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
BOND FUND SERIES
(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
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
Date of fiscal year end: DECEMBER 31
Date of reporting period: 06/30/2007
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP CONVERTIBLE CORPORATE BONDS AND NOTES SECTORS
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Health Care 15.6%
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Information Technology 11.4
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Consumer Discretionary 9.0
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Industrials 6.8
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Energy 4.2
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Financials 3.4
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Telecommunication Services 3.3
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Consumer Staples 3.1
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Utilities 2.0
Portfolio holdings and strategies are subject to change. Percentages are as of
June 30, 2007, and are based on net assets.
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PORTFOLIO ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Convertible Corporate Bonds and Notes 59.0%
Stocks 32.0
Bonds and Notes 6.0
Cash Equivalents 3.0
Portfolio holdings and strategies are subject to change. Percentages are as of
June 30, 2007, and are based on the total market value of investments.
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10 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
NOTES
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Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. The Fund's total returns shown do
not 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 1.800.525.7048 OR VISITING OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM. READ THE
PROSPECTUS CAREFULLY BEFORE INVESTING.
CLASS A shares of the Fund were first publicly offered on 5/1/95. 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 10-year 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%. While Class M
shares are subject to an annual 0.50% asset-based sales charge, the Board has
set that charge at zero effective February 11, 2004.
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.
11 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
FUND EXPENSES
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FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended June 30, 2007.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), or a $12.00 fee imposed annually
on accounts valued at less than $500.00 (subject to exceptions described in the
Statement of Additional Information). Therefore, the "hypothetical" lines of the
table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
12 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
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BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(1/1/07) (6/30/07) JUNE 30, 2007
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Class A Actual $ 1,000.00 $ 1,076.70 $ 4.85
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Class A Hypothetical 1,000.00 1,020.13 4.72
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Class B Actual 1,000.00 1,072.30 8.98
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Class B Hypothetical 1,000.00 1,016.17 8.74
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Class C Actual 1,000.00 1,072.50 8.93
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Class C Hypothetical 1,000.00 1,016.22 8.69
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Class M Actual 1,000.00 1,076.90 4.70
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Class M Hypothetical 1,000.00 1,020.28 4.57
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Class N Actual 1,000.00 1,074.70 6.50
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Class N Hypothetical 1,000.00 1,018.55 6.33
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 181/365
(to reflect the one-half year period). Those annualized expense ratios,
excluding indirect expenses from affiliated fund, based on the 6-month period
ended June 30, 2007 are as follows:
CLASS EXPENSE RATIOS
- ---------------------------
Class A 0.94%
- ---------------------------
Class B 1.74
- ---------------------------
Class C 1.73
- ---------------------------
Class M 0.91
- ---------------------------
Class N 1.26
The expense ratios reflect reduction to custodian fees and voluntary waiver or
reimbursement by the Fund's Manager that can be terminated at any time, without
advance notice. The "Financial Highlights" tables in the Fund's financial
statements, included in this report, also show the gross expense ratios, without
such waivers or reimbursements.
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13 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF INVESTMENTS June 30, 2007 / Unaudited
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PRINCIPAL VALUE
AMOUNT SEE NOTE 1
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CONVERTIBLE CORPORATE BONDS AND NOTES--58.8%
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CONSUMER DISCRETIONARY--9.0%
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AUTOMOBILES--0.6%
Ford Motor Co., 4.25% Cv. Sr. Unsec. Nts., 12/15/36 1 $ 2,000,000 $ 2,515,000
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HOTELS, RESTAURANTS & LEISURE--3.1%
Carnival Corp., 2% Cv. Sr. Unsec. Unsub. Debs., 4/15/21 5,000,000 6,337,500
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Hilton Hotels Corp., 3.375% Cv. Sr. Unsec. Unsub. Nts., 4/15/23 2,000,000 3,022,500
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Scientific Games Corp., 0.75% Cv. Sr. Sub. Nts., 12/1/24 3,000,000 3,847,500
--------------
13,207,500
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MEDIA--3.5%
Lamar Advertising Co., 2.875% Cv. Sr. Nts., 12/31/10 2,000,000 2,767,500
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Liberty Media Corp., 0.75% Cv. Sr. Unsec. Unsub. Debs., 3/30/23 5,000,000 6,137,500
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Walt Disney Co. (The), 2.125% Cv. Sr. Unsec. Nts., 4/15/23 5,000,000 6,012,500
--------------
14,917,500
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SPECIALTY RETAIL--1.8%
Lowe's Cos., Inc., 0.02% Cv. Sr. Nts., 10/19/21 2 4,000,000 4,300,000
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United Auto Group, Inc., 3.50% Cv. Sr. Sub. Nts., 4/1/26 3,000,000 3,251,250
--------------
7,551,250
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CONSUMER STAPLES--3.1%
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BEVERAGES--1.0%
Molson Coors Brewing Co., 2.50% Cv. Sr. Nts., 7/30/13 4,000,000 4,175,000
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FOOD & STAPLES RETAILING--0.6%
Pantry, Inc. (The), 3% Cv. Sr. Sub. Nts., 11/15/12 2,500,000 2,884,375
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FOOD PRODUCTS--0.9%
Archer-Daniels-Midland Co., 0.875% Cv. Sr. Nts., 2/15/14 1 4,000,000 3,820,000
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PERSONAL PRODUCTS--0.6%
Chattem, Inc., 2% Cv. Sr. Nts., Series AI, 11/15/13 1 2,000,000 2,480,000
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ENERGY--4.2%
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ENERGY EQUIPMENT & SERVICES--3.2%
Cameron International Corp.:
2.50% Cv. Sr. Unsec. Nts., 6/15/26 1 5,000,000 6,106,250
2.50% Cv. Sr. Unsec. Nts., 6/15/26 1,000,000 1,221,250
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Schlumberger Ltd., 2.125% Cv. Sr. Unsec. Nts., 6/1/23 3,000,000 6,405,000
--------------
13,732,500
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OIL & GAS--1.0%
Peabody Energy Corp., 4.75% Cv. Jr. Unsec. Sub. Debs., 12/15/66 4,000,000 4,245,000
14 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
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FINANCIALS--3.4%
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CAPITAL MARKETS--1.9%
Merrill Lynch & Co., Inc., 0% Cv. Sr. Unsec. Unsub. Nts., 3/13/32 2 $ 6,500,000 $ 8,007,350
- ------------------------------------------------------------------------------------------------------------------
REAL ESTATE--0.4%
Host Hotels & Resorts, Inc., 2.625% Cv. Sr. Nts., 4/15/27 1 2,000,000 1,840,000
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REAL ESTATE MANAGEMENT & DEVELOPMENT--1.1%
Forest City Enterprises, Inc., 3.625% Cv. Nts., 10/15/11 1 4,000,000 4,392,800
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HEALTH CARE--15.6%
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BIOTECHNOLOGY--4.5%
Amgen, Inc., 0.375% Cv. Sr. Nts., 2/1/13 1 7,000,000 6,247,500
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Genzyme Corp., 1.25% Cv. Sr. Nts., 12/1/23 1 4,000,000 4,220,000
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Gilead Sciences, Inc.:
0.50% Cv. Sr. Nts., 5/1/11 1 3,000,000 3,405,000
0.50% Cv. Sr. Nts., 5/1/11 1,000,000 1,135,000
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Invitrogen Corp., 1.50% Cv. Sr. Unsec. Nts., 2/15/24 2,000,000 1,847,500
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PDL BioPharma, Inc., 2% Cv. Sr. Unsec. Nts., 2/15/12 2,000,000 2,287,500
--------------
19,142,500
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HEALTH CARE EQUIPMENT & SUPPLIES--4.9%
Advanced Medical Optics, Inc., 1.375% Cv. Sr. Sub. Nts., 7/1/25 3,000,000 2,861,250
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Beckman Coulter, Inc., 2.50% Cv. Sr. Sub. Nts., 12/15/36 1 3,000,000 3,195,000
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Cytyc Corp.:
2.25% Cv. Sr. Nts., 3/15/24 1 1,000,000 1,465,000
2.25% Cv. Sr. Nts., 3/15/24 1,000,000 1,465,000
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Fisher Scientific International, Inc., 3.25% Cv. Sr Unsec. Sub. Nts., 3/1/24 4,000,000 5,730,000
- ------------------------------------------------------------------------------------------------------------------
Medtronic, Inc., 1.50% Cv. Sr. Unsec. Nts., 4/15/11 5,500,000 5,857,500
--------------
20,573,750
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HEALTH CARE PROVIDERS & SERVICES--0.8%
Omnicare, Inc., 3.25% Cv. Sr. Unsec. Debs., 12/15/35 4,000,000 3,365,000
- ------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS--5.4%
Allergan, Inc., 1.50% Cv. Nts., 4/1/26 1 5,000,000 5,312,500
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Medicis Pharmaceutical Corp., 2.50% Cv. Sr. Unsec. Nts., 6/4/32 3,000,000 3,397,500
- ------------------------------------------------------------------------------------------------------------------
Teva Pharmaceutical Finance II LLC, 0.50% Cv. Sr. Debs., Series A, 2/1/24
(cv. into ADRs of Teva Pharmaceutical Industries Ltd.) 6,500,000 7,491,250
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Wyeth, 4.877% Cv. Sr. Unsec. Nts., 1/15/24 3 6,000,000 6,817,200
--------------
23,018,450
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INDUSTRIALS--6.8%
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AEROSPACE & DEFENSE--2.6%
Alliant Techsystems, Inc., 2.75% Cv. Sr. Sub. Nts., 9/15/11 1 6,000,000 6,967,500
- ------------------------------------------------------------------------------------------------------------------
Lockheed Martin Corp., 5.11% Cv. Sr. Nts., 8/15/33 3 3,000,000 4,045,200
--------------
11,012,700
15 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
AIRLINES--1.1%
AirTran Holdings, Inc., 7% Cv. Sr. Nts., 7/1/23 $ 2,000,000 $ 2,467,500
- ------------------------------------------------------------------------------------------------------------------
UAL Corp., 5% Cv. Bonds, 2/1/21 2,000,000 2,235,200
--------------
4,702,700
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COMMERCIAL SERVICES & SUPPLIES--2.0%
FTI Consulting, Inc., 3.75% Cv. Sr. Unsec. Sub. Nts., 7/15/12 3,000,000 4,245,000
- ------------------------------------------------------------------------------------------------------------------
Waste Connections, Inc., 3.75% Cv. Sr. Unsec. Nts., 4/1/26 4,000,000 4,410,000
--------------
8,655,000
- ------------------------------------------------------------------------------------------------------------------
MACHINERY--1.1%
Danaher Corp., 2.518% Cv. Sr. Unsec. Unsub. Liquid Yield Option Nts., 1/22/21 2 3,000,000 3,326,250
- ------------------------------------------------------------------------------------------------------------------
SystemOne Technologies, Inc.:
2.888% Cv. Sub. Nts., 12/31/06 4,5 3,931,593 624,730
8.25% Cv. Sub. Nts., 12/31/06 4,5 3,212,132 510,408
--------------
4,461,388
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INFORMATION TECHNOLOGY--11.4%
- ------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--1.2%
Comverse Technology, Inc., 0% Cv. Sr. Unsec. Zero Yield
Puttable Securities, 5/15/23 2 4,000,000 4,940,000
- ------------------------------------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--1.8%
EMC Corp., 1.75% Cv. Sr. Nts., 12/1/11 1 6,000,000 7,605,000
- ------------------------------------------------------------------------------------------------------------------
IT SERVICES--1.6%
DST Systems, Inc., 3.625% Cv. Sr. Unsec. Debs., Series B, 8/15/23 3,000,000 4,957,500
- ------------------------------------------------------------------------------------------------------------------
Verifone Holdings, Inc., 1.375% Cv. Sr. Nts., 6/15/12 5 2,000,000 1,976,260
--------------
6,933,760
- ------------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--4.0%
Advanced Micro Devices, Inc., 6% Cv. Sr. Nts., 5/1/15 1 3,000,000 2,902,500
- ------------------------------------------------------------------------------------------------------------------
Agere Systems, Inc., 6.50% Cv. Unsec. Unsub. Nts., 12/15/09
(cv. into Agere Systems, Inc., Cl. A common stock) 5,000,000 5,106,250
- ------------------------------------------------------------------------------------------------------------------
Intel Corp.:
2.95% Cv. Unsec. Sub. Debs., 12/15/35 1 4,000,000 3,835,000
2.95% Cv. Unsec. Sub. Debs., 12/15/35 2,000,000 1,917,500
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Xilinx, Inc., 3.125% Cv. Jr. Unsec. Sub. Debs., 3/15/37 1 3,000,000 3,037,500
--------------
16,798,750
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SOFTWARE--2.8%
Amdocs Ltd., 0.50% Cv. Nts., 3/15/24 3,000,000 3,112,500
- ------------------------------------------------------------------------------------------------------------------
Red Hat, Inc., 0.50% Cv. Sr. Unsec. Sub. Debs., 1/15/24 3,000,000 3,138,750
- ------------------------------------------------------------------------------------------------------------------
Symantec Corp.:
0.75% Cv. Sr. Nts., 6/15/11 1 4,000,000 4,680,000
0.75% Cv. Sr. Unsec. Nts., 6/15/11 1,000,000 1,170,000
--------------
12,101,250
16 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--3.3%
- ------------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--0.7%
Level 3 Communications, Inc., 2.875% Cv. Sub. Nts., 7/15/10 $ 2,500,000 $ 2,734,375
- ------------------------------------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--2.6%
American Tower Corp., 3% Cv. Sr. Nts., 8/15/12 1,000,000 2,111,250
- ------------------------------------------------------------------------------------------------------------------
NII Holdings, Inc., 3.125% Cv. Sr. Unsec. Nts., 6/15/12 1 9,000,000 8,955,000
--------------
11,066,250
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UTILITIES--2.0%
- ------------------------------------------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER--2.0%
CenterPoint Energy, Inc., 3.75% Cv. Sr. Unsec. Nts., Series B, 5/15/23 2,000,000 3,117,500
- ------------------------------------------------------------------------------------------------------------------
CMS Energy Corp., 2.875% Cv. Sr. Nts., 12/1/24 4,000,000 5,245,000
--------------
8,362,500
--------------
Total Convertible Corporate Bonds and Notes (Cost $ 233,443,342) 249,241,648
SHARES
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PREFERRED STOCKS--27.3%
- ------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--4.1%
- ------------------------------------------------------------------------------------------------------------------
AUTOMOBILES--3.3%
Ford Motor Co. Capital Trust II, 6.50% Cum. Cv., Non-Vtg. 155,000 5,976,800
- ------------------------------------------------------------------------------------------------------------------
General Motors Corp.:
5.25% Cv. Sr. Unsec. Debs., Series B 250,000 5,525,000
6.25% Cv. Sr. Unsec. Debs., Series C, Non-Vtg. 6 100,000 2,506,000
--------------
14,007,800
- ------------------------------------------------------------------------------------------------------------------
MEDIA--0.8%
Interpublic Group of Cos., Inc. (The), 5.25% Cv. Unsec., Series B 1 3,000 3,207,375
- ------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--0.8%
- ------------------------------------------------------------------------------------------------------------------
FOOD PRODUCTS--0.8%
Bunge Ltd., 4.875% Cv. 30,000 3,461,250
- ------------------------------------------------------------------------------------------------------------------
ENERGY--3.1%
- ------------------------------------------------------------------------------------------------------------------
OIL & GAS--3.1%
Chesapeake Energy Corp., 4.50% Cum. Cv., Non-Vtg. 60,000 6,030,000
- ------------------------------------------------------------------------------------------------------------------
El Paso Corp., 4.99% Cv. 5,000 7,306,250
--------------
13,336,250
- ------------------------------------------------------------------------------------------------------------------
FINANCIALS--10.2%
- ------------------------------------------------------------------------------------------------------------------
CAPITAL MARKETS--4.4%
Affiliated Managers Group, Inc.:
5.10% Cv. 1 120,000 7,020,000
5.10% Cv. 20,000 1,170,000
- ------------------------------------------------------------------------------------------------------------------
E*TRADE Financial Corp., 6.125% Cum. Cv., Non-Vtg. 150,000 4,188,000
17 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
CAPITAL MARKETS Continued
Lehman Brothers Holdings, Inc., 6.25% Cv. Premium Income Equity Linked Nts.
(linked to General Mills, Inc. common stock) 240,000 $ 6,494,400
--------------
18,872,400
- ------------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS--1.0%
Washington Mutual Capital Trust 2001, 5.375% Cum. Cv. Units
(each unit consists of one preferred stock and one warrant to
purchase shares of Washington Mutual, Inc.), Non-Vtg. 7 75,000 4,199,250
- ------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--1.3%
Citigroup Funding, Inc., 5.02% Cv., Series GNW 175,000 5,615,750
- ------------------------------------------------------------------------------------------------------------------
INSURANCE--2.8%
MetLife, Inc., 6.375% Cv. Equity Units, Series B (each equity unit
consists of a fractional interest in trust preferred securities as well
as a stock purchase contract to purchase MetLife, Inc., Series A and Series B) 7 200,000 6,472,000
- ------------------------------------------------------------------------------------------------------------------
Platinum Underwriters Holdings Ltd., 6% Cv., Series A, Non-Vtg. 160,000 5,260,000
--------------
11,732,000
- ------------------------------------------------------------------------------------------------------------------
REAL ESTATE--0.7%
Simon Property Group, Inc., 6% Cv., Non-Vtg. 40,000 3,039,600
- ------------------------------------------------------------------------------------------------------------------
HEALTH CARE--0.6%
- ------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS--0.6%
Schering-Plough Corp., 6% Cv. 40,000 2,752,000
- ------------------------------------------------------------------------------------------------------------------
INDUSTRIALS--1.4%
- ------------------------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--1.4%
Northrop Grumman Corp., 7% Cum. Cv., Series B 40,000 5,776,000
- ------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--1.2%
- ------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--1.2%
Lucent Technologies Capital Trust I, 7.75% Cum. Cv., Non-Vtg. 5,000 5,150,000
- ------------------------------------------------------------------------------------------------------------------
MATERIALS--2.5%
- ------------------------------------------------------------------------------------------------------------------
CHEMICALS--0.6%
Celanese Corp., 4.25% Cum. Cv. 50,000 2,508,000
- ------------------------------------------------------------------------------------------------------------------
METALS & MINING--1.9%
Freeport-McMoRan Copper & Gold, Inc., 6.75% Cv., Non-Vtg. 6 50,000 6,425,000
- ------------------------------------------------------------------------------------------------------------------
Vale Capital Ltd., 5.50% Cv. 6 30,000 1,471,500
--------------
7,896,500
- ------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--1.1%
- ------------------------------------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--1.1%
Crown Castle International Corp., 6.25% Cv. 80,000 4,620,000
18 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
UTILITIES--2.3%
- ------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.3%
Entergy Corp., 7.625% Cv. 80,000 $ 5,263,200
- ------------------------------------------------------------------------------------------------------------------
NRG Energy, Inc., 5.75% Cv. 12,000 4,431,960
--------------
9,695,160
--------------
Total Preferred Stocks (Cost $102,791,006) 115,869,335
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--4.5%
- ------------------------------------------------------------------------------------------------------------------
Altria Group, Inc. 70,000 4,909,800
- ------------------------------------------------------------------------------------------------------------------
Bank of America Corp. 70,000 3,422,300
- ------------------------------------------------------------------------------------------------------------------
Johnson & Johnson 80,000 4,929,600
- ------------------------------------------------------------------------------------------------------------------
Microchip Technology, Inc. 50,000 1,852,000
- ------------------------------------------------------------------------------------------------------------------
SystemOne Technologies, Inc. 5,6 197,142 9,857
- ------------------------------------------------------------------------------------------------------------------
Tyco International Ltd. 120,000 4,054,800
--------------
Total Common Stocks (Cost $16,790,728) 19,178,357
PRINCIPAL
AMOUNT
- ------------------------------------------------------------------------------------------------------------------
STRUCTURED NOTES--6.0%
- ------------------------------------------------------------------------------------------------------------------
Allegro Investment Corp. SA, Cv. Equity Linked Nts., 5.05%, 3/17/08 $ 154,522 4,128,117
- ------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, 3M Co. Exchangeable Total Return Linked Nts.,
4.64%, 3/19/08 5 55,000 4,457,750
- ------------------------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The), Cv. Equity Linked Nts., 7.10%, 2/6/08
(linked to Occidental Petroleum Corp. common stock) 87,650 4,568,931
- ------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.:
Cv. Linked Nts., 6%, 12/5/07 (linked to Corning, Inc.) 5 285,705 7,079,770
Equity Linked Nts., 6.35%, 1/4/08 (linked to Global SantaFe Corp.) 5 82,342 5,303,237
--------------
Total Structured Notes (Cost $22,538,484) 25,537,805
SHARES
- ------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN AFFILIATED COMPANIES--3.0%
- ------------------------------------------------------------------------------------------------------------------
Oppenheimer Institutional Money Market Fund, Cl. E, 5.28% 8,9
(Cost $12,607,420) 12,607,420 12,607,420
- ------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $388,170,980) 99.6% 422,434,565
- ------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.4 1,894,874
-----------------------------
NET ASSETS 100.0% $ 424,329,439
=============================
19 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $93,208,925 or 21.97% of the Fund's net
assets as of June 30, 2007.
2. Zero coupon bond reflects effective yield on the date of purchase.
3. Represents the current interest rate for a variable or increasing rate
security.
4. Issue is in default. See Note 1 of accompanying Notes.
5. Illiquid security. The aggregate value of illiquid securities as of June 30,
2007 was $19,962,012, which represents 4.70% of the Fund's net assets. See Note
6 of accompanying Notes.
6. Non-income producing security.
7. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units, which
represent debt securities, principal amount disclosed represents total
underlying principal.
8. Rate shown is the 7-day yield as of June 30, 2007.
9. Is or was an affiliate, as defined in the Investment Company Act of 1940, at
or during the period ended June 30, 2007, by virtue of the Fund owning at least
5% of the voting securities of the issuer or as a result of the Fund and the
issuer having the same investment advisor. Transactions during the period in
which the issuer was an affiliate are as follows:
SHARES GROSS GROSS SHARES
DECEMBER 31, 2006 ADDITIONS REDUCTIONS JUNE 30, 2007
- ---------------------------------------------------------------------------------------------
Oppenheimer Institutional
Money Market Fund, Cl.E 18,266,066 121,496,030 127,154,676 12,607,420
- ---------------------------------------------------------------------------------------------
VALUE DIVIDEND
SEE NOTE 1 INCOME
- ---------------------------------------------------------------------------------------------
Oppenheimer Institutional
Money Market Fund, Cl. E $12,607,420 $429,816
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
June 30, 2007
- -------------------------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $375,563,560) $ 409,827,145
Affiliated companies (cost $12,607,420) 12,607,420
--------------
422,434,565
- -------------------------------------------------------------------------------------------------------------------
Cash 642,945
- -------------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 1,991,969
Interest and dividends 1,546,724
Shares of beneficial interest sold 379,217
Other 52,427
--------------
Total assets 427,047,847
- -------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 1,040,299
Shares of beneficial interest redeemed 850,567
Dividends 393,570
Distribution and service plan fees 252,763
Trustees' compensation 68,139
Shareholder communications 51,655
Transfer and shareholder servicing agent fees 45,525
Other 15,890
--------------
Total liabilities 2,718,408
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 424,329,439
==============
- -------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
Paid-in capital $ 451,038,639
- -------------------------------------------------------------------------------------------------------------------
Accumulated net investment loss (2,377,248)
- -------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (58,595,537)
- -------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 34,263,585
--------------
NET ASSETS $ 424,329,439
==============
21 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited / Continued
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- -------------------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $256,805,472 and
17,000,570 shares of beneficial interest outstanding) $ 15.11
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $ 16.03
- -------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and
offering price per share (based on net assets of $36,448,989 and 2,409,212 shares of
beneficial interest outstanding) $ 15.13
- -------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and
offering price per share (based on net assets of $57,570,989 and 3,813,185 shares of
beneficial interest outstanding) $ 15.10
- -------------------------------------------------------------------------------------------------------------------
Class M Shares:
Net asset value and redemption price per share (based on net assets of $70,071,733 and
4,641,802 shares of beneficial interest outstanding) $ 15.10
Maximum offering price per share (net asset value plus sales charge of 3.25% of offering price) $ 15.61
- -------------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and
offering price per share (based on net assets of $3,432,256 and 227,224 shares of beneficial
interest outstanding) $ 15.11
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 2007
- ---------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- ---------------------------------------------------------------------------------------------------------
Dividends:
Unaffiliated companies $ 3,256,960
Affiliated companies 429,816
- ---------------------------------------------------------------------------------------------------------
Interest 2,125,172
--------------
Total investment income 5,811,948
- ---------------------------------------------------------------------------------------------------------
EXPENSES
- ---------------------------------------------------------------------------------------------------------
Management fees 1,042,006
- ---------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 290,231
Class B 190,337
Class C 282,870
Class M 82,134
Class N 15,061
- ---------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 156,786
Class B 28,970
Class C 43,173
Class M 33,802
Class N 4,627
- ---------------------------------------------------------------------------------------------------------
Shareholder communications:
Class A 26,224
Class B 6,509
Class C 5,905
Class M 5,400
Class N 624
- ---------------------------------------------------------------------------------------------------------
Accounting service fees 64,438
- ---------------------------------------------------------------------------------------------------------
Trustees' compensation 10,249
- ---------------------------------------------------------------------------------------------------------
Custodian fees and expenses 1,548
- ---------------------------------------------------------------------------------------------------------
Administration service fees 750
- ---------------------------------------------------------------------------------------------------------
Other 56,854
--------------
Total expenses 2,348,498
Less reduction to custodian expenses (728)
Less waivers and reimbursements of expenses (8,163)
--------------
Net expenses 2,339,607
- ---------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 3,472,341
23 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENT OF OPERATIONS Unaudited / Continued
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
- ---------------------------------------------------------------------------------------------------------
Net realized gain on:
Investments $ 22,989,592
Closing and expiration of option contracts written 54,084
--------------
Net realized gain 23,043,676
- ---------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 4,460,329
- ---------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 30,976,346
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 2007 DECEMBER 31,
(UNAUDITED) 2006
- --------------------------------------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------------------------------------
Net investment income $ 3,472,341 $ 10,061,632
- --------------------------------------------------------------------------------------------------------------
Net realized gain 23,043,676 29,135,185
- --------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 4,460,329 3,105,320
--------------------------------
Net increase in net assets resulting from operations 30,976,346 42,302,137
- --------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (2,259,681) (7,800,060)
Class B (191,113) (1,112,118)
Class C (289,083) (1,396,887)
Class M (647,146) (2,400,470)
Class N (41,750) (244,472)
--------------------------------
(3,428,773) (12,954,007)
- --------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A 525,696 (27,464,457)
Class B (6,670,787) (21,179,903)
Class C (1,856,611) (10,458,453)
Class M (5,504,499) (13,103,309)
Class N (13,998,802) 13,889,747
--------------------------------
(27,505,003) (58,316,375)
- --------------------------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------------------
Total increase (decrease) 42,570 (28,968,245)
- --------------------------------------------------------------------------------------------------------------
Beginning of period 424,286,869 453,255,114
--------------------------------
End of period (including accumulated net investment loss
of $2,377,248 and $2,420,816, respectively) $ 424,329,439 $ 424,286,869
================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 2007 DEC. 31,
CLASS A (UNAUDITED) 2006 2005 2004 2003 2002
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.16 $ 13.22 $ 13.63 $ 13.27 $ 11.29 $ 12.76
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .13 1 .35 1 .35 1 .43 1 .56 .57
Net realized and unrealized gain (loss) .95 1.04 (.16) .58 1.98 (1.41)
-----------------------------------------------------------------------
Total from investment operations 1.08 1.39 .19 1.01 2.54 (.84)
- ------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.13) (.45) (.60) (.65) (.56) (.63)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 15.11 $ 14.16 $ 13.22 $ 13.63 $ 13.27 $ 11.29
=======================================================================
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.67% 10.63% 1.50% 7.74% 22.95% (6.59)%
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $256,805 $240,088 $251,033 $319,478 $310,641 $202,968
- ------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $250,915 $239,978 $277,049 $321,729 $252,347 $190,677
- ------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.84% 2.57% 2.66% 3.24% 4.48% 4.77%
Total expenses 0.94% 4 0.95% 4 0.97% 0.94% 0.94% 0.99%
Expenses after payments, waivers and/or
reimbursements and reduction to
custodian expenses 0.94% 0.95% 0.96% 0.94% 0.94% 0.99%
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 54% 50% 54% 61% 52%
1. Per share amounts calculated based on the average shares outstanding during
the period.
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 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 less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as
follows:
Six Months Ended June 30, 2007 0.94%
Year Ended December 31, 2006 0.95
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 2007 DEC. 31,
CLASS B (UNAUDITED) 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.18 $ 13.24 $ 13.65 $ 13.29 $ 11.30 $ 12.79
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .08 1 .24 1 .24 1 .33 1 .43 .43
Net realized and unrealized gain (loss) .94 1.04 (.15) .58 2.02 (1.38)
---------------------------------------------------------------------------------
Total from investment operations 1.02 1.28 .09 .91 2.45 (.95)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.07) (.34) (.50) (.55) (.46) (.54)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 15.13 $ 14.18 $ 13.24 $ 13.65 $ 13.29 $ 11.30
=================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.23% 9.75% 0.68% 6.92% 22.07% (7.44)%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $36,449 $40,597 $58,483 $ 84,816 $133,058 $154,350
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $38,443 $47,985 $68,098 $102,670 $139,757 $213,259
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.02% 1.74% 1.84% 2.47% 3.79% 3.95%
Total expenses 1.74% 4,5,6 1.75% 4,6 1.79% 5 1.75% 5 1.74% 5,7 1.77% 5
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 54% 50% 54% 61% 52%
1. Per share amounts calculated based on the average shares outstanding during
the period.
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 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 less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as
follows:
Six Months Ended June 30, 2007 1.74%
Year Ended December 31, 2006 1.75
5. Reduction to custodian expenses less than 0.005%.
6. Voluntary waiver or reimbursement of indirect management fees less than
0.005%.
7. Voluntary waiver of transfer agent fees less than 0.005%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 2007 DEC. 31,
CLASS C (UNAUDITED) 2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $14.15 $ 13.21 $ 13.62 $ 13.27 $ 11.28 $ 12.76
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .08 1 .24 1 .25 1 .33 1 .46 .46
Net realized and unrealized gain (loss) .94 1.04 (.16) .57 1.99 (1.40)
------------------------------------------------------------------------------
Total from investment operations 1.02 1.28 .09 .90 2.45 (.94)
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.07) (.34) (.50) (.55) (.46) (.54)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.10 $ 14.15 $ 13.21 $ 13.62 $ 13.27 $ 11.28
==============================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.25% 9.78% 0.72% 6.89% 22.14% (7.39)%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $57,571 $55,737 $62,231 $80,995 $82,149 $61,031
- ---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $57,080 $57,353 $69,275 $82,470 $69,787 $66,391
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.04% 1.77% 1.89% 2.48% 3.73% 3.97%
Total expenses 1.73% 4,5,6 1.74% 4,6 1.74% 5 1.70% 5 1.70% 5,7 1.76% 5
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 54% 50% 54% 61% 52%
1. Per share amounts calculated based on the average shares outstanding during
the period.
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 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 less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as
follows:
Six Months Ended June 30, 2007 1.73%
Year Ended December 31, 2006 1.74
5. Reduction to custodian expenses less than 0.005%.
6. Voluntary waiver or reimbursement of indirect management fees less than
0.005%.
7. Voluntary waiver of transfer agent fees less than 0.005%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 2007 DEC. 31,
CLASS M (UNAUDITED) 2006 2005 2004 2003 2002
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.15 $ 13.21 $ 13.62 $ 13.27 $ 11.28 $ 12.76
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .14 1 .36 1 .36 1 .43 1 .50 .49
Net realized and unrealized gain (loss) .95 1.03 (.16) .57 2.00 (1.40)
----------------------------------------------------------------------------------
Total from investment operations 1.09 1.39 .20 1.00 2.50 (.91)
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.14) (.45) (.61) (.65) (.51) (.57)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 15.10 $ 14.15 $ 13.21 $ 13.62 $ 13.27 $ 11.28
==================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.69% 10.68% 1.55% 7.69% 22.59% (7.16)%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $70,072 $70,996 $79,023 $100,877 $114,600 $108,426
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $70,703 $73,597 $86,969 $106,194 $110,337 $122,897
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.87% 2.60% 2.72% 3.24% 4.16% 4.24%
Total expenses 0.91% 4,5,6 0.91% 4,6 0.91% 5 0.95% 5,7 1.32% 5,7 1.51% 5
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 54% 50% 54% 61% 52%
1. Per share amounts calculated based on the average shares outstanding during
the period.
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 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 less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as
follows:
Six Months Ended June 30, 2007 0.91%
Year Ended December 31, 2006 0.91
5. Reduction to custodian expenses less than 0.005%.
6. Voluntary waiver or reimbursement of indirect management fees less than
0.005%.
7. Voluntary waiver of transfer agent fees less than 0.005%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 2007 DEC. 31,
CLASS N (UNAUDITED) 2006 2005 2004 2003 2002
- ------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $14.16 $ 13.22 $13.63 $13.27 $11.29 $12.76
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .11 1 .31 1 .28 1 .37 1 .49 .55
Net realized and unrealized gain (loss) .95 1.02 (.15) .58 2.00 (1.43)
---------------------------------------------------------------
Total from investment operations 1.06 1.33 .13 .95 2.49 (.88)
- ------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.11) (.39) (.54) (.59) (.51) (.59)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.11 $ 14.16 $13.22 $13.63 $13.27 $11.29
===============================================================
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.47% 10.19% 1.04% 7.31% 22.45% (6.92)%
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $3,432 $16,869 $2,485 $2,131 $1,458 $ 388
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $6,001 $ 5,669 $2,378 $1,781 $ 743 $ 205
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.46% 2.26% 2.17% 2.79% 3.87% 4.38%
Total expenses 1.26% 4 1.23% 4 1.45% 1.37% 1.37% 1.43%
Expenses after payments, waivers and/or
reimbursements and reduction to
custodian expenses 1.26% 1.23% 1.43% 1.37% 1.35% 1.38%
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 54% 50% 54% 61% 52%
1. Per share amounts calculated based on the average shares outstanding during
the period.
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 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 less than one full year.
4. Total expenses including indirect expenses from affiliated fund were as
follows:
Six Months Ended June 30, 2007 1.26%
Year Ended December 31, 2006 1.23
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Convertible Securities Fund (the Fund), a portfolio of the Bond Fund
Series, is registered under the Investment Company Act of 1940, as amended, as
an 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 due
to each class having its own expenses, such as transfer and shareholder
servicing agent fees and shareholder communications, directly attributable to
that class. Class 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. The Fund calculates the net asset value of its shares as
of the close of the New York Stock Exchange (the "Exchange"), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. Securities listed or traded on National
Stock Exchanges or other domestic 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(R) 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 traded on
foreign exchanges are valued based on the last sale price on the principal
exchange on which the security is traded, as identified by the portfolio pricing
service, prior to the time when the Fund's assets are valued. In the absence of
a sale, the security is valued at the official closing price on the principal
exchange. Corporate, government and municipal debt instruments having a
remaining maturity in excess of sixty days and all mortgage-backed securities
will be valued at the mean between the "bid" and "asked" prices. Futures
contracts traded on a commodities or futures exchange will be valued at the
final settlement price or official closing price on the principal exchange as
reported by such principal exchange at its trading session ending at, or most
recently prior to, the time when the Fund's assets are valued. Options are
valued daily based upon the last sale price on the principal exchange on
31 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
which the option is traded. Securities (including restricted securities) for
which market quotations are not readily available are valued at their fair
value. Foreign and domestic 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 exchanges
will be fair valued. Fair value is determined in good faith using consistently
applied procedures under the supervision of the Board of Trustees. Investments
in open-end registered investment companies (including affiliated funds) are
valued at that fund's net asset value. 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,
interest rates and/or redemption prices are linked to the performance of
underlying foreign currencies, interest rate spreads, stock market indices,
prices of individual securities, commodities or other financial instruments or
the occurrence of other specific events. The structured notes are often
leveraged, increasing the volatility of each note's market value relative to the
change in the underlying linked financial element or event. Fluctuations in
value of these securities are recorded as unrealized gains and losses in the
accompanying Statement of Operations. The Fund records a realized gain or loss
when a structured note is sold or matures.
- --------------------------------------------------------------------------------
INVESTMENT IN OPPENHEIMER INSTITUTIONAL MONEY MARKET FUND. The Fund is permitted
to invest daily available cash balances in an affiliated money market fund. The
Fund may invest the available cash in Class E shares of Oppenheimer
Institutional Money Market Fund ("IMMF") which seeks current income and
stability of principal. IMMF is a registered open-end management investment
company, regulated as a money market fund under the Investment Company Act of
1940, as amended. The Manager is also the investment advisor of IMMF. The Fund's
investment in IMMF is included in the Statement of Investments. As a
shareholder, the Fund is subject to its proportional share of IMMF's Class E
expenses, including its management fee. The Manager will waive fees and/or
reimburse Fund expenses in an amount equal to the indirect management fees
incurred through the Fund's investment in IMMF.
- --------------------------------------------------------------------------------
SECURITY CREDIT RISK. The Fund invests in high-yield securities, which may be
subject to a greater degree of credit risk, market fluctuations and loss of
income and principal, and may be more sensitive to economic conditions than
lower-yielding, higher-rated fixed income securities. The Fund may acquire
securities in default, and is not obligated to dispose of securities whose
issuers subsequently default. As of June 30, 2007, securities with an aggregate
market value of $1,135,138, representing 0.27% of the Fund's net assets, were in
default.
- --------------------------------------------------------------------------------
INVESTMENTS WITH OFF BALANCE SHEET RISK. The Fund enters into financial
instrument transactions (such as swaps, futures, options and other derivatives)
that may have off-balance sheet market risk. Off-balance sheet market risk
exists when the maximum potential
32 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
loss on a particular financial instrument is greater than the value of such
financial instrument, as reflected in the Fund's Statement of Assets and
Liabilities.
- --------------------------------------------------------------------------------
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.
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.
As of June 30, 2007, the Fund had available for federal income tax
purposes an estimated capital loss carryforward of $57,655,196 expiring by 2015.
This estimated capital loss carryforward represents carryforward as of the end
of the last fiscal year, increased for losses deferred under tax accounting
rules to the current fiscal year and is increased or decreased by capital losses
or gains realized in the first six months of the current fiscal year. As of June
30, 2007, it is estimated that the Fund will utilize $23,043,676 of capital loss
carryforward to offset realized capital gains. During the fiscal year ended
December 31, 2006, the Fund utilized $21,096,894 of capital loss carryforward to
offset capital gains realized in that fiscal year.
As of December 31, 2006, the Fund had available for federal income tax purposes
unused capital loss carryforward as follows:
EXPIRING
-------------------------
2010 $80,698,872
- --------------------------------------------------------------------------------
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 six months ended
June 30, 2007, the Fund's projected benefit obligations were increased by $3,975
and payments of $3,272 were made to retired trustees, resulting in an
accumulated liability of $57,251 as of June 30, 2007.
The Board of Trustees has adopted a compensation deferral 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.
For purposes of determining the amount owed to the Trustee under the plan,
deferred amounts are treated as though
33 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
equal dollar amounts had been invested in shares of the Fund or in other
Oppenheimer funds selected by the Trustee. The Fund purchases shares of the
funds selected for deferral by the Trustee in amounts equal to his or her deemed
investment, resulting in a Fund asset equal to the deferred compensation
liability. Such assets are included as a component of "Other" within the asset
section of the Statement of Assets and Liabilities. 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
compensation deferral plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. 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.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts, to the extent they are not
offset by positive cash balances maintained by the Fund, at a rate equal to the
Federal Funds Rate plus 0.50%. The "Reduction to custodian expenses" line item,
if applicable, represents earnings on cash balances maintained by the Fund
during the period. Such interest expense and other custodian fees may be paid
with these earnings.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Fund's organizational documents provide current and former
trustees and officers with a limited indemnification against liabilities arising
in connection with the performance of their duties to the Fund. In the normal
course of business, the Fund may also enter into contracts that provide general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown as this would be dependent on future claims that may be made against the
Fund. The risk of material loss from such claims is considered remote.
34 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
SIX MONTHS ENDED JUNE 30, 2007 YEAR ENDED DECEMBER 31, 2006
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------
CLASS A
Sold 1,624,387 $ 23,836,152 2,318,909 $ 31,684,747
Dividends and/or
distributions reinvested 123,569 1,835,212 444,736 6,153,926
Redeemed (1,706,239) (25,145,668) (4,798,119) (65,303,130)
-----------------------------------------------------------
Net increase (decrease) 41,717 $ 525,696 (2,034,474) $(27,464,457)
===========================================================
- --------------------------------------------------------------------------------------------
CLASS B
Sold 118,233 $ 1,748,282 219,096 $ 2,994,379
Dividends and/or
distributions reinvested 8,060 119,917 51,658 716,244
Redeemed (580,298) (8,538,986) (1,825,531) (24,890,526)
------------------------------------------------------------
Net decrease (454,005) $ (6,670,787) (1,554,777) $(21,179,903)
============================================================
- ---------------------------------------------------------------------------------------------
CLASS C
Sold 207,082 $ 3,055,099 363,323 $ 4,952,367
Dividends and/or
distributions reinvested 13,841 205,621 71,329 988,545
Redeemed (346,819) (5,117,331) (1,206,502) (16,399,365)
-----------------------------------------------------------
Net decrease (125,896) $ (1,856,611) (771,850) $(10,458,453)
===========================================================
- --------------------------------------------------------------------------------------------
CLASS M
Sold 19,347 $ 286,481 46,520 $ 635,319
Dividends and/or
distributions reinvested 31,103 461,562 121,268 1,676,096
Redeemed (426,781) (6,252,542) (1,132,431) (15,414,724)
-----------------------------------------------------------
Net decrease (376,331) $ (5,504,499) (964,643) $(13,103,309)
===========================================================
- --------------------------------------------------------------------------------------------
CLASS N
Sold 22,955 $ 357,838 1,037,870 $ 14,367,145
Dividends and/or
distributions reinvested 2,604 38,301 16,642 234,685
Redeemed (989,383) (14,394,941) (51,480) (712,083)
-----------------------------------------------------------
Net increase (decrease) (963,824) $(13,998,802) 1,003,032 $ 13,889,747
===========================================================
35 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations and investments in IMMF, for the six months ended
June 30, 2007, were as follows:
PURCHASES SALES
-------------------------------------------------------------
Investment securities $102,461,647 $125,717,383
- --------------------------------------------------------------------------------
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 average net assets as shown in the following table:
FEE SCHEDULE
------------------------------------------
Up to $50 million 0.6250%
Next $250 million 0.5000
Over $300 million 0.4375
- --------------------------------------------------------------------------------
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 average daily net assets and $9,000 for
each additional $30 million of average daily net assets. During the six months
ended June 30, 2007, the Fund paid $64,438 to the Manager for accounting and
pricing services.
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICE FEES. The Fund pays the Manager a fee of $1,500 per year
for preparing and filing the Fund's tax returns.
- --------------------------------------------------------------------------------
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 six months ended June 30, 2007, the Fund paid
$277,412 to OFS for services to the Fund.
- --------------------------------------------------------------------------------
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
periodically 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 all of those fees
to pay dealers, brokers, banks and other financial institutions periodically for
providing personal services and maintenance of accounts of their customers that
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
periods. Fees incurred by the Fund under the Plan are detailed in the Statement
of Operations.
36 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
- --------------------------------------------------------------------------------
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 those shares and servicing accounts. Under
the plans, the Fund pays the Distributor an annual asset-based sales charge of
0.75% on Class B and Class C shares and 0.25% on Class N shares. While the Class
M plan permits an annual asset-based sales charge payment of 0.50%, the Board
has set that payment at zero effective February 11, 2004. The Distributor also
receives a service fee of 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
determines its uncompensated expenses under the plan at calendar quarter ends.
The Distributor's aggregate uncompensated expenses under the plan at June 30,
2007 for Class B, Class C and Class N shares were $2,135,059, $2,698,443 and
$160,069, 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 following table for the period
indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CLASS M CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ---------------------------------------------------------------------------------------------------------------
June 30, 2007 $ 39,302 $ 732 $ -- $ 47,634 $ 630 $ --
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit
transfer and shareholder servicing agent fees for all classes to 0.35% of
average annual net assets per class. This undertaking may be amended or
withdrawn at any time.
The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's investment in
IMMF. During the six months ended June 30, 2007, the Manager waived $8,163 for
IMMF management fees.
- --------------------------------------------------------------------------------
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.
37 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. OPTION ACTIVITY Continued
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 or put options are noted
in the Statement of Investments where applicable. Contracts subject to call or
put, 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 [or commodity]
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 [or commodity]
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of not being able to enter into a closing transaction if a
liquid secondary market does not exist.
Written option activity for the six months ended June 30, 2007 was as follows:
CALL OPTIONS
--------------------------
NUMBER OF AMOUNT OF
CONTRACTS PREMIUMS
- -----------------------------------------------------------
Options outstanding as of
December 31, 2006 -- $ --
Options written 1,000 249,042
Options closed or expired (1,000) (249,042)
-----------------------
Options outstanding as of
June 30, 2007 -- $ --
=======================
- --------------------------------------------------------------------------------
6. ILLIQUID SECURITIES
As of June 30, 2007, investments in securities included issues that are
illiquid. A security may 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 will not invest more than 10% of its net assets (determined at the time of
purchase and reviewed periodically) in illiquid securities. Securities that are
illiquid are marked with the applicable footnote on the Statement of
Investments.
38 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
- --------------------------------------------------------------------------------
7. RECENT ACCOUNTING PRONOUNCEMENT
In September 2006, Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 157, FAIR VALUE MEASUREMENTS. This
standard establishes a single authoritative definition of fair value, sets out a
framework for measuring fair value and expands disclosures about fair value
measurements. SFAS No. 157 applies to fair value measurements already required
or permitted by existing standards. SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. As of June 30, 2007, the Manager does
not believe the adoption of SFAS No. 157 will materially impact the financial
statement amounts; however, additional disclosures may be required about the
inputs used to develop the measurements and the effect of certain of the
measurements on changes in net assets for the period.
39 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS 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
1.800.525.7048, (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 is required to
file 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 Fund's voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at
www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
40 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
ITEM 2. CODE OF ETHICS.
Not applicable to semiannual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to semiannual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to semiannual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUND'S AUDIT COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's Audit Committee (the "Committee") will evaluate potential Board
candidates to assess their qualifications. The Committee shall have the
authority, upon approval of the Board, to retain an executive search firm
to assist in this effort. The Committee may consider recommendations by
business and personal contacts of current Board members and by executive
search firms which the Committee may engage from time to time and may also
consider shareholder recommendations. The Committee may consider the advice
and recommendation of the Funds' investment manager and its affiliates in
making the selection.
2. The Committee shall screen candidates for Board membership. The Committee
has not established specific qualifications that it believes must be met by
a trustee nominee. In evaluating trustee nominees, the Committee considers,
among other things, an individual's background, skills, and experience;
whether the individual is an "interested person" as defined in the
Investment Company Act of 1940; and
whether the individual would be deemed an "audit committee financial
expert" within the meaning of applicable SEC rules. The Committee also
considers whether the individual's background, skills, and experience will
complement the background, skills, and experience of other nominees and
will contribute to the Board. There are no differences in the manner in
which the Committee evaluates nominees for trustees based on whether the
nominee is recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the Board at
such times as the Committee meets to consider new nominees for the Board.
The Committee shall have the sole discretion to determine the candidates to
present to the Board and, in such cases where required, to shareholders.
Recommendations for trustee nominees should, at a minimum, be accompanied
by the following:
o the name, address, and business, educational, and/or other pertinent
background of the person being recommended;
o a statement concerning whether the person is an "interested person" as
defined in the Investment Company Act of 1940;
o any other information that the Funds would be required to include in a
proxy statement concerning the person if he or she was nominated; and
o the name and address of the person submitting the recommendation and,
if that person is a shareholder, the period for which that person held
Fund shares.
The recommendation also can include any additional information which the
person submitting it believes would assist the Committee in evaluating the
recommendation.
4. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company (the parent company of the
Funds' investment adviser) would be deemed an "interested person" under the
Investment Company Act of 1940. In addition, certain other relationships
with Massachusetts Mutual Life Insurance Company or its subsidiaries, with
registered broker-dealers, or with the Funds' outside legal counsel may
cause a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a trustee,
Committee members and other directors customarily interview the individual
in person. In addition, the individual customarily is asked to complete a
detailed questionnaire which is designed to elicit information which must
be disclosed under SEC and stock exchange rules and to determine whether
the individual is subject to any statutory disqualification from serving as
a trustee of a registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the registrant's disclosure controls and procedures
(as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR
270.30a-3(c)) as of 06/30/2007, the registrant's principal executive officer and
principal financial officer found the registrant's disclosure controls and
procedures to provide reasonable assurances that information required to be
disclosed by the 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.
There have been no changes in the registrant's internal controls over financial
reporting that occurred during the registrant's second fiscal quarter of the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a) (1) Not applicable to semiannual reports.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Exhibit attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Bond Fund Series
By: /s/ John V. Murphy
---------------------------
John V. Murphy
Principal Executive Officer
Date: 08/08/2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John V. Murphy
---------------------------
John V. Murphy
Principal Executive Officer
Date: 08/08/2007
By: /s/ Brian W. Wixted
---------------------------
Brian W. Wixted
Principal Financial Officer
Date: 08/08/2007