-----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, CJtR11zMawDlEsOK5oF3mb2JSxYYHqS6qVwHuUzgfg/zIJQ5GDnu7BoDPx9Ynj++ oCEAT8K8HH2yO1Jk6kBOsQ== 0000935069-05-000356.txt : 20050228 0000935069-05-000356.hdr.sgml : 20050228 20050228114306 ACCESSION NUMBER: 0000935069-05-000356 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20041231 FILED AS OF DATE: 20050228 DATE AS OF CHANGE: 20050228 EFFECTIVENESS DATE: 20050228 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: 05643844 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 ra345_12018ncsr.txt RA345_12018NCSR.TXT 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, 2004 - December 31, 2004 ITEM 1. REPORTS TO STOCKHOLDERS. TOP HOLDINGS AND ALLOCATIONS - -------------------------------------------------------------------------------- TOP TEN CONVERTIBLE CORPORATE BOND AND NOTE SECTORS - -------------------------------------------------------------------------------- Information Technology 18.2% - -------------------------------------------------------------------------------- Consumer Discretionary 16.9 - -------------------------------------------------------------------------------- Health Care 9.7 - -------------------------------------------------------------------------------- Industrials 5.4 - -------------------------------------------------------------------------------- Energy 4.9 - -------------------------------------------------------------------------------- Utilities 2.8 - -------------------------------------------------------------------------------- Financials 2.5 - -------------------------------------------------------------------------------- Materials 2.1 - -------------------------------------------------------------------------------- Telecommunication Services 1.1 - -------------------------------------------------------------------------------- Consumer Staples 0.6 Portfolio holdings and allocations are subject to change. Percentages are as of December 31, 2004, and are based on net assets. - -------------------------------------------------------------------------------- PORTFOLIO ALLOCATION [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Convertible Corporate Bonds and Notes 64.2% Stocks 32.2 Bonds and Notes 2.7 Cash Equivalents 0.9 Portfolio holdings and allocations are subject to change. Percentages are as of December 31, 2004, and are based on total investments. - -------------------------------------------------------------------------------- 8 | OPPENHEIMER CONVERTIBLE SECURITIES FUND 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, 2004, FOLLOWED BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE BROAD-BASED MARKET INDICES. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. For the fiscal year ended December 31, 2004, Oppenheimer Convertible Securities Fund performed competitively versus its secondary benchmark, the Goldman Sachs Convertible Bond 100 Index, largely due to a few key factors. First, the Fund's overall exposure to the energy sector added to returns, as this segment of the market continued to enjoy strong performance due to a prolonged rally in the price of crude oil. As such, most sub-segments of the energy sector, including exploration and production, as well as oil services, all continued to post strong performance this year. Second, our overall exposure to leisure-related convertibles, such as select convertibles issued by hotels, cruise lines and gaming-related companies, also performed well for the Fund and added to our relative returns. These convertibles enjoyed a boost from strong performance in their underlying stocks, as consumer demand for leisure-related goods and services remained robust this year. Finally, select names within the Fund's portfolio also performed extremely well, thereby adding to the Fund's overall returns. In particular, our largest single holding, Tyco International Ltd., was a strong performer for us this year and substantially supported Fund returns. After a few difficult years, the manufacturing conglomerate underwent a substantial reorganization that included a new management team and a restructuring of the company into five core business segments. As a result, Tyco has enjoyed continually improving fundamentals and strong performance from several of its now more focused individual business lines, particularly electronics and medical services. Its new management team has placed greater emphasis on its core, strongest businesses, a move that helped push the company's valuation up in the eyes of investors. As the company continues to pay down its debt and maintains a renewed focus on profitable businesses, the outlook for this name appears quite favorable. However, while we still view this holding favorably, we are not convinced it represents the same opportunities it did a year ago. As such, we will monitor our exposure to this name. On the negative side, a few factors detracted from absolute performance. Our exposure to the advertising industry proved to be a detractor to returns, as this industry continued to struggle this year due to a persistently weak advertising environment. Despite this, we did enjoy solid performance from a handful of select media holdings, such as The Walt Disney Company, which performed well for the portfolio. As the company's fourth quarter 2004 earnings beat estimates, and with revenue up roughly 8% from 9 | OPPENHEIMER CONVERTIBLE SECURITIES FUND FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- 2003, Disney enjoyed good performance in 2004, driven by strong brands and continued strength from its theme park and its cable networks such as ESPN, also fared particularly well throughout the year. While our exposure to technology delivered strong performance this period, one of the sub-segments within that sector--semi-conductors--detracted from performance. This segment of the technology sector has been "beaten down" for quite some time. Since expectations are currently low for this segment of the market, an opportunity for improved performance in 2005 could be at hand, leading us to explore the possibility that current valuations could offer tremendous value. As such, we will continue to investigate opportunities to add to our semi-conductor holdings at what we believe to be good value. Finally, we believe the low volatility of the equity market played a central role in suppressing convertibles' returns this period and, consequently, in slightly dampening Fund returns. Equity market performance for the year was generally positive, especially on an absolute basis, but low volatility held back convertible returns relative to their underlying stocks. Additionally, yields declined this year for new convertible issuance, further exacerbating the situation and making yield more difficult to come by as a source of potential returns. As such, the upside potential of convertibles was somewhat muted in 2004. However, from a longer-term, historical perspective, we view the Fund's fiscal year as a reasonable year for convertible securities returns overall, and are confident that our individual security selection and emphasis on broad diversification helped support returns despite these somewhat challenging conditions. 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, 2004. 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 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. 10 | OPPENHEIMER CONVERTIBLE SECURITIES FUND 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 the Fund's business and operating expenses. While index comparisons may be useful to provide a benchmark for the Fund's performance, it must be noted that the Fund's investments are not limited to the investments in the indices. 11 | 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 [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Convertible Securities Lehman Brothers Goldman Sachs Convertible S&P 500 Fund (Class A) Aggregate Bond Index Bond 100 Index 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 03/31/2004 19,910 19,434 22,019 25,371 06/30/2004 19,692 18,959 22,047 25,808 09/30/2004 19,470 19,565 21,814 25,325 12/31/2004 20,833 19,752 23,010 27,662
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT 12/31/04 1-Year 1.55% 5-Year 1.43% Since Inception (5/1/95) 7.89% 12 | 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 [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Convertible Securities Lehman Brothers Goldman Sachs Convertible S&P 500 Fund (Class B) Aggregate Bond Index Bond 100 Index 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 03/31/2004 20,194 19,434 22,019 25,371 06/30/2004 19,973 18,959 22,047 25,808 09/30/2004 19,748 19,565 21,814 25,325 12/31/2004 21,131 19,752 23,010 27,662
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT 12/31/04 1-Year 1.92% 5-Year 1.53% Since Inception (5/1/95) 8.05% 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 PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800.525.7048. 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, A SALES CHARGE OF 3.25%. BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, SINCE INCEPTION RETURNS FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 17 FOR FURTHER INFORMATION. 13 | 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 [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Convertible Securities Lehman Brothers Goldman Sachs Convertible S&P 500 Fund (Class C) Aggregate Bond Index Bond 100 Index 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 03/31/2004 16,920 17,664 18,335 19,966 06/30/2004 16,704 17,232 18,359 20,310 09/30/2004 16,497 17,783 18,165 19,930 12/31/2004 17,611 17,953 19,160 21,769
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT 12/31/04 1-Year 5.89% 5-Year 1.86% Since Inception (3/11/96) 6.64% 14 | 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 [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Convertible Securities Lehman Brothers Goldman Sachs Convertible S&P 500 Fund (Class M) Aggregate Bond Index Bond 100 Index Index 12/31/1994 9,675 10,000 10,000 10,000 03/31/1995 10,336 10,504 10,845 10,973 06/30/1995 11,174 11,144 11,807 12,019 09/30/1995 12,089 11,363 12,466 12,973 12/31/1995 12,191 11,847 12,750 13,753 03/31/1996 12,433 11,637 13,521 14,491 06/30/1996 12,673 11,704 13,797 15,141 09/30/1996 12,928 11,920 14,212 15,609 12/31/1996 13,358 12,278 14,499 16,909 03/31/1997 13,601 12,209 14,694 17,363 06/30/1997 14,663 12,657 16,061 20,392 09/30/1997 15,790 13,078 17,734 21,919 12/31/1997 15,788 13,463 17,325 22,548 03/31/1998 17,093 13,672 18,824 25,691 06/30/1998 16,625 13,992 18,624 26,544 09/30/1998 14,847 14,583 16,413 23,910 12/31/1998 16,353 14,632 18,664 28,997 03/31/1999 16,603 14,560 18,989 30,441 06/30/1999 17,649 14,432 20,566 32,583 09/30/1999 17,234 14,530 19,921 30,554 12/31/1999 20,072 14,512 22,502 35,096 03/31/2000 21,195 14,832 23,887 35,900 06/30/2000 20,737 15,091 24,252 34,946 09/30/2000 20,940 15,546 25,345 34,608 12/31/2000 19,008 16,199 23,037 31,902 03/31/2001 18,296 16,691 21,876 28,122 06/30/2001 18,917 16,785 21,760 29,767 09/30/2001 17,133 17,559 19,771 25,399 12/31/2001 18,302 17,567 21,166 28,113 03/31/2002 18,412 17,584 20,755 28,191 06/30/2002 17,304 18,233 19,163 24,416 09/30/2002 15,823 19,069 17,424 20,200 12/31/2002 16,992 19,369 19,203 21,902 03/31/2003 17,432 19,638 19,546 21,212 06/30/2003 18,983 20,130 21,350 24,476 09/30/2003 19,449 20,100 22,044 25,124 12/31/2003 20,832 20,164 23,674 28,181 03/31/2004 21,426 20,700 24,455 28,658 06/30/2004 21,194 20,194 24,487 29,151 09/30/2004 20,973 20,839 24,228 28,606 12/31/2004 22,433 21,038 25,556 31,245
AVERAGE ANNUAL TOTAL RETURNS OF CLASS M SHARES WITH SALES CHARGE OF THE FUND AT 12/31/04 1-Year 4.19% 5-Year 1.58% 10-Year 8.41% 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 PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800.525.7048. 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, A SALES CHARGE OF 3.25%. BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, SINCE INCEPTION RETURNS FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 17 FOR FURTHER INFORMATION. 15 | 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 [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Convertible Securities Lehman Brothers Goldman Sachs Convertible S&P 500 Fund (Class N) Aggregate Bond Index Bond 100 Index 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 03/31/2004 11,371 12,464 10,640 9,545 06/30/2004 11,233 12,159 10,654 9,710 09/30/2004 11,094 12,548 10,541 9,528 12/31/2004 11,861 12,668 11,119 10,407
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT 12/31/04 1-Year 6.31% 5-Year N/A Since Inception (3/1/01) 4.55% 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 PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800.525.7048. 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, A SALES CHARGE OF 3.25%. BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, SINCE INCEPTION RETURNS FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 17 FOR FURTHER INFORMATION. 16 | 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 1.800.525.7048 OR VISITING OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. The Fund's investment strategy and focus can change over time. The mention of specific fund holdings does not constitute a recommendation by OppenheimerFunds, Inc. 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. While Class M shares are 17 | OPPENHEIMER CONVERTIBLE SECURITIES FUND NOTES - -------------------------------------------------------------------------------- subject to an annual 0.50% asset-based sales charge, the Board has set that charge at zero effective February 11, 2004. CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares are offered only through retirement plans. Unless otherwise noted, Class N returns include the contingent deferred sales charge of 1% for the 1-year period. Class N shares are subject to an annual 0.25% asset-based sales charge. An explanation of the calculation of performance is in the Fund's Statement of Additional Information. 18 | OPPENHEIMER CONVERTIBLE SECURITIES FUND FUND EXPENSES - -------------------------------------------------------------------------------- FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions; and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended December 31, 2004. ACTUAL EXPENSES. The "actual" lines of the table provide information about actual account values and actual expenses. You may use the information on this line for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the "actual" line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The "hypothetical" lines of the table provide information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio for each class of shares, and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or contingent deferred sales charges (loads), or a $12.00 fee imposed annually on accounts valued at less than $500.00 (subject to exceptions described in 19 | OPPENHEIMER CONVERTIBLE SECURITIES FUND FUND EXPENSES - -------------------------------------------------------------------------------- the Statement of Additional Information). Therefore, the "hypothetical" lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- BEGINNING ENDING EXPENSES ACCOUNT ACCOUNT PAID DURING VALUE VALUE 6 MONTHS ENDED (07/01/04) (12/31/04) DECEMBER 31,2004 - ------------------------------------------------------------------------ Class A Actual $ 1,000.00 $ 1,058.00 $ 4.93 - ------------------------------------------------------------------------ Class A Hypothetical 1,000.00 1,020.36 4.84 - ------------------------------------------------------------------------ Class B Actual 1,000.00 1,053.90 9.23 - ------------------------------------------------------------------------ Class B Hypothetical 1,000.00 1,016.19 9.06 - ------------------------------------------------------------------------ Class C Actual 1,000.00 1,054.30 8.92 - ------------------------------------------------------------------------ Class C Hypothetical 1,000.00 1,016.49 8.76 - ------------------------------------------------------------------------ Class M Actual 1,000.00 1,058.50 4.77 - ------------------------------------------------------------------------ Class M Hypothetical 1,000.00 1,020.51 4.68 - ------------------------------------------------------------------------ Class N Actual 1,000.00 1,055.90 7.31 - ------------------------------------------------------------------------ Class N Hypothetical 1,000.00 1,018.05 7.18 Hypothetical assumes 5% return before expenses. Expenses are equal to the Fund's annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). Those annualized expense ratios based on the 6-month period ended December 31, 2004 are as follows: CLASS EXPENSE RATIOS - --------------------------- Class A 0.95% - --------------------------- Class B 1.78 - --------------------------- Class C 1.72 - --------------------------- Class M 0.92 - --------------------------- Class N 1.41 - -------------------------------------------------------------------------------- 20 | OPPENHEIMER CONVERTIBLE SECURITIES FUND STATEMENT OF INVESTMENTS December 31, 2004 - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------ CONVERTIBLE CORPORATE BONDS AND NOTES--64.2% - ------------------------------------------------------------------------------------------------ CONSUMER DISCRETIONARY--16.9% - ------------------------------------------------------------------------------------------------ AUTO COMPONENTS--0.6% Goodyear Tire & Rubber Co. (The), 4% Cv. Sr. Nts., 6/15/34 1 $ 2,500,000 $ 3,612,500 - ------------------------------------------------------------------------------------------------ HOTELS, RESTAURANTS & LEISURE--4.4% Carnival Corp., 2% Cv. Sr. Unsec. Unsub. Debs., 4/15/21 5,000,000 7,568,750 - ------------------------------------------------------------------------------------------------ Hilton Hotels Corp., 3.375% Cv. Sr. Unsec. Unsub. Nts., 4/15/23 1 3,000,000 3,603,750 - ------------------------------------------------------------------------------------------------ International Game Technology, 1.30% Cv. Sr. Unsec. Unsub. Debs., 1/29/33 2 6,000,000 4,612,500 - ------------------------------------------------------------------------------------------------ Royal Caribbean Cruises Ltd., 38.15% Cv. Sr. Unsec. Unsub. Liquid Yield Option Nts., 2/2/21 2 5,000,000 3,218,750 - ------------------------------------------------------------------------------------------------ Scientific Games Corp., 0.75% Cv. Sr. Sub. Nts., 12/1/24 1 3,500,000 3,661,875 - ------------------------------------------------------------------------------------------------ Shuffle Master, Inc.: 1.25% Cv. Sr. Unsec. Nts., 4/15/24 1 2,000,000 2,505,000 1.25% Cv. Sr. Unsec. Nts., 4/15/24 500,000 626,250 ------------- 25,796,875 - ------------------------------------------------------------------------------------------------ HOUSEHOLD DURABLES--1.0% Beazer Homes USA, Inc., 4.625% Cv. Sr. Nts., 6/15/24 1 4,500,000 5,613,750 - ------------------------------------------------------------------------------------------------ LEISURE EQUIPMENT & PRODUCTS--1.2% Eastman Kodak Co., 3.375% Cv. Sr. Nts., 10/15/33 1 3,000,000 3,768,750 - ------------------------------------------------------------------------------------------------ Hasbro, Inc., 2.75% Cv. Sr. Unsec. Debs., 12/1/21 3,000,000 3,247,500 ------------- 7,016,250 - ------------------------------------------------------------------------------------------------ MEDIA--6.2% Charter Communications, Inc., 5.875% Cv. Sr. Nts., 11/16/09 1 2,000,000 2,262,500 - ------------------------------------------------------------------------------------------------ Citadel Broadcasting Corp.: 1.875% Cv. Sub. Nts., 2/15/11 1 4,000,000 3,635,000 1.875% Cv. Sub. Nts., 2/15/11 1,000,000 908,750 - ------------------------------------------------------------------------------------------------ Interpublic Group of Cos., Inc. (The): 4.50% Cv. Sr. Unsec. Nts., 3/15/23 1 3,000,000 3,945,000 4.50% Cv. Sr. Unsec. Nts., 3/15/23 1,500,000 1,972,500 - ------------------------------------------------------------------------------------------------ Liberty Media Corp.: 0.75% Exchangeable Sr. Unsec. Debs., 3/30/23 (exchangeable for Time Warner, Inc. common stock) 1 8,000,000 9,670,000 3.25% Exchangeable Sr. Unsec. Debs., 3/15/31 (exchangeable for Viacom, Inc. Cl. B common stock or cash based on the value thereof) 6,000,000 5,917,500 - ------------------------------------------------------------------------------------------------ Walt Disney Co. (The), 2.125% Cv. Sr. Unsec. Nts., 4/15/23 7,500,000 8,381,250 ------------- 36,692,500
21 | OPPENHEIMER CONVERTIBLE SECURITIES FUND STATEMENT OF INVESTMENTS Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------ SPECIALTY RETAIL--2.6% Gap, Inc. (The), 5.75% Cv. Sr. Unsec. Nts., 3/15/09 1 $ 3,000,000 $ 3,993,750 - ------------------------------------------------------------------------------------------------ Lowe's Cos., Inc., 0.861% Cv. Sr. Nts., 10/19/21 3 5,500,000 5,816,250 - ------------------------------------------------------------------------------------------------ TJX Cos., Inc. (The): 1.22% Cv. Unsec. Sub. Liquid Yield Option Nts., 2/13/21 2 2,000,000 1,765,000 1.66% Cv. Unsec. Sub. Liquid Yield Option Nts., 2/13/21 1,2 4,000,000 3,530,000 ------------- 15,105,000 - ------------------------------------------------------------------------------------------------ TEXTILES, APPAREL & LUXURY GOODS--0.9% Reebok International Ltd., 2% Cv. Sr. Unsec. Nts., Series B, 5/1/24 5,000,000 5,462,500 - ------------------------------------------------------------------------------------------------ CONSUMER STAPLES--0.6% - ------------------------------------------------------------------------------------------------ FOOD & STAPLES RETAILING--0.6% Costco Cos., Inc., 50.55% Cv. Sub. Nts., 8/19/17 2 3,000,000 3,307,500 - ------------------------------------------------------------------------------------------------ ENERGY--4.9% - ------------------------------------------------------------------------------------------------ ENERGY EQUIPMENT & SERVICES--3.3% Halliburton Co.: 3.125% Cv. Sr. Nts., 7/15/23 1 5,000,000 6,175,000 3.125% Cv. Sr. Nts., 7/15/23 1,000,000 1,235,000 - ------------------------------------------------------------------------------------------------ Pride International, Inc., 3.25% Cv. Sr. Nts., 5/1/33 1 5,000,000 5,443,750 - ------------------------------------------------------------------------------------------------ Schlumberger Ltd., 1.50% Cv. Sr. Unsec. Debs., Series A, 6/1/23 6,000,000 6,600,000 ------------- 19,453,750 - ------------------------------------------------------------------------------------------------ OIL & GAS--1.6% El Paso Corp., 6.34% Cv. Debs., 2/28/21 2 10,000,000 5,312,500 - ------------------------------------------------------------------------------------------------ Kerr-McGee Corp., 5.25% Cv. Jr. Unsec. Sub. Debs., 2/15/10 4,000,000 4,255,000 ------------- 9,567,500 - ------------------------------------------------------------------------------------------------ FINANCIALS--2.5% - ------------------------------------------------------------------------------------------------ CONSUMER FINANCE--1.5% American Express Co.: 1.85% Cv. Sr. Nts., 12/1/33 1,3 6,000,000 6,547,500 1.85% Cv. Sr. Nts., 12/1/33 3 2,000,000 2,182,500 ------------- 8,730,000 - ------------------------------------------------------------------------------------------------ REAL ESTATE--1.0% Host Marriott LP, 3.25% Cv. Sr. Debs., 4/15/24 1 5,000,000 5,775,000 - ------------------------------------------------------------------------------------------------ HEALTH CARE--9.7% - ------------------------------------------------------------------------------------------------ BIOTECHNOLOGY--3.6% Amylin Pharmaceuticals, Inc., 2.50% Cv. Sr. Unsec. Nts., 4/15/11 1 3,500,000 3,622,500 - ------------------------------------------------------------------------------------------------ Celgene Corp., 1.75% Cv. Sr. Nts., 6/1/08 1 2,000,000 2,587,500 - ------------------------------------------------------------------------------------------------ Genzyme Corp., 1.25% Cv. Sr. Nts., 12/1/23 1 6,000,000 6,390,000 - ------------------------------------------------------------------------------------------------ ImClone Systems, Inc., 1.375% Cv. Sr. Nts., 5/15/24 1 3,500,000 3,246,250
22 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------ BIOTECHNOLOGY Continued Invitrogen Corp., 1.50% Cv. Sr. Unsec. Nts., 2/15/24 $ 6,000,000 $ 5,655,000 ------------- 21,501,250 - ------------------------------------------------------------------------------------------------ HEALTH CARE EQUIPMENT & SUPPLIES--1.7% Cytyc Corp., 2.25% Cv. Sr. Nts., 3/15/24 1 2,000,000 2,425,000 - ------------------------------------------------------------------------------------------------ Fisher Scientific International, Inc., 3.25% Cv. Sr. Sub. Nts., 3/1/24 6,500,000 7,320,625 ------------- 9,745,625 - ------------------------------------------------------------------------------------------------ HEALTH CARE PROVIDERS & SERVICES--2.1% Health Management Associates, Inc., 1.50% Cv. Sr. Sub. Nts., 8/1/23 5,500,000 5,788,750 - ------------------------------------------------------------------------------------------------ Lincare Holdings, Inc., 3% Cv. Sr. Nts., 6/15/33 4,000,000 4,295,000 - ------------------------------------------------------------------------------------------------ Quest Diagnostics, Inc., 1.75% Cv. Sr. Unsec. Debs., 11/30/21 2,000,000 2,192,500 ------------- 12,276,250 - ------------------------------------------------------------------------------------------------ PHARMACEUTICALS--2.3% DOV Pharmaceutical, Inc., 2.50% Cv. Unsec. Sub. Debs., 1/15/25 1 1,500,000 1,593,750 - ------------------------------------------------------------------------------------------------ Teva Pharmaceutical Finance II BV, 0.50% Cv. Sr. Sec. Debs., Series A, 2/1/24 6,000,000 6,142,500 - ------------------------------------------------------------------------------------------------ Watson Pharmaceuticals, Inc.: 1.75% Cv. Sr. Unsec. Debs., 3/15/23 1 4,000,000 4,140,000 1.75% Cv. Sr. Unsec. Debs., 3/15/23 1,500,000 1,552,500 ------------- 13,428,750 - ------------------------------------------------------------------------------------------------ INDUSTRIALS--5.4% - ------------------------------------------------------------------------------------------------ AIRLINES--1.0% Continental Airlines, Inc., 4.50% Cv. Sr. Unsec. Unsub. Nts., 2/1/07 3,000,000 2,527,500 - ------------------------------------------------------------------------------------------------ Northwest Airlines Corp., 7.625% Cv. Sr. Nts., 11/15/23 3 4,000,000 3,215,000 ------------- 5,742,500 - ------------------------------------------------------------------------------------------------ INDUSTRIAL CONGLOMERATES--2.7% Tyco International Group SA, 2.75% Cv. Sr. Unsec. Unsub. Debs., Series A, 1/15/18 10,000,000 15,900,000 - ------------------------------------------------------------------------------------------------ MACHINERY--1.7% Danaher Corp., 2.46% Cv. Sr. Unsec. Unsub. Liquid Yield Option Nts., 1/22/21 2 5,000,000 4,268,750 - ------------------------------------------------------------------------------------------------ Navistar Financial Corp., 4.75% Cv. Unsec. Sub. Nts., 4/1/09 4,000,000 4,175,000 - ------------------------------------------------------------------------------------------------ SystemOne Technologies, Inc.: 2.888% Cv. Sub. Nts., 12/31/05 4 3,344,633 936,497 8.25% Cv. Sub. Nts., 12/31/05 4 2,962,671 829,548 ------------- 10,209,795 - ------------------------------------------------------------------------------------------------ INFORMATION TECHNOLOGY--18.2% - ------------------------------------------------------------------------------------------------ COMMUNICATIONS EQUIPMENT--4.3% Andrew Corp., 3.25% Cv. Sub. Nts., 8/15/13 3,500,000 4,545,625
23 | OPPENHEIMER CONVERTIBLE SECURITIES FUND STATEMENT OF INVESTMENTS Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------ COMMUNICATIONS EQUIPMENT Continued Comverse Technology, Inc., 0% Cv. Sr. Unsec. Zero Yield Puttable Securities, 5/15/23 2 $ 3,500,000 $ 5,162,500 - ------------------------------------------------------------------------------------------------ Corning, Inc., 3.50% Cv. Sr. Unsec. Debs., 11/1/08 2,000,000 2,437,500 - ------------------------------------------------------------------------------------------------ JDS Uniphase Corp., 0% Cv. Sr. Nts., 11/15/10 2 3,500,000 3,408,125 - ------------------------------------------------------------------------------------------------ Nortel Networks Corp., 4.25% Cv. Sr. Unsec. Nts., 9/1/08 7,500,000 7,331,250 - ------------------------------------------------------------------------------------------------ Tekelec, Inc., 2.25% Cv. Sr. Sub. Nts., 6/15/08 2,000,000 2,565,000 ------------- 25,450,000 - ------------------------------------------------------------------------------------------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--2.6% Agilent Technologies, Inc., 3% Cv. Sr. Unsec. Debs., 12/1/21 3 6,000,000 6,082,500 - ------------------------------------------------------------------------------------------------ Flextronics International Ltd., 1% Cv. Unsec. Sub. Nts., 1%, 8/1/10 4,000,000 4,610,000 - ------------------------------------------------------------------------------------------------ Vishay Intertechnology, Inc.: 3.625% Cv. Sub. Nts., 8/1/23 1 3,000,000 3,378,750 3.625% Cv. Sub. Nts., 8/1/23 1,000,000 1,126,250 ------------- 15,197,500 - ------------------------------------------------------------------------------------------------ IT SERVICES--3.4% BearingPoint, Inc., 2.50% Cv. Sub. Nts., 12/15/24 1 4,000,000 4,225,000 - ------------------------------------------------------------------------------------------------ CSG Systems International, Inc., 2.50% Cv. Nts., 6/15/24 1 3,500,000 3,578,750 - ------------------------------------------------------------------------------------------------ DST Systems, Inc., 3.625% Cv. Sr. Unsec. Debs., Series B, 8/15/23 6,000,000 7,507,500 - ------------------------------------------------------------------------------------------------ Electronic Data Systems Corp.: 3.875% Cv. Sr. Nts., 7/15/23 1 4,000,000 4,245,000 3.875% Cv. Sr. Unsec. Nts., 7/15/23 500,000 530,625 ------------- 20,086,875 - ------------------------------------------------------------------------------------------------ SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--4.0% Advanced Micro Devices, Inc., 4.75% Cv. Sr. Unsec. Debs., 2/1/22 3 5,000,000 5,768,750 - ------------------------------------------------------------------------------------------------ Agere Systems, Inc., 6.50% Cv. Unsec. Unsub. Nts., 12/15/09 (cv. into Agere Systems, Inc., Cl. A common stock) 5,000,000 5,312,500 - ------------------------------------------------------------------------------------------------ Cypress Semiconductor Corp., 1.25% Cv. Unsec. Sub. Nts., 6/15/08 5,000,000 5,306,250 - ------------------------------------------------------------------------------------------------ LSI Logic Corp., 4% Cv. Sub. Nts., 5/15/10 5,000,000 4,718,750 - ------------------------------------------------------------------------------------------------ Skyworks Solutions, Inc., 4.75% Cv. Unsec. Sub. Nts., 11/15/07 2,000,000 2,455,000 ------------- 23,561,250 - ------------------------------------------------------------------------------------------------ SOFTWARE--3.9% Computer Associates International, Inc., 5% Cv. Sr. Unsec. Nts., 3/15/07 6,500,000 8,425,625 - ------------------------------------------------------------------------------------------------ Mentor Graphics Corp., 6.875% Cv. Unsec. Sub. Nts., 6/15/07 3,500,000 3,696,875 - ------------------------------------------------------------------------------------------------ Novell, Inc., 0.50% Cv. Sr. Unsec. Debs., 7/15/24 1 7,500,000 7,171,875 - ------------------------------------------------------------------------------------------------ Red Hat, Inc., 0.50% Cv. Sr. Unsec. Debs., 1/15/24 1 4,000,000 3,690,000 ------------- 22,984,375
24 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------ MATERIALS--2.1% - ------------------------------------------------------------------------------------------------ CONTAINERS & PACKAGING--1.0% Sealed Air Corp., 3% Cv. Nts., 6/30/33 1 $ 5,500,000 $ 5,692,500 - ------------------------------------------------------------------------------------------------ METALS & MINING--1.1% Inco Ltd., 1% Cv. Unsec. Unsub. Debs., 3/14/23 3,000,000 3,937,500 - ------------------------------------------------------------------------------------------------ Quanex Corp., 2.50% Cv. Sr. Unsec. Nts., 5/15/34 1 2,000,000 2,677,500 ------------- 6,615,000 - ------------------------------------------------------------------------------------------------ TELECOMMUNICATION SERVICES--1.1% - ------------------------------------------------------------------------------------------------ DIVERSIFIED TELECOMMUNICATION SERVICES--1.1% American Tower Corp., 3% Cv. Sr. Nts., 8/15/12 3,000,000 3,401,250 - ------------------------------------------------------------------------------------------------ Level 3 Communications, Inc., 6% Cv. Nts., 9/15/09 5,000,000 3,131,250 ------------- 6,532,500 - ------------------------------------------------------------------------------------------------ UTILITIES--2.8% - ------------------------------------------------------------------------------------------------ ELECTRIC UTILITIES--2.8% Calpine Corp., 4.75% Cv. Sr. Unsec. Nts., 11/15/23 1 7,000,000 6,125,000 - ------------------------------------------------------------------------------------------------ CenterPoint Energy, Inc., 3.75% Cv. Sr. Nts., 5/15/23 1 4,000,000 4,595,000 - ------------------------------------------------------------------------------------------------ Duke Energy Corp., 1.75% Cv. Sr. Bonds, 5/15/23 5,000,000 5,637,500 ------------- 16,357,500 ------------- Total Convertible Corporate Bonds and Notes (Cost $350,196,019) 377,414,795 SHARES - ------------------------------------------------------------------------------------------------ PREFERRED STOCKS--30.3% - ------------------------------------------------------------------------------------------------ CONSUMER DISCRETIONARY--3.7% - ------------------------------------------------------------------------------------------------ AUTOMOBILES--3.1% Ford Motor Co. Capital Trust II, 6.50% Cum. Cv. Trust Preferred Securities, Non-Vtg. 175,000 9,238,250 - ------------------------------------------------------------------------------------------------ General Motors Corp., 5.25% Cv. Sr. Unsec. Debs., Series B 400,000 9,228,000 ------------- 18,466,250 - ------------------------------------------------------------------------------------------------ HOUSEHOLD DURABLES--0.6% Newell Financial Trust I, 5.25% Cum. Cv. Quarterly Income Preferred Securities, Non-Vtg. 70,000 3,298,750 - ------------------------------------------------------------------------------------------------ CONSUMER STAPLES--0.9% - ------------------------------------------------------------------------------------------------ FOOD & STAPLES RETAILING--0.9% Albertson's, Inc., 7.25% Cv. Units (each unit has a stated amount of $25, and will consist of a purchase contract issued by Albertson's, initially a 1/40, or 2.50%, ownership interest in one of their sr. nts. with a principal amount of $1,000) 5 210,000 5,334,000 - ------------------------------------------------------------------------------------------------ ENERGY--1.2% - ------------------------------------------------------------------------------------------------ OIL & GAS--1.2% Chesapeake Energy Corp., 4.125% Cum. Cv., Non-Vtg. 1 4,000 4,655,000
25 | OPPENHEIMER CONVERTIBLE SECURITIES FUND STATEMENT OF INVESTMENTS Continued - --------------------------------------------------------------------------------
VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------------------------ OIL & GAS Continued Williams Cos., Inc. (The), 5.50% Cv. Jr. Unsec. Debs. 1 30,000 $ 2,520,000 ------------- 7,175,000 - ------------------------------------------------------------------------------------------------ FINANCIALS--9.5% - ------------------------------------------------------------------------------------------------ COMMERCIAL BANKS--1.8% Marshall & Ilsley Corp., 6.50% Cv. 160,000 4,545,600 - ------------------------------------------------------------------------------------------------ Washington Mutual Capital Trust 2001: 5.375% Cum. Cv. Units (each unit consists of one preferred stock and one warrant to purchase shares of Washington Mutual, Inc.), Non-Vtg. 1,5 75,000 4,229,700 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 30,000 1,691,880 ------------- 10,467,180 - ------------------------------------------------------------------------------------------------ DIVERSIFIED FINANCIAL SERVICES--0.7% Capital One Financial Corp., 6.25% Cv. Upper DECS (each upper DECS has a stated amount of $50 and consists of a forward purchase contract to purchase Capital One Financial Corp. common stock and $50 principal amount of Capital One Financial Corp., 6.25% sr. nts., 5/17/07) 5 75,000 4,233,000 - ------------------------------------------------------------------------------------------------ INSURANCE--4.9% Chubb Corp. (The), 7% Cv. Equity Units, Series A (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 5,030,300 - ------------------------------------------------------------------------------------------------ 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) 5 100,000 6,575,000 - ------------------------------------------------------------------------------------------------ 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) 5 180,000 4,747,500 - ------------------------------------------------------------------------------------------------ Travelers Property Casualty Corp., 4.50% Cv. Jr. Unsec. Sub. Nts. 200,000 4,606,000 - ------------------------------------------------------------------------------------------------ UnumProvident Corp., 8.25% Cv 100,000 3,607,000 - ------------------------------------------------------------------------------------------------ XL Capital Ltd., 6.50% Cv 170,000 4,326,500 ------------- 28,892,300 - ------------------------------------------------------------------------------------------------ REAL ESTATE--1.2% Simon Property Group Inc., 6% Cv., Non-Vtg 120,000 7,106,400 - ------------------------------------------------------------------------------------------------ THRIFTS & MORTGAGE FINANCE--0.9% Sovereign Capital Trust VI, 4.375% Cv. 100,000 4,900,000
26 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------------------------ HEALTH CARE--3.2% - ------------------------------------------------------------------------------------------------ HEALTH CARE EQUIPMENT & SUPPLIES--1.2% 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. 5 120,000 $ 6,775,200 - ------------------------------------------------------------------------------------------------ HEALTH CARE PROVIDERS & SERVICES--0.7% Omnicare, Inc., 4% Cv. 80,000 4,412,800 - ------------------------------------------------------------------------------------------------ PHARMACEUTICALS--1.3% Schering-Plough Corp. 6% Cv. 140,000 7,854,000 - ------------------------------------------------------------------------------------------------ INDUSTRIALS--1.3% - ------------------------------------------------------------------------------------------------ AEROSPACE & DEFENSE--0.7% Northrop Grumman Corp., 7% Cum. Cv. Series B 30,000 3,967,500 - ------------------------------------------------------------------------------------------------ TRADING COMPANIES & DISTRIBUTORS--0.6% United Rentals Trust I, 6.50% Cv. Quarterly Income Preferred Securities 85,000 3,686,875 - ------------------------------------------------------------------------------------------------ INFORMATION TECHNOLOGY--3.1% - ------------------------------------------------------------------------------------------------ COMMUNICATIONS EQUIPMENT--1.7% Lucent Technologies Capital Trust I, 7.75% Cum. Cv., Non-Vtg. 8,500 10,111,260 - ------------------------------------------------------------------------------------------------ OFFICE ELECTRONICS--1.4% Xerox Corp., 6.25% Cv. 55,000 8,129,550 - ------------------------------------------------------------------------------------------------ MATERIALS--1.6% - ------------------------------------------------------------------------------------------------ METALS & MINING--0.8% Freeport-McMoRan Copper & Gold, Inc., 5.50% Cv. 1 5,000 4,900,000 - ------------------------------------------------------------------------------------------------ PAPER & FOREST PRODUCTS--0.8% International Paper Capital Trust, 5.25% Cum. Cv. (cv. into International Paper Co. common stock), Non-Vtg. 6 90,000 4,556,250 - ------------------------------------------------------------------------------------------------ TELECOMMUNICATION SERVICES--1.6% - ------------------------------------------------------------------------------------------------ DIVERSIFIED TELECOMMUNICATION SERVICES--1.6% 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. 5 120,000 6,346,800 - ------------------------------------------------------------------------------------------------ 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. 5 113,900 3,032,588 ------------- 9,379,388 - ------------------------------------------------------------------------------------------------ UTILITIES--4.2% - ------------------------------------------------------------------------------------------------ ELECTRIC UTILITIES--2.4% Calpine Capital Trust III, 5% Cum. Cv. Remarketable Term Income Deferrable Equity Securities, Non-Vtg. 70,000 3,403,750
27 | OPPENHEIMER CONVERTIBLE SECURITIES FUND STATEMENT OF INVESTMENTS Continued - --------------------------------------------------------------------------------
VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------------------------ ELECTRIC UTILITIES Continued 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, due 2007, issued by Cinergy Corp. Funding Trust I) 5 50,000 $ 3,170,000 - ------------------------------------------------------------------------------------------------ FPL Group, Inc., 8.50% Cv. Equity Units (each unit consists of corporate units, each with a stated amount of $50 and includes a purchase contract to purchase FPL Group, Inc. common stock and $50 principal amount of FPL Group Capital, Inc., 4.75% debs., series a, 2/16/07) 5 120,000 7,381,200 ------------- 13,954,950 - ------------------------------------------------------------------------------------------------ GAS UTILITIES--0.5% Sempra Energy, 8.50% Cv. Equity Units (each equity unit consists of income equity units, each has a stated value of $25 and consists of a purchase contract to purchase Sempra Energy common stock and $25 principal amount of Sempra Energy, 5.60% sr. nts., 5/17/07) 5 100,000 3,112,000 - ------------------------------------------------------------------------------------------------ MULTI-UTILITIES & UNREGULATED POWER--1.3% AES Trust III, 6.75% Cv. 90,000 4,441,500 - ------------------------------------------------------------------------------------------------ Williams Cos., Inc. (The), 5.50% Cv. Jr. Unsec. Sub. Debs. 40,000 3,360,000 ------------- 7,801,500 ------------- Total Preferred Stocks (Cost $158,535,076) 178,514,153 - ------------------------------------------------------------------------------------------------ COMMON STOCKS--1.8% - ------------------------------------------------------------------------------------------------ Comcast Corp., Cl. A Special, Non-Vtg. 7 165,800 5,444,872 - ------------------------------------------------------------------------------------------------ Johnson & Johnson 50,000 3,171,000 - ------------------------------------------------------------------------------------------------ Motorola, Inc. 100,000 1,720,000 - ------------------------------------------------------------------------------------------------ SystemOne Technologies, Inc. 7 197,142 29,571 ------------- Total Common Stocks (Cost $8,825,135) 10,365,443 UNITS - ------------------------------------------------------------------------------------------------ RIGHTS, WARRANTS AND CERTIFICATES--0.0% - ------------------------------------------------------------------------------------------------ Portion of Danskin, Inc., Promissory Nt. to be used to purchase 53,309 shares of restricted common stock in rights offering 4,6,7 (Cost $15,993) -- 15,993 PRINCIPAL AMOUNT - ------------------------------------------------------------------------------------------------ STRUCTURED NOTES--2.7% - ------------------------------------------------------------------------------------------------ Lehman Brothers Holdings, Inc., Cv. Premium Income Equity Linked Nts., 6.25%, 10/15/07 (linked to General Mills, Inc.) $ 200,000 5,384,000 - ------------------------------------------------------------------------------------------------ Morgan Stanley, Cv. Premium Equity Participating Security, 2.50%, 10/2/06 (exchangeable for General Electric Co. common stock) 298,463 10,683,483 ------------- Total Structured Notes (Cost $15,030,751) 16,067,483
28 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------ JOINT REPURCHASE AGREEMENTS--0.9% - ------------------------------------------------------------------------------------------------ Undivided interest of 0.49% in joint repurchase agreement (Principal Amount/Value $1,103,300,000, with a maturity value of $1,103,498,594) with UBS Warburg LLC, 2.16%, dated 12/31/04, to be repurchased at $5,410,974 on 1/3/05, collateralized by Federal National Mortgage Assn., 5%, 3/1/34, with a value of $1,127,561,486 (Cost $5,410,000) $ 5,410,000 $ 5,410,000 - ------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS, AT VALUE (COST $538,012,974) 99.9% 587,787,867 - ------------------------------------------------------------------------------------------------ OTHER ASSETS NET OF LIABILITIES 0.1 508,506 ----------------------------- NET ASSETS 100.0% $ 588,296,373 =============================
FOOTNOTES TO STATEMENT OF INVESTMENTS 1. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $159,432,200 or 27.10% of the Fund's net assets as of December 31, 2004. 2. Zero coupon bond reflects effective yield on the date of purchase. 3. Represents the current interest rate for a variable or increasing rate security. 4. Illiquid or restricted security. The aggregate value of illiquid or restricted securities as of December 31, 2004 was $1,782,038, which represents 0.30% of the Fund's net assets, of which $15,993 is considered restricted. See Note 5 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. Received as the result of issuer reorganization. 7. Non-income producing security. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 29 | OPPENHEIMER CONVERTIBLE SECURITIES FUND STATEMENT OF ASSETS AND LIABILITIES December 31, 2004 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investments, at value (cost $538,012,974)--see accompanying statement of investments $ 587,787,867 - -------------------------------------------------------------------------------- Cash 1,075,569 - -------------------------------------------------------------------------------- Receivables and other assets: Interest and dividends 2,539,233 Investments sold 613,134 Other 26,306 ------------- Total assets 592,042,109 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Payables and other liabilities: Shares of beneficial interest redeemed 3,070,293 Distribution and service plan fees 358,002 Trustees' compensation 130,037 Transfer and shareholder servicing agent fees 77,155 Shareholder communications 67,372 Other 42,877 -------------- Total liabilities 3,745,736 - -------------------------------------------------------------------------------- NET ASSETS $ 588,296,373 ============== - -------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS - -------------------------------------------------------------------------------- Paid-in capital $ 653,147,053 - -------------------------------------------------------------------------------- Accumulated net investment loss (4,639,826) - -------------------------------------------------------------------------------- Accumulated net realized loss on investments (109,985,747) - -------------------------------------------------------------------------------- Net unrealized appreciation on investments 49,774,893 -------------- NET ASSETS $ 588,296,373 ==============
30 | OPPENHEIMER CONVERTIBLE SECURITIES FUND - -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE - -------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net $13.63 assets of $319,477,580 and 23,443,391 shares of beneficial interest outstanding) Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $14.46 - -------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $84,815,864 and 6,214,381 shares of beneficial interest outstanding) $13.65 - -------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $80,994,661 and 5,946,692 shares of beneficial interest outstanding) $13.62 - -------------------------------------------------------------------------------- Class M Shares: Net asset value, redemption price per share (based on net assets of $100,877,243 and 7,406,974 shares of beneficial interest outstanding) $13.62 Maximum offering price per share (net asset value plus sales charge of 3.25% of offering price) $14.08 - -------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $2,131,025 and 156,376 shares of beneficial interest outstanding) $13.63 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 31 | OPPENHEIMER CONVERTIBLE SECURITIES FUND STATEMENT OF OPERATIONS For the Year Ended December 31, 2004 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INVESTMENT INCOME - -------------------------------------------------------------------------------- Dividends $ 12,931,206 - -------------------------------------------------------------------------------- Interest 12,794,857 -------------- Total investment income 25,726,063 - -------------------------------------------------------------------------------- EXPENSES - -------------------------------------------------------------------------------- Management fees 2,940,552 - -------------------------------------------------------------------------------- Distribution and service plan fees: Class A 771,143 Class B 1,027,329 Class C 824,144 Class M 307,581 Class N 8,890 - -------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 447,784 Class B 172,382 Class C 116,957 Class M 115,040 Class N 5,083 - -------------------------------------------------------------------------------- Shareholder communications: Class A 55,235 Class B 37,538 Class C 15,923 Class M 13,540 Class N 749 - -------------------------------------------------------------------------------- Accounting service fees 187,502 - -------------------------------------------------------------------------------- Trustees' compensation 51,119 - -------------------------------------------------------------------------------- Custodian fees and expenses 18,943 - -------------------------------------------------------------------------------- Other 133,074 -------------- Total expenses 7,250,508 Less reduction to custodian expenses (5,955) Less payments and waivers of expenses (38) -------------- Net expenses 7,244,515 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME 18,481,548 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN - -------------------------------------------------------------------------------- Net realized gain on: Investments 29,042,625 Net increase from payment by affiliate 3,750 -------------- Net realized gain 29,046,375 - -------------------------------------------------------------------------------- Net change in unrealized appreciation on investments (4,905,531) - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 42,622,392 ==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 32 | OPPENHEIMER CONVERTIBLE SECURITIES FUND STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2004 2003 - ------------------------------------------------------------------------------------------------- OPERATIONS - ------------------------------------------------------------------------------------------------- Net investment income $ 18,481,548 $ 23,819,107 - ------------------------------------------------------------------------------------------------- Net realized gain 29,046,375 29,278,307 - ------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) (4,905,531) 64,594,391 ------------------------------- Net increase in net assets resulting from operations 42,622,392 117,691,805 - ------------------------------------------------------------------------------------------------- DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------- Dividends from net investment income: Class A (15,613,529) (11,367,661) Class B (3,901,818) (5,345,568) Class C (3,350,297) (2,624,294) Class M (5,064,498) (4,627,938) Class N (83,852) (28,916) - ------------------------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS - ------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from beneficial interest transactions: Class A 1,054,354 66,001,751 Class B (50,450,935) (43,825,244) Class C (3,149,841) 9,713,833 Class M (16,303,106) (11,782,752) Class N 631,345 938,567 - ------------------------------------------------------------------------------------------------- NET ASSETS - ------------------------------------------------------------------------------------------------- Total increase (decrease) (53,609,785) 114,743,583 - ------------------------------------------------------------------------------------------------- Beginning of period 641,906,158 527,162,575 ------------------------------- End of period (including accumulated net investment loss of $4,639,826 and $970,782, respectively) $ 588,296,373 $ 641,906,158 ===============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 33 | OPPENHEIMER CONVERTIBLE SECURITIES FUND FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
CLASS A YEAR ENDED DECEMBER 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 13.27 $ 11.29 $ 12.76 $ 13.85 $ 16.36 Income (loss) from investment operations: Net investment income .43 1 .56 .57 .48 .72 Net realized and unrealized gain (loss) .58 1.98 (1.41) (.94) (1.45) ----------------------------------------------------------------------- Total from investment operations 1.01 2.54 (.84) (.46) (.73) - ------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.65) (.56) (.63) (.63) (.72) Distributions from net realized gain -- -- -- -- (1.06) ----------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.65) (.56) (.63) (.63) (1.78) - ------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 13.63 $ 13.27 $ 11.29 $ 12.76 $ 13.85 ======================================================================= - ------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 7.74% 22.95% (6.59)% (3.30)% (4.81)% - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 319,478 $ 310,641 $ 202,968 $ 187,458 $ 210,903 - ------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 321,729 $ 252,347 $ 190,677 $ 197,514 $ 225,938 - ------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 3.24% 4.48% 4.77% 3.58% 4.42% Total expenses 0.94% 4 0.94% 4,5 0.99% 4 0.95% 4 0.90% 4 - ------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 54% 61% 52% 69% 127%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 3. Annualized for periods of less than one full year. 4. Reduction to custodian expenses less than 0.01%. 5. Voluntary waiver of transfer agent fees less than 0.01%. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 34 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
CLASS B YEAR ENDED DECEMBER 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 13.29 $ 11.30 $ 12.79 $ 13.87 $ 16.38 - ------------------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income .33 1 .43 .43 .38 .59 Net realized and unrealized gain (loss) .58 2.02 (1.38) (.93) (1.45) ---------------------------------------------------------------------- Total from investment operations .91 2.45 (.95) (.55) (.86) - ------------------------------------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income (.55) (.46) (.54) (.53) (.59) Distributions from net realized gain -- -- -- -- (1.06) ---------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.55) (.46) (.54) (.53) (1.65) - ------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 13.65 $ 13.29 $ 11.30 $ 12.79 $ 13.87 ====================================================================== - ------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN, AT NET ASSET VALUE 2 6.92% 22.07% (7.44)% (3.97)% (5.55)% - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $ 84,816 $ 133,058 $ 154,350 $ 286,829 $ 373,860 - ------------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $ 102,670 $ 139,757 $ 213,259 $ 330,806 $ 418,592 - ------------------------------------------------------------------------------------------------------------------------ Ratios to average net assets: 3 Net investment income 2.47% 3.79% 3.95% 2.75% 3.62% Total expenses 1.75% 4 1.74% 4,5 1.77% 4 1.71% 4 1.70% 4 - ------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate 54% 61% 52% 69% 127%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 3. Annualized for periods of less than one full year. 4. Reduction to custodian expenses less than 0.01%. 5. Voluntary waiver of transfer agent fees less than 0.01%. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 35 | OPPENHEIMER CONVERTIBLE SECURITIES FUND FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
CLASS C YEAR ENDED DECEMBER 31, 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 13.27 $ 11.28 $ 12.76 $ 13.84 $ 16.35 - ------------------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income .33 1 .46 .46 .38 .59 Net realized and unrealized gain (loss) .57 1.99 (1.40) (.93) (1.45) ---------------------------------------------------------------------- Total from investment operations .90 2.45 (.94) (.55) (.86) - ------------------------------------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income (.55) (.46) (.54) (.53) (.59) Distributions from net realized gain -- -- -- -- (1.06) ---------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.55) (.46) (.54) (.53) (1.65) - ------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 13.62 $ 13.27 $ 11.28 $ 12.76 $ 13.84 ====================================================================== - ------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN, AT NET ASSET VALUE 2 6.89% 22.14% (7.39)% (3.98)% (5.56)% - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $ 80,995 $ 82,149 $ 61,031 $ 76,846 $ 91,567 - ------------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $ 82,470 $ 69,787 $ 66,391 $ 85,774 $ 96,574 - ------------------------------------------------------------------------------------------------------------------------ Ratios to average net assets: 3 Net investment income 2.48% 3.73% 3.97% 2.80% 3.62% Total expenses 1.70% 4 1.70% 4,5 1.76% 4 1.71% 4 1.70% 4 - ------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate 54% 61% 52% 69% 127%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 3. Annualized for periods of less than one full year. 4. Reduction to custodian expenses less than 0.01%. 5. Voluntary waiver of transfer agent fees less than 0.01%. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 36 | OPPENHEIMER CONVERTIBLE SECURITIES FUND
CLASS M YEAR ENDED DECEMBER 31, 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 13.27 $ 11.28 $ 12.76 $ 13.84 $ 16.35 - --------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .43 1 .50 .49 .41 .64 Net realized and unrealized gain (loss) .57 2.00 (1.40) (.93) (1.45) ------------------------------------------------------------------------- Total from investment operations 1.00 2.50 (.91) (.52) (.81) - --------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.65) (.51) (.57) (.56) (.64) Distributions from net realized gain -- -- -- -- (1.06) ------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.65) (.51) (.57) (.56) (1.70) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 13.62 $ 13.27 $ 11.28 $ 12.76 $ 13.84 ========================================================================= - --------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 7.69% 22.59% (7.16)% (3.72)% (5.30)% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 100,877 $ 114,600 $ 108,426 $ 144,612 $ 181,521 - --------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 106,194 $ 110,337 $ 122,897 $ 160,919 $ 213,617 - --------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 3.24% 4.16% 4.24% 3.04% 3.90% Total expenses 0.95% 4,5 1.32% 4,5 1.51% 4 1.45% 4 1.42% 4 - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 54% 61% 52% 69% 127%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 3. Annualized for periods of less than one full year. 4. Reduction to custodian expenses less than 0.01%. 5. Voluntary waiver of transfer agent fees less than 0.01%. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 37 | OPPENHEIMER CONVERTIBLE SECURITIES FUND FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
CLASS N YEAR ENDED DECEMBER 31, 2004 2003 2002 2001 1 - ------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 13.27 $ 11.29 $ 12.76 $ 13.68 - ------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .37 2 .49 .55 .42 Net realized and unrealized gain (loss) .58 2.00 (1.43) (.84) ----------------------------------------------------- Total from investment operations .95 2.49 (.88) (.42) - ------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.59) (.51) (.59) (.50) Distributions from net realized gain -- -- -- -- ----------------------------------------------------- Total dividends and/or distributions to shareholders (.59) (.51) (.59) (.50) - ------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 13.63 $ 13.27 $ 11.29 $ 12.76 ===================================================== - ------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 7.31% 22.45% (6.92)% (3.02)% - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 2,131 $ 1,458 $ 388 $ 36 - ------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 1,781 $ 743 $ 205 $ 10 - ------------------------------------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income 2.79% 3.87% 4.38% 5.45% Total expenses 1.37% 1.37% 1.43% 1.22% Expenses after payments and waivers and reduction to custodian expenses N/A 5 1.35% 1.38% N/A 5 - ------------------------------------------------------------------------------------------------------- Portfolio turnover rate 54% 61% 52% 69%
1. For the period from March 1, 2001 (inception of offering) to December 31, 2001. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. 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. 4. Annualized for periods of less than one full year. 5. Reduction to custodian expenses less than 0.01%. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 38 | 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 due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. Class A, B, C, M and N have separate distribution and/or service plans. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. - -------------------------------------------------------------------------------- SECURITIES VALUATION. The Fund calculates the net asset value of its shares as of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business. Securities 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. Corporate, government and municipal debt instruments having a remaining maturity in excess of 60 days and all mortgage-backed securities will be valued at the mean between the "bid" and "asked" prices. Securities may be valued primarily using dealer-supplied valuations or a portfolio pricing service authorized by the Board of Trustees. Securities (including restricted securities) for which market quotations are not readily available are valued at their fair value. Foreign and domestic securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund's assets are valued but after the close of their respective exchanges will be fair valued. Fair value is determined in good faith using consistently applied procedures under the supervision of the Board of Trustees. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). 39 | OPPENHEIMER CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued STRUCTURED NOTES. The Fund invests in structured notes whose market values, interest rates and/or redemption prices are linked to the performance of underlying foreign currencies, interest rate spreads, stock market indices, prices of individual securities, commodities or other financial instruments or the occurrence of other specific events. The structured notes are often leveraged, increasing the volatility of each note's market value relative to the change in the underlying linked financial element or event. Fluctuations in value of these securities are recorded as unrealized gains and losses in the accompanying financial statements. The Fund records a realized gain or loss when a structured note is sold or matures. As of December 31, 2004, the market value of these securities comprised 2.7% of the Fund's net assets and resulted in unrealized cumulative gains of $1,036,732. - -------------------------------------------------------------------------------- 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. 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. 40 | OPPENHEIMER CONVERTIBLE SECURITIES FUND NET UNREALIZED APPRECIATION BASED ON COST OF SECURITIES AND UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME INCOME GAIN CARRYFORWARD 1,2,3 TAX PURPOSES ------------------------------------------------------------------------ $52,124 $-- $109,300,089 $44,520,263 1. As of December 31, 2004, the Fund had $109,300,089 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, 2004, details of the capital loss carryforwards were as follows. EXPIRING ---------------------- 2009 $ 18,833,093 2010 90,466,996 ------------ Total $109,300,089 ============ 2.During the fiscal year ended December 31, 2004, the Fund utilized $22,626,011 of capital loss carryforward to offset capital gains realized in that fiscal year. 3. During the fiscal year ended December 31, 2003, the Fund utilized $24,570,184 of capital loss carryforward to offset capital gains realized in that fiscal year. 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, 2004. Net assets of the Fund were unaffected by the reclassifications. INCREASE TO REDUCTION TO ACCUMULATED NET ACCUMULATED NET REALIZED LOSS INVESTMENT LOSS ON INVESTMENTS ----------------------------------- $5,863,402 $5,863,402 The tax character of distributions paid during the years ended December 31, 2004 and December 31, 2003 was as follows: YEAR ENDED YEAR ENDED DECEMBER 31, 2004 DECEMBER 31, 2003 ------------------------------------------------------------------- Distributions paid from: Ordinary income $28,013,994 $23,994,377 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, 2004 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. 41 | OPPENHEIMER CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued Federal tax cost of securities $543,267,604 ============= Gross unrealized appreciation $ 52,694,676 Gross unrealized depreciation (8,174,413) ------------- Net unrealized appreciation $ 44,520,263 ============= - -------------------------------------------------------------------------------- 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, 2004, the Fund's projected benefit obligations were increased by $13,596 and payments of $2,372 were made to retired trustees, resulting in an accumulated liability of $116,064 as of December 31, 2004. 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. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of "Other" within the asset section of the Statement of Assets and Liabilities. Deferral of trustees' fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund's assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the Plan. - -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. Income distributions, if any, are declared and paid quarterly. Capital gain distributions, if any, are declared and paid annually. - -------------------------------------------------------------------------------- INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. - -------------------------------------------------------------------------------- CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts at a rate equal to the Federal Funds Rate plus 0.50%. The Reduction to 42 | OPPENHEIMER CONVERTIBLE SECURITIES FUND Custodian Expenses line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings. - -------------------------------------------------------------------------------- SECURITY TRANSACTIONS. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. - -------------------------------------------------------------------------------- OTHER. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST The Fund has authorized an unlimited number of no par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:
YEAR ENDED DECEMBER 31, 2004 YEAR ENDED DECEMBER 31, 2003 SHARES AMOUNT SHARES AMOUNT - --------------------------------------------------------------------------------------- CLASS A Sold 6,358,012 $ 84,644,732 10,293,699 $ 125,272,357 Dividends and/or distributions reinvested 900,277 12,114,223 717,012 8,840,852 Redeemed (7,215,971) (95,704,601) (5,594,158) (68,111,458) ------------------------------------------------------------ Net increase 42,318 $ 1,054,354 5,416,553 $ 66,001,751 ============================================================ - --------------------------------------------------------------------------------------- CLASS B Sold 1,168,753 $ 15,636,529 2,802,713 $ 34,182,973 Dividends and/or distributions reinvested 193,385 2,607,930 300,964 3,678,039 Redeemed (5,155,900) (68,695,394) (6,750,493) (81,686,256) ------------------------------------------------------------ Net decrease (3,793,762) $ (50,450,935) (3,646,816) $ (43,825,244) ============================================================ - --------------------------------------------------------------------------------------- CLASS C Sold 1,078,891 $ 14,393,979 1,914,058 $ 23,378,006 Dividends and/or distributions reinvested 162,119 2,182,505 144,706 1,777,170 Redeemed (1,486,132) (19,726,325) (1,277,679) (15,441,343) ------------------------------------------------------------ Net increase (decrease) (245,122) $ (3,149,841) 781,085 $ 9,713,833 ============================================================ - --------------------------------------------------------------------------------------- CLASS M Sold 140,463 $ 1,876,605 223,208 $ 2,730,862 Dividends and/or distributions reinvested 265,627 3,571,401 264,332 3,234,301 Redeemed (1,637,323) (21,751,112) (1,462,362) (17,747,915) ------------------------------------------------------------ Net decrease (1,231,233) $ (16,303,106) (974,822) $ (11,782,752) ============================================================
43 | OPPENHEIMER CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST Continued
YEAR ENDED DECEMBER 31, 2004 YEAR ENDED DECEMBER 31, 2003 SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------- CLASS N Sold 102,523 $ 1,367,550 89,088 $ 1,101,574 Dividends and/or distributions reinvested 5,527 74,505 2,161 27,095 Redeemed (61,549) (810,710) (15,713) (190,102) -------------------------------------------------------------- Net increase 46,501 $ 631,345 75,536 $ 938,567 ==============================================================
- -------------------------------------------------------------------------------- 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than U.S. government obligations and short-term obligations, for the year ended December 31, 2004, were $311,733,023 and $328,138,505, respectively. There were no purchases and sales of $25,103,516 of U.S. government and government agency obligations for the year ended December 31, 2004. - -------------------------------------------------------------------------------- 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 average daily net assets and $9,000 for each additional $30 million of average daily net assets. During the year ended December 31, 2004, the Fund paid $187,502 to the Manager for accounting and pricing services. - -------------------------------------------------------------------------------- ADMINISTRATION SERVICES. The Fund pays the Manager a fee of $1,500 per year for preparing and filing the Fund's tax returns. - -------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended December 31, 2004, the Fund paid $861,707 to OFS for services to the Fund. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor) acts as the Fund's principal underwriter in the continuous public offering of the Fund's classes of shares. - -------------------------------------------------------------------------------- SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A shares. It reimburses the Distributor for a portion of its costs incurred for services provided to accounts that hold Class A shares. Reimbursement is made 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 44 | OPPENHEIMER CONVERTIBLE SECURITIES FUND currently uses all of those fees to pay dealers, brokers, banks and other financial institutions quarterly for providing personal services and maintenance of accounts of their customers that hold Class A shares. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent 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 those 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 and Class C shares and 0.25% per year on Class N shares. While the Class M plan permits an annual asset-based sales charge payment of 0.50%, the Board has set that payment at zero effective February 11, 2004. The Distributor also receives a service fee of 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, 2004 for Class B, Class C and Class N shares were $2,725,440, $2,181,422 and $27,851, 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.
CLASS A CLASS B CLASS C CLASS N CLASS A CLASS M CONTINGENT CONTINGENT CONTINGENT CONTINGENT FRONT-END FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR - ----------------------------------------------------------------------------------------------------------------- December 31, 2004 $131,622 $6,967 $2,108 $242,429 $14,123 $2,508
- -------------------------------------------------------------------------------- PAYMENTS AND WAIVERS OF EXPENSES. Following a review of its use of brokerage commissions for sales that is permitted under its investment advisory agreement, the Fund's Manager terminated that practice in July 2003. Subsequently, the Manager paid the Fund $3,750, an amount equivalent to certain of such commissions incurred in prior years. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. During the year ended December 31, 2004, OFS waived $38 for Class M shares. This undertaking may be amended or withdrawn at any time. 45 | OPPENHEIMER CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 5. ILLIQUID OR RESTRICTED SECURITIES As of December 31, 2004, 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 will not invest 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. Information concerning restricted securities is as follows:
UNREALIZED ACQUISITION VALUATION AS OF APPRECIATION SECURITY DATE COST DECEMBER 31, 2004 (DEPRECIATION) - ------------------------------------------------------------------------------------------------------- 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 $--
- -------------------------------------------------------------------------------- 6. LITIGATION A consolidated amended complaint has been filed as putative derivative and class actions against the Manager, OFS and the Distributor (collectively, the "Oppenheimer defendants"), as well as 51 of the Oppenheimer funds (as "Nominal Defendants") including the Fund, 31 present and former Directors or Trustees and 9 present and former officers of the funds. This complaint, filed in the U.S. District Court for the Southern District of New York on January 10, 2005, consolidates into a single action and amends six individual previously-filed putative derivative and class action complaints. Like those prior complaints, the complaint alleges that the Manager charged excessive fees for distribution and other costs, improperly used assets of the funds in the form of directed brokerage commissions and 12b-1 fees to pay brokers to promote sales of the funds, and failed to properly disclose the use of assets of the funds to make those payments in violation of the Investment Company Act of 1940 and the Investment Advisers Act of 1940. Also, like those prior complaints, the complaint further alleges that by permitting and/or participating in those actions, the Directors/Trustees and the Officers breached their fiduciary duties to shareholders of the funds under the Investment Company Act of 1940 and at common law. The complaint seeks unspecified compensatory and punitive damages, rescission of the funds' investment advisory agreements, an accounting of all fees paid, and an award of attorneys' fees and litigation expenses. 46 | OPPENHEIMER CONVERTIBLE SECURITIES FUND The Oppenheimer defendants believe that the allegations contained in the Complaints are without merit and that they, the funds named as Nominal Defendants, and the Directors/Trustees of those funds have meritorious defenses against the claims asserted. The Oppenheimer defendants intend to defend these lawsuits vigorously and to contest any claimed liability, and they have retained legal counsel to defend such suits. The Oppenheimer defendants believe that it is premature to render any opinion as to the likelihood of an outcome unfavorable to them and that no estimate can yet be made with any degree of certainty as to the amount or range of any potential loss. 47 | OPPENHEIMER CONVERTIBLE SECURITIES FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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, 2004, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year 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. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, 2004, by correspondence with the custodian. 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, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles. KPMG LLP Denver, Colorado February 8, 2005 48 | OPPENHEIMER CONVERTIBLE SECURITIES FUND FEDERAL INCOME TAX INFORMATION Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- In early 2005, if applicable, shareholders of record received information regarding all dividends and distributions paid to them by the Fund during calendar year 2004. 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, 2004 which are not designated as capital gain distributions should be multiplied by 3.77% 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, 2004 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. $992,784 of the Fund's fiscal year taxable income may be eligible for the lower individual income tax rates. In early 2005, 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. 49 | OPPENHEIMER CONVERTIBLE SECURITIES FUND PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF INVESTMENTS Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which the Fund votes proxies relating to securities ("portfolio proxies") held by the Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to file 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 Fund's Form N-PX filing is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.525.7048, and (ii) on the SEC's website at www.sec.gov. The Fund files its complete schedule of portfolio holdings with the SEC for the first quarter and the third quarter of each fiscal year on Form N-Q. The Fund's Form N-Q filings are available on the SEC's website at http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public Reference Room in Washington D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 50 | OPPENHEIMER CONVERTIBLE SECURITIES FUND TRUSTEES AND OFFICERS Unaudited - --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------- NAME, POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS BY HELD FUND, LENGTH SERVICE, TRUSTEE; NUMBER OF PORTFOLIOS IN FUND COMPLEX CURRENTLY OVERSEEN BY TRUSTEE AGE INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY, CENTENNIAL, CO TRUSTEES 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, UNTIL HIS RESIGNATION, RETIREMENT, DEATH OR REMOVAL. THOMAS W. COURTNEY, Principal of Courtney Associates, Inc. (venture capital firm); former General Partner Chairman of the Board of of Trivest Venture Fund (private venture capital fund); former President of Investment Trustees, Trustee (since Counseling Federated Investors, Inc.; Trustee of the following open-end investment 1995) companies: Cash Assets Trust, PIMCO ADVISORS VIT, Tax Free Trust of Arizona and 4 Age: 71 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 Funds and Trustee (since 1992) Neuberger Berman Trust, (1995-present); Neuberger Berman Equity Funds (November Age: 75 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 of Age: 73 Capital Cash Management Trust, Prime Cash Fund, PIMCO ADVISORS VIT and Narragansett Insured Tax-Free Income Fund. Formerly a director of OCC Cash Reserves, Inc. (open-end investment company) (1989-December 2002). 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: 71 LACY B. HERRMANN, Chairman and Chief Executive Officer of Aquila Management Corporation, the sponsoring Trustee (since 1995) organization and manager, administrator and/or sub-adviser to the following open-end Age: 75 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, 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. Formerly Chairman of the Board of Trustees and President of Hawaiian Tax-Free Trust. Oversees 10 portfolios in the OppenheimerFunds complex.
51 | OPPENHEIMER CONVERTIBLE SECURITIES FUND TRUSTEES AND OFFICERS Unaudited / Continued - -------------------------------------------------------------------------------- BRIAN WRUBLE, General Partner (since September 1995) of Odyssey Partners, L.P. (hedge funds in Trustee (since 2001) distribution since 1/1/97); Director (since September 2004) of Special Value Age: 61 Opportunities Fund, LLC; Investment Advisory Board (since October 2004) of Zurich Financial Services; Board of Governing Trustees (since August 1990) of The Jackson Laboratory (genetics laboratory, non profit); Trustee (since May 1992) of Institute for Advanced Study (educational institute); Formerly Special Limited Partner (1999-2004) and Managing Principal (through December 1998) of Odyssey Investment Partners, LLC (private equity investment); Trustee (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, 11TH FLOOR, NEW YORK, NY 10281-1008, AND FOR MR. WIXTED AND MR.VANDEHEY, 6803 S. TUCSON WAY, CENTENNIAL, CO 80112-3924. EACH OFFICER SERVES FOR AN ANNUAL TERM OR UNTIL HIS RESIGNATION, DEATH OR REMOVAL. JOHN V. MURPHY, Chairman, Chief Executive Officer and director (since June 2001) and President (since President (since 2001) September 2000) of the Manager; President and a director or trustee of other Age: 55 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 following investment advisory subsidiaries of the Manager: OFI Institutional Asset Management, Inc., Centennial Asset Management Corporation, Trinity Investment Management Corporation and Tremont Capital Management, Inc. (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.; 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 Babson Capital Management LLC); a member of the Investment Company Institute's Board of Governors (elected to serve from October 3, 2003 through September 30, 2006). 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 62 portfolios as Trustee/Director and 21 additional portfolios as Officer in the OppenheimerFunds complex.
52 | OPPENHEIMER CONVERTIBLE SECURITIES FUND - --------------------------------------------------------------------------------------------------------------------- EDWARD EVERETT, Vice President of the Manager since January 2000; an officer of 1 portfolio in the Vice President (since 2000) OppenheimerFunds complex; formerly Assistant Vice President of the Manager and of the and Portfolio Manager Fund (January 1996 - January 2000). (since 1993) Age: 38 ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since February Secretary (since 2001) 2002) of the Manager; General Counsel and a director (since November 2001) of the Age: 56 Distributor; General Counsel (since November 2001) of Centennial Asset Management Corporation; Senior Vice President and General Counsel (since November 2001) of HarbourView Asset Management Corporation; Secretary and General Counsel (since November 2001) of Oppenheimer Acquisition Corp.; Assistant Secretary and a director (since October 1997) of OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President and a director (since November 2001) of Oppenheimer Partnership Holdings, Inc.; a director (since November 2001) of Oppenheimer Real Asset Management, Inc.; Senior Vice President, General Counsel and a director (since November 2001) of Shareholder Financial Services, Inc., Shareholder Services, Inc., OFI Private Investments, Inc. and OFI Trust Company; Vice President (since November 2001) of OppenheimerFunds Legacy Program; Senior Vice President and General Counsel (since November 2001) of OFI Institutional Asset Management, Inc.; a director (since June 2003) of OppenheimerFunds (Asia) Limited. Formerly Senior Vice President (May 1985-December 2003), 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); and OppenheimerFunds International Ltd. (October 1997-November 2001). An officer of 83 portfolios in the OppenheimerFunds complex. MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer (since March 2004) of the Manager; Vice President and Vice President (since June 1983) of OppenheimerFunds Distributor, Inc., Centennial Chief Compliance Officer Asset Management Corporation and Shareholder Services, Inc. Formerly (until February (since 2004) 2004) Vice President and Director of Internal Audit of the Manager. An officer of 83 Age: 54 portfolios in the Oppenheimer funds complex. BRIAN W. WIXTED, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer of Treasurer (since 1999) HarbourView Asset Management Corporation, Shareholder Financial Services, Inc., Age: 45 Shareholder Services, Inc., Oppenheimer Real Asset Management Corporation, and Oppenheimer Partnership Holdings, Inc. (since March 1999), of OFI Private Investments, Inc. (since March 2000), of OppenheimerFunds International Ltd. and OppenheimerFunds plc (since May 2000), of OFI Institutional Asset Management, Inc. (since November 2000), and of OppenheimerFunds Legacy Program (a Colorado non-profit corporation) (since June 2003); Treasurer and Chief Financial Officer (since May 2000) of OFI Trust Company (a trust company subsidiary of the Manager); Assistant Treasurer (since March 1999) of Oppenheimer Acquisition Corp. Formerly Assistant Treasurer of Centennial Asset Management Corporation (March 1999-October 2003) and OppenheimerFunds Legacy Program (April 2000-June 2003); Principal and Chief Operating Officer (March 1995-March 1999) at Bankers Trust Company-Mutual Fund Services Division. An officer of 83 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, BY CALLING 1.800.525.7048. 53 | 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 registrant has determined that the registrant 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 $20,000 in fiscal 2004 and $20,000 in fiscal 2003. (b) Audit-Related 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 $39,500 in fiscal 2004 and no such fees in fiscal 2003 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 include: internal control reviews. (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 $6,000 in fiscal 2004 and $5,000 in fiscal 2003 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 include: 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 $74 in fiscal 2004 and $90 in fiscal 2003. 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 services provided to the registrant's Board of Trustees with respect to the annual renewal of the registrant's investment advisory agreement. (e) (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. Under applicable laws, pre-approval of non-audit services maybe 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% (f) Not applicable as less than 50%. (g) The principal accountant for the audit of the registrant's annual financial statements billed $45,574 in fiscal 2004 and $5,090 in fiscal 2003 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. (h) 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. SCHEDULE OF INVESTMENTS Not applicable ITEM 7. NOT APPLICABLE ITEM 8. NOT APPLICABLE ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Board is responsible for approving nominees for election as trustees. To assist in this task, the Board has designated the Audit Committee as the nominating committee for the Board. It reviews and recommends nominees to the Board. The Committee is comprised entirely of disinterested trustees as defined in Section 2(a)(19) of the Investment Company Act of 1940. The Audit Committee charter describes the responsibilities of the Committee in nominating candidates for election as independent Trustees of the Registrant. The Registrant's Board has adopted a written charter for the Committee. A current copy of the Audit Committee charter is available to shareholders on the OppenheimerFunds website at WWW.OPPENHEIMERFUNDS.COM. Under the current policy, if the Board determines that a vacancy exists or is likely to exist on the Board, the Audit Committee of the Board will consider candidates for Board membership including recommended by Registrant shareholders. The Audit Committee will consider nominees recommended by independent Board members or recommended by any other Board members including Board members affiliated with the Registrant's investment advisors. The Committee may, upon Board approval, retain an executive search firm to assist in screening potential candidates. Upon Board approval, the Audit Committee may also use the services of legal, financial, or other external counsel that it deems necessary or desirable in the screening process. Shareholders wishing to submit a nominee for election to the Board may do so by mailing their submission to the offices of OppenheimerFunds, Inc., 6803 South Tucson Way, Centennial, CO 80112, to the attention of the Board of Trustees of the named Registrant, c/o the Secretary of the Registrant. The Committee's process for identifying and evaluating nominees for trustees includes a number of factors. In screening candidates for board membership, whether the candidate is suggested by Board members, shareholders or others, the Committee considers the candidate's professional experience, soundness of judgment, integrity, ability to make independent, analytical inquiries, collegiality, willingness and ability to devote the time required to perform Board activities adequately, ability to represent the interests of all shareholders of the Registrant, and diversity relative to the board's composition. Candidates are expected to provide a mix of attributes, experience, perspective and skills necessary to effectively advance the interests of shareholders. ITEM 10. CONTROLS AND PROCEDURES (a) Based on their evaluation of registrant's disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR 270.30a-3(c)) as of December 31, 2004, 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 changes in registrant's internal controls over financial reporting that occurred during the registrant's last fiscal quarter 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)(NOT APPLICABLE TO SEMIANNUAL REPORTS) (B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS) EX-99.CODE ETH 2 ra345_12018ex99codeeth.txt RA345_12018EX99CODEETH.TXT 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 communications 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. Each Covered Officer should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. - -------- 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. 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 whether 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 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 - ----------- 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. 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 3 ra345_12018ex-99cert.txt RA345_12018EX-99CERT 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-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) 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 d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 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 control over financial reporting 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: 2/8/05 /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-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) 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 d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 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 control over financial reporting 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: 2/8/05 /s/ Brian W. Wixted ---------------------------- Brian W. Wixted Chief Financial Officer EX-99.906 4 ra345_12018ex906cert.txt RA345_12018EX906CERT.TXT 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 2002 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, 2004 (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 Securities Fund Oppenheimer Convertible Securities Fund /s/ John V. Murphy /s/ Brian W. Wixted - ---------------------------- ---------------------------- John V. Murphy Brian W. Wixted Date: 2/8/05 Date: 2/8/05 -----END PRIVACY-ENHANCED MESSAGE-----