<PAGE>
OPPENHEIMER MULTI-GOVERNMENT TRUST
OFFICERS AND TRUSTEES
Leon Levy, Chairman of the Board
of Trustees
Leo Cherne, Trustee
Edmund T. Delaney, Trustee
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Sidney M. Robbins, Trustee
Donald W. Spiro, Trustee and President
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Thomas P. Reedy, Vice President
Ashwin K. Vasan, Vice President
Eva A. Zeff, Vice President
George C. Bowen, Treasurer
Lynn M. Coluccy, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
INVESTMENT ADVISER
Oppenheimer Management Corporation
ADMINISTRATOR
Mitchell Hutchins Asset Management Inc.
TRANSFER AGENT AND REGISTRAR
Shareholder Financial Services, Inc.
CUSTODIAN OF PORTFOLIO SECURITIES
The Bank of New York
INDEPENDENT AUDITORS
KPMG Peat Marwick
LEGAL COUNSEL
Gordon Altman Butowsky Weitzen Shalov &
Wein
This is a copy of a report to shareholders of Oppenheimer
Multi-Government Trust. It does not offer for sale or solicit
orders to buy any securities.
Notice is hereby given in accordance with Section 23(c) of the
Investment Company Act of 1940 that periodically the Trust may
purchase its shares of beneficial interest in the open market
at prevailing market prices.
RA675 (10/93) [LOGO]
1993 ANNUAL REPORT
- ------------------------------------------------------
O P P E N H E I M E R
MULTI-GOVERNMENT
TRUST
OCTOBER 31, 1993
[LOGO]
<PAGE>
REPORT TO SHAREHOLDERS:
Oppenheimer Multi-Government Trust produced an annualized dividend yield of
9.29% for the 28-day period ended October 31, 1993.(1) During the past twelve
months, the Trust's total return at net asset value was 10.08%.(2)
The Trust seeks high current income consistent with preservation of capital
and has a secondary emphasis on capital appreciation. In keeping with its
flexible investment strategy, the Trust's managers seek high yields in
different economic environments by shifting assets among the various fixed
income sectors described below. As of October 31, 1993, the Trust's portfolio
was allocated as follows:(3)
53.7% U.S. government obligations
12.9% Foreign government fixed income securities
4.3% Money market instruments
29.1% Corporate bonds, notes and warrants
U.S. interest rates continued to decline throughout 1993 and the U.S. economy
has remained in a slow growth mode. Many economies overseas appear poised to
rebound from recession, and in Europe, we believe that there is a strong
likelihood that interest rates will fall causing prices of some existing bond
investments to rise.
We took advantage of the rise in price of long-term U.S. Treasuries and
recently sold a portion of the Fund's investments in these securities. This
strategy reduced the average maturity of the Fund's U.S. government
investments, helping to limit the risks associated with a rise in interest
rates.
We continue to diversify the Trust's holdings in the foreign sector,
particularly in emerging markets where growth rates in many cases are higher
than in the U.S. The Trust's holdings are distributed across three broad
regions -- Europe, the "Dollar bloc" countries of Australia, Canada and New
Zealand, and emerging markets. We are maintaining a relatively short average
maturity in these investments to help guard against the risks of a rise in
interest rates, which would cause the value of bond investments to fall.
In addition to offering attractive yields, many of the high yield corporate
bonds in the portfolio have appreciated in price as the U.S. economic recovery
has helped corporations increase profits and strengthen balance sheets. In
particular, the Trust has increased its holdings in the broadcast and media
sector which we expect will experience rapid growth.
Thank you for your confidence in Oppenheimer Multi-Government Trust. We will
continue to monitor the market conditions closely to seek out the best
opportunities for the Trust.
Sincerely,
Donald W. Spiro
President -- Oppenheimer
Multi-Government Trust
November 19, 1993
(1) Dividend yield was calculated by annualizing the 28-day October dividend
of $.057 per share and dividing that amount by the 10/29/93 closing price
on The New York Stock Exchange of $8.00 per share.
(2) Based on the change in net asset value per share from 10/31/92 to
10/31/93, with all dividends reinvested. Brokerage costs and taxes were
not considered. Past performance does not guarantee future results.
(3) Portfolio allocations are subject to change.
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1993
Oppenheimer Multi-Government Trust
<TABLE>
<CAPTION>
Face Market
Amount Value-Note 1
------------ ------------
<C> <S> <C>
REPURCHASE AGREEMENTS--4.1%
$ 2,300,000 Repurchase agreement with J.P. Morgan Securities, Inc., 2.93%, dated 10/29/93
and maturing 11/1/93, collateralized by U.S. Treasury Bills, 3.16%,
4/14/94, with a value of $2,354,965 (Cost $2,300,000)...................... $ 2,300,000
------------
SHORT-TERM FOREIGN GOVERNMENT OBLIGATIONS--5.0%
+9,271,550 United Mexican States Treasury Bills, 0%, 2/24/94 (Cost $2,840,528).......... 2,835,843
------------
LONG-TERM FOREIGN GOVERNMENT OBLIGATIONS--7.1%
+1,600,000 Canada (Government of) Bonds, Series A37, 10.50%, 3/1/01 (4)................. 1,474,720
+2,285,850 First Australia National Mortgage Acceptance Corp. Ltd. Bonds, Series 22,
11.40%, 12/15/01........................................................... 1,769,607
+1,100,000 Treasury Corp. of Victoria Gtd. Bonds, 8.25%, 10/15/03....................... 797,046
------------
Total Long-Term Foreign Government Obligations (Cost $3,851,213)............. 4,041,373
------------
SHORT-TERM FOREIGN CORPORATE BONDS AND NOTES--2.6%
Citibank:
204,050 20.50% CD, 11/5/93(3)........................................................ 495,229
408,400 17.35% CD, 7/28/94(3)........................................................ 991,187
------------
Total Short-Term Foreign Corporate Bonds and Notes (Cost $1,510,916)......... 1,486,416
------------
LONG-TERM U.S. GOVERNMENT OBLIGATIONS--50.9%
Federal Home Loan Mortgage Corp. Mtg.-Backed Certificates:
252,306 11.50%, 1/1/18............................................................... 284,433
1,194,879 13%, 5/1/19.................................................................. 1,372,629
Federal National Mortgage Assn.:
5,068,515 7%, 7/1/23................................................................... 5,211,067
4,872,262 7% Guaranteed Pass-Through Certificates, 8/1/23.............................. 5,009,294
U.S. Treasury Nts.:
14,500,000 13.125%, 5/15/94............................................................. 15,270,239
1,500,000 12.625%, 8/15/94............................................................. 1,607,805
------------
Total Long-Term U.S. Government Obligations (Cost $29,711,928)............... 28,755,467
------------
U.S. CORPORATE BONDS AND NOTES--25.0%
AEROSPACE/DEFENSE--.8%
600,000 GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98................................ 466,500
------------
BROADCAST MEDIA/CABLE TV--3.7%
300,000 Adelphia Communications Corp., 12.50% Sr. Nts., 5/15/02...................... 337,125
400,000 Cablevision Systems Corp., 9.875% Sr. Sub. Debs., 2/15/13.................... 472,000
300,000 Continental Cablevision, Inc., 9.50% Sr. Debs., 8/1/13....................... 337,500
600,000 International Cabletel, Inc., 0%/10.875% Sr. Def. Cpn. Nts., 10/15/03(1)..... 384,000
900,000 Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr. Sub. Disc. Nts.,
8/1/03(1).................................................................. 585,000
------------
2,115,625
------------
BUILDING MATERIALS--2.6%
300,000 American Standard, Inc., 9.875% Sr. Sub. Nts., 6/1/01........................ 304,500
400,000 Pacific Lumber Co., 10.50% Sr. Nts., 3/1/03.................................. 407,000
USG Corp.:
500,000 10.25% Sr. Sec. Nts., 12/15/02............................................... 514,375
250,000 8.75% Debs., 3/1/17.......................................................... 231,875
------------
1,457,750
------------
</TABLE>
2
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Government Trust
<TABLE>
<CAPTION>
Face Market
Amount Value-Note 1
------------ ------------
<C> <S> <C>
U.S. CORPORATE BONDS AND NOTES (CONTINUED)
CONSUMER GOODS--MANUFACTURING--1.6%
$ 400,000 Amstar Corp., 11.375% Sr. Sub. Nts., 2/15/97................................. $ 410,000
800,000 Coleman Holdings, Inc., 0% Sr. Sec. Disc. Nts., 5/27/98(2)................... 503,000
------------
913,000
------------
CONTAINERS--PAPER--1.1%
Gaylord Container Corp.:
400,000 11.50% Sr. Nts., 5/15/01..................................................... 405,000
300,000 0%/12.75% Sr. Sub. Disc. Debs., 5/15/05(1)................................... 216,375
------------
621,375
------------
FINANCIAL/INSURANCE--.7%
400,000 Card Establishment Services, Inc., 10% Sr. Sub. Nts., 10/1/03(2)............. 415,000
------------
FOOD AND RESTAURANTS--3.5%
300,000 American Restaurant Group, Inc., 12% Gtd. Sr. Sec. Nts., 9/15/98............. 299,625
400,000 Di Giorgio Corp., 12% Sr. Nts., 2/15/03...................................... 427,500
400,000 Flagstar Corp., 10.75% Sr. Nts., 9/15/01..................................... 410,500
400,000 Royal Crown Corp., 9.75% Sr. Sec. Nts., 8/1/00............................... 409,500
400,000 Specialty Foods Corp., 10.75% Sr. Nts., 8/15/01(2)........................... 406,000
------------
1,953,125
------------
GAMING/HOTELS--.5%
300,000 Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03.......................... 301,500
------------
HEALTHCARE/MEDICAL PRODUCTS--.5%
300,000 Eye Care Centers of America, Inc., Units(2).................................. 306,000
------------
HOME BUILDING/DEVELOPMENT--.8%
400,000 NVR, Inc., 11% Gtd. Sr. Nts., 4/15/03........................................ 421,000
------------
MANUFACTURING--DIVERSIFIED--1.5%
400,000 Foamex LP/Foamex Capital Corp., 11.25% Sr. Nts., 10/1/02..................... 433,000
400,000 Imo Industries, Inc., 12.25% Sr. Sub. Debs., 8/15/97......................... 405,000
------------
838,000
------------
OIL AND GAS--EXPLORATION AND PRODUCTION--1.0%
Mesa Capital Corp.:
101,000 0%/12.75% Disc. Nts., 6/30/96 (1)............................................ 83,830
25,000 0%/12.75% Cv. Disc. Nts., 6/30/98 (1)........................................ 48,250
482,000 0%/12.75% Sec. Disc. Nts., 6/30/98 (1)....................................... 410,905
------------
542,985
------------
OIL AND GAS--REFINING--.8%
400,000 Wainoco Oil Corp., 12% Sr. Nts., 8/1/02...................................... 421,000
------------
PUBLISHING--.8%
900,000 Bell & Howell Holdings Co., 0%/11.50% Sr. Disc. Debs., Series B, 3/1/05
(1)........................................................................ 479,250
------------
RETAIL--FOOD AND DRUG--.7%
400,000 Purity Supreme, Inc., 11.75% Sr. Sec. Nts., Series B, 8/1/99................. 386,000
------------
</TABLE>
3
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer Multi-Government Trust
<TABLE>
<CAPTION>
Face Market
Amount Value-Note 1
------------ ------------
<C> <S> <C>
U.S. CORPORATE BONDS AND NOTES (CONTINUED)
RETAIL--SPECIALTY--2.2%
$ 400,000 Brylane LP/Brylane Capital Corp., 10% Sr. Sub. Nts., 9/1/03(2)............... $ 409,000
250,000 Finlay Enterprises, Inc., 0%/12% Sr. Disc. Debs., 5/1/05(1).................. 147,500
250,000 Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03.......................... 251,875
400,000 Musicland Group, Inc. (The), 9% Sr. Sub. Nts., 6/15/03....................... 407,000
300,000 Pay 'N Pak Stores, Inc., 13.50% Sr. Sub. Debs., 6/1/98 *..................... 3,000
------------
1,218,375
------------
SERVICES--1.2%
500,000 Envirotest Systems Corp., 9.625% Sr. Sub. Nts., 4/1/03....................... 508,750
200,000 Moran Energy, Inc., 8.75% Cv. Sub. Debs., 1/15/08............................ 149,799
------------
658,549
------------
TELECOMMUNICATIONS--.6%
500,000 Horizon Cellular Telephone LP/Horizon Finance Corp., 0%/11.375% Sr. Sub.
Disc. Nts., 10/1/00 (1)(2)................................................. 350,000
------------
TEXTILES/APPAREL--.4%
250,000 Consoltex Group, Inc., 11% Gtd. Sr. Sub. Nts., Series A, 10/1/03 (2)......... 251,250
------------
Total U.S. Corporate Bonds and Notes (Cost $13,858,017)...................... 14,116,284
------------
<CAPTION>
Shares
------------
<C> <S> <C>
Common Stocks--.0%
500 Finlay Enterprises, Inc., Cl. A * (Cost $5,365).............................. 5,500
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments, at Value (Cost $54,077,967)............................... 94.7% 53,540,883
Other Assets Net of Liabilities.............................................. 5.3 2,985,532
--------- -----------
Net Assets................................................................... 100.0% $56,526,415
--------- -----------
--------- -----------
<FN>
+ Face amount is reported in foreign currency.
* Non-income producing security.
(1) Represents a zero coupon bond that converts to a fixed rate of interest at a
designated future date.
(2) Restricted security--See Note 5 of Notes to Financial Statements.
(3) Indexed instrument for which the principal amount due at maturity is
affected by the relative value of a foreign security.
(4) Securities with an aggregate market value of $1,474,720 are segregated to
collateralize outstanding forward foreign currency exchange contracts. See
Note 6 of Notes to Financial Statements.
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE>
Statement of Assets and Liabilities October 31, 1993
Oppenheimer Multi-Government Trust
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $54,077,967) -- see accompanying statement................. $53,540,883
Unrealized appreciation on forward foreign currency exchange contracts -- Note 6....... 52,884
Cash................................................................................... 81,200
Receivables:
Investments sold..................................................................... 1,855,076
Interest............................................................................. 1,457,607
Other.................................................................................. 11,519
-----------
Total assets....................................................................... 56,999,169
-----------
LIABILITIES:
Payables and other liabilities:
Investments purchased................................................................ 300,000
Dividends............................................................................ 71,982
Management and administrative fees -- Note 4......................................... 16,611
Other................................................................................ 84,161
-----------
Total liabilities.................................................................. 472,754
-----------
NET ASSETS............................................................................. $56,526,415
-----------
-----------
COMPOSITION OF NET ASSETS:
Par value of shares of beneficial interest............................................. $ 66,155
Additional paid-in capital............................................................. 59,800,516
Distributions in excess of net investment income....................................... (27,770)
Accumulated net realized loss from investment, written option and foreign currency
transactions......................................................................... (2,826,976)
Net unrealized appreciation of investments -- Note 3................................... 240,658
Net unrealized depreciation on translation of assets and liabilities denominated in
foreign currencies................................................................... (726,168)
-----------
NET ASSETS--Applicable to 6,615,505 shares of beneficial interest outstanding.......... $56,526,415
-----------
-----------
NET ASSET VALUE PER SHARE.............................................................. $8.54
-----------
-----------
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE>
Statement of Operations For the Year Ended October 31, 1993
Oppenheimer Multi-Government Trust
<TABLE>
<S> <C>
INVESTMENT INCOME--Interest................................. $6,040,151
----------
EXPENSES:
Management fees--Note 4..................................... 363,058
Administrative fees--Note 4................................. 111,769
Shareholder reports......................................... 60,678
Transfer agent and accounting services fees--Note 4......... 58,799
Legal and auditing fees..................................... 26,215
Custodian fees and expenses................................. 24,134
Trustees' fees and expenses................................. 16,233
Other....................................................... 22,571
----------
Total expenses.......................................... 683,457
----------
NET INVESTMENT INCOME....................................... 5,356,694
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments............................ (399,294)
----------
Net change in unrealized appreciation (depreciation) of
investments:
Beginning of year......................................... (961,685)
End of year--Note 3....................................... 240,658
----------
Net change.............................................. 1,202,343
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS............. 803,049
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS BEFORE
FOREIGN
EXCHANGE LOSS............................................. 6,159,743
----------
REALIZED AND UNREALIZED FOREIGN EXCHANGE LOSS:
Net realized loss on foreign currency transactions.......... (472,486)
----------
Net change in unrealized depreciation on translation of
assets and liabilities denominated in foreign currencies:
Beginning of year......................................... (459,622)
End of year............................................... (726,168)
----------
Net change.............................................. (266,546)
----------
NET REALIZED AND UNREALIZED FOREIGN EXCHANGE LOSS........... (739,032)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $5,420,711
----------
----------
</TABLE>
See accompanying Notes to Financial Statements.
6
<PAGE>
Statements of Changes in Net Assets
Oppenheimer Multi-Government Trust
<TABLE>
<CAPTION>
Year Ended October 31,
------------------------
1993 1992
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 5,356,694 $ 5,769,482
Net realized gain (loss) on investments.................................... (399,294) 817,778
Net realized loss from foreign currency transactions....................... (472,486) (483,725)
Net change in unrealized appreciation or depreciation of investments....... 1,202,343 (2,759,629)
Net change in unrealized appreciation or depreciation on translation of
assets and liabilities denominated in foreign currencies................. (266,546) (155,620)
----------- -----------
Net increase in net assets resulting from operations..................... 5,420,711 3,188,286
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ($.751 and $.918 per share, respectively)....... (4,929,126) (5,914,773)
Tax return of capital distribution ($.08 per share)........................ (527,213) --
----------- -----------
Total dividends and distributions to shareholders...................... (5,456,339) (5,914,773)
BENEFICIAL INTEREST TRANSACTIONS:
Proceeds from shares issued to shareholders in reinvestment of dividends... 893,881 1,186,620
----------- -----------
Total increase (decrease) in net assets................................ 858,253 (1,539,867)
NET ASSETS:
Beginning of year.......................................................... 55,668,162 57,208,029
----------- -----------
End of year (including (distributions in excess of) undistributed net
investment income of $(27,770) and $64,108, respectively)................ $56,526,415 $55,668,162
----------- -----------
----------- -----------
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE>
Financial Highlights
Oppenheimer Multi-Government Trust
<TABLE>
<CAPTION>
Year Ended October 31,
----------------------------------------------------------
1993 1992 1991 1990 1989+
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period........... $ 8.55 $ 8.97 $ 8.66 $ 9.12 $ 9.30
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income........................ .82 .89 .97 .96 .82
Net realized and unrealized gain (loss) on
investments, options written and foreign
currencies................................. -- (.39) .33 (.43) (.09)
---------- ---------- ---------- ---------- ----------
Total income from investment operations.... .82 .50 1.30 .53 .73
---------- ---------- ---------- ---------- ----------
Dividends and distributions to shareholders:
Dividends from net investment income......... (.75) (.92) (.99) (.94) (.80)
Tax return of capital distribution........... (.08) -- -- -- --
Distributions from net realized gain on
investments, options written and foreign
currencies................................. -- -- -- (.05) (.04)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions to
shareholders............................. (.83) (.92) (.99) (.99) (.84)
Offering costs................................. -- -- -- -- (.07)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period................. $ 8.54 $ 8.55 $ 8.97 $ 8.66 $ 9.12
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Market value, end of period.................... $ 8.00 $ 8.63 $ 9.50 $ 7.75 $ 9.00
TOTAL RETURN, AT MARKET
VALUE***...................................... 2.22% .70% 37.18% (3.27)% .47%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)....... $ 56,526 $ 55,668 $ 57,208 $ 54,676 $ 57,418
Average net assets (in thousands).............. $ 55,877 $ 56,970 $ 55,604 $ 56,175 $ 57,012
Number of shares outstanding at end of period
(in thousands)................................ 6,616 6,511 6,378 6,310 6,298
Ratios to average net assets:
Net investment income........................ 9.59% 10.13% 11.06% 10.83% 9.85%*
Expenses..................................... 1.22% 1.32% 1.21% 1.22% 1.34%*
Portfolio turnover rate**...................... 112.5% 98.4% 59.9% 95.3% 98.7%
<FN>
* Annualized.
** The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding
short-term securities) for the year ended October 31, 1993 were $56,992,443
and $67,791,419, respectively.
*** Assumes a hypothetical purchase at the current market price 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
a sale at the current market price on the last business day of the period.
+ For the period from November 30, 1988 (commencement of operations) to
October 31, 1989.
</TABLE>
See accompanying Notes to Financial Statements.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Oppenheimer Multi-Government Trust
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Multi-Government Trust (the Trust) is registered under the
Investment Company Act of 1940, as amended, as a diversified, closed-end
management investment company. The Trust's investment adviser is Oppenheimer
Management Corporation (the Manager). The following is a summary of significant
accounting policies consistently followed by the Trust.
INVESTMENT VALUATION--Portfolio securities are valued at 4:00 p.m. (New York
time) on the last day of each week on which day the New York Stock Exchange is
open. Listed and unlisted securities for which such information is regularly
reported are valued at the last sale price of the day or, in the absence of
sales, at values based on the closing bid or asked price or the last sale price
on the prior trading day. Long-term debt securities are valued by a portfolio
pricing service approved by the Board of Trustees. Long-term debt securities
which cannot be valued by the approved portfolio pricing service are valued by
averaging the mean between the bid and asked prices obtained from two active
market makers in such securities. Short-term debt securities having a remaining
maturity of 60 days or less are valued at cost (or last determined market value)
adjusted for amortization to maturity of any premium or discount. Securities for
which market quotes are not readily available are valued under procedures
established by the Board of Trustees to determine fair value in good faith.
Forward foreign currency contracts are valued at the forward rate on a daily
basis.
SECURITY CREDIT RISK--The Trust invests in high yield securities, which may be
subject to a greater degree of credit risk, greater market fluctuations and risk
of loss of income and principal, and may be more sensitive to economic
conditions than lower yielding, higher rated fixed income securities. The Trust
may acquire securities in default, and is not obligated to dispose of securities
whose issuers subsequently default. At October 31, 1993, securities with an
aggregate market value of $3,000, representing .01% of the Trust's total assets,
were in default.
FOREIGN CURRENCY TRANSLATION--The accounting records of the Trust are maintained
in U.S. dollars. Prices of securities denominated in non-U.S. currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of securities and investment income are translated at
the rates of exchange prevailing on the respective dates of such transactions.
The net gain or loss resulting from changes in the foreign currency exchange
rates is reported separately in the Statement of Operations.
The Trust generally enters into forward foreign currency exchange contracts as a
hedge, upon the purchase or sale of a security denominated in a foreign
currency. In addition, the Trust may enter into such contracts as a hedge
against changes in foreign currency exchange rates on portfolio positions. A
forward exchange contract is a commitment to purchase or sell a foreign currency
at a future date, at a negotiated rate. Risks may arise from the potential
inability of the counterparty to meet the terms of the contract and from
unanticipated movements in the value of a foreign currency relative to the U.S.
dollar.
REPURCHASE AGREEMENTS--The Trust requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. If the seller of the agreement defaults and the value of
the collateral declines, or if the seller enters an insolvency proceeding,
realization of the value of the collateral by the Trust may be delayed or
limited.
FEDERAL INCOME TAXES--The Trust intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income tax provision is required. At October 31, 1993, the Trust had
available for federal income tax purposes an unused capital loss carryover of
approximately $2,769,000, $1,293,000 of which
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Government Trust
will expire in 1998, $1,042,000 in 1999 and $434,000 in 2001.
TRUSTEES' FEES AND EXPENSES--The Trust has adopted a nonfunded retirement plan
for the Trust'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
October 31, 1993, a provision of $1,879 was made for the Trust's projected
benefit obligations, resulting in an accumulated liability of $29,540 at October
31, 1993. No payments have been made under the plan.
DISTRIBUTIONS TO SHAREHOLDERS--The Trust intends to declare and pay dividends
from net investment income every 28 days. Distributions from net realized gains
on investments, if any, will be made at least once each year.
Taxable income and net realized capital gains available for distribution to
shareholders, as determined under the provisions of the Internal Revenue Code,
may differ from amounts determined for financial statement purposes. Differences
result primarily from foreign currency transactions, deferred trustee
compensation and bad debt expense. To the extent that those differences which
are permanent in nature result in overdistributions to shareholders, amounts are
reclassified between undistributed net investment income and accumulated net
realized capital gains, and paid-in capital. As of November 1, 1992, the
cumulative effect of such differences of $457,589 was reclassified as a
reduction to paid-in capital, decreasing undistributed net investment income by
$155,530 and decreasing the accumulated net realized loss by $613,119. An
additional $599,195 was reclassified to reduce paid-in capital during the year
ended October 31, 1993, as a result of differences in treatments of foreign
currency transactions. The impact of this reclassification was to increase
undistributed net investment income by $163,297 and further decrease the
accumulated net realized loss by $435,898.
OTHER--Investment transactions are accounted for on the date the investments are
purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the life of
the respective securities, in accordance with federal income tax requirements.
Realized gains and losses on investments and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the same basis
used for federal income tax purposes. Interest on payment-in-kind debt
instruments is accrued as income at the coupon rate and a market adjustment is
made on the ex-date.
2. SHARES OF BENEFICIAL INTEREST
The Trust has authorized an unlimited number of $.01 par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Year Ended
October 31,
--------------------
1993 1992
--------- ---------
<S> <C> <C>
Net increase in shares from
dividends reinvested........... 104,816 132,487
--------- ---------
--------- ---------
</TABLE>
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At October 31, 1993, net unrealized appreciation of investments of $240,658 was
composed of gross appreciation of $1,706,258, and gross depreciation of
$1,465,600.
4. MANAGEMENT AND ADMINISTRATIVE FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Trust which provides for an annual fee of .65% on
the Trust's net assets.
Mitchell Hutchins Asset Management Inc. serves as the Trust's Administrator. The
Trust pays the Administrator an annual fee of .20% of the Trust's net assets.
The Manager acts as the accounting agent for the Trust at an annual fee of
$18,000, plus out-of-pocket costs and expenses reasonably incurred.
Shareholder Financial Services, Inc. (SFSI), a wholly-owned subsidiary of the
Manager, is the transfer agent and registrar for the Trust. Fees paid to SFSI
are based on the number of accounts and the number of shareholder transactions,
plus out-of-pocket costs and expenses.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer Multi-Government Trust
5. RESTRICTED SECURITIES
The Trust owns securities purchased in private placement
transactions, without registration under the Securities Act of 1933
(the Act). The securities are valued under methods approved by the
Board of Trustees as reflecting fair value. The Trust intends to
invest no more than 10% of its net assets (determined at the time of
purchase) in restricted and illiquid securities, excluding
securities eligible for resale pursuant to Rule 144A of the Act that
are determined to be liquid by the Board of Trustees or by the
Manager under Board-approved guidelines.
<TABLE>
<CAPTION>
Valuation Per Unit
Acquisition as of October 31,
Security Date Cost Per Unit 1993
- --------------------------------------------- --------------- ------------- ------------------
<S> <C> <C> <C>
Brylane LP/Brylane Capital Corp., 10% Sr.
Sub. Nts., 9/1/03+.......................... 8/20/93 $ 99.22 $ 102.25
Card Establishment Services, Inc., 10% Sr.
Sub. Nts., 10/1/03+......................... 10/5/93 100.00 103.75
Coleman Holdings, Inc., 0% Sr. Sec. Disc.
Nts., 5/27/98+.............................. 7/15/93-8/18/93 60.54 62.88
Consoltex Group, Inc., 11% Gtd. Sr. Sub.
Nts., Series A, 10/1/03+.................... 9/23/93 100.00 100.50
Eye Care Centers of America, Inc., Units+.... 9/28/93 100.00 102.00
Horizon Cellular Telephone LP/Horizon Finance
Corp., 0%/11.375% Sr. Sub. Disc. Nts.,
10/1/00+.................................... 9/24/93 64.54 70.00
Specialty Foods Corp., 10.75% Sr. Nts.,
8/15/01+.................................... 8/10/93 100.00 101.50
<FN>
+ Transferable under Rule 144A of the Act.
</TABLE>
6. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
At October 31, 1993, the Trust had outstanding forward exchange
currency contracts to purchase and sell foreign currencies as
follows:
<TABLE>
<CAPTION>
Expiration Valuation as of Unrealized Appreciation
Contracts to Purchase: Date Contract Amount October 31, 1993 (Depreciation)
- --------------------------- ------------- --------------- ----------------- -------------------------
<S> <C> <C> <C> <C>
Canadian Dollar............ 11/5/93 $ 1,135,761 $ 1,135,134 $ (627)
--------------- -----------------
--------------- -----------------
<CAPTION>
Contracts to Sell:
- ---------------------------
<S> <C> <C> <C> <C>
Canadian Dollar............ 11/5/93 $ 2,323,780 $ 2,377,291 53,511
--------------- -----------------
--------------- -----------------
$ 52,884
-------
-------
</TABLE>
11
<PAGE>
INDEPENDENT AUDITORS' REPORT
Oppenheimer Multi-Government Trust
The Board of Trustees and Shareholders of
Oppenheimer Multi-Government Trust:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Multi-Government Trust as of October 31, 1993, 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 four-year period then
ended and the period from November 30, 1988 (commencement of operations) to
October 31, 1989. These financial statements and financial highlights are the
responsibility of the Trust'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 generally accepted auditing
standards. 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 and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1993, by correspondence with the custodian
and brokers; and where confirmations were not received from brokers, we
performed other auditing procedures. 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 Multi-Government Trust as of October 31, 1993, 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 four-year period then ended and the period from
November 30, 1988 (commencement of operations) to October 31, 1989, in
conformity with generally accepted accounting principles.
KPMG PEAT MARWICK
Denver, Colorado
November 19, 1993
12
<PAGE>
FEDERAL INCOME TAX INFORMATION (Unaudited)
Oppenheimer Multi-Government Trust
In early 1994, shareholders will receive information regarding all dividends and
distributions paid to them by the Trust during calendar year 1993. Regulations
of the U.S. Treasury Department require the Trust to report this information to
the Internal Revenue Service.
None of the dividends paid by the Trust during the fiscal year ended October 31,
1993 are eligible for the corporate dividend-received deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Trust 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 adviser for specific guidance.
13
<PAGE>
Oppenheimer Multi-Government Trust
GENERAL INFORMATION CONCERNING THE TRUST
Oppenheimer Multi-Government Trust (the "Trust") is a closed-end diversified
management investment company with a primary investment objective of seeking
high current income consistent with preservation of capital. The Trust's
secondary investment objective is capital appreciation. In seeking its
objectives, as a matter of fundamental policy, the Trust will invest at least
65% of its total assets in debt instruments issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("U.S. Government Securities") or
by foreign governments, their political subdivisions, agencies or
instrumentalities, including supranational entities ("Foreign Government
Securities").
Currently, as a matter of fundamental policy, the Trust will invest at least 50%
of its total assets in U.S. Government Securities and will not make any purchase
that will cause 25% or more of its total assets to be invested in Foreign
Government Securities. The Trust's Board of Trustees (the "Board") has approved
and recommended, subject to the approval of the shareholders of the Trust at the
next annual meeting of shareholders of the Trust, that this policy be changed to
a non-fundamental policy, changeable by the Board without shareholder approval,
and further that (i) the required minimum investment in U.S. Government
Securities be reduced to a minimum investment of 30% of the Trust's total assets
and (ii) the percentage limitation on investment in Foreign Government
Securities be replaced with the policy set forth below in "Foreign Investment
Concentration."
The Trust may also invest in certain other securities, including fixed-income
securities of domestic and foreign corporations, and may engage in certain
special investment techniques, including repurchase transactions, when-issued
and delayed delivery transactions and hedging. The investment adviser to the
Trust is Oppenheimer Management Corporation (the "Adviser").
RECENT CHANGES IN INVESTMENT POLICIES, RESTRICTIONS AND TECHNIQUES
The following non-fundamental changes to the Trust's investment policies,
restrictions and special investment techniques were approved by the Board.
RATINGS OF INVESTMENTS--The Trust is permitted to invest in unrated securities
and securities in any rating category, provided that investments in securities
rated lower than investment grade ("Baa" by Moody's Investors Service, Inc.
("Moody's") or "BBB" by Standard & Poor's Corporation ("S&P")) may not exceed
50% of the Trust's total assets, with no more than 30% of the Trust's total
assets being invested in non-investment grade Foreign Government Securities,
securities issued by foreign corporations and securities denominated in non-U.S.
currencies. Notwithstanding the foregoing, the Trust may not invest more than 5%
of its total assets, measured at the time of purchase, in securities rated "C"
by Moody's or "D" by S&P. Previously, Foreign Government Securities and
corporate securities denominated in foreign currencies were required to be rated
"A" or better by Moody's or S&P or, if unrated, be of comparable quality.
The Trust's ability to increase its investment in high yield securities will
enable it to seek higher investment return. However, high yield securities,
whether rated or unrated, may be subject to greater market fluctuations and
risks of loss of income and principal and may have less liquidity than lower
yielding, higher-rated fixed-income securities. Principal risks of high yield
securities include (i) limited liquidity and secondary market support, (ii)
substantial market price volatility resulting from changes in prevailing
interest rates, (iii) subordination of the holder's claims to the prior claims
of banks and other senior lenders in bankruptcy proceedings, (iv) the operation
of mandatory sinking fund or call/redemption provisions during periods of
declining interest rates, whereby the holder might receive redemption proceeds
at times when only lower-yielding portfolio securities are available for
investment, (v) the possibility that earnings of the issuer may be insufficient
to meet its debt service, and (vi) the issuer's low creditworthiness and
potential for insolvency during periods of rising interest rates and economic
downturn.
FOREIGN INVESTMENT CONCENTRATION--The percentage concentration by the Trust in
14
<PAGE>
Oppenheimer Multi-Government Trust
investments in any one country, except the United States, is subject to
limitations imposed by the Board (which may be changed by the Board). Currently,
the Trust may not invest more than 25% of its total assets in Foreign Government
Securities and foreign corporate securities of any one country.
HEDGING AND INTEREST RATE SWAP TRANSACTIONS--The Trust is permitted to use
certain hedging instruments to attempt to protect against possible declines in
the market value of the Trust's portfolio from downward trends in debt
securities markets (generally due to a rise in interest rates), to protect the
Trust's unrealized gains in the value of its debt securities which have
appreciated, to facilitate selling debt securities for investment reasons, to
establish a position in the debt securities markets as a temporary substitute
for purchasing particular debt securities, or to reduce the risk of adverse
currency fluctuations. One of the hedging instruments the Trust may now employ
is interest rate swaps, which involve the exchange by the Trust with another
party of their respective commitments to pay or receive interest on a security
(e.g., an exchange of floating rate payments for fixed rate payments). The Trust
will not use interest rate swaps for leverage. Swap transactions will be entered
into only as to security positions held by the Trust. The Trust may not enter
into swap transactions with respect to more than 25% of its total assets. The
Trust will segregate liquid assets (e.g., cash, U.S. Government Securities or
other appropriate high grade debt obligations) equal to the net excess, if any,
of its obligations over its entitlements under the swap and will mark to market
that amount daily. There is a risk of loss on a swap equal to the net amount of
interest payments that the Trust is contractually obligated to make. The credit
risk of an interest rate swap depends on the counterparty's ability to perform.
The value of the swap may decline if the counterparty's creditworthiness
deteriorates. If the counterparty defaults, the Trust risks the loss of the net
amount of interest payments that it is contractually entitled to receive. The
Trust may be able to reduce or eliminate its exposure to losses under swap
agreements either by assigning them to another party, or by entering into an
offsetting swap agreement with the same counterparty or another creditworthy
party.
PORTFOLIO MANAGEMENT OF THE TRUST
Effective August 19, 1993, Ashwin K. Vasan and Thomas P. Reedy were appointed
Vice Presidents and Portfolio Managers of the Trust, replacing Arthur P.
Steinmetz and Ralph W. Stellmacher, and thereby became, along with Eva A. Zeff,
also a Portfolio Manager and Vice President of the Trust, the persons
principally responsible for the day-to-day management of the Trust's portfolio.
Messrs. Vasan and Reedy also serve as Vice Presidents of the Adviser and
officers of certain other OppenheimerFunds. Mr. Vasan previously served as a
securities analyst for the Adviser, prior to which he was a securities analyst
for Citibank, N.A. Mr. Reedy previously served as a securities analyst for the
Adviser.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Pursuant to the Trust's Dividend Reinvestment and Cash Purchase Plan (the
"Plan"), as to shares of the Trust ("Shares") not registered in nominee name,
all dividends and capital gains distributions ("Distributions") declared by the
Trust will be automatically reinvested in additional full and fractional Shares
unless a shareholder elects to receive cash. If Shares are registered in nominee
name, the shareholder should consult the nominee if the shareholder desires to
participate in the Plan. Shareholders that participate in the Plan
("Participants") may, at their option, make additional cash investments in
Shares, semi-annually in amounts of at least $100, through payment to
Shareholder Financial Services, Inc., the agent for the Plan (the "Agent"),
accompanied by a service fee of $.75.
Depending upon the circumstances hereinafter described, Plan Shares will be
acquired by the Agent for the Participant's account through receipt of newly
issued Shares or the purchase of outstanding Shares on the open market. If the
market price of Shares on the relevant date (normally the payment date) equals
or exceeds their net asset value, the Agent will ask the Trust for payment of
the Distribution in additional Shares at the greater of the Trust's net asset
value
15
<PAGE>
Oppenheimer Multi-Government Trust
determined as of the date of purchase or 95% of the then-current market price.
If the market price is lower than net asset value, the Distribution will be paid
in cash, which the Agent will use to buy Shares on The New York Stock Exchange
(the "NYSE"), or otherwise on the open market to the extent available. If the
market price exceeds the net asset value before the Agent has completed its
purchases, the average purchase price per Share paid by the Agent may exceed the
net asset value, resulting in fewer Shares being acquired than if the
Distribution had been paid in Shares issued by the Trust.
Participants may elect to withdraw from the Plan at any time and thereby receive
cash in lieu of Shares by sending appropriate written instructions to the Agent.
Elections received by the Agent will be effective only if received more than ten
days prior to the record date for any Distribution; otherwise, such termination
will be effective shortly after the investment of such Distribution with respect
to any subsequent Distribution. Upon withdrawal from or termination of the Plan,
all Shares acquired under the Plan will remain in the Participant's account
unless otherwise requested. For full Shares, the Participant may either: (1)
receive without charge a share certificate for such Shares; or (2) request the
Agent (after receipt by the Agent of signature guaranteed instructions by all
registered owners) to sell the Shares acquired under the Plan and remit the
proceeds less any brokerage commissions and a $2.50 service fee. Fractional
Shares may either remain in the Participant's account or be reduced to cash by
the Agent at the current market price with the proceeds remitted to the
Participant. Shareholders who have previously withdrawn from the Plan may rejoin
at any time by sending written instructions signed by all registered owners to
the Agent.
There is no direct charge for participation in the Plan; all fees of the Agent
are paid by the Trust. There are no brokerage charges for Shares issued directly
by the Trust. However, each Participant will pay a pro rata share of brokerage
commissions incurred with respect to open market purchases of Shares to be
issued under the Plan. Participants will receive tax information annually for
their personal records and to assist in federal income tax return preparation.
The automatic reinvestment of Distributions does not relieve Participants of any
income tax that may be payable on Distributions.
The Plan may be terminated or amended at any time upon 30 days' prior written
notice to Participants which, with respect to a Plan termination, must precede
the record date of any Distribution by the Trust. Additional information
concerning the Plan may be obtained by shareholders holding Shares registered
directly in their names by writing the Agent, Shareholder Financial Services,
Inc., P.O. Box 173673, Denver, CO 80217-3673 or by calling 1-800-647-7374.
Shareholders holding Shares in nominee name should contact their brokerage firm
or other nominee for more information.
SHAREHOLDER INFORMATION
The Shares are traded on the NYSE. Daily market prices for the Trust's shares
are published in the New York Stock Exchange Composite Transaction section of
newspapers under the designation "OppenGvt." The Trust's NYSE trading symbol is
OGT. Weekly net asset value (NAV) and market price information about the Trust
is published each Monday in THE WALL STREET JOURNAL and THE NEW YORK TIMES and
each Saturday in BARRON'S, and other newspapers in a table called "Closed-End
Bond Funds."
OTHER INFORMATION
Except as set forth above, since February 26, 1993 (the effective date of the
Trust's registration statement), there have been no (i) material changes in the
Trust's investment objectives or policies, (ii) changes in the Trust's
declaration of trust or by-laws that would delay or prevent a change in control
of the Trust, (iii) material changes in the principal risk factors associated
with investment in the Trust and (iv) changes in persons who are primarily
responsible for the day-to-day management of the Trust's portfolio.
16
