2002 14,643 15,005 15,561 19,641
06/30/2002 13,753 15,559 14,367 17,011
09/30/2002 12,567 16,272 13,064 14,074
12/31/2002 13,489 16,528 14,398 15,259
03/31/2003 13,822 16,758 14,655 14,779
06/30/2003 15,038 17,177 16,007 17,053
09/30/2003 15,396 17,152 16,528 17,504
12/31/2003 16,476 17,206 17,750 19,634
<FN>
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES OF THE FUND WITH SALES CHARGE AT 12/31/03
1-Year 21.14% 5-Year 4.66% Since Inception 6.61% Inception Date 3/11/96
</FN>
10 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
CLASS M SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Convertible Securities Fund (Class M)
Lehman Brothers Aggregate Bond Index
Goldman Sachs Convertible Bond 100 Index
S&P 500 Index
[LINE GRAPH]
Goldman Sachs
Oppenheimer Convertible Lehman Brothers Convertible Bond
Securities Fund (Class M) Aggregate Bond Index 100 Index S&P 500 Index
12/31/1993 $ 9,675 $10,000 $10,000 $10,000
03/31/1994 9,834 9,713 9,895 9,621
06/30/1994 9,589 9,613 9,637 9,662
09/30/1994 10,048 9,672 9,980 10,133
12/31/1994 9,560 9,708 9,513 10,131
03/31/1995 10,213 10,198 10,318 11,117
06/30/1995 11,041 10,819 11,233 12,176
09/30/1995 11,945 11,032 11,859 13,143
12/31/1995 12,045 11,502 12,130 13,934
03/31/1996 12,284 11,298 12,863 14,682
06/30/1996 12,522 11,362 13,126 15,340
09/30/1996 12,774 11,572 13,521 15,814
12/31/1996 13,199 11,919 13,793 17,131
03/31/1997 13,439 11,853 13,979 17,591
06/30/1997 14,488 12,288 15,279 20,660
09/30/1997 15,602 12,696 16,871 22,207
12/31/1997 15,600 13,070 16,482 22,845
03/31/1998 16,889 13,274 17,908 26,029
06/30/1998 16,427 13,584 17,718 26,893
09/30/1998 14,670 14,158 15,615 24,224
12/31/1998 16,158 14,206 17,756 29,378
03/31/1999 16,405 14,135 18,065 30,841
06/30/1999 17,439 14,011 19,565 33,011
09/30/1999 17,029 14,106 18,951 30,955
12/31/1999 19,833 14,089 21,407 35,557
03/31/2000 20,942 14,400 22,725 36,371
06/30/2000 20,490 14,651 23,072 35,405
09/30/2000 20,691 15,092 24,112 35,062
12/31/2000 18,782 15,727 21,916 32,321
03/31/2001 18,078 16,204 20,811 28,491
06/30/2001 18,691 16,296 20,701 30,158
09/30/2001 16,928 17,047 18,809 25,733
12/31/2001 18,084 17,055 20,136 28,482
03/31/2002 18,192 17,071 19,745 28,561
06/30/2002 17,098 17,701 18,230 24,737
09/30/2002 15,635 18,512 16,576 20,466
12/31/2002 16,790 18,804 18,269 22,190
03/31/2003 17,224 19,066 18,595 21,491
06/30/2003 18,757 19,542 20,311 24,798
09/30/2003 19,217 19,514 20,972 25,454
12/31/2003 20,584 19,576 22,522 28,551
<FN>
AVERAGE ANNUAL TOTAL RETURNS OF CLASS M SHARES OF THE FUND WITH SALES CHARGE AT 12/31/03
1-Year 18.61% 5-Year 4.27% 10-Year 7.49% Inception Date 6/3/86
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR MORE CURRENT
PERFORMANCE DATA, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800 CALL
OPP (255.5677). FUND RETURNS INCLUDE CHANGES IN SHARE PRICE, REINVESTED
DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES, THE CURRENT
MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE CONTINGENT
DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); FOR CLASS C AND N SHARES,
THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD; AND FOR CLASS M
SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 3.25%. SEE PAGE 13 FOR
FURTHER DETAILS. GRAPHS ARE NOT DRAWN TO SAME SCALE.
</FN>
11 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Convertible Securities Fund (Class N)
Lehman Brothers Aggregate Bond Index
Goldman Sachs Convertible Bond 100 Index
S&P 500 Index
[LINE GRAPH]
Goldman Sachs
Oppenheimer Convertible Lehman Brothers Convertible Bond
Securities Fund (Class N) Aggregate Bond Index 100 Index S&P 500 Index
03/01/2001 $10,000 $10,000 $10,000 $10,000
03/31/2001 9,690 10,050 9,518 9,367
06/30/2001 10,020 10,107 9,468 9,915
09/30/2001 9,073 10,573 8,602 8,460
12/31/2001 9,698 10,578 9,209 9,364
03/31/2002 9,770 10,588 9,030 9,390
06/30/2002 9,188 10,979 8,338 8,132
09/30/2002 8,398 11,482 7,581 6,728
12/31/2002 9,027 11,663 8,355 7,295
03/31/2003 9,257 11,825 8,505 7,065
06/30/2003 10,072 12,121 9,289 8,153
09/30/2003 10,328 12,103 9,591 8,368
12/31/2003 11,054 12,141 10,300 9,387
<FN>
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES OF THE FUND WITH SALES CHARGE AT 12/31/03
1-Year 21.45% Since Inception 3.60% Inception Date 3/1/01
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR MORE CURRENT
PERFORMANCE DATA, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800 CALL
OPP (255.5677). FUND RETURNS INCLUDE CHANGES IN SHARE PRICE, REINVESTED
DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES, THE CURRENT
MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE CONTINGENT
DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); FOR CLASS C AND N SHARES,
THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD; AND FOR CLASS M
SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 3.25%. SEE PAGE 13 FOR
FURTHER DETAILS. GRAPHS ARE NOT DRAWN TO SAME SCALE.
</FN>
12 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
NOTES
- --------------------------------------------------------------------------------
Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares. Investors should consider the
Fund's investment objectives, risks, and other charges and expenses carefully
before investing. The Fund's prospectus contains this and other information
about the Fund, and may be obtained by asking your financial advisor, calling us
at 1.800.CALL OPP (1.800.225.5677) or visit the OppenheimerFunds website at
WWW.OPPENHEIMERFUNDS.COM. Read the prospectus carefully before you invest or
send money.
CLASS A shares of the Fund were first publicly offered on 5/1/95. The Fund's
maximum sales charge for Class A shares was lower prior to 3/11/96, so actual
performance may have been higher. Class A returns include the current maximum
initial sales charge of 5.75%.
CLASS B shares of the Fund were first publicly offered on 5/1/95. Class B
returns include the applicable contingent deferred sales charge of 5% (1-year)
and 2% (5-year). Because Class B shares convert to Class A shares 72 months
after purchase, the "since inception" return for Class B uses Class A
performance for the period after conversion. Class B shares are subject to an
annual 0.75% asset-based sales charge.
CLASS C shares of the Fund were first publicly offered on 3/11/96. Class C
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class C shares are subject to an annual 0.75% asset-based sales charge.
CLASS M shares of the Fund were first publicly offered on 6/3/86. Class M
returns include the current maximum initial sales charge of 3.25%. Prior to
March 11, 1996, Class M shares were designated as Class A shares. Class M shares
are subject to an annual 0.50% asset-based sales charge.
CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
13 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF INVESTMENTS DECEMBER 31, 2003
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PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND NOTES--58.9%
- --------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--14.1%
- --------------------------------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--3.8%
Brinker International, Inc., Zero Coupon Cv. Sr. Unsec. Debs., 10/10/21 1 $ 6,500,000 $ 4,411,875
- --------------------------------------------------------------------------------------------------------------------------------
Carnival Corp., 2% Cv. Sr. Unsec. Unsub. Debs., 4/15/21 5,000,000 5,906,250
- --------------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp.:
3.375% Cv. Sr. Unsec. Unsub. Nts., 4/15/23 2 4,000,000 4,345,000
3.375% Cv. Sr. Unsec. Unsub. Nts., 4/15/23 1,000,000 1,086,250
- --------------------------------------------------------------------------------------------------------------------------------
International Game Technology,
Zero Coupon Cv. Sr. Unsec. Unsub. Debs., 1/29/33 1,2 5,000,000 4,006,250
- --------------------------------------------------------------------------------------------------------------------------------
Royal Caribbean Cruises Ltd.,
Zero Coupon Cv. Sr. Unsec. Unsub. Bonds, 5/18/21 1 7,500,000 4,406,250
------------
24,161,875
- --------------------------------------------------------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--0.7%
Amazon.com, Inc.:
4.75% Cv. Sub. Debs., 2/1/09 840,000 853,650
4.75% Cv. Unsec. Sub. Debs., 2/1/09 2 3,360,000 3,414,600
------------
4,268,250
- --------------------------------------------------------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS--0.5%
Eastman Kodak Co., 3.375% Cv. Sr. Nts., 10/15/33 2 3,000,000 3,345,000
- --------------------------------------------------------------------------------------------------------------------------------
MEDIA--6.8%
Charter Communications, Inc., 5.75% Cv. Sr. Unsec. Nts., 10/15/05 4,000,000 3,800,000
- --------------------------------------------------------------------------------------------------------------------------------
Interpublic Group of Cos., Inc. (The):
1.80% Cv. Unsec. Sub. Nts., 9/16/04 2,000,000 1,965,000
4.50% Cv. Sr. Unsec. Nts., 3/15/23 500,000 766,250
4.50% Cv. Sr. Unsec. Nts., 3/15/23 2 3,000,000 4,597,500
- --------------------------------------------------------------------------------------------------------------------------------
Liberty Media Corp.:
0.75% Exchangeable Sr. Unsec. Debs., 3/30/23
(exchangeable for Time Warner, Inc. common stock) 2 8,000,000 9,480,000
3.25% Exchangeable Sr. Sec. Debs., 3/15/31
(exchangeable for Viacom, Inc. Cl. B common stock) 2 5,000,000 5,225,000
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) 5,000,000 3,531,250
- --------------------------------------------------------------------------------------------------------------------------------
Omnicom Group, Inc., Zero Coupon Cv. Sr. Nts., 6/15/33 1,2 5,000,000 5,106,250
- --------------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., Zero Coupon Cv. Nts., 12/6/19 1 5,000,000 3,156,250
- --------------------------------------------------------------------------------------------------------------------------------
Walt Disney Co. (The), 2.125% Cv. Sr. Unsec. Nts., 4/15/23 6,000,000 6,382,500
------------
44,010,000
- --------------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL--2.3%
Gap, Inc. (The), 5.75% Cv. Sr. Unsec. Nts., 3/15/09 2 4,000,000 6,155,000
- --------------------------------------------------------------------------------------------------------------------------------
Lowe's Cos., Inc., 0.861% Cv. Sr. Nts., 10/19/21 3 3,500,000 3,736,250
- --------------------------------------------------------------------------------------------------------------------------------
TJX Cos., Inc. (The):
Zero Coupon Cv. Unsec. Sub. Liquid Yield Option Nts., 2/13/21 1 2,000,000 1,685,000
Zero Coupon Cv. Unsec. Sub. Liquid Yield Option Nts., 2/13/21 1,2 4,000,000 3,370,000
------------
14,946,250
14 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--0.5%
- --------------------------------------------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--0.5%
Costco Cos., Inc., Zero Coupon Cv. Sub. Nts., 8/19/17 1 $ 4,000,000 $ 3,405,000
- --------------------------------------------------------------------------------------------------------------------------------
ENERGY--4.6%
- --------------------------------------------------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--3.0%
Grey Wolf, Inc.:
3.75% Cv. Contingent Sr. Unsec. Nts., 5/7/23 500,000 473,125
3.75% Cv. Sr. Unsec. Nts, 5/7/23 2 3,500,000 3,311,875
- --------------------------------------------------------------------------------------------------------------------------------
Halliburton Co., 3.125% Cv. Sr. Nts., 7/15/23 2 5,000,000 5,206,250
- --------------------------------------------------------------------------------------------------------------------------------
Pride International, Inc., 3.25% Cv. Sr. Nts., 5/1/33 2 5,000,000 5,318,750
- --------------------------------------------------------------------------------------------------------------------------------
Schlumberger Ltd., 2.125% Cv. Sr. Unsec. Debs., Series B, 6/1/23 2 5,000,000 4,968,750
------------
19,278,750
- --------------------------------------------------------------------------------------------------------------------------------
OIL & GAS--1.6%
Devon Energy Corp., 4.95% Cv. Sr. Unsec. Debs., 8/15/08
(cv. into Chevron Corp. common stock) 5,000,000 5,131,250
- --------------------------------------------------------------------------------------------------------------------------------
Kerr-McGee Corp., 5.25% Cv. Jr. Unsec. Sub. Debs., 2/15/10 5,000,000 5,293,750
------------
10,425,000
- --------------------------------------------------------------------------------------------------------------------------------
FINANCIALS--3.2%
- --------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS--2.2%
E*TRADE Group, Inc., 6% Cv. Unsec. Sub. Nts., 2/1/07 6,000,000 6,165,000
- --------------------------------------------------------------------------------------------------------------------------------
GATX Corp.:
7.50% Cv. Sr. Unsec. Nts., 2/1/07 2 2,000,000 2,342,500
7.50% Cv. Sr. Unsec. Nts., 2/1/07 1,000,000 1,171,250
- --------------------------------------------------------------------------------------------------------------------------------
Providian Financial Corp., 3.25% Cv. Sr. Unsec. Nts., 8/15/05 5,000,000 4,762,500
------------
14,441,250
- --------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE--1.0%
EOP Operating LP, 7.25% Cv. Sr. Nts., 11/15/08 2 6,000,000 6,375,000
- --------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE--9.5%
- --------------------------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY--4.1%
Amgen, Inc., Zero Coupon Cv. Sr. Unsec. Unsub. Liquid Yield
Option Nts., 3/1/32 1 9,500,000 7,208,125
- --------------------------------------------------------------------------------------------------------------------------------
Celgene Corp., 1.75% Cv. Sr. Nts., 6/1/08 2 2,500,000 3,000,000
- --------------------------------------------------------------------------------------------------------------------------------
Genzyme Corp., 3% Cv. Unsec. Sub. Debs., 5/15/21 4,000,000 4,070,000
- --------------------------------------------------------------------------------------------------------------------------------
Gilead Sciences, Inc., 2% Cv. Sr. Unsec. Nts., 12/15/07 2,500,000 3,425,000
- --------------------------------------------------------------------------------------------------------------------------------
Invitrogen Corp., 5.50% Cv. Unsec. Sub. Nts., 3/1/07 5,000,000 5,187,500
- --------------------------------------------------------------------------------------------------------------------------------
Sepracor, Inc., 5.75% Cv. Unsec. Sub. Nts., 11/15/06 3,500,000 3,521,875
------------
26,412,500
- --------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--0.8%
Medtronic, Inc., 1.25% Unsec. Debs., 9/15/21 2 5,000,000 5,143,750
- --------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--2.1%
Health Management Associates, Inc., 1.50% Cv. Sr. Sub. Nts., 8/1/23 2 5,000,000 5,525,000
- --------------------------------------------------------------------------------------------------------------------------------
Quest Diagnostics, Inc., 1.75% Cv. Sr. Unsec. Debs., 11/30/21 4,000,000 4,125,000
15 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF INVESTMENTS CONTINUED
- -------------------------------------------------------------------------------
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES Continued
WebMD Corp., 1.75% Cv. Sub. Nts., 6/15/23 2 $ 4,000,000 $ 3,585,000
------------
13,235,000
- --------------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS--2.5%
IVAX Corp., 5.50% Cv. Sr. Unsec. Sub. Nts., 5/15/07 3,500,000 3,644,375
- --------------------------------------------------------------------------------------------------------------------------------
Roche Holdings, Inc., Zero Coupon Cv. Nts., 7/25/21 1 5,000,000 3,093,750
- --------------------------------------------------------------------------------------------------------------------------------
Teva Pharmaceuticals Finance Netherlands BV,
0.75% Cv. Sr. Unsec. Nts., 8/15/21 3,000,000 4,035,000
- --------------------------------------------------------------------------------------------------------------------------------
Watson Pharmaceuticals, Inc., 1.75% Cv. Sr. Unsec. Debs., 3/15/23 2 4,000,000 5,285,000
------------
16,058,125
- --------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS--4.4%
- --------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--2.8%
Tyco International Group SA:
2.75% Cv. Sr. Unsec. Unsub. Debs., 1/15/18 11,000,000 14,093,750
2.75% Cv. Sr. Unsec. Unsub. Debs., Series A, 1/15/18 2 3,000,000 3,843,750
------------
17,937,500
- --------------------------------------------------------------------------------------------------------------------------------
MACHINERY--1.6%
Danaher Corp., Zero Coupon Cv. Sr. Unsec. Unsub. Liquid
Yield Option Nts., 1/22/21 1 5,000,000 3,512,500
- --------------------------------------------------------------------------------------------------------------------------------
Navistar Financial Corp., 4.75% Cv. Unsec. Sub. Nts., 4/1/09 4,000,000 4,325,000
- --------------------------------------------------------------------------------------------------------------------------------
SystemOne Technologies, Inc.:
8.25% Cv. Sub. Nts., 12/31/05 4 3,084,881 1,079,708
8.25% Cv. Sub. Nts., 12/31/05 4 2,962,671 1,036,935
------------
9,954,143
- --------------------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--17.4%
- --------------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--3.5%
Commscope, Inc., 4% Cv. Jr. Unsec. Sub. Nts., 12/15/06 4,000,000 3,850,000
- --------------------------------------------------------------------------------------------------------------------------------
Comverse Technology, Inc., Zero Coupon Cv. Sr. Unsec. Zero Yield
Puttable Securities, 5/15/23 1 4,500,000 5,310,000
- --------------------------------------------------------------------------------------------------------------------------------
Corning, Inc., 3.50% Cv. Sr. Unsec. Debs., 11/1/08 3,000,000 3,731,250
- --------------------------------------------------------------------------------------------------------------------------------
Juniper Networks, Inc., 4.75% Cv. Unsec. Sub. Nts., 3/15/07 1,037,000 1,062,925
- --------------------------------------------------------------------------------------------------------------------------------
Lucent Technologies, Inc., 2.75% Cv. Sr. Unsec. Debs., Series B, 6/15/25 4,000,000 4,745,000
- --------------------------------------------------------------------------------------------------------------------------------
Nortel Networks Corp.:
4.25% Cv. Sr. Unsec. Nts., 9/1/08 2 2,000,000 1,902,500
4.25% Cv. Sr. Unsec. Nts., 9/1/08 2,000,000 1,902,500
------------
22,504,175
- --------------------------------------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--3.6%
Agilent Technologies, Inc.:
3% Cv. Sr. Unsec. Debs., 12/1/21 3 2,500,000 2,743,750
3% Cv. Sr. Unsec. Nts., 12/1/21 2,3 3,000,000 3,292,500
- --------------------------------------------------------------------------------------------------------------------------------
Celestica, Inc., Zero Coupon Cv. Liquid Yield Option Nts., 8/1/20 1 8,000,000 4,270,000
- --------------------------------------------------------------------------------------------------------------------------------
Flextronics International Ltd., 1% Cv. Unsec. Nts., 8/1/10 2 3,500,000 4,204,375
16 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS Continued
Solectron Corp., Zero Coupon Cv. Sr. Unsec. Unsub. Liquid Yield
Option Nts., 11/20/20 1 $ 7,000,000 $ 4,007,500
- --------------------------------------------------------------------------------------------------------------------------------
Vishay Intertechnology, Inc., 3.625% Cv. Sub. Nts., 8/1/23 2 3,000,000 4,245,000
------------
22,763,125
- --------------------------------------------------------------------------------------------------------------------------------
IT CONSULTING & SERVICES--1.8%
DST Systems, Inc., 4.125% Cv. Sr. Unsec. Debs., Series A, 8/15/23 2 5,500,000 6,586,250
- --------------------------------------------------------------------------------------------------------------------------------
Electronic Data Systems Corp., 3.875% Cv. Sr. Nts., 7/15/23 2 5,000,000 5,243,750
------------
11,830,000
- --------------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS--4.1%
Advanced Micro Devices, Inc., 4.75% Cv. Sr. Unsec. Debs., 2/1/22 3 4,000,000 4,100,000
- --------------------------------------------------------------------------------------------------------------------------------
Agere Systems, Inc., 6.50% Cv. Unsec. Unsub. Nts., 12/15/09
(cv. into Agere Systems, Inc., Cl. A common stock) 3,000,000 4,125,000
- --------------------------------------------------------------------------------------------------------------------------------
International Rectifier Corp., 4.25% Cv. Sub. Nts., 7/15/07 2 4,000,000 4,020,000
- --------------------------------------------------------------------------------------------------------------------------------
Lam Research Corp., 4% Cv. Unsec. Sub. Nts., 6/1/06 4,500,000 4,635,000
- --------------------------------------------------------------------------------------------------------------------------------
LSI Logic Corp., 4% Cv. Sub. Nts., 5/15/10 2 5,000,000 5,581,250
- --------------------------------------------------------------------------------------------------------------------------------
Micron Technology, Inc., 2.50% Cv. Unsec. Sub. Nts., 2/1/10 2 3,000,000 3,982,500
------------
26,443,750
- --------------------------------------------------------------------------------------------------------------------------------
SOFTWARE--4.4%
BEA Systems, Inc., 4% Cv. Unsub. Nts., 12/15/06 4,000,000 4,035,000
- --------------------------------------------------------------------------------------------------------------------------------
Computer Associates International, Inc.:
5% Cv. Sr. Nts., 3/15/07 2 4,000,000 5,180,000
5% Cv. Sr. Unsec. Nts., 3/15/07 1,500,000 1,942,500
- --------------------------------------------------------------------------------------------------------------------------------
Fair Issac Corp., 1.50% Cv. Sr. Nts., 8/15/23 2 4,500,000 4,663,125
- --------------------------------------------------------------------------------------------------------------------------------
Mentor Graphics Corp.:
6.875% Cv. Sub. Nts., 6/15/07 2 2,000,000 2,137,500
6.875% Cv. Unsec. Sub. Nts., 6/15/07 1,000,000 1,068,750
- --------------------------------------------------------------------------------------------------------------------------------
Mercury Interactive Corp.:
4.75% Cv. Nts., 7/1/07 2 4,000,000 3,985,000
4.75% Cv. Unsec. Sub. Nts., 7/1/07 1,000,000 996,250
- --------------------------------------------------------------------------------------------------------------------------------
Veritas Software Corp., 0.25% Cv. Sub. Nts., 8/1/13 2 4,000,000 4,380,000
------------
28,388,125
- --------------------------------------------------------------------------------------------------------------------------------
MATERIALS--2.0%
- --------------------------------------------------------------------------------------------------------------------------------
CONTAINERS & PACKAGING--0.8%
Sealed Air Corp., 3% Cv. Nts., 6/30/33 2 5,000,000 5,312,500
- --------------------------------------------------------------------------------------------------------------------------------
METALS & MINING--1.2%
Freeport-McMoRan Cooper & Gold, Inc.,
7% Cv. Sr. Unsec. Unsub. Nts., 2/11/11 2,000,000 3,300,000
- --------------------------------------------------------------------------------------------------------------------------------
Inco Ltd., 1% Cv. Unsec. Unsub. Debs., 3/14/23 3,000,000 4,181,250
------------
7,481,250
17 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF INVESTMENTS CONTINUED
- -------------------------------------------------------------------------------
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
UTILITIES--3.2%
- --------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.2%
Calpine Corp., 4.75% Cv. Sr. Unsec. Nts., 11/15/23 2 $ 4,000,000 $ 4,135,000
- --------------------------------------------------------------------------------------------------------------------------------
CenterPoint Energy, Inc., 3.75% Cv. Sr. Nts., 5/15/23 2 5,000,000 5,337,500
- --------------------------------------------------------------------------------------------------------------------------------
Duke Energy Corp., 1.75% Cv. Sr. Bonds, 5/15/23 4,500,000 4,668,750
------------
14,141,250
- --------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES--1.0%
El Paso Corp., Zero Coupon Cv. Debs., 2/28/21 1 13,000,000 6,045,000
------------
Total Convertible Corporate Bonds and Notes (Cost $349,041,628) 378,306,568
SHARES
- --------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--30.6%
- --------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--4.2%
- --------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES--3.0%
Ford Motor Co. Capital Trust II, 6.50% Cum. Cv. Trust
Preferred Securities, Non-Vtg. 165,000 9,215,250
- --------------------------------------------------------------------------------------------------------------------------------
General Motors Corp., 5.25% Cv. Sr. Unsec. Debs., Series B 375,000 10,076,250
------------
19,291,500
- --------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD DURABLES--0.5%
Newell Financial Trust I, 5.25% Cum. Cv. Quarterly Income
Preferred Securities, Non-Vtg. 70,000 3,220,000
- --------------------------------------------------------------------------------------------------------------------------------
MEDIA--0.7%
Equity Securities Trust I/Cablevision Systems Corp., 6.50% Cv., Series CVC
(exchangeable into Cablevision NY Group, Cl. A common stock) 175,000 4,369,750
- --------------------------------------------------------------------------------------------------------------------------------
ENERGY--0.7%
- --------------------------------------------------------------------------------------------------------------------------------
OIL & GAS--0.7%
Unocal Corp./Unocal Capital Trust, 6.25% Cum. Cv., Non-Vtg. 80,000 4,340,000
- --------------------------------------------------------------------------------------------------------------------------------
FINANCIALS--8.1%
- --------------------------------------------------------------------------------------------------------------------------------
BANKS--1.2%
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 70,000 3,185,000
- --------------------------------------------------------------------------------------------------------------------------------
Washington Mutual Capital Trust I, 5.375% Cum. Cv. Units (each unit
consists of one preferred stock and one warrant to purchase shares of
Washington Mutual, Inc.), Non-Vtg. 2,5 75,000 4,174,500
- --------------------------------------------------------------------------------------------------------------------------------
Washington Mutual, Inc., 5.375% Cum. Cv. Units (each unit consists of
one preferred stock and one warrant to purchase shares of
Washington Mutual, Inc.), Non-Vtg. 5 10,000 556,600
------------
7,916,100
- --------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIALS--0.5%
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 70,000 3,355,800
18 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
INSURANCE--4.9%
Chubb Corp. (The), 7% Cv. Equity Units (each unit consists of one
warrant to purchase Chubb Corp. (The) common stock and $25 principal
amount of Chubb Corp. (The), 4% sr. nts., 11/16/07) 5 170,000 $ 4,855,200
- --------------------------------------------------------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The), 7% Cv. Equity Units
(each unit has a stated amount of $50 and consists of a purchase contract
to purchase Hartford Financial Services Group, Inc. (The) common stock and
a normal unit which consists of $1,000 principal amount of Hartford Financial
Services Group, Inc. (The), 2.56% sr. nts., 8/16/08) 5 90,000 5,459,400
- --------------------------------------------------------------------------------------------------------------------------------
PMI Group, Inc. (The), 5.875% Cv. Hybrid Income Term Security Units
(each unit has a stated value of $25 and consists of a purchase contract
to purchase PMI Group, Inc. (The) common stock and a corporate unit
which consists of PMI Group, Inc. (The), 3% sr. nts., 11/15/08) 5,6 140,000 3,603,600
- --------------------------------------------------------------------------------------------------------------------------------
Prudential Financial, Inc./Prudential Financial Capital Trust I, 6.75% Cum. Cv.
Equity Security Units (each unit has a stated amount of $50 and 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 6,510,000
- --------------------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., 4.50% Cv. Jr. Unsec. Sub. Nts. 300,000 7,350,000
- --------------------------------------------------------------------------------------------------------------------------------
UnumProvident Corp., 8.25% Cv. 100,000 3,386,000
------------
31,164,200
- --------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE--1.5%
Host Marriott Financial Trust, 6.75% Cv. Quarterly
Income Preferred Securities 100,000 5,200,000
- --------------------------------------------------------------------------------------------------------------------------------
Regency Centers Corp., 2% Cv. 120,000 4,612,560
------------
9,812,560
- --------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE--2.7%
- --------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--0.9%
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. 5 100,000 5,525,000
- --------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--1.8%
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 25,000 2,205,750
- --------------------------------------------------------------------------------------------------------------------------------
McKesson Financing Trust, 5% Cum. Cv., Non-Vtg. 90,000 4,567,500
- --------------------------------------------------------------------------------------------------------------------------------
Omnicare, Inc., 4% Cv. 80,000 5,100,000
------------
11,873,250
- --------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS--3.5%
- --------------------------------------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--1.8%
Coltec Capital Trust, 5.25% Cv. Term Income Deferrable Equity Securities
(cv. into Goodrich Corp. common stock and EnProIndustries, Inc.
common stock) 80,000 3,188,400
- --------------------------------------------------------------------------------------------------------------------------------
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 40,000 4,148,000
19 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF INVESTMENTS CONTINUED
- -------------------------------------------------------------------------------
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 $ 4,071,000
------------
11,407,400
- --------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--1.7%
Allied Waste Industries, Inc., 6.25% Cv. Sr., Non-Vtg. 50,000 3,825,000
- --------------------------------------------------------------------------------------------------------------------------------
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 70,000 3,504,200
- --------------------------------------------------------------------------------------------------------------------------------
United Rentals Trust I, 6.50% Cv. Quarterly Income Preferred Securities 85,000 3,793,125
------------
11,122,325
- --------------------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--2.5%
- --------------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--1.6%
Lucent Technologies Capital Trust I, 7.75% Cum. Cv., Non-Vtg. 3,000 3,187,500
- --------------------------------------------------------------------------------------------------------------------------------
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) 5 100,000 4,343,000
- --------------------------------------------------------------------------------------------------------------------------------
Nortel Networks Corp., 7% Cv. 40 3,052,215
------------
10,582,715
- --------------------------------------------------------------------------------------------------------------------------------
OFFICE ELECTRONICS--0.9%
Xerox Corp., 6.25% Cv. 45,000 5,838,750
- --------------------------------------------------------------------------------------------------------------------------------
MATERIALS--1.9%
- --------------------------------------------------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS--1.9%
Boise Cascade Corp., 7.50% Adjustable Conversion-Rate Equity
Security Units (each unit consists of a contract to purchase Boise
Cascade Corp. common stock and a preferred security of Boise
Cascade Trust I), Non-Vtg. 5 90,000 4,607,100
- --------------------------------------------------------------------------------------------------------------------------------
International Paper Capital Trust, 5.25% Cum. Cv. (cv. into International
Paper Co. common stock), Non-Vtg. 150,000 7,612,500
------------
12,219,600
- --------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--1.8%
- --------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.8%
Alltel Corp., 7.75% Cv. Equity Units (each unit consists of 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 4,970,000
- --------------------------------------------------------------------------------------------------------------------------------
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 CenteryTel, Inc. common stock and $25 principal amount
of CenturyTel, Inc., 6.02% sr. nts., series j, due 2007), Non-Vtg. 5 170,000 4,590,000
20 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES Continued
Sprint Corp., 7.125% Cv. Unsec. Equity Units (each unit consists of units referred
to as corporate units each with a stated amount of $25 and 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 $ 1,775,000
------------
11,335,000
- --------------------------------------------------------------------------------------------------------------------------------
UTILITIES--5.2%
- --------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--3.1%
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 and includes a purchase contract for Cinergy Corp.
common stock, and a 6.90% preferred trust security, 6.90% due 2007
issued by Cinergy Corp. Funding Trust I) 5 70,000 4,459,000
- --------------------------------------------------------------------------------------------------------------------------------
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 3,458,700
- --------------------------------------------------------------------------------------------------------------------------------
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 5.87% sr. nts., due 2006 and a contract to purchase Duke Energy Corp.
common stock), Non-Vtg. 5 100,000 1,384,000
- --------------------------------------------------------------------------------------------------------------------------------
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 6,927,600
- --------------------------------------------------------------------------------------------------------------------------------
TXU Corp., 8.125% Cv. Feline Prides Units (each unit consists of units
referred to as Income Prides with a stated amount of $50, which includes
$50 principal amount of TXU Corp., 5.80% sr. nts., 5/16/08 and a purchase
contract to purchase TXU Corp. common stock with attached preference
stock purchase rights, 5/16/06), Non-Vtg. 5 100,000 3,361,000
------------
19,590,300
- --------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES--0.7%
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
mount of Sempra Energy, 5.60% sr. nts., 5/17/07) 5 160,000 4,553,600
- --------------------------------------------------------------------------------------------------------------------------------
MULTI-UTILITIES--1.4%
AES Trust III, 6.75% Cv. 60,000 2,595,000
- --------------------------------------------------------------------------------------------------------------------------------
Williams Cos., Inc. (The):
5.50% Cv. Jr. Unsec. Sub. Debs. 2 80,000 5,210,000
5.50% Cv. Jr. Unsec. Sub. Debs. 20,000 1,302,500
------------
9,107,500
------------
Total Preferred Stocks (Cost $172,145,006) 196,625,350
21 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF INVESTMENTS CONTINUED
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--1.1%
- --------------------------------------------------------------------------------------------------------------------------------
Danskin, Inc., Restricted Common Shares 4,6,7 2,015,119 $ --
- --------------------------------------------------------------------------------------------------------------------------------
Johnson & Johnson 50,000 2,583,000
- --------------------------------------------------------------------------------------------------------------------------------
Pfizer, Inc. 120,000 4,239,600
- --------------------------------------------------------------------------------------------------------------------------------
SystemOne Technologies, Inc. 6 197,142 49,286
------------
Total Common Stocks (Cost $6,946,526) 6,871,886
UNITS
- --------------------------------------------------------------------------------------------------------------------------------
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--3.9%
- --------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 3.625%, 3/31/04 (Cost $25,003,143) $25,000,000 25,169,925
- --------------------------------------------------------------------------------------------------------------------------------
STRUCTURED NOTES--2.7%
- --------------------------------------------------------------------------------------------------------------------------------
Bank of America Corp., Linked Sr. Nts., Series RTY, 7%, 3/3/04
(redemption linked to the Russell 2000 Index) 6,500,000 7,221,700
- --------------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Corp. (New York Branch),
6% Equity Linked Nts., 12/23/04 (redemption linked to
Comcast Corp., Cl. A Special common stock) 165,800 5,098,349
- --------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., Capped Appreciation Linked Nts.,
5%, 12/30/04 (linked to the performance of Wyeth) 2 5,000,000 5,018,500
------------
Total Structured Notes (Cost $16,495,551) 17,338,549
- --------------------------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--3.0%
- --------------------------------------------------------------------------------------------------------------------------------
Undivided interest of 10% in joint repurchase agreement (Principal
Amount/Market Value $190,001,000, with a maturity value of $190,009,444) with
Banc One Capital Markets, Inc., 0.80%, dated 12/31/03, to be repurchased at
$19,009,845 on 1/2/04, collateralized by U.S. Treasury Bonds, 4.25%, 11/30/13,
with a value of $194,000,862 (Cost $19,009,000) 19,009,000 19,009,000
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $588,656,847) 100.2% 643,337,271
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.2) (1,431,113)
--------------------------
NET ASSETS 100.0% $641,906,158
==========================
22 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Represents a zero coupon bond.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $191,541,975 or 29.84% of the Fund's net
assets as of December 31, 2003.
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. Received as the result of issuer reorganization. Currently has minimal market
value.
Affiliated company. Represents ownership of at least 5% of the voting securities
of the issuer, and is or was an affiliate, as defined in the Investment Company
Act of 1940, at or during the period ended December 31, 2003. There were no
affiliate securities held by the Fund as of December 31, 2003. Transactions
during the period in which the issuer was an affiliate are as follows:
SHARES/UNITS SHARES/UNITS
DECEMBER 31, GROSS GROSS DECEMBER 31, REALIZED
2002 ADDITIONS REDUCTIONS 2003 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 --
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* -- -- -- -- --
-----------
$ 3,047,417
===========
<FN>
*No longer an affiliate as of December 31, 2003.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2003
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------------------
Investments, at value (cost $588,656,847)--see accompanying statement $ 643,337,271
- --------------------------------------------------------------------------------------------
Cash 614,518
- --------------------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns 3,447,429
Shares of beneficial interest sold 1,389,451
Investments sold 954,799
Other 27,799
-------------
Total assets 649,771,267
- --------------------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 5,763,425
Shares of beneficial interest redeemed 1,444,604
Distribution and service plan fees 378,802
Trustees' compensation 111,692
Transfer and shareholder servicing agent fees 81,654
Shareholder reports 55,328
Other 29,604
-------------
Total liabilities 7,865,109
- --------------------------------------------------------------------------------------------
NET ASSETS $ 641,906,158
=============
- --------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------------------
Paid-in capital $ 721,365,236
- --------------------------------------------------------------------------------------------
Accumulated net investment loss (970,782)
- --------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (133,168,720)
- --------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 54,680,424
-------------
NET ASSETS $ 641,906,158
=============
24 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
- --------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- --------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$310,641,497 and 23,401,073 shares of beneficial interest outstanding) $13.27
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering price) $14.08
- --------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $133,057,612
and 10,008,143 shares of beneficial interest outstanding) $13.29
- --------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $82,148,554
and 6,191,814 shares of beneficial interest outstanding) $13.27
- --------------------------------------------------------------------------------------------
Class M Shares:
Net asset value and redemption price per share (based on net assets of
$114,600,010 and 8,638,207 shares of beneficial interest outstanding) $13.27
Maximum offering price per share (net asset value plus sales charge of 3.25% of
offering price) $13.72
- --------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $1,458,485
and 109,875 shares of beneficial interest outstanding) $13.27
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------------------
Interest $ 19,024,873
- --------------------------------------------------------------------------------------------
Dividends 12,211,024
------------
Total investment income 31,235,897
- --------------------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------------------
Management fees 2,755,382
- --------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 599,232
Class B 1,398,157
Class C 697,297
Class M 766,119
Class N 3,698
- --------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 423,353
Class B 288,769
Class C 121,800
Class M 114,152
Class N 2,492
- --------------------------------------------------------------------------------------------
Accounting service fees 174,795
- --------------------------------------------------------------------------------------------
Trustees' compensation 49,164
- --------------------------------------------------------------------------------------------
Custodian fees and expenses 11,191
- --------------------------------------------------------------------------------------------
Other 18,729
------------
Total expenses 7,424,330
Less reduction to custodian expenses (2,914)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class A (1,975)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class B (1,366)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class C (530)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class M (581)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class N (174)
------------
Net expenses 7,416,790
- --------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 23,819,107
- --------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments:
Unaffiliated companies 32,229,419
Affiliated companies (3,047,417)
Closing and expiration of option contracts written 96,305
------------
Net realized gain 29,278,307
- --------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 64,594,391
- --------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $117,691,805
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2003 2002
- -------------------------------------------------------------------------------------------------
OPERATIONS
- -------------------------------------------------------------------------------------------------
Net investment income $ 23,819,107 $ 25,383,283
- -------------------------------------------------------------------------------------------------
Net realized gain (loss) 29,278,307 (85,635,374)
- -------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 64,594,391 12,007,604
-----------------------------
Net increase (decrease) in net assets resulting from operations 117,691,805 (48,244,487)
- -------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (11,367,661) (10,356,782)
Class B (5,345,568) (9,416,327)
Class C (2,624,294) (3,014,487)
Class M (4,627,938) (5,875,935)
Class N (28,916) (11,341)
- -------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- -------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A 66,001,751 38,583,437
Class B (43,825,244) (103,076,509)
Class C 9,713,833 (7,317,685)
Class M (11,782,752) (20,269,990)
Class N 938,567 381,879
- -------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------
Total increase (decrease) 114,743,583 (168,618,227)
- -------------------------------------------------------------------------------------------------
Beginning of period 527,162,575 695,780,802
-----------------------------
End of period [including accumulated net investment loss of
$970,782 and $1,934,293, respectively] $641,906,158 $ 527,162,575
=============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED DECEMBER 31, 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.29 $12.76 $13.85 $16.36 $14.84
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .56 .57 .48 .72 .70
Net realized and unrealized gain (loss) 1.98 (1.41) (.94) (1.45) 2.66
-------------------------------------------------------------------
Total from investment operations 2.54 (.84) (.46) (.73) 3.36
- ----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.56) (.63) (.63) (.72) (.70)
Distributions from net realized gain -- -- -- (1.06) (1.14)
-------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.56) (.63) (.63) (1.78) (1.84)
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.27 $11.29 $12.76 $13.85 $16.36
===================================================================
- ----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 22.95% (6.59)% (3.30)% (4.81)% 23.37%
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $310,641 $202,968 $187,458 $210,903 $220,671
- ----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $252,347 $190,677 $197,514 $225,938 $207,008
- ----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 4.48% 4.77% 3.58% 4.42% 4.55%
Total expenses 0.94% 3,4 0.99% 3 0.95% 3 0.90% 3 0.95% 3
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 52% 69% 127% 95%
<FN>
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. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
CLASS B YEAR ENDED DECEMBER 31, 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.30 $12.79 $13.87 $16.38 $14.87
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .43 .43 .38 .59 .59
Net realized and unrealized gain (loss) 2.02 (1.38) (.93) (1.45) 2.65
-------------------------------------------------------------------
Total from investment operations 2.45 (.95) (.55) (.86) 3.24
- ----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.46) (.54) (.53) (.59) (.59)
Distributions from net realized gain -- -- -- (1.06) (1.14)
-------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.46) (.54) (.53) (1.65) (1.73)
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.29 $11.30 $12.79 $13.87 $16.38
===================================================================
- ----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 22.07% (7.44)% (3.97)% (5.55)% 22.35%
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $133,058 $154,350 $286,829 $373,860 $431,370
- ----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $139,757 $213,259 $330,806 $418,592 $414,611
- ----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 3.79% 3.95% 2.75% 3.62% 3.79%
Total expenses 1.74% 3,4 1.77% 3 1.71% 3 1.70% 3 1.71% 3
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 52% 69% 127% 95%
<FN>
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. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS CONTINUED
- --------------------------------------------------------------------------------
CLASS C YEAR ENDED DECEMBER 31, 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.28 $12.76 $13.84 $16.35 $14.84
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .46 .46 .38 .59 .59
Net realized and unrealized gain (loss) 1.99 (1.40) (.93) (1.45) 2.65
-------------------------------------------------------------------
Total from investment operations 2.45 (.94) (.55) (.86) 3.24
- ----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.46) (.54) (.53) (.59) (.59)
Distributions from net realized gain -- -- -- (1.06) (1.14)
-------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.46) (.54) (.53) (1.65) (1.73)
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.27 $11.28 $12.76 $13.84 $16.35
===================================================================
- ----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 22.14% (7.39)% (3.98)% (5.56)% 22.41%
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $82,149 $61,031 $76,846 $91,567 $94,352
- ----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $69,787 $66,391 $85,774 $96,574 $94,329
Ratios to average net assets: 2
Net investment income 3.73% 3.97% 2.80% 3.62% 3.80%
Total expenses 1.70% 3,4 1.76% 3 1.71% 3 1.70% 3 1.70% 3
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 52% 69% 127% 95%
<FN>
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. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
CLASS M YEAR ENDED DECEMBER 31, 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.28 $12.76 $13.84 $16.35 $14.84
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .50 .49 .41 .64 .63
Net realized and unrealized gain (loss) 2.00 (1.40) (.93) (1.45) 2.65
-------------------------------------------------------------------
Total from investment operations 2.50 (.91) (.52) (.81) 3.28
- ----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.51) (.57) (.56) (.64) (.63)
Distributions from net realized gain -- -- -- (1.06) (1.14)
-------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.51) (.57) (.56) (1.70) (1.77)
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.27 $11.28 $12.76 $13.84 $16.35
===================================================================
- ----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 22.59% (7.16)% (3.72)% (5.30)% 22.74%
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $114,600 $108,426 $144,612 $181,521 $234,023
- ----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $110,337 $122,897 $160,919 $213,617 $235,419
Ratios to average net assets: 2
Net investment income 4.16% 4.24% 3.04% 3.90% 4.06%
Total expenses 1.32% 3,4 1.51% 3 1.45% 3 1.42% 3 1.45% 3
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 52% 69% 127% 95%
<FN>
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. Reduction to custodian expenses less than 0.01%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS CONTINUED
- --------------------------------------------------------------------------------
CLASS N YEAR ENDED DECEMBER 31, 2003 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 .49 .55 .42
Net realized and unrealized gain (loss) 2.00 (1.43) (.84)
---------------------------------------
Total from investment operations 2.49 (.88) (.42)
- --------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.51) (.59) (.50)
Distributions from net realized gain -- -- --
---------------------------------------
Total dividends and/or distributions to shareholders (.51) (.59) (.50)
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.27 $11.29 $12.76
=======================================
- --------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 22.45% (6.92)% (3.02)%
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,458 $388 $36
- --------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 743 $205 $10
- --------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 3.87% 4.38% 5.45%
Total expenses 1.37% 1.43% 1.22%
Expenses after expense reimbursement or fee waiver
and reduction to custodian expenses 1.35% 1.38% N/A 4
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 52% 69%
<FN>
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, 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%.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Convertible Securities Fund (the Fund), a portfolio of the Bond
Fund Series, is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. The Fund's investment
objective is to seek a high level of total return on its assets through a
combination of current income and capital appreciation. The Fund's investment
advisor is OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B, Class C, 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 with respect to the Fund in
general and exclusive voting rights on matters that affect that class alone.
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. Securities whose values have been
materially affected by what the Manager identifies as a significant event
occurring before the Fund's assets are valued but after the close of their
respective foreign exchanges will be fair valued. 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
33 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
Fund records a realized gain or loss when a structured note is sold or matures.
As of December 31, 2003, the market value of these securities comprised 2.7% of
the Fund's net assets, and resulted in unrealized gains of $842,998.
-------------------------------------------------------------------------------
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.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years
and unrealized appreciation or depreciation of securities and other investments
for federal income tax purposes.
NET UNREALIZED
APPRECIATION
BASED ON COST OF
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED SECURITIES AND OTHER
NET INVESTMENT LONG-TERM LOSS INVESTMENTS FOR FEDERAL
INCOME GAIN CARRYFORWARD 1,2 INCOME TAX PURPOSES
---------------------------------------------------------------------------------
$1,184,025 $-- $131,926,100 $51,387,836
<FN>
1. As of December 31, 2003, the Fund had $131,926,100 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of December 31, 2003,
details of the capital loss carryforwards were as follows:
EXPIRING
----------------------
2009 $ 41,459,104
2010 90,466,996
------------
Total $131,926,100
=============
2. During the fiscal year December 31, 2003, the Fund utilized $21,570,184 of
capital loss carryforward to offset capital gains realized in that fiscal year.
During the fiscal year December 31, 2002, the Fund did not utilize any capital
loss carryforwards.
</FN>
34 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
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. Accordingly,
the following amounts have been reclassified for December 31, 2003. Net assets
of the Fund were unaffected by the reclassifications.
REDUCTION TO INCREASE TO
ACCUMULATED ACCUMULATED NET
NET INVESTMENT REALIZED LOSS ON
LOSS INVESTMENTS
------------------------------------
$1,138,781 $1,138,781
The tax character of distributions paid during the years ended December 31,
2003 and December 31, 2002 was as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
---------------------------------------------------------------
Distributions paid from:
Ordinary income $23,994,377 $28,674,872
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments
for federal income tax purposes as of December 31, 2003 are noted below. The
primary difference between book and tax appreciation or depreciation of
securities and other investments, if applicable, is attributable to the tax
deferral of losses or tax realization of financial statement unrealized gain or
loss.
Federal tax cost of securities $591,949,435
============
Gross unrealized appreciation $ 59,480,921
Gross unrealized depreciation (8,093,085)
------------
Net unrealized appreciation $ 51,387,836
============
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded 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 year ended
December 31, 2003, the Fund's projected benefit obligations were increased by
$16,097 and payments of $2,372 were made to retired trustees, resulting in an
accumulated liability of $104,840 as of December 31, 2003.
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
Oppenheimer funds selected by the Trustee. 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.
35 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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. Income distributions, if any, are
declared and paid quarterly. Capital gain distributions, if any, are declared
and paid annually.
-------------------------------------------------------------------------------
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, if applicable,
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 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:
YEAR ENDED DECEMBER 31, 2003 YEAR ENDED DECEMBER 31, 2002
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------
CLASS A
Sold 10,293,699 $125,272,357 8,236,543 $ 96,210,339
Dividends and/or
distributions reinvested 717,012 8,840,852 712,104 8,199,709
Redeemed (5,594,158) (68,111,458) (5,651,194) (65,826,611)
-------------------------------------------------------------
Net increase 5,416,553 $ 66,001,751 3,297,453 $ 38,583,437
=============================================================
------------------------------------------------------------------------------------------
CLASS B
Sold 2,802,713 $ 34,182,973 1,455,217 $ 17,209,549
Dividends and/or
distributions reinvested 300,964 3,678,039 550,830 6,406,897
Redeemed (6,750,493) (81,686,256) (10,784,316) (126,692,955)
-------------------------------------------------------------
Net decrease (3,646,816) $(43,825,244) (8,778,269) $(103,076,509)
=============================================================
36 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
YEAR ENDED DECEMBER 31, 2003 YEAR ENDED DECEMBER 31, 2002
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------
CLASS C
Sold 1,914,058 $ 23,378,006 947,643 $ 10,925,314
Dividends and/or
distributions reinvested 144,706 1,777,170 173,843 2,006,345
Redeemed (1,277,679) (15,441,343) (1,734,724) (20,249,344)
------------------------------------------------------------
Net increase (decrease) 781,085 $ 9,713,833 (613,238) $ (7,317,685)
=============================================================
------------------------------------------------------------------------------------------
CLASS M
Sold 223,208 $ 2,730,862 169,391 $ 1,991,974
Dividends and/or
distributions reinvested 264,332 3,234,301 344,816 3,977,838
Redeemed (1,462,362) (17,747,915) (2,237,918) (26,239,802)
-------------------------------------------------------------
Net decrease (974,822) $(11,782,752) (1,723,711) $(20,269,990)
=============================================================
- -------------------------------------------------------------------------------------------
CLASS N
Sold 89,088 $ 1,101,574 37,735 $ 451,651
Dividends and/or
distributions reinvested 2,161 27,095 855 9,599
Redeemed (15,713) (190,102) (7,108) (79,371)
-------------------------------------------------------------
Net increase 75,536 $ 938,567 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 year ended December 31, 2003, were
$346,402,469 and $299,537,010, respectively.
-------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with
the investment advisory agreement with the Fund which provides for a fee 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 year ended, the Fund paid
$174,795 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 per account fee. For the year ended December 31, 2003, the Fund
paid $944,910 to OFS for services to the Fund.
37 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
-------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
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 Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
-------------------------------------------------------------------------------
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. The Distributor currently uses the fees it receives
from the Fund to pay brokers, dealers and other financial institutions for
personal services and account maintenance services they provide for their
customers who hold Class A shares. Any unreimbursed expenses the Distributor
incurs with respect to Class A shares in any fiscal year cannot be recovered in
subsequent years. Fees incurred by the Fund under the plan are detailed in the
Statement of Operations.
-------------------------------------------------------------------------------
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 to compensate the Distributor for its services in
connection with the distribution of these shares and servicing accounts. 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, 0.50% per year on Class
M shares and 0.25% per year on Class N shares. The Distributor also receives a
service fee of up to 0.25% per year under each plan. If either the Class B,
Class C, Class M or Class N plan is terminated by the Fund or by the
shareholders of a class, the Board of Trustees and its independent trustees
must determine whether the Distributor shall be entitled to payment from the
Fund of all or a portion of the service fee and/or asset-based sales charge in
respect to shares sold prior to the effective date of such termination. The
Distributor's aggregate uncompensated expenses under the plan at December 31,
2003 for Class B, Class C and Class N shares was $3,330,489, $2,068,728 and
$21,760, respectively. Fees incurred by the Fund under the plans are detailed
in the Statement of Operations.
-------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of fund shares prior to investment or from redemption
proceeds prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.
38 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
CLASS A CLASS B CLASS C CLASS N
CLASS A CLASS M CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END FRONT-END DEFERRED SALES DEFERRED SALES DEFERRED SALES DEFERRED SALES
SALES CHARGES SALES CHARGES CHARGES CHARGES CHARGES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
---------------------------------------------------------------------------------------------------------------------
December 31, 2003 $248,513 $7,400 $6,904 $325,658 $5,278 $889
-------------------------------------------------------------------------------
5. OPTION ACTIVITY
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a
written put option, or the cost of the security for a purchased put or call
option is adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a note
to the Statement of Investments. Options written are reported as a liability in
the Statement of Assets and Liabilities. Realized gains and losses are reported
in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the opportunity
for profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Fund may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the Fund pays a premium whether or not the
option is exercised. The Fund also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not exist.
Written option activity for the year ended December 31, 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
December 31, 2003 -- $ --
==============================
39 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS CONTINUED
- --------------------------------------------------------------------------------
-------------------------------------------------------------------------------
6. ILLIQUID OR RESTRICTED SECURITIES
As of December 31, 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 December 31, 2003 was
$2,132,636, which represents 0.33% 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 DEC. 31, 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 --
-------------------------------------------------------------------------------
7. BORROWING AND LENDING ARRANGEMENTS
The Fund entered into an "interfund borrowing and lending arrangement" with
other funds in the Oppenheimer funds complex, to allow funds to borrow for
liquidity purposes. The arrangement was initiated pursuant to exemptive relief
granted by the Securities and Exchange Commission (the SEC) to allow these
affiliated funds to lend money to, and borrow money from, each other, in an
attempt to reduce borrowing costs below those of bank loan facilities. The
SEC's order requires the Fund's Board of Trustees to adopt operating policies
and procedures to administer interfund borrowing and lending. Under the
arrangement the Fund may lend money to other Oppenheimer funds and may borrow
from other Oppenheimer funds at a rate set by the Fund's Board of Trustees,
based upon a recommendation by the Manager. The Fund's borrowings, if any, are
subject to asset coverage requirements under the Investment Company Act and the
provisions of the SEC order and other applicable regulations. If the Fund
borrows money, there is a risk that the loan could be called on one day's
notice, in which case the Fund might have to borrow from a bank at higher rates
if a loan were not available from another Oppenheimer fund. If the Fund lends
money to another fund, it will be subject to the risk that the other fund might
not repay the loan in a timely manner, or at all.
The Fund had no interfund borrowings or loans outstanding during the year
ended or at December 31, 2003.
40 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
OPPENHEIMER BOND FUND SERIES:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Convertible Securities Fund (a portfolio of the Bond Fund Series)
including the statement of investments, as of December 31, 2003, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the four years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The
financial highlights for the period ended December 31, 1999, were audited by
other auditors whose report dated January 24, 2000, expressed an unqualified
opinion on this information.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of December 31, 2003, by
correspondence with the custodian and brokers or by other appropriate auditing
procedures where replies from brokers were not received. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Convertible Securities Fund as of December 31, 2003, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for
each of the four years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
KPMG LLP
Denver, Colorado
January 23, 2004
41 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
FEDERAL INCOME TAX INFORMATION UNAUDITED
- --------------------------------------------------------------------------------
-------------------------------------------------------------------------------
In early 2004, if applicable, shareholders of record received information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2003. Regulations of the U.S. Treasury Department require the
Fund to report this information to the Internal Revenue Service.
Dividends, if any, paid by the Fund during the fiscal year ended December
31, 2003 which are not designated as capital gain distributions should be
multiplied by 2.56% to arrive at the amount eligible for the corporate
dividend-received deduction.
A portion, if any, of the dividends paid by the Fund during the fiscal year
ended December 31, 2003 which are not designated as capital gain distributions
are eligible for lower individual income tax rates to the extent that the Fund
has received qualified dividend income as stipulated by recent tax legislation.
$11,904,339 of the Fund's fiscal year taxable income may be eligible for the
lower individual income tax rates. In early 2004, shareholders of record will
receive information regarding the percentage of distributions that are eligible
for lower individual income tax rates.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because
of the complexity of the federal regulations which may affect your individual
tax return and the many variations in state and local tax regulations, we
recommend that you consult your tax advisor for specific guidance.
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES UNAUDITED
- --------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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.
42 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
TRUSTEES AND OFFICERS UNAUDITED
- --------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS HELD
FUND, LENGTH OF SERVICE, AGE BY TRUSTEE; NUMBER OF PORTFOLIOS IN FUND COMPLEX CURRENTLY OVERSEEN BY TRUSTEE
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY,
TRUSTEES CENTENNIAL, CO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, UNTIL HIS
OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
THOMAS W. COURTNEY, Principal of Courtney Associates, Inc. (venture capital firm); former General
Chairman of the Partner of Trivest Venture Fund (private venture capital fund); former President
Board of Trustees, of Investment Counseling Federated Investors, Inc.; Trustee of the following
Trustee (since1995) open-end investment companies: Cash Assets Trust, PIMCO ADVISORS VIT, Tax Free
Age: 70 Trust of Arizona and 4 funds for the Hawaiian Tax Free Trust. Oversees 10
portfolios in the OppenheimerFunds complex.
JOHN CANNON, Director, Neuberger Berman Income Managers Trust, Neuberger & Berman Income
Trustee (since 1992) Funds and Neuberger Berman Trust, (1995-present); Neuberger Berman Equity Funds
Age: 73 (November 2000-present); Trustee, Neuberger Berman Mutual Funds (October
1994-present); formerly Chairman and Treasurer, CDC Associates, a registered
investment adviser (December 1993-February 1996); Independent Consultant; Chief
Investment Officer, CDC Associates (1996-June 2000); Consultant and director,
CDC Associates (December 1993-February 1999). Oversees 3 portfolios in the
OppenheimerFunds complex.
PAUL Y. CLINTON, Principal of Clinton Management Associates, a financial and venture capital
Trustee ( since 1995) consulting firm; Trustee of the following open-end investment companies: Trustee
Age: 72 of Capital Cash Management Trust, Prime Cash Fund, PIMCO ADVISORS VIT and
Narragansett Insured Tax-Free Income Fund. Oversees 10 portfolios in the
OppenheimerFunds complex.
ROBERT G. GALLI, A trustee or director of other Oppenheimer funds. Oversees 35 portfolios in the
Trustee (since 1998) OppenheimerFunds complex.
Age: 70
LACY B. HERRMANN, Chairman and Chief Executive Officer of Aquila Management Corporation, the
Trustee (since 1995) sponsoring organization and manager, administrator and/or sub-adviser to the
Age: 74 following open-end investment companies, and Chairman of the Board of Trustees
and President of each: Churchill Cash Reserves Trust, Aquila-Cascadia Equity
Fund, Cash Assets Trust, Prime Cash Fund, Narragansett Insured Tax-Free Income
Fund, Tax-Free Fund For Utah, Churchill Tax-Free Fund of Kentucky, Tax-Free Fund
of Colorado, Tax-Free Trust of Oregon, Tax-Free Trust of Arizona, Hawaiian
Tax-Free Trust, and Aquila Rocky Mountain Equity Fund and PIMCO ADVISORS VIT;
Vice President, Director, Secretary, and formerly Treasurer of Aquila
Distributors, Inc., distributor of the above funds; President and Chairman of
the Board of Trustees of Capital Cash Management Trust ("CCMT"), and an Officer
and Trustee/Director of its predecessors; President and Director of STCM
Management Company, Inc., sponsor and adviser to CCMT; Chairman, President and a
Director of InCap Management Corporation, formerly sub-adviser and administrator
of Prime Cash Fund and Short Term Asset Reserves; Trustee Emeritus of Brown
University. Oversees 10 portfolios in the OppenheimerFunds complex.
43 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
TRUSTEES AND OFFICERS UNAUDITED / CONTINUED
- --------------------------------------------------------------------------------
BRIAN WRUBLE, Special Limited Partner (since January 1999) of Odyssey Investment Partners, LLC
Trustee (since 2001) (private equity investment); General Partner (since September 1996) of Odyssey
Age: 60 Partners, L.P. (hedge fund in distribution since 1/1/97); Board of Governing
Trustees (since August 1990) of The Jackson Laboratory (non-profit); Trustee
(since May 1992) of Institute for Advanced Study (educational institute);
formerly Trustee (May 2000 - 2002) of Research Foundation of AIMR (investment
research, non-profit); Governor, Jerome Levy Economics Institute of Bard College
(economics research) (August 1990-September 2001); Director of Ray & Berendtson,
Inc. (executive search firm) (May 2000-April 2002). Oversees 10 portfolios in
the OppenheimerFunds complex.
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS THE ADDRESS OF THE OFFICERS IN THE CHART BELOW IS AS FOLLOWS: FOR MESSRS. EVERETT,
MURPHY AND ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, NEW YORK, NY
10281-1008, FOR MR. WIXTED, 6803 S. TUCSON WAY, CENTENNIAL, CO 80112-3924. EACH
OFFICER SERVES FOR AN ANNUAL TERM OR UNTIL HIS OR HER EARLIER RESIGNATION, DEATH
OR REMOVAL.
EDWARD EVERETT, Vice President of the Manager (since January 2000); an officer of 1 portfolio in
Vice President and the OppenheimerFunds complex; formerly Assistant Vice President of the Manager
Portfolio Manager (January 1996 - January 2000).
(since 2000)
Age: 37
JOHN V. MURPHY, Chairman, Chief Executive Officer and director (since June 2001) and President
President (since 2001) (since September 2000) of the Manager; President and a director or trustee of
Age: 54 other Oppenheimer funds; President and a director (since July 2001) of
Oppenheimer Acquisition Corp. (the Manager's parent holding company) and of
Oppenheimer Partnership Holdings, Inc. (a holding company subsidiary of the
Manager); a director (since November 2001) of OppenheimerFunds Distributor, Inc.
(a subsidiary of the Manager); Chairman and a director (since July 2001) of
Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer
agent subsidiaries of the Manager); President and a director (since July 2001)
of OppenheimerFunds Legacy Program (a charitable trust program established by
the Manager); a director of the investment advisory subsidiaries of the Manager:
OFI Institutional Asset Management, Inc. and Centennial Asset Management
Corporation (since November 2001), HarbourView Asset Management Corporation and
OFI Private Investments, Inc. (since July 2001); President (since November 1,
2001) and a director (since July 2001) of Oppenheimer Real Asset Management,
Inc.; a director (since November 2001) of Trinity Investment Management Corp.
and Tremont Advisers, Inc. (Investment advisory affiliates of the Manager);
Executive Vice President (since February 1997) of Massachusetts Mutual Life
Insurance Company (the Manager's parent company); a director (since June 1995)
of DLB Acquisition Corporation (a holding company that owns the shares of David
L. Babson & Company, Inc.); formerly, Chief Operating Officer (September
2000-June 2001) of the Manager; President and trustee (November 1999-November
2001) of MML Series Investment Fund and MassMutual Institutional Funds (open-end
investment companies); a director (September 1999-August 2000) of C.M. Life
Insurance Company; President, Chief Executive Officer and director (September
1999-August 2000) of MML Bay State Life Insurance Company; a director (June
1989-June 1998) of Emerald Isle Bancorp and Hibernia Savings Bank (a
wholly-owned subsidiary of Emerald Isle Bancorp). Oversees 72 portfolios as
Trustee/Officer and 10 portfolios as Officer in the OppenheimerFunds complex.
44 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
BRIAN W. WIXTED, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer
Treasurer (since 1999) (since March 1999) of HarbourView Asset Management Corporation, Shareholder
Age: 44 Services, Inc., Oppenheimer Real Asset Management Corporation, Shareholder
Financial Services, Inc., Oppenheimer Partnership Holdings, Inc., OFI Private
Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. and
OppenheimerFunds plc (since May 2000) and OFI Institutional Asset Management,
Inc. (since November 2000) (offshore fund management subsidiaries of the
Manager); Treasurer and Chief Financial Officer (since May 2000) of Oppenheimer
Trust Company (a trust company subsidiary of the Manager); Assistant Treasurer
(since March 1999) of Oppenheimer Acquisition Corp. and OppenheimerFunds Legacy
Program (since April 2000); formerly Principal and Chief Operating Officer
(March 1995-March 1999), Bankers Trust Company-Mutual Fund Services Division. An
officer of 82 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since
Secretary ( since 2001) February 2002) of the Manager; General Counsel and a director (since November
Age: 55 2001) of OppenheimerFunds Distributor, Inc.; Senior Vice President and General
Counsel (since November 2001) of HarbourView Asset Management Corporation; Vice
President and a director (since November 2000) of Oppenheimer Partnership
Holdings, Inc.; Senior Vice President, General Counsel and a director (since
November 2001) of Shareholder Services, Inc., Shareholder Financial Services,
Inc., OFI Private Investments, Inc., Oppenheimer Trust Company and OFI
Institutional Asset Management, Inc.; General Counsel (since November 2001) of
Centennial Asset Management Corporation; a director (since November 2001) of
Oppenheimer Real Asset Management, Inc.; Assistant Secretary and a director
(since November 2001) of OppenheimerFunds International Ltd.; Vice President
(since November 2001) of OppenheimerFunds Legacy Program; Secretary (since
November 2001) of Oppenheimer Acquisition Corp.; formerly Senior Vice President
(May 1985-January 2004) of the Manager, Acting General Counsel (November
2001-February 2002) and Associate General Counsel (May 1981-October 2001) of the
Manager; Assistant Secretary of Shareholder Services, Inc. (May 1985-November
2001), Shareholder Financial Services, Inc. (November 1989-November 2001);
OppenheimerFunds International Ltd. and OppenheimerFunds plc (October
1997-November 2001). An officer of 82 portfolios in the OppenheimerFunds
complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND IS AVAILABLE WITHOUT CHARGE UPON REQUEST.
45 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer, principal
accounting officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the Fund has determined that the Fund does not
have an audit committee financial expert serving on its Audit Committee. In this
regard, no member of the Audit Committee was identified as having all of the
technical attributes identified in Instruction 2(b) to Item 3 of Form N-CSR to
qualify as an "audit committee financial expert," whether through the type of
specialized education or experience described in that Instruction. The Board has
concluded that while the members of the Audit Committee collectively have the
necessary attributes and experience required to serve effectively as an Audit
Committee, no single member possesses all of the required technical attributes
through the particular methods of education or experience set forth in the
Instructions to be designated as an audit committee financial expert.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) Audit Fees
The principal accountant for the audit of the registrant's annual
financial statements billed $19,000 in fiscal 2003 and $19,750 in
fiscal 2002.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual
financial statements billed $0 in fiscal 2003 and $442 in
fiscal 2002.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees during the last two
fiscal years to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant.
Such fees would include, among others: due diligence related to
mergers and acquisitions, accounting consultations and audits in
connection with acquisitions, internal control reviews and
consultation concerning financial accounting and reporting
standards.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed $5,000 in fiscal 2003 and $0 in
fiscal 2002 to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant.
Such fees would include, among others: tax compliance, tax
planning and tax advice. Tax compliance generally involves
preparation of original and amended tax returns, claims for a
refund and tax payment-planning services. Tax planning and tax
advice includes assistance with tax audits and appeals, tax advice
related to mergers and acquisitions and requests for rulings or
technical advice from taxing authorities.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual
financial statements billed $90 in fiscal 2003 and $73 in
fiscal 2002.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees during the last two
fiscal years to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant.
Such fees would include the cost to the principal accountant of
attending audit committee meetings and consultations regarding the
registrant's retirement plan with respect to its trustees.
(i) (1) During its regularly scheduled periodic meetings, the
registrant's audit committee will pre-approve all audit,
audit-related, tax and other services to be provided by the
principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its
Chairman for any subsequent new engagements that arise between
regularly scheduled meeting dates provided that any fees such
pre-approved are presented to the audit committee at its next
regularly scheduled meeting.
Pre-approval of non-audit services is waived provided that: 1) the
aggregate amount of all such services provided constitutes no more
than five percent of the total amount of fees paid by the
registrant to it principal accountant during the fiscal year in
which services are provided 2) such services were not recognized
by the registrant at the time of engagement as non-audit services
and 3) such services are promptly brought to the attention of the
audit committee of the registrant and approved prior to the
completion of the audit.
(2) 100%
(j) Not applicable as less than 50%.
(k) The principal accountant for the audit of the registrant's annual
financial statements billed $5,090 in fiscal 2003 and $515 in
fiscal 2002 to the registrant and the registrant's investment
adviser or any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the
registrant related to non-audit fees. Those billings did not
include any prohibited non-audit services as defined by the
Securities Exchange Act of 1934.
(l) The registrant's audit committee of the board of trustees has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser, and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)
(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal account's independence. No such services
were rendered.
ITEM 5. NOT APPLICABLE
ITEM 6. RESERVED
ITEM 7. NOT APPLICABLE
ITEM 8. NOT APPLICABLE
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable for fiscal periods ending December 31, 2003.
ITEM 10. 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 December 31, 2003, registrant's
principal executive officer and principal financial officer found
registrant's disclosure controls and procedures to provide reasonable
assurances 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 over financial reporting that occurred during the registrant's
second fiscal half-year that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)