-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M+69OvqiQ2bZ2F1MlvdwwqRMz9/LwS0Si6tj5BYckd15P8GoleGaysgSHMani4uv cGcBQ57X5HJeHRgqHLXXmA== 0000935069-04-000312.txt : 20040302 0000935069-04-000312.hdr.sgml : 20040302 20040302112118 ACCESSION NUMBER: 0000935069-04-000312 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040302 EFFECTIVENESS DATE: 20040302 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER CONVERTIBLE SECURITIES FUND CENTRAL INDEX KEY: 0000788959 IRS NUMBER: 166289311 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-04576 FILM NUMBER: 04641463 BUSINESS ADDRESS: STREET 1: 350 LINDEN OAKS CITY: ROCHESTER STATE: NY ZIP: 14625-2807 BUSINESS PHONE: 7163838700 MAIL ADDRESS: STREET 1: 350 LINDEN OAKS CITY: ROCHESTER STATE: NY ZIP: 14625-2807 FORMER COMPANY: FORMER CONFORMED NAME: OPPENHEIMER BOND FUND FOR GROWTH /MA/ DATE OF NAME CHANGE: 19970910 FORMER COMPANY: FORMER CONFORMED NAME: ROCHESTER FUND SERIES DATE OF NAME CHANGE: 19940325 FORMER COMPANY: FORMER CONFORMED NAME: ROCHESTER FUND SERIES BOND FUND FOR GROWTH DATE OF NAME CHANGE: 19930503 N-CSR 1 ra0345_9461vef.txt RA0345_9461VEF UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-4576 OPPENHEIMER CONVERTIBLE SECURITIES FUND (Exact name of registrant as specified in charter) 6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924 (Address of principal executive offices) (Zip code) Robert G. Zack, Esq. OppenheimerFunds, Inc. Two World Financial Center, New York, New York 10281-1008 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (303) 768-3200 -------------- Date of fiscal year end: DECEMBER 31 ----------- Date of reporting period: JANUARY 1, 2003 - DECEMBER 31, 2003 ITEM 1. REPORTS TO STOCKHOLDERS. FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED DECEMBER 31, 2003, FOLLOWED BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO APPROPRIATE BROAD-BASED MARKET INDICES. MANAGEMENT'S DISCUSSION OF PERFORMANCE. Oppenheimer Convertible Securities Fund's fiscal year, which ended December 31, 2003, was underscored by a steady rebound in the U.S. equity markets. This, along with the continuation of a bond-market rally that prevailed through May, helped create a favorable backdrop for the Fund's performance for the year. In general, the Fund's broad mix of securities again proved to benefit performance. This strategy maintained the portfolio's exposure to various segments of the convertible bond market, which as a whole performed well this period, buoyed by strong returns in the equity markets. Specifically, the Fund's exposure to lower-quality convertibles--which somewhat outperformed their higher-quality counterparts during most of the period--helped add to performance. Conversely, the Fund's relative underweighting of these bonds versus many peer funds cost the Fund marginal returns. Had we increased the Fund's allocation to lower-quality convertibles, we might have added to performance. However, we believe to do so would not have been in line with the Fund's long-term strategy of striving for a broad mix of convertible bonds and a more diversified exposure to the convertible bond market at large. Another factor that added to performance, specifically during the first few months of the period, was the fact that bonds continued their prolonged rally through May. In the early months of the period, investors' appetite for risk remained muted due to geopolitical tensions and mixed performance in the stock markets. The overall good performance of many fixed-income securities at that time boosted investor interest in convertibles and thereby helped support Fund performance. As was the case for the first half of the Fund's fiscal year, the Fund's exposure to the technology sector significantly added to performance. Since corporate spending on technology generally improved this period, technology remained a market leader throughout the year, and since it typically represents one of the portfolio's largest holdings, the Fund's returns benefited substantially. Likewise, Xerox Corp. was a strong performer for the Fund's portfolio, as the company began to see the effects of major improvements in their business model and internal structure come to fruition. Finally, Advanced Micro Devices, Inc., which also enjoyed a significant turnaround this year thanks to several new product launches, posted favorable gains, thereby supporting overall Fund performance. While our technology exposure provided positive performance across the board, a few of our technology holdings--while still posting gains--marginally lagged the technology sector at large. For example, although LSI Logic Corp., a semiconductor company, generated positive returns, it slightly trailed the bulk of our technology holdings. Given this, we are pleased with the decision to maintain an overweighted exposure to this sector. 6 | OPPENHEIMER CONVERTIBLE SECURITIES FUND Our experience regarding the telecommunications sector remained mixed throughout the period, as many wireless carriers continue to struggle amid fierce price competition. However, some of the Fund's best performers came from the telecommunications equipment providers segment of this sector. For example, Lucent Technologies, Inc. remained a strong performer throughout the period, markedly benefiting performance. The most significant factor detracting from Fund performance this year was the fact that we held less exposure to lower-quality convertible bonds than many of our peers. We believe, from a long-term perspective, this represents only a marginal impact to performance, and we adhere to those strategies that we believe will lead to favorable and consistent long-term risk-adjusted returns. COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the performance of a hypothetical $10,000 investment in each class of shares of the Fund held until December 31, 2003. In the case of Class A and Class B shares, performance is measured from inception of the Class on May 1, 1995. In the case of Class C shares, performance is measured from inception of the Class on March 11, 1996. In the case of Class M shares, performance is measured over a 10-year period. In the case of Class N shares, performance is measured from inception of the Class on March 1, 2001. The performance information for all three indices in the graphs begins on 4/30/95 for Class A and Class B, 2/29/96 for Class C, 12/31/93 for Class M and 2/28/01 for Class N shares. The Fund's performance reflects the deduction of the maximum initial sales charge on Class A and Class M shares, the applicable contingent deferred sales charge on Class B, Class C and Class N shares, and reinvestments of all dividends and capital gains distributions. Past performance cannot guarantee future results. The Fund's performance is compared to the performance of the Lehman Brothers Aggregate Bond Index, Goldman Sachs Convertible Bond 100 Index, and the S&P 500 Index. The Lehman Brothers Aggregate Bond Index is a broad-based, unmanaged index of U.S. corporate bond issues, U.S. government securities and mortgage-backed securities, widely recognized as a measure of the performance of the domestic debt securities market. The Goldman Sachs Convertible Bond 100 Index is an unmanaged index of convertible securities. The S&P 500 Index is a broad-based index of equity securities widely regarded as a general measurement of the performance of the U.S. equity securities market. Index performance reflects the reinvestment of income but does not consider the effect of transaction costs, and none of the data in the graphs shows the effect of taxes. The Fund's performance reflects the effects of Fund's business and operating expenses. While index comparisons may be useful to provide a benchmark for the Fund's performance, it must be noted that the Fund's investments are not limited to the investments in the indices. 7 | OPPENHEIMER CONVERTIBLE SECURITIES FUND FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- CLASS A SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Convertible Securities Fund (Class A) Lehman Brothers Aggregate Bond Index Goldman Sachs Convertible Bond 100 Index S&P 500 Index [LINE GRAPH]
Goldman Sachs Oppenheimer Convertible Lehman Brothers Convertible Bond Securities Fund (Class A) Aggregate Bond Index 100 Index S&P 500 Index 05/01/1995 $ 9,425 $10,000 $10,000 $10,000 06/30/1995 9,970 10,463 10,631 10,640 09/30/1995 10,798 10,669 11,224 11,485 12/31/1995 10,890 11,123 11,480 12,176 03/31/1996 11,120 10,926 12,174 12,829 06/30/1996 11,349 10,988 12,423 13,404 09/30/1996 11,592 11,191 12,796 13,819 12/31/1996 11,992 11,527 13,054 14,970 03/31/1997 12,224 11,463 13,231 15,372 06/30/1997 13,203 11,884 14,461 18,053 09/30/1997 14,233 12,278 15,967 19,405 12/31/1997 14,243 12,640 15,599 19,962 03/31/1998 15,438 12,836 16,949 22,745 06/30/1998 15,035 13,136 16,769 23,500 09/30/1998 13,444 13,692 14,778 21,168 12/31/1998 14,824 13,738 16,805 25,671 03/31/1999 15,065 13,670 17,097 26,950 06/30/1999 16,044 13,550 18,517 28,846 09/30/1999 15,677 13,642 17,936 27,049 12/31/1999 18,290 13,625 20,261 31,071 03/31/2000 19,336 13,926 21,507 31,783 06/30/2000 18,941 14,168 21,836 30,938 09/30/2000 19,153 14,595 22,821 30,639 12/31/2000 17,410 15,209 20,742 28,243 03/31/2001 16,781 15,671 19,696 24,897 06/30/2001 17,371 15,759 19,593 26,353 09/30/2001 15,754 16,486 17,801 22,486 12/31/2001 16,836 16,493 19,057 24,889 03/31/2002 16,970 16,509 18,687 24,957 06/30/2002 15,970 17,118 17,254 21,616 09/30/2002 14,608 17,903 15,688 17,884 12/31/2002 15,727 18,185 17,290 19,390 03/31/2003 16,143 18,438 17,599 18,780 06/30/2003 17,581 18,899 19,223 21,669 09/30/2003 18,049 18,871 19,849 22,242 12/31/2003 19,336 18,931 21,316 24,949 AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES OF THE FUND WITH SALES CHARGE AT 12/31/03 1-Year 15.88% 5-Year 4.22% Since Inception 7.90% Inception Date 5/1/95
8 | OPPENHEIMER CONVERTIBLE SECURITIES FUND CLASS B SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Convertible Securities Fund (Class B) Lehman Brothers Aggregate Bond Index Goldman Sachs Convertible Bond 100 Index S&P 500 Index [LINE GRAPH]
Goldman Sachs Oppenheimer Convertible Lehman Brothers Convertible Bond Securities Fund (Class B) Aggregate Bond Index 100 Index S&P 500 Index 05/01/1995 $10,000 $10,000 $10,000 $10,000 06/30/1995 10,566 10,463 10,631 10,640 09/30/1995 11,421 10,669 11,224 11,485 12/31/1995 11,509 11,123 11,480 12,176 03/31/1996 11,730 10,926 12,174 12,829 06/30/1996 11,948 10,988 12,423 13,404 09/30/1996 12,180 11,191 12,796 13,819 12/31/1996 12,577 11,527 13,054 14,970 03/31/1997 12,797 11,463 13,231 15,372 06/30/1997 13,796 11,884 14,461 18,053 09/30/1997 14,844 12,278 15,967 19,405 12/31/1997 14,832 12,640 15,599 19,962 03/31/1998 16,045 12,836 16,949 22,745 06/30/1998 15,587 13,136 16,769 23,500 09/30/1998 13,912 13,692 14,778 21,168 12/31/1998 15,322 13,738 16,805 25,671 03/31/1999 15,542 13,670 17,097 26,950 06/30/1999 16,509 13,550 18,517 28,846 09/30/1999 16,112 13,642 17,936 27,049 12/31/1999 18,747 13,625 20,261 31,071 03/31/2000 19,781 13,926 21,507 31,783 06/30/2000 19,343 14,168 21,836 30,938 09/30/2000 19,529 14,595 22,821 30,639 12/31/2000 17,708 15,209 20,742 28,243 03/31/2001 17,033 15,671 19,696 24,897 06/30/2001 17,618 15,759 19,593 26,353 09/30/2001 15,979 16,486 17,801 22,486 12/31/2001 17,076 16,493 19,057 24,889 03/31/2002 17,212 16,509 18,687 24,957 06/30/2002 16,198 17,118 17,254 21,616 09/30/2002 14,816 17,903 15,688 17,884 12/31/2002 15,951 18,185 17,290 19,390 03/31/2003 16,373 18,438 17,599 18,780 06/30/2003 17,832 18,899 19,223 21,669 09/30/2003 18,307 18,871 19,849 22,242 12/31/2003 19,612 18,931 21,316 24,949 AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES OF THE FUND WITH SALES CHARGE AT 12/31/03 1-Year 17.07% 5-Year 4.33% Since Inception 8.08% Inception Date 5/1/95 THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR MORE CURRENT PERFORMANCE DATA, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800 CALL OPP (255.5677). FUND RETURNS INCLUDE CHANGES IN SHARE PRICE, REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); FOR CLASS C AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD; AND FOR CLASS M SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 3.25%. SEE PAGE 13 FOR FURTHER DETAILS. GRAPHS ARE NOT DRAWN TO SAME SCALE.
9 | OPPENHEIMER CONVERTIBLE SECURITIES FUND FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- CLASS C SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Convertible Securities Fund (Class C) Lehman Brothers Aggregate Bond Index Goldman Sachs Convertible Bond 100 Index S&P 500 Index [LINE GRAPH]
Goldman Sachs Oppenheimer Convertible Lehman Brothers Convertible Bond Securities Fund (Class C) Aggregate Bond Index 100 Index S&P 500 Index 03/11/1996 $10,000 $10,000 $10,000 $10,000 03/31/1996 10,048 9,930 10,138 10,096 06/30/1996 10,235 9,987 10,344 10,549 09/30/1996 10,426 10,172 10,656 10,875 12/31/1996 10,774 10,477 10,871 11,781 03/31/1997 10,955 10,418 11,017 12,097 06/30/1997 11,811 10,801 12,041 14,207 09/30/1997 12,711 11,160 13,296 15,271 12/31/1997 12,701 11,488 12,989 15,710 03/31/1998 13,742 11,667 14,114 17,899 06/30/1998 13,349 11,939 13,964 18,494 09/30/1998 11,921 12,444 12,306 16,658 12/31/1998 13,122 12,486 13,993 20,202 03/31/1999 13,311 12,424 14,237 21,209 06/30/1999 14,140 12,315 15,420 22,701 09/30/1999 13,812 12,399 14,936 21,287 12/31/1999 16,062 12,384 16,871 24,452 03/31/2000 16,950 12,657 17,909 25,012 06/30/2000 16,573 12,877 18,183 24,347 09/30/2000 16,722 13,265 19,003 24,111 12/31/2000 15,169 13,823 17,272 22,226 03/31/2001 14,591 14,243 16,401 19,593 06/30/2001 15,076 14,323 16,315 20,739 09/30/2001 13,644 14,984 14,823 17,696 12/31/2001 14,566 14,991 15,869 19,587 03/31/2002 14,643 15,005 15,561 19,641 06/30/2002 13,753 15,559 14,367 17,011 09/30/2002 12,567 16,272 13,064 14,074 12/31/2002 13,489 16,528 14,398 15,259 03/31/2003 13,822 16,758 14,655 14,779 06/30/2003 15,038 17,177 16,007 17,053 09/30/2003 15,396 17,152 16,528 17,504 12/31/2003 16,476 17,206 17,750 19,634 AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES OF THE FUND WITH SALES CHARGE AT 12/31/03 1-Year 21.14% 5-Year 4.66% Since Inception 6.61% Inception Date 3/11/96
10 | OPPENHEIMER CONVERTIBLE SECURITIES FUND CLASS M SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Convertible Securities Fund (Class M) Lehman Brothers Aggregate Bond Index Goldman Sachs Convertible Bond 100 Index S&P 500 Index [LINE GRAPH]
Goldman Sachs Oppenheimer Convertible Lehman Brothers Convertible Bond Securities Fund (Class M) Aggregate Bond Index 100 Index S&P 500 Index 12/31/1993 $ 9,675 $10,000 $10,000 $10,000 03/31/1994 9,834 9,713 9,895 9,621 06/30/1994 9,589 9,613 9,637 9,662 09/30/1994 10,048 9,672 9,980 10,133 12/31/1994 9,560 9,708 9,513 10,131 03/31/1995 10,213 10,198 10,318 11,117 06/30/1995 11,041 10,819 11,233 12,176 09/30/1995 11,945 11,032 11,859 13,143 12/31/1995 12,045 11,502 12,130 13,934 03/31/1996 12,284 11,298 12,863 14,682 06/30/1996 12,522 11,362 13,126 15,340 09/30/1996 12,774 11,572 13,521 15,814 12/31/1996 13,199 11,919 13,793 17,131 03/31/1997 13,439 11,853 13,979 17,591 06/30/1997 14,488 12,288 15,279 20,660 09/30/1997 15,602 12,696 16,871 22,207 12/31/1997 15,600 13,070 16,482 22,845 03/31/1998 16,889 13,274 17,908 26,029 06/30/1998 16,427 13,584 17,718 26,893 09/30/1998 14,670 14,158 15,615 24,224 12/31/1998 16,158 14,206 17,756 29,378 03/31/1999 16,405 14,135 18,065 30,841 06/30/1999 17,439 14,011 19,565 33,011 09/30/1999 17,029 14,106 18,951 30,955 12/31/1999 19,833 14,089 21,407 35,557 03/31/2000 20,942 14,400 22,725 36,371 06/30/2000 20,490 14,651 23,072 35,405 09/30/2000 20,691 15,092 24,112 35,062 12/31/2000 18,782 15,727 21,916 32,321 03/31/2001 18,078 16,204 20,811 28,491 06/30/2001 18,691 16,296 20,701 30,158 09/30/2001 16,928 17,047 18,809 25,733 12/31/2001 18,084 17,055 20,136 28,482 03/31/2002 18,192 17,071 19,745 28,561 06/30/2002 17,098 17,701 18,230 24,737 09/30/2002 15,635 18,512 16,576 20,466 12/31/2002 16,790 18,804 18,269 22,190 03/31/2003 17,224 19,066 18,595 21,491 06/30/2003 18,757 19,542 20,311 24,798 09/30/2003 19,217 19,514 20,972 25,454 12/31/2003 20,584 19,576 22,522 28,551 AVERAGE ANNUAL TOTAL RETURNS OF CLASS M SHARES OF THE FUND WITH SALES CHARGE AT 12/31/03 1-Year 18.61% 5-Year 4.27% 10-Year 7.49% Inception Date 6/3/86 THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR MORE CURRENT PERFORMANCE DATA, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800 CALL OPP (255.5677). FUND RETURNS INCLUDE CHANGES IN SHARE PRICE, REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); FOR CLASS C AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD; AND FOR CLASS M SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 3.25%. SEE PAGE 13 FOR FURTHER DETAILS. GRAPHS ARE NOT DRAWN TO SAME SCALE.
11 | OPPENHEIMER CONVERTIBLE SECURITIES FUND FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- CLASS N SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer Convertible Securities Fund (Class N) Lehman Brothers Aggregate Bond Index Goldman Sachs Convertible Bond 100 Index S&P 500 Index [LINE GRAPH]
Goldman Sachs Oppenheimer Convertible Lehman Brothers Convertible Bond Securities Fund (Class N) Aggregate Bond Index 100 Index S&P 500 Index 03/01/2001 $10,000 $10,000 $10,000 $10,000 03/31/2001 9,690 10,050 9,518 9,367 06/30/2001 10,020 10,107 9,468 9,915 09/30/2001 9,073 10,573 8,602 8,460 12/31/2001 9,698 10,578 9,209 9,364 03/31/2002 9,770 10,588 9,030 9,390 06/30/2002 9,188 10,979 8,338 8,132 09/30/2002 8,398 11,482 7,581 6,728 12/31/2002 9,027 11,663 8,355 7,295 03/31/2003 9,257 11,825 8,505 7,065 06/30/2003 10,072 12,121 9,289 8,153 09/30/2003 10,328 12,103 9,591 8,368 12/31/2003 11,054 12,141 10,300 9,387 AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES OF THE FUND WITH SALES CHARGE AT 12/31/03 1-Year 21.45% Since Inception 3.60% Inception Date 3/1/01 THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR MORE CURRENT PERFORMANCE DATA, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800 CALL OPP (255.5677). FUND RETURNS INCLUDE CHANGES IN SHARE PRICE, REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); FOR CLASS C AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD; AND FOR CLASS M SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 3.25%. SEE PAGE 13 FOR FURTHER DETAILS. GRAPHS ARE NOT DRAWN TO SAME SCALE.
12 | OPPENHEIMER CONVERTIBLE SECURITIES FUND NOTES - -------------------------------------------------------------------------------- Total returns and the ending account values in the graphs include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. The Fund's total returns shown do not reflect the deduction of income taxes on an individual's investment. Taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares. Investors should consider the Fund's investment objectives, risks, and other charges and expenses carefully before investing. The Fund's prospectus contains this and other information about the Fund, and may be obtained by asking your financial advisor, calling us at 1.800.CALL OPP (1.800.225.5677) or visit the OppenheimerFunds website at WWW.OPPENHEIMERFUNDS.COM. Read the prospectus carefully before you invest or send money. CLASS A shares of the Fund were first publicly offered on 5/1/95. The Fund's maximum sales charge for Class A shares was lower prior to 3/11/96, so actual performance may have been higher. Class A returns include the current maximum initial sales charge of 5.75%. CLASS B shares of the Fund were first publicly offered on 5/1/95. Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to Class A shares 72 months after purchase, the "since inception" return for Class B uses Class A performance for the period after conversion. Class B shares are subject to an annual 0.75% asset-based sales charge. CLASS C shares of the Fund were first publicly offered on 3/11/96. Class C returns include the contingent deferred sales charge of 1% for the 1-year period. Class C shares are subject to an annual 0.75% asset-based sales charge. CLASS M shares of the Fund were first publicly offered on 6/3/86. Class M returns include the current maximum initial sales charge of 3.25%. Prior to March 11, 1996, Class M shares were designated as Class A shares. Class M shares are subject to an annual 0.50% asset-based sales charge. CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares are offered only through retirement plans. Unless otherwise noted, Class N returns include the contingent deferred sales charge of 1% for the 1-year period. Class N shares are subject to an annual 0.25% asset-based sales charge. An explanation of the calculation of performance is in the Fund's Statement of Additional Information. 13 | OPPENHEIMER CONVERTIBLE SECURITIES FUND STATEMENT OF INVESTMENTS DECEMBER 31, 2003 - --------------------------------------------------------------------------------
PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------------------------- CONVERTIBLE CORPORATE BONDS AND NOTES--58.9% - -------------------------------------------------------------------------------------------------------------------------------- CONSUMER DISCRETIONARY--14.1% - -------------------------------------------------------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE--3.8% Brinker International, Inc., Zero Coupon Cv. Sr. Unsec. Debs., 10/10/21 1 $ 6,500,000 $ 4,411,875 - -------------------------------------------------------------------------------------------------------------------------------- Carnival Corp., 2% Cv. Sr. Unsec. Unsub. Debs., 4/15/21 5,000,000 5,906,250 - -------------------------------------------------------------------------------------------------------------------------------- Hilton Hotels Corp.: 3.375% Cv. Sr. Unsec. Unsub. Nts., 4/15/23 2 4,000,000 4,345,000 3.375% Cv. Sr. Unsec. Unsub. Nts., 4/15/23 1,000,000 1,086,250 - -------------------------------------------------------------------------------------------------------------------------------- International Game Technology, Zero Coupon Cv. Sr. Unsec. Unsub. Debs., 1/29/33 1,2 5,000,000 4,006,250 - -------------------------------------------------------------------------------------------------------------------------------- Royal Caribbean Cruises Ltd., Zero Coupon Cv. Sr. Unsec. Unsub. Bonds, 5/18/21 1 7,500,000 4,406,250 ------------ 24,161,875 - -------------------------------------------------------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL--0.7% Amazon.com, Inc.: 4.75% Cv. Sub. Debs., 2/1/09 840,000 853,650 4.75% Cv. Unsec. Sub. Debs., 2/1/09 2 3,360,000 3,414,600 ------------ 4,268,250 - -------------------------------------------------------------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS--0.5% Eastman Kodak Co., 3.375% Cv. Sr. Nts., 10/15/33 2 3,000,000 3,345,000 - -------------------------------------------------------------------------------------------------------------------------------- MEDIA--6.8% Charter Communications, Inc., 5.75% Cv. Sr. Unsec. Nts., 10/15/05 4,000,000 3,800,000 - -------------------------------------------------------------------------------------------------------------------------------- Interpublic Group of Cos., Inc. (The): 1.80% Cv. Unsec. Sub. Nts., 9/16/04 2,000,000 1,965,000 4.50% Cv. Sr. Unsec. Nts., 3/15/23 500,000 766,250 4.50% Cv. Sr. Unsec. Nts., 3/15/23 2 3,000,000 4,597,500 - -------------------------------------------------------------------------------------------------------------------------------- Liberty Media Corp.: 0.75% Exchangeable Sr. Unsec. Debs., 3/30/23 (exchangeable for Time Warner, Inc. common stock) 2 8,000,000 9,480,000 3.25% Exchangeable Sr. Sec. Debs., 3/15/31 (exchangeable for Viacom, Inc. Cl. B common stock) 2 5,000,000 5,225,000 4% Exchangeable Sr. Unsec. Debs., 11/15/29 (exchangeable for Sprint Corp. PCS, Series 1 common stock or cash based on the value of that stock) 5,000,000 3,531,250 - -------------------------------------------------------------------------------------------------------------------------------- Omnicom Group, Inc., Zero Coupon Cv. Sr. Nts., 6/15/33 1,2 5,000,000 5,106,250 - -------------------------------------------------------------------------------------------------------------------------------- Time Warner, Inc., Zero Coupon Cv. Nts., 12/6/19 1 5,000,000 3,156,250 - -------------------------------------------------------------------------------------------------------------------------------- Walt Disney Co. (The), 2.125% Cv. Sr. Unsec. Nts., 4/15/23 6,000,000 6,382,500 ------------ 44,010,000 - -------------------------------------------------------------------------------------------------------------------------------- SPECIALTY RETAIL--2.3% Gap, Inc. (The), 5.75% Cv. Sr. Unsec. Nts., 3/15/09 2 4,000,000 6,155,000 - -------------------------------------------------------------------------------------------------------------------------------- Lowe's Cos., Inc., 0.861% Cv. Sr. Nts., 10/19/21 3 3,500,000 3,736,250 - -------------------------------------------------------------------------------------------------------------------------------- TJX Cos., Inc. (The): Zero Coupon Cv. Unsec. Sub. Liquid Yield Option Nts., 2/13/21 1 2,000,000 1,685,000 Zero Coupon Cv. Unsec. Sub. Liquid Yield Option Nts., 2/13/21 1,2 4,000,000 3,370,000 ------------ 14,946,250
14 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------------------------- CONSUMER STAPLES--0.5% - -------------------------------------------------------------------------------------------------------------------------------- FOOD & STAPLES RETAILING--0.5% Costco Cos., Inc., Zero Coupon Cv. Sub. Nts., 8/19/17 1 $ 4,000,000 $ 3,405,000 - -------------------------------------------------------------------------------------------------------------------------------- ENERGY--4.6% - -------------------------------------------------------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES--3.0% Grey Wolf, Inc.: 3.75% Cv. Contingent Sr. Unsec. Nts., 5/7/23 500,000 473,125 3.75% Cv. Sr. Unsec. Nts, 5/7/23 2 3,500,000 3,311,875 - -------------------------------------------------------------------------------------------------------------------------------- Halliburton Co., 3.125% Cv. Sr. Nts., 7/15/23 2 5,000,000 5,206,250 - -------------------------------------------------------------------------------------------------------------------------------- Pride International, Inc., 3.25% Cv. Sr. Nts., 5/1/33 2 5,000,000 5,318,750 - -------------------------------------------------------------------------------------------------------------------------------- Schlumberger Ltd., 2.125% Cv. Sr. Unsec. Debs., Series B, 6/1/23 2 5,000,000 4,968,750 ------------ 19,278,750 - -------------------------------------------------------------------------------------------------------------------------------- OIL & GAS--1.6% Devon Energy Corp., 4.95% Cv. Sr. Unsec. Debs., 8/15/08 (cv. into Chevron Corp. common stock) 5,000,000 5,131,250 - -------------------------------------------------------------------------------------------------------------------------------- Kerr-McGee Corp., 5.25% Cv. Jr. Unsec. Sub. Debs., 2/15/10 5,000,000 5,293,750 ------------ 10,425,000 - -------------------------------------------------------------------------------------------------------------------------------- FINANCIALS--3.2% - -------------------------------------------------------------------------------------------------------------------------------- DIVERSIFIED FINANCIALS--2.2% E*TRADE Group, Inc., 6% Cv. Unsec. Sub. Nts., 2/1/07 6,000,000 6,165,000 - -------------------------------------------------------------------------------------------------------------------------------- GATX Corp.: 7.50% Cv. Sr. Unsec. Nts., 2/1/07 2 2,000,000 2,342,500 7.50% Cv. Sr. Unsec. Nts., 2/1/07 1,000,000 1,171,250 - -------------------------------------------------------------------------------------------------------------------------------- Providian Financial Corp., 3.25% Cv. Sr. Unsec. Nts., 8/15/05 5,000,000 4,762,500 ------------ 14,441,250 - -------------------------------------------------------------------------------------------------------------------------------- REAL ESTATE--1.0% EOP Operating LP, 7.25% Cv. Sr. Nts., 11/15/08 2 6,000,000 6,375,000 - -------------------------------------------------------------------------------------------------------------------------------- HEALTH CARE--9.5% - -------------------------------------------------------------------------------------------------------------------------------- BIOTECHNOLOGY--4.1% Amgen, Inc., Zero Coupon Cv. Sr. Unsec. Unsub. Liquid Yield Option Nts., 3/1/32 1 9,500,000 7,208,125 - -------------------------------------------------------------------------------------------------------------------------------- Celgene Corp., 1.75% Cv. Sr. Nts., 6/1/08 2 2,500,000 3,000,000 - -------------------------------------------------------------------------------------------------------------------------------- Genzyme Corp., 3% Cv. Unsec. Sub. Debs., 5/15/21 4,000,000 4,070,000 - -------------------------------------------------------------------------------------------------------------------------------- Gilead Sciences, Inc., 2% Cv. Sr. Unsec. Nts., 12/15/07 2,500,000 3,425,000 - -------------------------------------------------------------------------------------------------------------------------------- Invitrogen Corp., 5.50% Cv. Unsec. Sub. Nts., 3/1/07 5,000,000 5,187,500 - -------------------------------------------------------------------------------------------------------------------------------- Sepracor, Inc., 5.75% Cv. Unsec. Sub. Nts., 11/15/06 3,500,000 3,521,875 ------------ 26,412,500 - -------------------------------------------------------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES--0.8% Medtronic, Inc., 1.25% Unsec. Debs., 9/15/21 2 5,000,000 5,143,750 - -------------------------------------------------------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES--2.1% Health Management Associates, Inc., 1.50% Cv. Sr. Sub. Nts., 8/1/23 2 5,000,000 5,525,000 - -------------------------------------------------------------------------------------------------------------------------------- Quest Diagnostics, Inc., 1.75% Cv. Sr. Unsec. Debs., 11/30/21 4,000,000 4,125,000
15 | OPPENHEIMER CONVERTIBLE SECURITIES FUND STATEMENT OF INVESTMENTS CONTINUED - -------------------------------------------------------------------------------
PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES Continued WebMD Corp., 1.75% Cv. Sub. Nts., 6/15/23 2 $ 4,000,000 $ 3,585,000 ------------ 13,235,000 - -------------------------------------------------------------------------------------------------------------------------------- PHARMACEUTICALS--2.5% IVAX Corp., 5.50% Cv. Sr. Unsec. Sub. Nts., 5/15/07 3,500,000 3,644,375 - -------------------------------------------------------------------------------------------------------------------------------- Roche Holdings, Inc., Zero Coupon Cv. Nts., 7/25/21 1 5,000,000 3,093,750 - -------------------------------------------------------------------------------------------------------------------------------- Teva Pharmaceuticals Finance Netherlands BV, 0.75% Cv. Sr. Unsec. Nts., 8/15/21 3,000,000 4,035,000 - -------------------------------------------------------------------------------------------------------------------------------- Watson Pharmaceuticals, Inc., 1.75% Cv. Sr. Unsec. Debs., 3/15/23 2 4,000,000 5,285,000 ------------ 16,058,125 - -------------------------------------------------------------------------------------------------------------------------------- INDUSTRIALS--4.4% - -------------------------------------------------------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES--2.8% Tyco International Group SA: 2.75% Cv. Sr. Unsec. Unsub. Debs., 1/15/18 11,000,000 14,093,750 2.75% Cv. Sr. Unsec. Unsub. Debs., Series A, 1/15/18 2 3,000,000 3,843,750 ------------ 17,937,500 - -------------------------------------------------------------------------------------------------------------------------------- MACHINERY--1.6% Danaher Corp., Zero Coupon Cv. Sr. Unsec. Unsub. Liquid Yield Option Nts., 1/22/21 1 5,000,000 3,512,500 - -------------------------------------------------------------------------------------------------------------------------------- Navistar Financial Corp., 4.75% Cv. Unsec. Sub. Nts., 4/1/09 4,000,000 4,325,000 - -------------------------------------------------------------------------------------------------------------------------------- SystemOne Technologies, Inc.: 8.25% Cv. Sub. Nts., 12/31/05 4 3,084,881 1,079,708 8.25% Cv. Sub. Nts., 12/31/05 4 2,962,671 1,036,935 ------------ 9,954,143 - -------------------------------------------------------------------------------------------------------------------------------- INFORMATION TECHNOLOGY--17.4% - -------------------------------------------------------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT--3.5% Commscope, Inc., 4% Cv. Jr. Unsec. Sub. Nts., 12/15/06 4,000,000 3,850,000 - -------------------------------------------------------------------------------------------------------------------------------- Comverse Technology, Inc., Zero Coupon Cv. Sr. Unsec. Zero Yield Puttable Securities, 5/15/23 1 4,500,000 5,310,000 - -------------------------------------------------------------------------------------------------------------------------------- Corning, Inc., 3.50% Cv. Sr. Unsec. Debs., 11/1/08 3,000,000 3,731,250 - -------------------------------------------------------------------------------------------------------------------------------- Juniper Networks, Inc., 4.75% Cv. Unsec. Sub. Nts., 3/15/07 1,037,000 1,062,925 - -------------------------------------------------------------------------------------------------------------------------------- Lucent Technologies, Inc., 2.75% Cv. Sr. Unsec. Debs., Series B, 6/15/25 4,000,000 4,745,000 - -------------------------------------------------------------------------------------------------------------------------------- Nortel Networks Corp.: 4.25% Cv. Sr. Unsec. Nts., 9/1/08 2 2,000,000 1,902,500 4.25% Cv. Sr. Unsec. Nts., 9/1/08 2,000,000 1,902,500 ------------ 22,504,175 - -------------------------------------------------------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--3.6% Agilent Technologies, Inc.: 3% Cv. Sr. Unsec. Debs., 12/1/21 3 2,500,000 2,743,750 3% Cv. Sr. Unsec. Nts., 12/1/21 2,3 3,000,000 3,292,500 - -------------------------------------------------------------------------------------------------------------------------------- Celestica, Inc., Zero Coupon Cv. Liquid Yield Option Nts., 8/1/20 1 8,000,000 4,270,000 - -------------------------------------------------------------------------------------------------------------------------------- Flextronics International Ltd., 1% Cv. Unsec. Nts., 8/1/10 2 3,500,000 4,204,375
16 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS Continued Solectron Corp., Zero Coupon Cv. Sr. Unsec. Unsub. Liquid Yield Option Nts., 11/20/20 1 $ 7,000,000 $ 4,007,500 - -------------------------------------------------------------------------------------------------------------------------------- Vishay Intertechnology, Inc., 3.625% Cv. Sub. Nts., 8/1/23 2 3,000,000 4,245,000 ------------ 22,763,125 - -------------------------------------------------------------------------------------------------------------------------------- IT CONSULTING & SERVICES--1.8% DST Systems, Inc., 4.125% Cv. Sr. Unsec. Debs., Series A, 8/15/23 2 5,500,000 6,586,250 - -------------------------------------------------------------------------------------------------------------------------------- Electronic Data Systems Corp., 3.875% Cv. Sr. Nts., 7/15/23 2 5,000,000 5,243,750 ------------ 11,830,000 - -------------------------------------------------------------------------------------------------------------------------------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--4.1% Advanced Micro Devices, Inc., 4.75% Cv. Sr. Unsec. Debs., 2/1/22 3 4,000,000 4,100,000 - -------------------------------------------------------------------------------------------------------------------------------- Agere Systems, Inc., 6.50% Cv. Unsec. Unsub. Nts., 12/15/09 (cv. into Agere Systems, Inc., Cl. A common stock) 3,000,000 4,125,000 - -------------------------------------------------------------------------------------------------------------------------------- International Rectifier Corp., 4.25% Cv. Sub. Nts., 7/15/07 2 4,000,000 4,020,000 - -------------------------------------------------------------------------------------------------------------------------------- Lam Research Corp., 4% Cv. Unsec. Sub. Nts., 6/1/06 4,500,000 4,635,000 - -------------------------------------------------------------------------------------------------------------------------------- LSI Logic Corp., 4% Cv. Sub. Nts., 5/15/10 2 5,000,000 5,581,250 - -------------------------------------------------------------------------------------------------------------------------------- Micron Technology, Inc., 2.50% Cv. Unsec. Sub. Nts., 2/1/10 2 3,000,000 3,982,500 ------------ 26,443,750 - -------------------------------------------------------------------------------------------------------------------------------- SOFTWARE--4.4% BEA Systems, Inc., 4% Cv. Unsub. Nts., 12/15/06 4,000,000 4,035,000 - -------------------------------------------------------------------------------------------------------------------------------- Computer Associates International, Inc.: 5% Cv. Sr. Nts., 3/15/07 2 4,000,000 5,180,000 5% Cv. Sr. Unsec. Nts., 3/15/07 1,500,000 1,942,500 - -------------------------------------------------------------------------------------------------------------------------------- Fair Issac Corp., 1.50% Cv. Sr. Nts., 8/15/23 2 4,500,000 4,663,125 - -------------------------------------------------------------------------------------------------------------------------------- Mentor Graphics Corp.: 6.875% Cv. Sub. Nts., 6/15/07 2 2,000,000 2,137,500 6.875% Cv. Unsec. Sub. Nts., 6/15/07 1,000,000 1,068,750 - -------------------------------------------------------------------------------------------------------------------------------- Mercury Interactive Corp.: 4.75% Cv. Nts., 7/1/07 2 4,000,000 3,985,000 4.75% Cv. Unsec. Sub. Nts., 7/1/07 1,000,000 996,250 - -------------------------------------------------------------------------------------------------------------------------------- Veritas Software Corp., 0.25% Cv. Sub. Nts., 8/1/13 2 4,000,000 4,380,000 ------------ 28,388,125 - -------------------------------------------------------------------------------------------------------------------------------- MATERIALS--2.0% - -------------------------------------------------------------------------------------------------------------------------------- CONTAINERS & PACKAGING--0.8% Sealed Air Corp., 3% Cv. Nts., 6/30/33 2 5,000,000 5,312,500 - -------------------------------------------------------------------------------------------------------------------------------- METALS & MINING--1.2% Freeport-McMoRan Cooper & Gold, Inc., 7% Cv. Sr. Unsec. Unsub. Nts., 2/11/11 2,000,000 3,300,000 - -------------------------------------------------------------------------------------------------------------------------------- Inco Ltd., 1% Cv. Unsec. Unsub. Debs., 3/14/23 3,000,000 4,181,250 ------------ 7,481,250
17 | OPPENHEIMER CONVERTIBLE SECURITIES FUND STATEMENT OF INVESTMENTS CONTINUED - -------------------------------------------------------------------------------
PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------------------------- UTILITIES--3.2% - -------------------------------------------------------------------------------------------------------------------------------- ELECTRIC UTILITIES--2.2% Calpine Corp., 4.75% Cv. Sr. Unsec. Nts., 11/15/23 2 $ 4,000,000 $ 4,135,000 - -------------------------------------------------------------------------------------------------------------------------------- CenterPoint Energy, Inc., 3.75% Cv. Sr. Nts., 5/15/23 2 5,000,000 5,337,500 - -------------------------------------------------------------------------------------------------------------------------------- Duke Energy Corp., 1.75% Cv. Sr. Bonds, 5/15/23 4,500,000 4,668,750 ------------ 14,141,250 - -------------------------------------------------------------------------------------------------------------------------------- GAS UTILITIES--1.0% El Paso Corp., Zero Coupon Cv. Debs., 2/28/21 1 13,000,000 6,045,000 ------------ Total Convertible Corporate Bonds and Notes (Cost $349,041,628) 378,306,568 SHARES - -------------------------------------------------------------------------------------------------------------------------------- PREFERRED STOCKS--30.6% - -------------------------------------------------------------------------------------------------------------------------------- CONSUMER DISCRETIONARY--4.2% - -------------------------------------------------------------------------------------------------------------------------------- AUTOMOBILES--3.0% Ford Motor Co. Capital Trust II, 6.50% Cum. Cv. Trust Preferred Securities, Non-Vtg. 165,000 9,215,250 - -------------------------------------------------------------------------------------------------------------------------------- General Motors Corp., 5.25% Cv. Sr. Unsec. Debs., Series B 375,000 10,076,250 ------------ 19,291,500 - -------------------------------------------------------------------------------------------------------------------------------- HOUSEHOLD DURABLES--0.5% Newell Financial Trust I, 5.25% Cum. Cv. Quarterly Income Preferred Securities, Non-Vtg. 70,000 3,220,000 - -------------------------------------------------------------------------------------------------------------------------------- MEDIA--0.7% Equity Securities Trust I/Cablevision Systems Corp., 6.50% Cv., Series CVC (exchangeable into Cablevision NY Group, Cl. A common stock) 175,000 4,369,750 - -------------------------------------------------------------------------------------------------------------------------------- ENERGY--0.7% - -------------------------------------------------------------------------------------------------------------------------------- OIL & GAS--0.7% Unocal Corp./Unocal Capital Trust, 6.25% Cum. Cv., Non-Vtg. 80,000 4,340,000 - -------------------------------------------------------------------------------------------------------------------------------- FINANCIALS--8.1% - -------------------------------------------------------------------------------------------------------------------------------- BANKS--1.2% Household International, Inc., 8.875% Cv. Adjustable Conversion-Rate Equity Security Units (each unit has a stated amount of $25 and consists of a contract to purchase Household International, Inc. common stock and $25 principal amount of Household Finance Corp., 8.875% sr. unsec. nts., 2/15/08), Non-Vtg. 5 70,000 3,185,000 - -------------------------------------------------------------------------------------------------------------------------------- Washington Mutual Capital Trust I, 5.375% Cum. Cv. Units (each unit consists of one preferred stock and one warrant to purchase shares of Washington Mutual, Inc.), Non-Vtg. 2,5 75,000 4,174,500 - -------------------------------------------------------------------------------------------------------------------------------- Washington Mutual, Inc., 5.375% Cum. Cv. Units (each unit consists of one preferred stock and one warrant to purchase shares of Washington Mutual, Inc.), Non-Vtg. 5 10,000 556,600 ------------ 7,916,100 - -------------------------------------------------------------------------------------------------------------------------------- DIVERSIFIED FINANCIALS--0.5% Capital One Financial Corp., 6.25% Cv. Upper DECS (each upper DECS has a stated amount of $50 and consists of a forward purchase contract to purchase Capital One Financial Corp. common stock and $50 principal amount of Capital One Financial Corp., 6.25% sr. nts., 5/17/07) 5 70,000 3,355,800
18 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
MARKET VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------------------------- INSURANCE--4.9% Chubb Corp. (The), 7% Cv. Equity Units (each unit consists of one warrant to purchase Chubb Corp. (The) common stock and $25 principal amount of Chubb Corp. (The), 4% sr. nts., 11/16/07) 5 170,000 $ 4,855,200 - -------------------------------------------------------------------------------------------------------------------------------- Hartford Financial Services Group, Inc. (The), 7% Cv. Equity Units (each unit has a stated amount of $50 and consists of a purchase contract to purchase Hartford Financial Services Group, Inc. (The) common stock and a normal unit which consists of $1,000 principal amount of Hartford Financial Services Group, Inc. (The), 2.56% sr. nts., 8/16/08) 5 90,000 5,459,400 - -------------------------------------------------------------------------------------------------------------------------------- PMI Group, Inc. (The), 5.875% Cv. Hybrid Income Term Security Units (each unit has a stated value of $25 and consists of a purchase contract to purchase PMI Group, Inc. (The) common stock and a corporate unit which consists of PMI Group, Inc. (The), 3% sr. nts., 11/15/08) 5,6 140,000 3,603,600 - -------------------------------------------------------------------------------------------------------------------------------- Prudential Financial, Inc./Prudential Financial Capital Trust I, 6.75% Cum. Cv. Equity Security Units (each unit has a stated amount of $50 and consists of a contract to purchase Prudential Financial, Inc. common stock and a redeemable capital security of Prudential Financial Capital Trust I), Non-Vtg. 5 100,000 6,510,000 - -------------------------------------------------------------------------------------------------------------------------------- Travelers Property Casualty Corp., 4.50% Cv. Jr. Unsec. Sub. Nts. 300,000 7,350,000 - -------------------------------------------------------------------------------------------------------------------------------- UnumProvident Corp., 8.25% Cv. 100,000 3,386,000 ------------ 31,164,200 - -------------------------------------------------------------------------------------------------------------------------------- REAL ESTATE--1.5% Host Marriott Financial Trust, 6.75% Cv. Quarterly Income Preferred Securities 100,000 5,200,000 - -------------------------------------------------------------------------------------------------------------------------------- Regency Centers Corp., 2% Cv. 120,000 4,612,560 ------------ 9,812,560 - -------------------------------------------------------------------------------------------------------------------------------- HEALTH CARE--2.7% - -------------------------------------------------------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES--0.9% Baxter International, Inc., 7% Cv. Equity Units (each equity unit has a stated value of $50 and consists of a purchase contract to purchase Baxter International, Inc. common stock and $50 principal amount of Baxter International, Inc., 3.60% sr. nts., 2/16/08), Non-Vtg. 5 100,000 5,525,000 - -------------------------------------------------------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES--1.8% Anthem, Inc., 6% Cv. Equity Security Units (each unit has a stated amount of $50 and consists of a contract to purchase Anthem, Inc. common stock and $50 principal amount of Anthem, Inc., 5.95% sub. debs., 11/15/04) 5 25,000 2,205,750 - -------------------------------------------------------------------------------------------------------------------------------- McKesson Financing Trust, 5% Cum. Cv., Non-Vtg. 90,000 4,567,500 - -------------------------------------------------------------------------------------------------------------------------------- Omnicare, Inc., 4% Cv. 80,000 5,100,000 ------------ 11,873,250 - -------------------------------------------------------------------------------------------------------------------------------- INDUSTRIALS--3.5% - -------------------------------------------------------------------------------------------------------------------------------- AEROSPACE & DEFENSE--1.8% Coltec Capital Trust, 5.25% Cv. Term Income Deferrable Equity Securities (cv. into Goodrich Corp. common stock and EnProIndustries, Inc. common stock) 80,000 3,188,400 - -------------------------------------------------------------------------------------------------------------------------------- Northrop Grumman Corp., 7.25% Cv. Equity Security Units (each unit has a stated amount of $100 and consists of a contract to purchase Northrop Grumman Corp. common stock and $100 principal amount of Northrop Grumman Corp., 5.25% sr. unsec. nts., 11/16/04), Non-Vtg. 5 40,000 4,148,000
19 | OPPENHEIMER CONVERTIBLE SECURITIES FUND STATEMENT OF INVESTMENTS CONTINUED - -------------------------------------------------------------------------------
MARKET VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------------------------- AEROSPACE & DEFENSE Continued Raytheon Co./RC Trust I, 8.25% Cum. Cv. Equity Security Units (each unit consists of a contract to purchase Raytheon Co., Cl. B common stock and a trust preferred security of RC Trust I), Non-Vtg. 5 75,000 $ 4,071,000 ------------ 11,407,400 - -------------------------------------------------------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES--1.7% Allied Waste Industries, Inc., 6.25% Cv. Sr., Non-Vtg. 50,000 3,825,000 - -------------------------------------------------------------------------------------------------------------------------------- Cendant Corp., 7.75% Cv. Upper DECS (each upper DECS has a stated value of $50 and consists of a forward purchase contract to purchase Cendant Corp. common stock and $50 principal amount of Cendant Corp., 6.75% sr. nts., 8/17/07), Non-Vtg. 5 70,000 3,504,200 - -------------------------------------------------------------------------------------------------------------------------------- United Rentals Trust I, 6.50% Cv. Quarterly Income Preferred Securities 85,000 3,793,125 ------------ 11,122,325 - -------------------------------------------------------------------------------------------------------------------------------- INFORMATION TECHNOLOGY--2.5% - -------------------------------------------------------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT--1.6% Lucent Technologies Capital Trust I, 7.75% Cum. Cv., Non-Vtg. 3,000 3,187,500 - -------------------------------------------------------------------------------------------------------------------------------- Motorola, Inc., 7% Cv. Equity Security Units (each unit has a stated amount of $50 and consists of a contract to purchase Motorola, Inc. common stock and $50 principal amount of Motorola, Inc., 6.50% sr. unsec. nts., 11/16/07) 5 100,000 4,343,000 - -------------------------------------------------------------------------------------------------------------------------------- Nortel Networks Corp., 7% Cv. 40 3,052,215 ------------ 10,582,715 - -------------------------------------------------------------------------------------------------------------------------------- OFFICE ELECTRONICS--0.9% Xerox Corp., 6.25% Cv. 45,000 5,838,750 - -------------------------------------------------------------------------------------------------------------------------------- MATERIALS--1.9% - -------------------------------------------------------------------------------------------------------------------------------- PAPER & FOREST PRODUCTS--1.9% Boise Cascade Corp., 7.50% Adjustable Conversion-Rate Equity Security Units (each unit consists of a contract to purchase Boise Cascade Corp. common stock and a preferred security of Boise Cascade Trust I), Non-Vtg. 5 90,000 4,607,100 - -------------------------------------------------------------------------------------------------------------------------------- International Paper Capital Trust, 5.25% Cum. Cv. (cv. into International Paper Co. common stock), Non-Vtg. 150,000 7,612,500 ------------ 12,219,600 - -------------------------------------------------------------------------------------------------------------------------------- TELECOMMUNICATION SERVICES--1.8% - -------------------------------------------------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES--1.8% Alltel Corp., 7.75% Cv. Equity Units (each unit consists of corporate units, each with a stated value of $50 and includes a purchase contract to purchase Alltel Corp. common stock and $50 principal amount of Alltel Corp., 6.25% sr. nts., 5/17/07), Non-Vtg. 5 100,000 4,970,000 - -------------------------------------------------------------------------------------------------------------------------------- CenturyTel, Inc., 6.875% Cv. Equity Units (each unit consists of units referred to as corporate units, each with a stated amount of $25 and includes a purchase contract to purchase CenteryTel, Inc. common stock and $25 principal amount of CenturyTel, Inc., 6.02% sr. nts., series j, due 2007), Non-Vtg. 5 170,000 4,590,000
20 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
MARKET VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES Continued Sprint Corp., 7.125% Cv. Unsec. Equity Units (each unit consists of units referred to as corporate units each with a stated amount of $25 and consist of $25 principal amount of Sprint Capital Corp., 6% sr. nts., 8/17/06 and a purchase contract to purchase Sprint Corp. (PCS Group) common stock) 5 250,000 $ 1,775,000 ------------ 11,335,000 - -------------------------------------------------------------------------------------------------------------------------------- UTILITIES--5.2% - -------------------------------------------------------------------------------------------------------------------------------- ELECTRIC UTILITIES--3.1% Cinergy Corp., 9.50% Cv. Flexible Equity Linked Exchangeable Preferred Redeemable Increased Dividend Equity Securities (each feline prides consists of units referred to as income prides, each with a stated amount of $50 and includes a purchase contract for Cinergy Corp. common stock, and a 6.90% preferred trust security, 6.90% due 2007 issued by Cinergy Corp. Funding Trust I) 5 70,000 4,459,000 - -------------------------------------------------------------------------------------------------------------------------------- DTE Energy Co., 8.75% Cv. Equity Units (each unit has a stated value of $25 and consists of a contract to purchase DTE Energy Co. common stock and $25 principal amount of DTE Energy Co., 4.15% sr. unsec. nts., 8/16/07) 5 135,000 3,458,700 - -------------------------------------------------------------------------------------------------------------------------------- Duke Energy Corp., 8.25% Cv. Equity Units (each equity unit consists of units referred to as corporate units which consist of $25 principal amount of 5.87% sr. nts., due 2006 and a contract to purchase Duke Energy Corp. common stock), Non-Vtg. 5 100,000 1,384,000 - -------------------------------------------------------------------------------------------------------------------------------- FPL Group, Inc., 8.50% Cv. Equity Units (each unit consists of corporate units, each with a stated amount of $50 and includes a purchase contract to purchase FPL Group, Inc. common stock and $50 principal amount of FPL Group Capital, Inc., 4.75% debs., series a, 2/16/07) 5 120,000 6,927,600 - -------------------------------------------------------------------------------------------------------------------------------- TXU Corp., 8.125% Cv. Feline Prides Units (each unit consists of units referred to as Income Prides with a stated amount of $50, which includes $50 principal amount of TXU Corp., 5.80% sr. nts., 5/16/08 and a purchase contract to purchase TXU Corp. common stock with attached preference stock purchase rights, 5/16/06), Non-Vtg. 5 100,000 3,361,000 ------------ 19,590,300 - -------------------------------------------------------------------------------------------------------------------------------- GAS UTILITIES--0.7% Sempra Energy, 8.50% Cv. Equity Units (each equity unit consists of income equity units, each has a stated value of $25 and consists of a purchase contract to purchase Sempra Energy common stock and $25 principal mount of Sempra Energy, 5.60% sr. nts., 5/17/07) 5 160,000 4,553,600 - -------------------------------------------------------------------------------------------------------------------------------- MULTI-UTILITIES--1.4% AES Trust III, 6.75% Cv. 60,000 2,595,000 - -------------------------------------------------------------------------------------------------------------------------------- Williams Cos., Inc. (The): 5.50% Cv. Jr. Unsec. Sub. Debs. 2 80,000 5,210,000 5.50% Cv. Jr. Unsec. Sub. Debs. 20,000 1,302,500 ------------ 9,107,500 ------------ Total Preferred Stocks (Cost $172,145,006) 196,625,350
21 | OPPENHEIMER CONVERTIBLE SECURITIES FUND STATEMENT OF INVESTMENTS CONTINUED
MARKET VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS--1.1% - -------------------------------------------------------------------------------------------------------------------------------- Danskin, Inc., Restricted Common Shares 4,6,7 2,015,119 $ -- - -------------------------------------------------------------------------------------------------------------------------------- Johnson & Johnson 50,000 2,583,000 - -------------------------------------------------------------------------------------------------------------------------------- Pfizer, Inc. 120,000 4,239,600 - -------------------------------------------------------------------------------------------------------------------------------- SystemOne Technologies, Inc. 6 197,142 49,286 ------------ Total Common Stocks (Cost $6,946,526) 6,871,886 UNITS - -------------------------------------------------------------------------------------------------------------------------------- RIGHTS, WARRANTS AND CERTIFICATES--0.0% - -------------------------------------------------------------------------------------------------------------------------------- Danskin, Inc. Wts., Exp. 10/8/04 4,6,7 367,801 -- - -------------------------------------------------------------------------------------------------------------------------------- Portion of Danskin, Inc. Promissory Nt. to be used to purchase 53,309 shares of restricted common stock in rights offering 4,6,7 -- 15,993 ------------ Total Rights, Warrants and Certificates (Cost $15,993) 15,993 PRINCIPAL AMOUNT - -------------------------------------------------------------------------------------------------------------------------------- U.S. GOVERNMENT OBLIGATIONS--3.9% - -------------------------------------------------------------------------------------------------------------------------------- U.S. Treasury Nts., 3.625%, 3/31/04 (Cost $25,003,143) $25,000,000 25,169,925 - -------------------------------------------------------------------------------------------------------------------------------- STRUCTURED NOTES--2.7% - -------------------------------------------------------------------------------------------------------------------------------- Bank of America Corp., Linked Sr. Nts., Series RTY, 7%, 3/3/04 (redemption linked to the Russell 2000 Index) 6,500,000 7,221,700 - -------------------------------------------------------------------------------------------------------------------------------- Credit Suisse First Boston Corp. (New York Branch), 6% Equity Linked Nts., 12/23/04 (redemption linked to Comcast Corp., Cl. A Special common stock) 165,800 5,098,349 - -------------------------------------------------------------------------------------------------------------------------------- Merrill Lynch & Co., Inc., Capped Appreciation Linked Nts., 5%, 12/30/04 (linked to the performance of Wyeth) 2 5,000,000 5,018,500 ------------ Total Structured Notes (Cost $16,495,551) 17,338,549 - -------------------------------------------------------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS--3.0% - -------------------------------------------------------------------------------------------------------------------------------- Undivided interest of 10% in joint repurchase agreement (Principal Amount/Market Value $190,001,000, with a maturity value of $190,009,444) with Banc One Capital Markets, Inc., 0.80%, dated 12/31/03, to be repurchased at $19,009,845 on 1/2/04, collateralized by U.S. Treasury Bonds, 4.25%, 11/30/13, with a value of $194,000,862 (Cost $19,009,000) 19,009,000 19,009,000 - -------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $588,656,847) 100.2% 643,337,271 - -------------------------------------------------------------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (0.2) (1,431,113) -------------------------- NET ASSETS 100.0% $641,906,158 ==========================
22 | OPPENHEIMER CONVERTIBLE SECURITIES FUND FOOTNOTES TO STATEMENT OF INVESTMENTS 1. Represents a zero coupon bond. 2. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $191,541,975 or 29.84% of the Fund's net assets as of December 31, 2003. 3. Represents the current interest rate for a variable or increasing rate security. 4. Identifies issues considered to be illiquid or restricted. See Note 6 of Notes to Financial Statements. 5. Units may be comprised of several components, such as debt and equity and/or warrants to purchase equity at some point in the future. For units, which represent debt securities, principal amount disclosed represents total underlying principal. 6. Non-income producing security. 7. Received as the result of issuer reorganization. Currently has minimal market value. Affiliated company. Represents ownership of at least 5% of the voting securities of the issuer, and is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended December 31, 2003. There were no affiliate securities held by the Fund as of December 31, 2003. Transactions during the period in which the issuer was an affiliate are as follows:
SHARES/UNITS SHARES/UNITS DECEMBER 31, GROSS GROSS DECEMBER 31, REALIZED 2002 ADDITIONS REDUCTIONS 2003 LOSS - --------------------------------------------------------------------------------------------------------------- STOCKS AND/OR WARRANTS Danskin, Inc. 2,610,710 -- 2,610,710 -- $ 3,047,417 Danskin, Inc. Restricted Common Shares* 2,015,119 -- -- 2,015,119 -- Danskin, Inc. Wts., Exp. 10/8/04* 367,801 -- -- 367,801 -- Portion of Danskin, Inc. Promissory Nt. to be used to purchase 53,309 shares of restricted common stock in rights offering* -- -- -- -- -- ----------- $ 3,047,417 =========== *No longer an affiliate as of December 31, 2003.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 23 | OPPENHEIMER CONVERTIBLE SECURITIES FUND STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2003 - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------------------- Investments, at value (cost $588,656,847)--see accompanying statement $ 643,337,271 - -------------------------------------------------------------------------------------------- Cash 614,518 - -------------------------------------------------------------------------------------------- Receivables and other assets: Interest, dividends and principal paydowns 3,447,429 Shares of beneficial interest sold 1,389,451 Investments sold 954,799 Other 27,799 ------------- Total assets 649,771,267 - -------------------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased 5,763,425 Shares of beneficial interest redeemed 1,444,604 Distribution and service plan fees 378,802 Trustees' compensation 111,692 Transfer and shareholder servicing agent fees 81,654 Shareholder reports 55,328 Other 29,604 ------------- Total liabilities 7,865,109 - -------------------------------------------------------------------------------------------- NET ASSETS $ 641,906,158 ============= - -------------------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS - -------------------------------------------------------------------------------------------- Paid-in capital $ 721,365,236 - -------------------------------------------------------------------------------------------- Accumulated net investment loss (970,782) - -------------------------------------------------------------------------------------------- Accumulated net realized loss on investments (133,168,720) - -------------------------------------------------------------------------------------------- Net unrealized appreciation on investments 54,680,424 ------------- NET ASSETS $ 641,906,158 =============
24 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
- -------------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE - -------------------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net assets of $310,641,497 and 23,401,073 shares of beneficial interest outstanding) $13.27 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $14.08 - -------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $133,057,612 and 10,008,143 shares of beneficial interest outstanding) $13.29 - -------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $82,148,554 and 6,191,814 shares of beneficial interest outstanding) $13.27 - -------------------------------------------------------------------------------------------- Class M Shares: Net asset value and redemption price per share (based on net assets of $114,600,010 and 8,638,207 shares of beneficial interest outstanding) $13.27 Maximum offering price per share (net asset value plus sales charge of 3.25% of offering price) $13.72 - -------------------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $1,458,485 and 109,875 shares of beneficial interest outstanding) $13.27
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 25 | OPPENHEIMER CONVERTIBLE SECURITIES FUND STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003 - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------- INVESTMENT INCOME - -------------------------------------------------------------------------------------------- Interest $ 19,024,873 - -------------------------------------------------------------------------------------------- Dividends 12,211,024 ------------ Total investment income 31,235,897 - -------------------------------------------------------------------------------------------- EXPENSES - -------------------------------------------------------------------------------------------- Management fees 2,755,382 - -------------------------------------------------------------------------------------------- Distribution and service plan fees: Class A 599,232 Class B 1,398,157 Class C 697,297 Class M 766,119 Class N 3,698 - -------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 423,353 Class B 288,769 Class C 121,800 Class M 114,152 Class N 2,492 - -------------------------------------------------------------------------------------------- Accounting service fees 174,795 - -------------------------------------------------------------------------------------------- Trustees' compensation 49,164 - -------------------------------------------------------------------------------------------- Custodian fees and expenses 11,191 - -------------------------------------------------------------------------------------------- Other 18,729 ------------ Total expenses 7,424,330 Less reduction to custodian expenses (2,914) Less voluntary waiver of transfer and shareholder servicing agent fees--Class A (1,975) Less voluntary waiver of transfer and shareholder servicing agent fees--Class B (1,366) Less voluntary waiver of transfer and shareholder servicing agent fees--Class C (530) Less voluntary waiver of transfer and shareholder servicing agent fees--Class M (581) Less voluntary waiver of transfer and shareholder servicing agent fees--Class N (174) ------------ Net expenses 7,416,790 - -------------------------------------------------------------------------------------------- NET INVESTMENT INCOME 23,819,107 - -------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------------------- Net realized gain (loss) on: Investments: Unaffiliated companies 32,229,419 Affiliated companies (3,047,417) Closing and expiration of option contracts written 96,305 ------------ Net realized gain 29,278,307 - -------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on investments 64,594,391 - -------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $117,691,805 ============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 26 | OPPENHEIMER CONVERTIBLE SECURITIES FUND STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2003 2002 - ------------------------------------------------------------------------------------------------- OPERATIONS - ------------------------------------------------------------------------------------------------- Net investment income $ 23,819,107 $ 25,383,283 - ------------------------------------------------------------------------------------------------- Net realized gain (loss) 29,278,307 (85,635,374) - ------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) 64,594,391 12,007,604 ----------------------------- Net increase (decrease) in net assets resulting from operations 117,691,805 (48,244,487) - ------------------------------------------------------------------------------------------------- DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------- Dividends from net investment income: Class A (11,367,661) (10,356,782) Class B (5,345,568) (9,416,327) Class C (2,624,294) (3,014,487) Class M (4,627,938) (5,875,935) Class N (28,916) (11,341) - ------------------------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS - ------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from beneficial interest transactions: Class A 66,001,751 38,583,437 Class B (43,825,244) (103,076,509) Class C 9,713,833 (7,317,685) Class M (11,782,752) (20,269,990) Class N 938,567 381,879 - ------------------------------------------------------------------------------------------------- NET ASSETS - ------------------------------------------------------------------------------------------------- Total increase (decrease) 114,743,583 (168,618,227) - ------------------------------------------------------------------------------------------------- Beginning of period 527,162,575 695,780,802 ----------------------------- End of period [including accumulated net investment loss of $970,782 and $1,934,293, respectively] $641,906,158 $ 527,162,575 =============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 27 | OPPENHEIMER CONVERTIBLE SECURITIES FUND FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
CLASS A YEAR ENDED DECEMBER 31, 2003 2002 2001 2000 1999 - ---------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ---------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $11.29 $12.76 $13.85 $16.36 $14.84 - ---------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .56 .57 .48 .72 .70 Net realized and unrealized gain (loss) 1.98 (1.41) (.94) (1.45) 2.66 ------------------------------------------------------------------- Total from investment operations 2.54 (.84) (.46) (.73) 3.36 - ---------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.56) (.63) (.63) (.72) (.70) Distributions from net realized gain -- -- -- (1.06) (1.14) ------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.56) (.63) (.63) (1.78) (1.84) - ---------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $13.27 $11.29 $12.76 $13.85 $16.36 =================================================================== - ---------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 1 22.95% (6.59)% (3.30)% (4.81)% 23.37% - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $310,641 $202,968 $187,458 $210,903 $220,671 - ---------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $252,347 $190,677 $197,514 $225,938 $207,008 - ---------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 2 Net investment income 4.48% 4.77% 3.58% 4.42% 4.55% Total expenses 0.94% 3,4 0.99% 3 0.95% 3 0.90% 3 0.95% 3 - ---------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 61% 52% 69% 127% 95% 1. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 2. Annualized for periods of less than one full year. 3. Reduction to custodian expenses less than 0.01%. 4. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 28 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
CLASS B YEAR ENDED DECEMBER 31, 2003 2002 2001 2000 1999 - ---------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ---------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $11.30 $12.79 $13.87 $16.38 $14.87 - ---------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .43 .43 .38 .59 .59 Net realized and unrealized gain (loss) 2.02 (1.38) (.93) (1.45) 2.65 ------------------------------------------------------------------- Total from investment operations 2.45 (.95) (.55) (.86) 3.24 - ---------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.46) (.54) (.53) (.59) (.59) Distributions from net realized gain -- -- -- (1.06) (1.14) ------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.46) (.54) (.53) (1.65) (1.73) - ---------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $13.29 $11.30 $12.79 $13.87 $16.38 =================================================================== - ---------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 1 22.07% (7.44)% (3.97)% (5.55)% 22.35% - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $133,058 $154,350 $286,829 $373,860 $431,370 - ---------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $139,757 $213,259 $330,806 $418,592 $414,611 - ---------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 2 Net investment income 3.79% 3.95% 2.75% 3.62% 3.79% Total expenses 1.74% 3,4 1.77% 3 1.71% 3 1.70% 3 1.71% 3 - ---------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 61% 52% 69% 127% 95% 1. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 2. Annualized for periods of less than one full year. 3. Reduction to custodian expenses less than 0.01%. 4. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 29 | OPPENHEIMER CONVERTIBLE SECURITIES FUND FINANCIAL HIGHLIGHTS CONTINUED - --------------------------------------------------------------------------------
CLASS C YEAR ENDED DECEMBER 31, 2003 2002 2001 2000 1999 - ---------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ---------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $11.28 $12.76 $13.84 $16.35 $14.84 - ---------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .46 .46 .38 .59 .59 Net realized and unrealized gain (loss) 1.99 (1.40) (.93) (1.45) 2.65 ------------------------------------------------------------------- Total from investment operations 2.45 (.94) (.55) (.86) 3.24 - ---------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.46) (.54) (.53) (.59) (.59) Distributions from net realized gain -- -- -- (1.06) (1.14) ------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.46) (.54) (.53) (1.65) (1.73) - ---------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $13.27 $11.28 $12.76 $13.84 $16.35 =================================================================== - ---------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 1 22.14% (7.39)% (3.98)% (5.56)% 22.41% - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $82,149 $61,031 $76,846 $91,567 $94,352 - ---------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $69,787 $66,391 $85,774 $96,574 $94,329 Ratios to average net assets: 2 Net investment income 3.73% 3.97% 2.80% 3.62% 3.80% Total expenses 1.70% 3,4 1.76% 3 1.71% 3 1.70% 3 1.70% 3 - ---------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 61% 52% 69% 127% 95% 1. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 2. Annualized for periods of less than one full year. 3. Reduction to custodian expenses less than 0.01%. 4. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 30 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
CLASS M YEAR ENDED DECEMBER 31, 2003 2002 2001 2000 1999 - ---------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ---------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $11.28 $12.76 $13.84 $16.35 $14.84 - ---------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .50 .49 .41 .64 .63 Net realized and unrealized gain (loss) 2.00 (1.40) (.93) (1.45) 2.65 ------------------------------------------------------------------- Total from investment operations 2.50 (.91) (.52) (.81) 3.28 - ---------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.51) (.57) (.56) (.64) (.63) Distributions from net realized gain -- -- -- (1.06) (1.14) ------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.51) (.57) (.56) (1.70) (1.77) - ---------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $13.27 $11.28 $12.76 $13.84 $16.35 =================================================================== - ---------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 1 22.59% (7.16)% (3.72)% (5.30)% 22.74% - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $114,600 $108,426 $144,612 $181,521 $234,023 - ---------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $110,337 $122,897 $160,919 $213,617 $235,419 Ratios to average net assets: 2 Net investment income 4.16% 4.24% 3.04% 3.90% 4.06% Total expenses 1.32% 3,4 1.51% 3 1.45% 3 1.42% 3 1.45% 3 - ---------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 61% 52% 69% 127% 95% 1. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 2. Annualized for periods of less than one full year. 3. Reduction to custodian expenses less than 0.01%. 4. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 31 | OPPENHEIMER CONVERTIBLE SECURITIES FUND FINANCIAL HIGHLIGHTS CONTINUED - --------------------------------------------------------------------------------
CLASS N YEAR ENDED DECEMBER 31, 2003 2002 2001 1 - -------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - -------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $11.29 $12.76 $13.68 - -------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .49 .55 .42 Net realized and unrealized gain (loss) 2.00 (1.43) (.84) --------------------------------------- Total from investment operations 2.49 (.88) (.42) - -------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.51) (.59) (.50) Distributions from net realized gain -- -- -- --------------------------------------- Total dividends and/or distributions to shareholders (.51) (.59) (.50) - -------------------------------------------------------------------------------------------------------- Net asset value, end of period $13.27 $11.29 $12.76 ======================================= - -------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 22.45% (6.92)% (3.02)% - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $1,458 $388 $36 - -------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 743 $205 $10 - -------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 3.87% 4.38% 5.45% Total expenses 1.37% 1.43% 1.22% Expenses after expense reimbursement or fee waiver and reduction to custodian expenses 1.35% 1.38% N/A 4 - -------------------------------------------------------------------------------------------------------- Portfolio turnover rate 61% 52% 69% 1. For the period from March 1, 2001 (inception of offering) to December 31, 2001. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 3. Annualized for periods of less than one full year. 4. Reduction to custodian expenses less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 32 | OPPENHEIMER CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- ------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Convertible Securities Fund (the Fund), a portfolio of the Bond Fund Series, is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment objective is to seek a high level of total return on its assets through a combination of current income and capital appreciation. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B, Class C, Class M and Class N shares. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B, Class C and Class N shares are sold without a front-end sales charge but may be subject to a contingent deferred sales charge (CDSC). Class M shares are sold with a reduced front-end sales charge. Class N shares are sold only through retirement plans. Retirement plans that offer Class N shares may impose charges on those accounts. All classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ by minor amounts due to each class having its own expenses directly attributable to that class. Classes A, B, C, M and N have separate distribution and/or service plans. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. ------------------------------------------------------------------------------- SECURITIES VALUATION. Securities listed or traded on National Stock Exchanges or other domestic or foreign exchanges are valued based on the last sale price of the security traded on that exchange prior to the time when the Fund's assets are valued. Securities traded on NASDAQ are valued based on the closing price provided by NASDAQ prior to the time when the Fund's assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the closing bid and asked prices, and if not, at the closing bid price. Securities (including restricted securities) for which quotations are not readily available are valued primarily using dealer-supplied valuations, a portfolio pricing service authorized by the Board of Trustees, or at their fair value. Securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund's assets are valued but after the close of their respective foreign exchanges will be fair valued. Fair value is determined in good faith using consistently applied procedures under the supervision of the Board of Trustees. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). ------------------------------------------------------------------------------- STRUCTURED NOTES. The Fund invests in structured notes whose market values and redemption prices are linked to the market value of specific securities. The structured notes are leveraged, which increases the Fund's exposure to changes in prices of the underlying securities and increases the volatility of each note's market value relative to the change in the underlying security prices. Fluctuations in value of these securities are recorded as unrealized gains and losses in the accompanying financial statements. The 33 | OPPENHEIMER CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS CONTINUED - -------------------------------------------------------------------------------- ------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued Fund records a realized gain or loss when a structured note is sold or matures. As of December 31, 2003, the market value of these securities comprised 2.7% of the Fund's net assets, and resulted in unrealized gains of $842,998. ------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other affiliated funds advised by the Manager, may transfer uninvested cash balances into joint trading accounts on a daily basis. Secured by U.S. government securities, these balances are invested in one or more repurchase agreements. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. In the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. ------------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. ------------------------------------------------------------------------------- FEDERAL TAXES. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders, therefore, no federal income or excise tax provision is required. The tax components of capital shown in the table below represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes.
NET UNREALIZED APPRECIATION BASED ON COST OF UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED SECURITIES AND OTHER NET INVESTMENT LONG-TERM LOSS INVESTMENTS FOR FEDERAL INCOME GAIN CARRYFORWARD 1,2 INCOME TAX PURPOSES --------------------------------------------------------------------------------- $1,184,025 $-- $131,926,100 $51,387,836 1. As of December 31, 2003, the Fund had $131,926,100 of net capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. As of December 31, 2003, details of the capital loss carryforwards were as follows: EXPIRING ---------------------- 2009 $ 41,459,104 2010 90,466,996 ------------ Total $131,926,100 ============= 2. During the fiscal year December 31, 2003, the Fund utilized $21,570,184 of capital loss carryforward to offset capital gains realized in that fiscal year. During the fiscal year December 31, 2002, the Fund did not utilize any capital loss carryforwards.
34 | OPPENHEIMER CONVERTIBLE SECURITIES FUND Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund. Accordingly, the following amounts have been reclassified for December 31, 2003. Net assets of the Fund were unaffected by the reclassifications. REDUCTION TO INCREASE TO ACCUMULATED ACCUMULATED NET NET INVESTMENT REALIZED LOSS ON LOSS INVESTMENTS ------------------------------------ $1,138,781 $1,138,781 The tax character of distributions paid during the years ended December 31, 2003 and December 31, 2002 was as follows: YEAR ENDED YEAR ENDED DECEMBER 31, 2003 DECEMBER 31, 2002 --------------------------------------------------------------- Distributions paid from: Ordinary income $23,994,377 $28,674,872 The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of December 31, 2003 are noted below. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss. Federal tax cost of securities $591,949,435 ============ Gross unrealized appreciation $ 59,480,921 Gross unrealized depreciation (8,093,085) ------------ Net unrealized appreciation $ 51,387,836 ============ - -------------------------------------------------------------------------------- TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the Fund's independent trustees. Benefits are based on years of service and fees paid to each trustee during the years of service. During the year ended December 31, 2003, the Fund's projected benefit obligations were increased by $16,097 and payments of $2,372 were made to retired trustees, resulting in an accumulated liability of $104,840 as of December 31, 2003. The Board of Trustees has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. Under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or are invested in other Oppenheimer funds selected by the Trustee. Deferral of trustees' fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund's assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the Plan. 35 | OPPENHEIMER CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS CONTINUED - -------------------------------------------------------------------------------- ------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. Income distributions, if any, are declared and paid quarterly. Capital gain distributions, if any, are declared and paid annually. ------------------------------------------------------------------------------- INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. ------------------------------------------------------------------------------- EXPENSE OFFSET ARRANGEMENT. The reduction of custodian fees, if applicable, represents earnings on cash balances maintained by the Fund. ------------------------------------------------------------------------------- SECURITY TRANSACTIONS. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. ------------------------------------------------------------------------------- OTHER. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST The Fund has authorized an unlimited number of no par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:
YEAR ENDED DECEMBER 31, 2003 YEAR ENDED DECEMBER 31, 2002 SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------------------------------------------ CLASS A Sold 10,293,699 $125,272,357 8,236,543 $ 96,210,339 Dividends and/or distributions reinvested 717,012 8,840,852 712,104 8,199,709 Redeemed (5,594,158) (68,111,458) (5,651,194) (65,826,611) ------------------------------------------------------------- Net increase 5,416,553 $ 66,001,751 3,297,453 $ 38,583,437 ============================================================= ------------------------------------------------------------------------------------------ CLASS B Sold 2,802,713 $ 34,182,973 1,455,217 $ 17,209,549 Dividends and/or distributions reinvested 300,964 3,678,039 550,830 6,406,897 Redeemed (6,750,493) (81,686,256) (10,784,316) (126,692,955) ------------------------------------------------------------- Net decrease (3,646,816) $(43,825,244) (8,778,269) $(103,076,509) =============================================================
36 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
YEAR ENDED DECEMBER 31, 2003 YEAR ENDED DECEMBER 31, 2002 SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------------------------------------------ CLASS C Sold 1,914,058 $ 23,378,006 947,643 $ 10,925,314 Dividends and/or distributions reinvested 144,706 1,777,170 173,843 2,006,345 Redeemed (1,277,679) (15,441,343) (1,734,724) (20,249,344) ------------------------------------------------------------ Net increase (decrease) 781,085 $ 9,713,833 (613,238) $ (7,317,685) ============================================================= ------------------------------------------------------------------------------------------ CLASS M Sold 223,208 $ 2,730,862 169,391 $ 1,991,974 Dividends and/or distributions reinvested 264,332 3,234,301 344,816 3,977,838 Redeemed (1,462,362) (17,747,915) (2,237,918) (26,239,802) ------------------------------------------------------------- Net decrease (974,822) $(11,782,752) (1,723,711) $(20,269,990) ============================================================= - ------------------------------------------------------------------------------------------- CLASS N Sold 89,088 $ 1,101,574 37,735 $ 451,651 Dividends and/or distributions reinvested 2,161 27,095 855 9,599 Redeemed (15,713) (190,102) (7,108) (79,371) ------------------------------------------------------------- Net increase 75,536 $ 938,567 31,482 $ 381,879 =============================================================
------------------------------------------------------------------------------- 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the year ended December 31, 2003, were $346,402,469 and $299,537,010, respectively. ------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for a fee at an annual rate of 0.625% of the first $50 million of average annual net assets of the Fund, 0.50% of the next $250 million and 0.4375% of average annual net assets over $300 million. ------------------------------------------------------------------------------- ACCOUNTING FEES. Accounting fees paid to the Manager were in accordance with the accounting services agreement with the Fund which provides for an annual fee of $12,000 for the first $30 million of net assets and $9,000 for each additional $30 million of net assets. During the year ended, the Fund paid $174,795 to the Manager for accounting and pricing services. ------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended December 31, 2003, the Fund paid $944,910 to OFS for services to the Fund. 37 | OPPENHEIMER CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS CONTINUED - -------------------------------------------------------------------------------- ------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes, up to an annual rate of 0.35% of average net assets per class. This undertaking may be amended or withdrawn at any time. ------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN (12B-1) FEES. Under its General Distributor's Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor) acts as the Fund's principal underwriter in the continuous public offering of the Fund's classes of shares. ------------------------------------------------------------------------------- SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A shares. It reimburses the Distributor for a portion of its costs incurred for services provided to accounts that hold Class A shares. Reimbursement is made quarterly at an annual rate of up to 0.25% of the average annual net assets of Class A shares of the Fund. The Distributor currently uses the fees it receives from the Fund to pay brokers, dealers and other financial institutions for personal services and account maintenance services they provide for their customers who hold Class A shares. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent years. Fees incurred by the Fund under the plan are detailed in the Statement of Operations. ------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C, CLASS M AND CLASS N SHARES. The Fund has adopted Distribution and Service Plans for Class B, Class C, Class M and Class N shares to compensate the Distributor for its services in connection with the distribution of these shares and servicing accounts. Under the plans, the Fund pays the Distributor an annual asset-based sales charge of 0.75% per year on Class B shares and on Class C shares, 0.50% per year on Class M shares and 0.25% per year on Class N shares. The Distributor also receives a service fee of up to 0.25% per year under each plan. If either the Class B, Class C, Class M or Class N plan is terminated by the Fund or by the shareholders of a class, the Board of Trustees and its independent trustees must determine whether the Distributor shall be entitled to payment from the Fund of all or a portion of the service fee and/or asset-based sales charge in respect to shares sold prior to the effective date of such termination. The Distributor's aggregate uncompensated expenses under the plan at December 31, 2003 for Class B, Class C and Class N shares was $3,330,489, $2,068,728 and $21,760, respectively. Fees incurred by the Fund under the plans are detailed in the Statement of Operations. ------------------------------------------------------------------------------- SALES CHARGES. Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. The sales charges retained by the Distributor from the sale of shares and the CDSC retained by the Distributor on the redemption of shares is shown in the table below for the period indicated. 38 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
CLASS A CLASS B CLASS C CLASS N CLASS A CLASS M CONTINGENT CONTINGENT CONTINGENT CONTINGENT FRONT-END FRONT-END DEFERRED SALES DEFERRED SALES DEFERRED SALES DEFERRED SALES SALES CHARGES SALES CHARGES CHARGES CHARGES CHARGES CHARGES RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR --------------------------------------------------------------------------------------------------------------------- December 31, 2003 $248,513 $7,400 $6,904 $325,658 $5,278 $889
------------------------------------------------------------------------------- 5. OPTION ACTIVITY The Fund may buy and sell put and call options, or write put and covered call options on portfolio securities in order to produce incremental earnings or protect against changes in the value of portfolio securities. The Fund generally purchases put options or writes covered call options to hedge against adverse movements in the value of portfolio holdings. When an option is written, the Fund receives a premium and becomes obligated to sell or purchase the underlying security at a fixed price, upon exercise of the option. Options are valued daily based upon the last sale price on the principal exchange on which the option is traded and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss upon the expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. Securities designated to cover outstanding call options are noted in the Statement of Investments where applicable. Shares subject to call, expiration date, exercise price, premium received and market value are detailed in a note to the Statement of Investments. Options written are reported as a liability in the Statement of Assets and Liabilities. Realized gains and losses are reported in the Statement of Operations. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Written option activity for the year ended December 31, 2003 was as follows: CALL OPTIONS ------------------------------- NUMBER OF AMOUNT OF CONTRACTS PREMIUMS - -------------------------------------------------------------------- Options outstanding as of December 31, 2002 -- $ -- Options written 1,800 446,093 Options closed or expired (1,800) (446,093) ------------------------------- Options outstanding as of December 31, 2003 -- $ -- ============================== 39 | OPPENHEIMER CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS CONTINUED - -------------------------------------------------------------------------------- ------------------------------------------------------------------------------- 6. ILLIQUID OR RESTRICTED SECURITIES As of December 31, 2003, investments in securities included issues that are illiquid or restricted. Restricted securities are purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Trustees as reflecting fair value. A security may also be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Fund intends to invest no more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid or restricted securities. Certain restricted securities, eligible for resale to qualified institutional investors, are not subject to that limitation. The aggregate value of illiquid or restricted securities subject to this limitation as of December 31, 2003 was $2,132,636, which represents 0.33% of the Fund's net assets, of which $15,993 is considered restricted. Information concerning restricted securities is as follows:
ACQUISITION VALUATION AS OF UNREALIZED SECURITY DATES COST DEC. 31, 2003 DEPRECIATION ---------------------------------------------------------------------------------------------- STOCKS AND/OR WARRANTS Danskin, Inc. Restricted Common Shares 8/14/95 $528,136 $ -- $528,136 Danskin, Inc. Wts., Exp. 10/8/04 8/14/95 -- -- -- Portion of Danskin, Inc. Promissory Nt. to be used to purchase 53,309 shares of restricted common stock in rights offering 8/14/95 15,993 15,993 --
------------------------------------------------------------------------------- 7. BORROWING AND LENDING ARRANGEMENTS The Fund entered into an "interfund borrowing and lending arrangement" with other funds in the Oppenheimer funds complex, to allow funds to borrow for liquidity purposes. The arrangement was initiated pursuant to exemptive relief granted by the Securities and Exchange Commission (the SEC) to allow these affiliated funds to lend money to, and borrow money from, each other, in an attempt to reduce borrowing costs below those of bank loan facilities. The SEC's order requires the Fund's Board of Trustees to adopt operating policies and procedures to administer interfund borrowing and lending. Under the arrangement the Fund may lend money to other Oppenheimer funds and may borrow from other Oppenheimer funds at a rate set by the Fund's Board of Trustees, based upon a recommendation by the Manager. The Fund's borrowings, if any, are subject to asset coverage requirements under the Investment Company Act and the provisions of the SEC order and other applicable regulations. If the Fund borrows money, there is a risk that the loan could be called on one day's notice, in which case the Fund might have to borrow from a bank at higher rates if a loan were not available from another Oppenheimer fund. If the Fund lends money to another fund, it will be subject to the risk that the other fund might not repay the loan in a timely manner, or at all. The Fund had no interfund borrowings or loans outstanding during the year ended or at December 31, 2003. 40 | OPPENHEIMER CONVERTIBLE SECURITIES FUND INDEPENDENT AUDITORS' REPORT - -------------------------------------------------------------------------------- THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER BOND FUND SERIES: We have audited the accompanying statement of assets and liabilities of Oppenheimer Convertible Securities Fund (a portfolio of the Bond Fund Series) including the statement of investments, as of December 31, 2003, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the period ended December 31, 1999, were audited by other auditors whose report dated January 24, 2000, expressed an unqualified opinion on this information. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2003, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer Convertible Securities Fund as of December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Denver, Colorado January 23, 2004 41 | OPPENHEIMER CONVERTIBLE SECURITIES FUND FEDERAL INCOME TAX INFORMATION UNAUDITED - -------------------------------------------------------------------------------- ------------------------------------------------------------------------------- In early 2004, if applicable, shareholders of record received information regarding all dividends and distributions paid to them by the Fund during calendar year 2003. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. Dividends, if any, paid by the Fund during the fiscal year ended December 31, 2003 which are not designated as capital gain distributions should be multiplied by 2.56% to arrive at the amount eligible for the corporate dividend-received deduction. A portion, if any, of the dividends paid by the Fund during the fiscal year ended December 31, 2003 which are not designated as capital gain distributions are eligible for lower individual income tax rates to the extent that the Fund has received qualified dividend income as stipulated by recent tax legislation. $11,904,339 of the Fund's fiscal year taxable income may be eligible for the lower individual income tax rates. In early 2004, shareholders of record will receive information regarding the percentage of distributions that are eligible for lower individual income tax rates. The foregoing information is presented to assist shareholders in reporting distributions received from the Fund to the Internal Revenue Service. Because of the complexity of the federal regulations which may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax advisor for specific guidance. PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES UNAUDITED - -------------------------------------------------------------------------------- ------------------------------------------------------------------------------- The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which the Fund votes proxies relating to securities ("portfolio proxies") held by the Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.225.5677, (ii) on the Fund's website at www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In addition, the Fund will be required to file new Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. The first such filing is due no later than August 31, 2004, for the twelve months ended June 30, 2004. Once filed, the Fund's Form N-PX filing will be available (i) without charge, upon request, by calling the Fund toll-free at 1.800.225.5677, and (ii) on the SEC's website at www.sec.gov. 42 | OPPENHEIMER CONVERTIBLE SECURITIES FUND TRUSTEES AND OFFICERS UNAUDITED - --------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS HELD FUND, LENGTH OF SERVICE, AGE BY TRUSTEE; NUMBER OF PORTFOLIOS IN FUND COMPLEX CURRENTLY OVERSEEN BY TRUSTEE INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY, TRUSTEES CENTENNIAL, CO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL. THOMAS W. COURTNEY, Principal of Courtney Associates, Inc. (venture capital firm); former General Chairman of the Partner of Trivest Venture Fund (private venture capital fund); former President Board of Trustees, of Investment Counseling Federated Investors, Inc.; Trustee of the following Trustee (since1995) open-end investment companies: Cash Assets Trust, PIMCO ADVISORS VIT, Tax Free Age: 70 Trust of Arizona and 4 funds for the Hawaiian Tax Free Trust. Oversees 10 portfolios in the OppenheimerFunds complex. JOHN CANNON, Director, Neuberger Berman Income Managers Trust, Neuberger & Berman Income Trustee (since 1992) Funds and Neuberger Berman Trust, (1995-present); Neuberger Berman Equity Funds Age: 73 (November 2000-present); Trustee, Neuberger Berman Mutual Funds (October 1994-present); formerly Chairman and Treasurer, CDC Associates, a registered investment adviser (December 1993-February 1996); Independent Consultant; Chief Investment Officer, CDC Associates (1996-June 2000); Consultant and director, CDC Associates (December 1993-February 1999). Oversees 3 portfolios in the OppenheimerFunds complex. PAUL Y. CLINTON, Principal of Clinton Management Associates, a financial and venture capital Trustee ( since 1995) consulting firm; Trustee of the following open-end investment companies: Trustee Age: 72 of Capital Cash Management Trust, Prime Cash Fund, PIMCO ADVISORS VIT and Narragansett Insured Tax-Free Income Fund. Oversees 10 portfolios in the OppenheimerFunds complex. ROBERT G. GALLI, A trustee or director of other Oppenheimer funds. Oversees 35 portfolios in the Trustee (since 1998) OppenheimerFunds complex. Age: 70 LACY B. HERRMANN, Chairman and Chief Executive Officer of Aquila Management Corporation, the Trustee (since 1995) sponsoring organization and manager, administrator and/or sub-adviser to the Age: 74 following open-end investment companies, and Chairman of the Board of Trustees and President of each: Churchill Cash Reserves Trust, Aquila-Cascadia Equity Fund, Cash Assets Trust, Prime Cash Fund, Narragansett Insured Tax-Free Income Fund, Tax-Free Fund For Utah, Churchill Tax-Free Fund of Kentucky, Tax-Free Fund of Colorado, Tax-Free Trust of Oregon, Tax-Free Trust of Arizona, Hawaiian Tax-Free Trust, and Aquila Rocky Mountain Equity Fund and PIMCO ADVISORS VIT; Vice President, Director, Secretary, and formerly Treasurer of Aquila Distributors, Inc., distributor of the above funds; President and Chairman of the Board of Trustees of Capital Cash Management Trust ("CCMT"), and an Officer and Trustee/Director of its predecessors; President and Director of STCM Management Company, Inc., sponsor and adviser to CCMT; Chairman, President and a Director of InCap Management Corporation, formerly sub-adviser and administrator of Prime Cash Fund and Short Term Asset Reserves; Trustee Emeritus of Brown University. Oversees 10 portfolios in the OppenheimerFunds complex.
43 | OPPENHEIMER CONVERTIBLE SECURITIES FUND TRUSTEES AND OFFICERS UNAUDITED / CONTINUED - --------------------------------------------------------------------------------
BRIAN WRUBLE, Special Limited Partner (since January 1999) of Odyssey Investment Partners, LLC Trustee (since 2001) (private equity investment); General Partner (since September 1996) of Odyssey Age: 60 Partners, L.P. (hedge fund in distribution since 1/1/97); Board of Governing Trustees (since August 1990) of The Jackson Laboratory (non-profit); Trustee (since May 1992) of Institute for Advanced Study (educational institute); formerly Trustee (May 2000 - 2002) of Research Foundation of AIMR (investment research, non-profit); Governor, Jerome Levy Economics Institute of Bard College (economics research) (August 1990-September 2001); Director of Ray & Berendtson, Inc. (executive search firm) (May 2000-April 2002). Oversees 10 portfolios in the OppenheimerFunds complex. - ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS THE ADDRESS OF THE OFFICERS IN THE CHART BELOW IS AS FOLLOWS: FOR MESSRS. EVERETT, MURPHY AND ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, NEW YORK, NY 10281-1008, FOR MR. WIXTED, 6803 S. TUCSON WAY, CENTENNIAL, CO 80112-3924. EACH OFFICER SERVES FOR AN ANNUAL TERM OR UNTIL HIS OR HER EARLIER RESIGNATION, DEATH OR REMOVAL. EDWARD EVERETT, Vice President of the Manager (since January 2000); an officer of 1 portfolio in Vice President and the OppenheimerFunds complex; formerly Assistant Vice President of the Manager Portfolio Manager (January 1996 - January 2000). (since 2000) Age: 37 JOHN V. MURPHY, Chairman, Chief Executive Officer and director (since June 2001) and President President (since 2001) (since September 2000) of the Manager; President and a director or trustee of Age: 54 other Oppenheimer funds; President and a director (since July 2001) of Oppenheimer Acquisition Corp. (the Manager's parent holding company) and of Oppenheimer Partnership Holdings, Inc. (a holding company subsidiary of the Manager); a director (since November 2001) of OppenheimerFunds Distributor, Inc. (a subsidiary of the Manager); Chairman and a director (since July 2001) of Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer agent subsidiaries of the Manager); President and a director (since July 2001) of OppenheimerFunds Legacy Program (a charitable trust program established by the Manager); a director of the investment advisory subsidiaries of the Manager: OFI Institutional Asset Management, Inc. and Centennial Asset Management Corporation (since November 2001), HarbourView Asset Management Corporation and OFI Private Investments, Inc. (since July 2001); President (since November 1, 2001) and a director (since July 2001) of Oppenheimer Real Asset Management, Inc.; a director (since November 2001) of Trinity Investment Management Corp. and Tremont Advisers, Inc. (Investment advisory affiliates of the Manager); Executive Vice President (since February 1997) of Massachusetts Mutual Life Insurance Company (the Manager's parent company); a director (since June 1995) of DLB Acquisition Corporation (a holding company that owns the shares of David L. Babson & Company, Inc.); formerly, Chief Operating Officer (September 2000-June 2001) of the Manager; President and trustee (November 1999-November 2001) of MML Series Investment Fund and MassMutual Institutional Funds (open-end investment companies); a director (September 1999-August 2000) of C.M. Life Insurance Company; President, Chief Executive Officer and director (September 1999-August 2000) of MML Bay State Life Insurance Company; a director (June 1989-June 1998) of Emerald Isle Bancorp and Hibernia Savings Bank (a wholly-owned subsidiary of Emerald Isle Bancorp). Oversees 72 portfolios as Trustee/Officer and 10 portfolios as Officer in the OppenheimerFunds complex.
44 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
BRIAN W. WIXTED, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer Treasurer (since 1999) (since March 1999) of HarbourView Asset Management Corporation, Shareholder Age: 44 Services, Inc., Oppenheimer Real Asset Management Corporation, Shareholder Financial Services, Inc., Oppenheimer Partnership Holdings, Inc., OFI Private Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. and OppenheimerFunds plc (since May 2000) and OFI Institutional Asset Management, Inc. (since November 2000) (offshore fund management subsidiaries of the Manager); Treasurer and Chief Financial Officer (since May 2000) of Oppenheimer Trust Company (a trust company subsidiary of the Manager); Assistant Treasurer (since March 1999) of Oppenheimer Acquisition Corp. and OppenheimerFunds Legacy Program (since April 2000); formerly Principal and Chief Operating Officer (March 1995-March 1999), Bankers Trust Company-Mutual Fund Services Division. An officer of 82 portfolios in the OppenheimerFunds complex. ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since Secretary ( since 2001) February 2002) of the Manager; General Counsel and a director (since November Age: 55 2001) of OppenheimerFunds Distributor, Inc.; Senior Vice President and General Counsel (since November 2001) of HarbourView Asset Management Corporation; Vice President and a director (since November 2000) of Oppenheimer Partnership Holdings, Inc.; Senior Vice President, General Counsel and a director (since November 2001) of Shareholder Services, Inc., Shareholder Financial Services, Inc., OFI Private Investments, Inc., Oppenheimer Trust Company and OFI Institutional Asset Management, Inc.; General Counsel (since November 2001) of Centennial Asset Management Corporation; a director (since November 2001) of Oppenheimer Real Asset Management, Inc.; Assistant Secretary and a director (since November 2001) of OppenheimerFunds International Ltd.; Vice President (since November 2001) of OppenheimerFunds Legacy Program; Secretary (since November 2001) of Oppenheimer Acquisition Corp.; formerly Senior Vice President (May 1985-January 2004) of the Manager, Acting General Counsel (November 2001-February 2002) and Associate General Counsel (May 1981-October 2001) of the Manager; Assistant Secretary of Shareholder Services, Inc. (May 1985-November 2001), Shareholder Financial Services, Inc. (November 1989-November 2001); OppenheimerFunds International Ltd. and OppenheimerFunds plc (October 1997-November 2001). An officer of 82 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION ABOUT THE FUND'S TRUSTEES AND IS AVAILABLE WITHOUT CHARGE UPON REQUEST. 45 | OPPENHEIMER CONVERTIBLE SECURITIES FUND ITEM 2. CODE OF ETHICS The registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT The Board of Trustees of the Fund has determined that the Fund does not have an audit committee financial expert serving on its Audit Committee. In this regard, no member of the Audit Committee was identified as having all of the technical attributes identified in Instruction 2(b) to Item 3 of Form N-CSR to qualify as an "audit committee financial expert," whether through the type of specialized education or experience described in that Instruction. The Board has concluded that while the members of the Audit Committee collectively have the necessary attributes and experience required to serve effectively as an Audit Committee, no single member possesses all of the required technical attributes through the particular methods of education or experience set forth in the Instructions to be designated as an audit committee financial expert. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES (a) Audit Fees The principal accountant for the audit of the registrant's annual financial statements billed $19,000 in fiscal 2003 and $19,750 in fiscal 2002. (b) Audit-Related Fees The principal accountant for the audit of the registrant's annual financial statements billed $0 in fiscal 2003 and $442 in fiscal 2002. The principal accountant for the audit of the registrant's annual financial statements billed no such fees during the last two fiscal years to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. Such fees would include, among others: due diligence related to mergers and acquisitions, accounting consultations and audits in connection with acquisitions, internal control reviews and consultation concerning financial accounting and reporting standards. (c) Tax Fees The principal accountant for the audit of the registrant's annual financial statements billed no such fees to the registrant during the last two fiscal years. The principal accountant for the audit of the registrant's annual financial statements billed $5,000 in fiscal 2003 and $0 in fiscal 2002 to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. Such fees would include, among others: tax compliance, tax planning and tax advice. Tax compliance generally involves preparation of original and amended tax returns, claims for a refund and tax payment-planning services. Tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions and requests for rulings or technical advice from taxing authorities. (d) All Other Fees The principal accountant for the audit of the registrant's annual financial statements billed $90 in fiscal 2003 and $73 in fiscal 2002. The principal accountant for the audit of the registrant's annual financial statements billed no such fees during the last two fiscal years to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. Such fees would include the cost to the principal accountant of attending audit committee meetings and consultations regarding the registrant's retirement plan with respect to its trustees. (i) (1) During its regularly scheduled periodic meetings, the registrant's audit committee will pre-approve all audit, audit-related, tax and other services to be provided by the principal accountants of the registrant. The audit committee has delegated pre-approval authority to its Chairman for any subsequent new engagements that arise between regularly scheduled meeting dates provided that any fees such pre-approved are presented to the audit committee at its next regularly scheduled meeting. Pre-approval of non-audit services is waived provided that: 1) the aggregate amount of all such services provided constitutes no more than five percent of the total amount of fees paid by the registrant to it principal accountant during the fiscal year in which services are provided 2) such services were not recognized by the registrant at the time of engagement as non-audit services and 3) such services are promptly brought to the attention of the audit committee of the registrant and approved prior to the completion of the audit. (2) 100% (j) Not applicable as less than 50%. (k) The principal accountant for the audit of the registrant's annual financial statements billed $5,090 in fiscal 2003 and $515 in fiscal 2002 to the registrant and the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant related to non-audit fees. Those billings did not include any prohibited non-audit services as defined by the Securities Exchange Act of 1934. (l) The registrant's audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7) (ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal account's independence. No such services were rendered. ITEM 5. NOT APPLICABLE ITEM 6. RESERVED ITEM 7. NOT APPLICABLE ITEM 8. NOT APPLICABLE ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable for fiscal periods ending December 31, 2003. ITEM 10. CONTROLS AND PROCEDURES (a) Based on their evaluation of registrant's disclosure controls and procedures (as defined in rule 30a-2(c) under the Investment Company Act of 1940 (17 CFR 270.30a-2(c)) as of December 31, 2003, registrant's principal executive officer and principal financial officer found registrant's disclosure controls and procedures to provide reasonable assurances that information required to be disclosed by registrant in the reports that it files under the Securities Exchange Act of 1934 (a) is accumulated and communicated to registrant's management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure, and (b) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the U.S. Securities and Exchange Commission. (b) There have been no significant changes in registrant's internal controls over financial reporting that occurred during the registrant's second fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 11. EXHIBITS. (A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT) (B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS) EX-99.CODE ETH 3 ex99_code-345.txt EX99_CODE-345 EX-99.CODE ETH CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS OF THE OPPENHEIMER FUNDS AND OF OPPENHEIMERFUNDS, INC. This Code of Ethics for Principal Executive and Senior Financial Officers (referred to in this document as the "Code") has been adopted by each of the investment companies for which OppenheimerFunds, Inc. or one of its subsidiaries or affiliates (referred to collectively in this document as "OFI") acts as investment adviser (individually, a "Fund" and collectively, the "Funds"), and by OFI to effectuate compliance with Section 406 under the Sarbanes-Oxley Act of 2002 and the rules adopted to implement Section 406. This Code applies to each Fund's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions ("Covered Officers"). A listing of positions currently within the ambit of Covered Officers is attached as EXHIBIT A.(1) 1. Purpose of the Code This Code sets forth standards and procedures that are reasonably designed to deter wrongdoing and promote: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely, and understandable disclosure in reports and documents that a Fund files with, or submits to, the U.S. Securities and Exchange Commission ("SEC") and in other public ommunications made by the Fund; o compliance with applicable governmental laws, rules and regulations; o the prompt internal reporting of violations of this Code to the Code Administrator identified below; and o accountability for adherence to this Code. In general, the principles that govern honest and ethical conduct, including the avoidance of conflicts of interest between personal and professional relationships, reflect, at the minimum, the following: (1) the duty at all times in performing any responsibilities as a Fund financial officer, controller, accountant or principal executive officer to place the interests of the Funds ahead of personal interests; (2) the fundamental standard that Covered Officers should not take inappropriate advantage of their positions; (3) the duty to assure that a Fund's financial statements and reports to its shareholders are prepared honestly and accurately in accordance with applicable rules, regulations and accounting standards; and (4) the duty to conduct the Funds' business and affairs in an honest and ethical manner. - -------- 1 The obligations imposed by this Code on Covered Officers are separate from and in addition to any obligations that may be imposed on such persons as Covered Persons under the Code of Ethics adopted by the Oppenheimer Funds dated May 15, 2002, under Rule 17j-1 of the Investment Company Act of 1940, as amended and any other code of conduct applicable to Covered Officers in whatever capacity they serve. This Code does not incorporate by reference any provisions of the Rule 17j-1 Code of Ethics and accordingly, any violations or waivers granted under the Rule 17j-1 Code of Ethics will not be considered a violation or waiver under this Code. Each Covered Officer should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. It is acknowledged that, as a result of the contractual relationship between each Fund and OFI, of which the Covered Officers are also officers or employees, and subject to OFI's fiduciary duties to each Fund, the Covered Officers will, in the normal course of their duties, be involved in establishing policies and implementing decisions that will have different effects on OFI and the Funds. It is further acknowledged that the participation of the Covered Officers in such activities is inherent in the contractual relationship between each Fund and OFI and is consistent with the expectations of the Board of Trustees/Directors of the performance by the Covered Officers of their duties as officers of the Funds. 2. Prohibitions The specific provisions and reporting requirements of this Code are concerned primarily with promoting honest and ethical conduct and avoiding conflicts of interest in personal and professional relationships. No Covered Officer may use information concerning the business and affairs of a Fund, including the investment intentions of a Fund, or use his or her ability to influence such investment intentions, for personal gain to himself or herself, his or her family or friends or any other person or in a manner detrimental to the interests of a Fund or its shareholders. No Covered Officer may use his or her personal influence or personal relationships to influence the preparation and issuance of financial reports of a Fund whereby the Covered Officer would benefit personally to the detriment of the Fund and its shareholders. No Covered Officer shall intentionally for any reason take any action or fail to take any action in connection with his or her official acts on behalf of a Fund that causes the Fund to violate applicable laws, rules and regulations. No Covered Officer shall, in connection with carrying out his or her official duties and responsibilities on behalf of a Fund: (i) employ any device, scheme or artifice to defraud a Fund or its shareholders; (ii) intentionally cause a Fund to make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading in its official documents, regulatory filings, financial statements or communications to the public; (iii) engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any Fund or its shareholders; (iv) engage in any manipulative practice with respect to any Fund; (v) use his or her personal influence or personal relationships to influence any business decision, investment decisions, or financial reporting by a Fund whereby the Covered Officer would benefit personally to the detriment of the Fund or its shareholders; (vi) intentionally cause a Fund to fail to comply with applicable laws, rules and regulations, including failure to comply with the requirement of full, fair, accurate, understandable and timely disclosure in reports and documents that a Fund files with, or submits to, the SEC and in other public communications made by the Fund; (vii) intentionally mislead or omit to provide material information to the Fund's independent auditors or to the Board of Trustees/Directors or the officers of the Fund or its investment adviser in connection with financial reporting matters; (viii) fail to notify the Code Administrator or the Chief Executive Officer of the Fund or its investment adviser promptly if he or she becomes aware of any existing or potential violations of this Code or applicable laws; (ix) retaliate against others for, or otherwise discourage the reporting of, actual or apparent violations of this Code; or (x) fails to acknowledge or certify compliance with this Code if requested to do so. 3. Reports of Conflicts of Interests If a Covered Officer becomes aware of a conflict of interest under this Code or, to the Covered Officer's reasonable belief, the appearance of one, he or she must immediately report the matter to the Code's Administrator. If the Code Administrator is involved or believed to be involved in the conflict of interest or appearance of conflict of interest, the Covered Officer shall report the matter directly to the OFI's Chief Executive Officer. Upon receipt of a report of a conflict, the Code Administrator will take prompt steps to determine whether a conflict of interest exists. If the Code Administrator determines that an actual conflict of interest exists, the Code Administrator will take steps to resolve the conflict. If the Code Administrator determines that the appearance of a conflict exists, the Code Administrator will take appropriate steps to remedy such appearance. If the Code Administrator determines that no conflict or appearance of a conflict exists, the Code Administrator shall meet with the Covered Officer to advise him or her of such finding and of his or her reason for taking no action. In lieu of determining whether a conflict or appearance of conflict exists, the Code Administrator may in his or her discretion refer the matter to the Fund's Board of Trustees/Directors. 4. Waivers Any Covered Officer requesting a waiver of any of the provisions of this Code must submit a written request for such waiver to the Code Administrator, setting forth the basis of such request and all necessary facts upon which such request can be evaluated. The Code Administrator shall review such request and make a written determination thereon, which shall be binding. The Code Administrator may in reviewing such request, consult at his discretion with legal counsel to OFI or to the Fund. In determining whether to waive any of the provisions of this Code, the Code Administrator shall consider hether the proposed waiver: : (i) is prohibited by this Code; (ii) is consistent with honest and ethical conduct; and (iii) will result in a conflict of interest between the Covered Officer's personal and professional obligations to a Fund. In lieu of determining whether to grant a waiver, the Code Administrator in his or her discretion may refer the matter to the appropriate Fund's Board of Trustees/Directors. 5. Reporting Requirements (a) Each Covered Officer shall, upon becoming subject to this Code, be provided with a copy of this Code and shall affirm in writing that he or she has received, read, understands and shall adhere to this Code. (b) At least annually, all Covered Officers shall be provided with a copy of this Code and shall certify that they have read and understand this Code and recognize that they are subject thereto. (c) At least annually, all Covered Officers shall certify that they have complied with the requirements of this Code and that they have disclosed or reported any violations of this Code to the Code Administrator or the Chief Executive Officer of the Fund or its investment adviser. (d) The Code Administrator shall submit a quarterly report to the Board of Trustees/Directors of each Fund containing (i) a description of any report of a conflict of interest or apparent conflict and the disposition thereof; (ii) a description of any request for a waiver from this Code and the disposition thereof; (iii) any violation of the Code that has been reported or found and the sanction imposed; (iv) interpretations issued under the Code by the Code Administrator; and (v) any other significant information arising under the Code including any proposed amendments. (e) Each Covered Officer shall notify the Code Administrator promptly if he or she knows of or has a reasonable belief that any violation of this Code has occurred or is likely to occur. Failure to do so is itself a violation of this Code. (f) Any changes to or waivers of this Code, including "implicit" waivers as defined in applicable SEC rules, will, to the extent required, be disclosed by the Code Administrator or his or her designee as provided by applicable SEC rules.(2) 6. Annual Renewal At least annually, the Board of Trustees/Directors of each Fund shall review the Code and determine whether any amendments (including any amendments that may be recommended by OFI or the Fund's legal counsel) are necessary or desirable, and shall consider whether to renew and/or amend the Code. 7. Sanctions Any violation of this Code of Ethics shall be subject to the imposition of such sanctions by OFI as may be deemed appropriate under the circumstances to achieve the purposes of this Code and may include, without limitation, a letter of censure, suspension from employment or termination of employment, in the sole discretion of OFI. 8. Administration and Construction (a) The administration of this Code of Ethics shall be the responsibility of OFI's General Counsel or his designee as the "Code Administrator" of this Code, acting under the terms of this Code and the oversight of the Trustees/Directors of the Funds. (b) The duties of such Code Administrator will include: (i) Continuous maintenance of a current list of the names of all Covered Officers; (ii) Furnishing all Covered Officers a copy of this Code and initially and periodically informing them of their duties and obligations thereunder; (iii) Maintaining or supervising the maintenance of all records required by this Code, including records of waivers granted hereunder; (iv) Issuing interpretations of this Code which appear to the Code Administrator to be consistent with the objectives of this Code and any applicable laws or regulations; (v) Conducting such inspections or investigations as shall reasonably be required to detect and report any violations of this Code, with his or her recommendations, to the Chief Executive Officer of OFI and to the Trustees/Directors of the - ----------- 2 An "implicit waiver" is the failure to take action within a reasonable period of time regarding a material departure from a provision of this Code that has been made known to the General Counsel, the Code Administrator, an executive officer of the Fund or OFI. affected Fund(s) or any committee appointed by them to deal with such information; and (vi) Periodically conducting educational training programs as needed to explain and reinforce the terms of this Code. (c) In carrying out the duties and responsibilities described under this Code, the Code Administrator may consult with legal counsel, who may include legal counsel to the applicable Funds, and such other persons as the Administrator shall deem necessary or desirable. The Code Administrator shall be protected from any liability hereunder or under any applicable law, rule or regulation, for decisions made in good faith based upon his or her reasonable judgment. 9. Required Records The Administrator shall maintain and cause to be maintained in an easily accessible place, the following records for the period required by applicable SEC rules (currently six years following the end of the fiscal year of OFI in which the applicable event or report occurred): (a) A copy of any Code which has been in effect during the period; (b) A record of any violation of any such Code and of any action taken as a result of such violation, during the period; (c) A copy of each annual report pursuant to the Code made by a Covered Officer during the period; (d) A copy of each report made by the Code Administrator pursuant to this Code during the period; (e) A list of all Covered Officers who are or have been required to make reports pursuant to this Code during the period, plus those person(s) who are or were responsible for reviewing these reports; (f) A record of any request to waive any requirement of this Code, the decision thereon and the reasons supporting the decision; and (g) A record of any report of any conflict of interest or appearance of a conflict of interest received by the Code Administrator or discovered by the Code Administrator during the period, the decision thereon and the reasons supporting the decision. 10. Amendments and Modifications This Code may not be amended or modified except by an amendment in writing which is approved or ratified by OFI and by a majority vote of the Independent Trustees/Directors of each of the applicable Funds. 11. Confidentiality. This Code is identified for the internal use of the Funds and OFI. Reports and records prepared or maintained under this Code are considered confidential and shall be maintained and protected accordingly to the extent permitted by applicable laws, rules and regulations. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Trustees/Directors of the affected Fund(s) and their counsel, the independent auditors of the affected Funds and/or OFI, and to OFI, except as such disclosure may be required pursuant to applicable judicial or regulatory process. Dated as of: June 25, 2003 Adopted by Board I of the Oppenheimer Funds June 13, 2003 /S/ ROBERT G. ZACK Robert G. Zack, Secretary Adopted by Board II of the Oppenheimer/Centennial Funds June 24, 2003 /S/ ROBERT G. ZACK Robert G. Zack, Secretary Adopted by Board III of the Oppenheimer Funds June 9, 2003 /S/ ROBERT G. ZACK Robert G. Zack, Secretary Adopted by Board IV of the Oppenheimer Funds May 21, 2003 /S/ ROBERT G. ZACK Robert G. Zack, Secretary Adopted by the Boards of Directors of OppenheimerFunds, Inc. and its subsidiaries and affiliates that act as investment adviser to the Oppenheimer or Centennial funds June 1, 2003 /S/ ROBERT G. ZACK Robert G. Zack, Senior Vice President and General Counsel EXHIBIT A POSITIONS COVERED BY THIS CODE OF ETHICS FOR SENIOR OFFICERS Each Oppenheimer or Centennial fund Principal Executive Officer Principal Financial Officer Treasurer Assistant Treasurer Personnel of OFI who by virtue of their jobs perform critical financial and accounting functions for OFI on behalf of a Fund, including: Treasurer Senior Vice President/Fund Accounting Vice President/Fund Accounting EX-99.CERT 4 ex99_302cert-345.txt EX99_302CERT-345 Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, JOHN V. MURPHY, certify that: -------------- 1. I have reviewed this report on Form N-CSR of Oppenheimer Convertible Securities Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of trustees (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 2/11/04 /s/John V. Murphy --------------------------- John V. Murphy Chief Executive Officer Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, BRIAN W. WIXTED, certify that: --------------- 1. I have reviewed this report on Form N-CSR of Oppenheimer Convertible Securities Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of trustees (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 2/11/04 /s/Brian W. Wixted ---------------------------- Brian W. Wixted Chief Financial Officer EX-99.906 5 ex99_906cert-345.txt EX99_906CERT-345 EX-99.906CERT Section 906 Certifications CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2003 JOHN V. MURPHY, Chief Executive Officer, and BRIAN W. WIXTED, Chief Financial Officer, of Oppenheimer Convertible Securities Fund (the "Registrant"), each certify to the best of his or her knowledge that: 1. The Registrant's periodic report on Form N-CSR for the period ended December 31, 2003 (the "Form N-CSR") fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Form N-CSR filed with the Commission. Chief Executive Officer Chief Financial Officer Oppenheimer Convertible Oppenheimer Convertible Securities Fund Securities Fund /s/John V. Murphy /s/Brian W. Wixted - ---------------------------- --------------------------- John V. Murphy Brian W. Wixted Date: 2/11/04 Date: 2/11/04 -----END PRIVACY-ENHANCED MESSAGE-----