As filed with the Securities and Exchange
Commission on March 31, 1997
Registration No. 811-5670
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
REGISTRATION STATEMENT UNDER THE INVESTMENT /X/
COMPANY ACT OF 1940
AMENDMENT NO. 12
/X/
OPPENHEIMER WORLD BOND FUND
(formerly "Oppenheimer Multi-Government Trust")
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(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048-0203
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(Address of Principal Executive Offices)
212-323-0200
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(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
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FORM N-2
OPPENHEIMER WORLD BOND FUND
(formerly "Oppenheimer Multi-Government Trust")
Cross Reference Sheet
Part A of
Form N-2
Item No. Prospectus Heading
1 *
2 *
3 *
4 *
5 *
6 *
7 *
8 General Description of the Registrant
9 Management
10 Capital Stock, Long-Term Debt, and Other Securities
11 *
12 *
13 See Item 15 of the Statement of Additional
Information
Part B of
Form N-2
Item No. Heading In Statement of Additional Information
14 Cover Page
15 Table of Contents
16 *
17 See Item 8 of the Prospectus
18 Management
19 Control Persons and Principal Holders of Securities
20 See Item 9 of the Prospectus
21 Brokerage Allocation and Other Practices
22 See Item 10 of the Prospectus
23 Financial Statements
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* Not applicable or negative answer.
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OPPENHEIMER WORLD BOND FUND
(formerly "Oppenheimer Multi-Government Trust")
PART A
March 31, 1997
INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Outside Front Cover.
Inapplicable.
Item 2. Inside Front and Outside Back Cover Page.
Inapplicable.
Item 3. Fee Table and Synopsis.
Inapplicable.
Item 4. Financial Highlights.
Inapplicable.
Item 5. Plan of Distribution.
Inapplicable.
Item 6. Selling Shareholders.
Inapplicable.
Item 7. Use of Proceeds.
Inapplicable.
Item 8. General Description of the Registrant.
1. Organization. Oppenheimer World Bond Fund, formerly
named "Oppenheimer Multi-Government Trust" (the "Fund" or
"Registrant") is a closed-end diversified management investment
company organized as a Massachusetts business trust on October 5,
1988.
2, 3 and 4. Objectives. The Fund's primary investment
objective is high current income consistent with preservation of
capital. Its secondary objective is capital appreciation, which it
may pursue by seeking to take advantage of changes in currency
exchange and interest rates and by investing in convertible
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securities. The Fund's investment policies and practices are not "fundamental"
policies (as defined below) unless a particular policy is identified as
fundamental. The Fund's Board of Trustees may change non-fundamental investment
policies without shareholder approval. The Fund's investment objectives are
fundamental policies.
Investment Policies and Strategies. In seeking its objectives, as a matter of
non-fundamental policy, the Fund will invest at least 65% of its total assets in
bonds (defined, for purposes of this non-fundamental investment policy, to be
debt securities), and will invest at least 50% of its net assets in foreign
securities. Also, as a matter of non-fundamental policy, the Fund will not make
any purchase that will cause 25% or more of its total assets to be invested in
Foreign Government Securities and foreign corporate securities of any one
country (other than the United States). Foreign Government Securities are debt
instruments issued or guaranteed by foreign governments, or their political
subdivisions, agencies or instrumentalities, including supranational entities.
The Fund may also invest in U.S. Government Securities, which are debt
instruments issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
In addition to investment in U.S. Government Securities and Foreign
Government Securities, the Fund may invest in fixed-income securities of
domestic and foreign corporations, including short-term money market
instruments. Other securities and investments which may be held by the Fund
include put and call options, common stock acquired upon the exercise of options
or conversion of convertible securities, and futures contracts and related
options. The Fund is designed for long-term investment and investors should not
consider it as a trading vehicle although the Fund itself may at times have a
relatively high turnover rate.
The Fund's investment adviser, OppenheimerFunds, Inc. (the "Adviser"),
will adjust the duration of the Fund's investment in debt securities from time
to time, depending on its assessment of relative yields of securities of
different maturities and its expectations of future changes in interest rates.
The Fund measures its portfolio duration on a "dollar-weighted" basis.
"Effective portfolio duration" refers to the expected percentage change in the
value of a bond resulting from a change in general interest rates (measured by
each 1% change in the rates on U.S. Treasury securities). For example, if a bond
has an effective duration of three years, a 1% increase in general interest
rates would be expected to cause the bond to decline about 3%. It is a measure
of portfolio volatility.
U.S. Government Securities are considered among the most
creditworthy of fixed-income investments. Because of this, the
yields available from U.S. Government Securities are generally
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lower than the yields available from corporate debt securities. Nevertheless,
the values of U.S. Government Securities (like those of fixed-income securities
generally) will change as interest rates fluctuate. Despite guarantees as to the
timely payment of principal and interest on U.S. Government Securities and
Foreign Government Securities, such guarantees do not extend to the value or
yield of such securities nor do they extend to the value of shares of the Fund.
o Special Risks - High Yield Securities. The debt instruments in which
the Fund may invest may be unrated or, if rated, 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 ("Standard & Poor's")or Duff & Phelps, Inc. (Duff & Phelps)
or another nationally recognized statistical rating organization) may not exceed
50% of the Fund's total assets, with no more than 30% of the Fund's total assets
being invested in non-investment grade: (1) Foreign Government Securities, (2)
securities issued by foreign corporations or (3) securities denominated in
non-U.S. currencies. Notwithstanding the foregoing, the Fund may not invest more
than 5% of its total assets, measured at the time of purchase, in securities
which are rated "C" or "D" by either Moody's, Duff & Phelps or Standard &
Poor's. Those securities may be considered highly speculative and may be in
default. The Appendix to this Prospectus describes these rating categories.
The primary advantage of lower-rated, high yield securities is their
relatively higher investment return. High yield bonds offer a higher yield to
maturity than bonds with higher ratings, as compensation for holding an
obligation that may be subject to greater risk. During periods of falling
interest rates, the values of outstanding fixed-income securities generally
rise. Conversely, during periods of rising interest rates, the values of such
securities generally decline. The magnitude of these fluctuations will generally
be greater for securities with longer maturities. Those changes will affect the
values of the Fund's portfolio securities, and therefore its net asset value per
share. Further, because of their high coupon rates, high yield securities are
generally less price sensitive to changes in interest rates than U.S. Treasury
Securities. However, high yield securities, whether rated or unrated, may be
subject to greater market fluctuations and risks of loss of income and principal
and have less liquidity than lower yielding, higher-rated fixed-income
securities.
Some of the 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
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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. Some high yield bonds pay interest
in kind rather than in cash.
As a result of the limited liquidity of high yield securities, their
prices have at times experienced significant and rapid decline when a
significant number of holders of high yield securities simultaneously decided to
sell them. A decline is also likely in the high yield bond market during an
economic downturn. An economic downturn or an increase in interest rates could
severely disrupt the market for high yield securities and adversely affect the
value of outstanding securities and the ability of the issuers to repay
principal and interest.
o Interest Rate Risks. In addition to credit risks, described below,
debt securities are subject to changes in value due to changes in prevailing
interest rates. When prevailing interest rates fall, the values of outstanding
debt securities generally rise. Conversely, when interest rates rise, the values
of outstanding debt securities generally decline. The magnitude of these
fluctuations will usually be greater when the average maturity of the portfolio
securities is longer.
|X| Credit Risks. Debt securities are also subject to credit risks.
Credit risk relates to the ability of the issuer of a debt security to make
interest or principal payments on the security as they become due. Generally,
higher-yielding, lower-rated bonds (which are some of the type of bonds the Fund
seeks to invest in) are subject to greater credit risk than higher-rated bonds.
Securities issued or guaranteed by the U.S. Government are subject to little, if
any, credit risk if they are backed by the "full faith and credit of the U.S.
Government," which in general terms means that the U.S. Treasury stands behind
the obligation to pay interest and principal. While the Adviser may rely to some
extent on credit ratings by nationally recognized statistical rating agencies,
including, but not limited to Standard & Poor's, Duff & Phelps or Moody's, in
evaluating the credit risk of securities selected for the Fund's portfolio, it
may also use its own research and analysis or that provided by other sources.
However, many factors affect an issuer's ability to make timely payments, and
there can be no assurance that the credit risks of a particular security will
not change over time or that the credit risk will be correctly analyzed by the
Adviser, by nationally recognized rating agencies, or by other sources.
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o Foreign Securities. The Fund may invest in equity and debt
securities (which may either be denominated in U.S. dollars or in
non-U.S. currencies), issued or guaranteed by foreign corporations,
certain supranational entities (described below), and foreign
governments or their agencies or instrumentalities, and in debt
obligations issued by U.S. corporations denominated in non-U.S.
currencies. All such securities are referred to as "foreign
securities."
Investing in foreign securities offers potential benefits not available
from investing solely in securities of domestic issuers, including the
opportunity to invest in foreign issuers that appear to offer growth potential,
or in foreign countries with economic policies or business cycles different from
those of the U.S., or to reduce fluctuations in portfolio value by taking
advantage of foreign stock markets that do not move in a manner parallel to U.S.
markets. If the Fund's portfolio securities are held abroad, the countries in
which they may be held and the sub-custodians or depositories holding them must
be approved by the Corporation's Board of Directors to the extent that approval
is required under applicable rules of the Securities and Exchange Commission.
o Risks of Foreign Investing. Investments in foreign securities present
special additional risks and considerations not typically associated with
investments in domestic securities: reduction of income by foreign taxes;
fluctuation in value of foreign portfolio investments due to changes in currency
rates and control regulations (e.g., currency blockage); transaction charges for
currency exchange; lack of public information about foreign issuers; lack of
uniform accounting, auditing and financial reporting standards comparable to
those applicable to domestic issuers; less volume on foreign exchanges than on
U.S. exchanges; greater volatility and less liquidity on foreign markets than in
the U.S.; less regulation of foreign issuers, stock exchanges and brokers than
in the U.S.; greater difficulties in commencing lawsuits and obtaining judgments
in foreign courts; higher brokerage commission rates than in the U.S.; increased
risks of delays in settlement of portfolio transactions or loss of certificates
for portfolio securities; possibilities in some countries of expropriation,
confiscatory taxation, political, financial or social instability or adverse
diplomatic developments; and unfavorable differences between the U.S. economy
and foreign economies. In the past, U.S. Government policies have discouraged
certain investments abroad by U.S. investors, through taxation or other
restrictions, and it is possible that such restrictions could be re-imposed.
o Special Risks of Emerging Market Countries. Investments in
emerging market countries may involve further risks in addition to
those identified above for investments in foreign securities.
Securities issued by emerging market countries and by companies
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located in those countries may be subject to extended settlement periods,
whereby the Fund might not receive principal and/or income on a timely basis and
its net asset value could be affected. There may be a lack of liquidity for
emerging market securities; interest rates and foreign currency exchange rates
may be more volatile; sovereign limitations on foreign investments may be more
likely to be imposed; there may be significant balance of payment deficits; and
their economies and markets may respond in a more volatile manner to economic
changes than those of developed countries.
Because the Fund may purchase securities denominated in foreign
currencies, a change in the value of any such currency against the U.S. dollar
will result in a change in the U.S. dollar value of the Fund's assets and the
Fund's income available for distribution. In addition, although a portion of the
Fund's investment income may be received or realized in foreign currencies, the
Fund will be required to compute and distribute its income in U.S. dollars, and
absorb the cost of currency fluctuations. The Fund may engage in foreign
currency exchange transactions for hedging purposes to protect against changes
in future exchange rates.
o U.S. Government Securities.
U.S. Government Securities are debt obligations issued or guaranteed by
the United States Government or its agencies or instrumentalities. Obligations
of U.S. Government agencies or instrumentalities may or may not be guaranteed or
supported by the "full faith and credit" of the United States. Some are backed
by the right of the issuer to borrow from the U.S. Treasury; others, by
discretionary authority of the U.S. Government to purchase the agencies'
obligations; while others are supported only by the credit of the
instrumentality. All U.S. Treasury obligations are backed by the full faith and
credit of the United States. If the securities are not backed by the full faith
and credit of the United States, the owner of the securities must look
principally to the agency issuing the obligation for repayment and may not be
able to assert a claim against the United States in the event that the agency or
instrumentality does not meet its commitment. U.S.
Government Securities include the following:
o U.S. Treasury Obligations. These include Treasury Bills
(which have maturities of one year or less when issued), Treasury
Notes (which have maturities of two to ten years when issued) and
Treasury Bonds (which have maturities generally greater than ten
years when issued). U.S. Treasury obligations are backed by the
full faith and credit of the United States.
o Obligations Issued or Guaranteed by U.S. Government
Agencies or Instrumentalities. These are obligations that are
supported by any of the following: (a) the full faith and credit of
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the U.S. Government, such as Government National Mortgage Association ("Ginnie
Mae") modified pass-through certificates as described below, (b) the right of
the issuer to borrow an amount limited to a specific line of credit from the
U.S. Government such as bonds issued by Federal National Mortgage Association
("Fannie Mae"), (c) the discretionary authority of the U.S. Government to
purchase the obligations of the agency or instrumentality, or (d) the credit of
the instrumentality, such as obligations of Federal Home Loan Mortgage
Corporation ("Freddie Mac"). Agencies and instrumentalities the securities of
which are supported by the discretionary authority of the U.S. Government to
purchase such securities and which the Fund may purchase under (c) above
include: Federal Land Banks, Farmers Home Administration, Central Bank for
Cooperatives, Federal Intermediate Credit Banks, Freddie Mac and Fannie Mae.
o Zero Coupon Treasury Securities. "Zero coupon" Treasury securities
are: (i) U.S. Treasury notes or bonds which have been stripped of their
unmatured interest coupons and receipts; or (ii) certificates representing
interests in such stripped debt obligations or coupons. The Fund will not invest
in certificates which are issued by private issuers. Because a zero coupon
security pays no interest to its holder during its life, the Fund will invest in
such securities for capital appreciation purposes. Such securities usually trade
at a deep discount from their face or par value and will be subject to greater
fluctuations of market value in response to changing interest rates than debt
obligations of comparable maturities which make current distribution of
interest. Current Federal tax law requires that a holder of a zero coupon
security accrue a portion of the discount at which the security was purchased as
income each year even though the holder received no interest payment in cash on
the security during the year. The Fund will not invest more than 10% of its
total assets at the time of purchase in zero coupon Treasury securities.
o Mortgage-Backed Securities and CMOs. The Fund's investment in U.S.
Government Securities may include securities which represent participation
interests in pools of residential mortgage loans which are guaranteed by
agencies or instrumentalities of the U.S. Government. Such securities differ
from conventional debt securities which provide for periodic payment of interest
in fixed amounts (usually semi-annually) with principal payments at maturity or
specified call dates. Mortgage-backed securities provide monthly payments which
are, in effect, a "pass-through" of the monthly interest and principal payments
(including any prepayment made by the individual borrowers on the pooled
mortgage loans). Principal prepayments result from the sale of the underlying
property or the refinancing or foreclosure of underlying mortgages or other
factors.
The effective maturity of a mortgage-backed security may be
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shortened by unscheduled or early payment of principal and interest on the
underlying mortgages, which may affect the effective yield of such securities.
The principal that is returned may be invested in instruments having a higher or
lower yield than the prepaid instruments, depending on then-current market
conditions. Such securities therefore may be less effective as a means of
"locking in" attractive long-term interest rates and may have less potential for
appreciation during periods of declining interest rates than conventional bonds
with comparable stated maturities. If the Fund buys mortgage-backed securities
at a premium, prepayments of principal and foreclosures of mortgages may result
in some loss of the Fund's principal investment to the extent of the premium
paid.
The Fund may invest in collateralized mortgage obligations ("CMOs")
that are issued or guaranteed by the U.S. Government or its agencies or
instrumentalities (or by a private issuer), or that are collateralized by a
portfolio of mortgages or mortgage-related securities guaranteed by such an
agency or instrumentality (or by a private issuer). Payment of the interest and
principal generated by the pool of mortgages is passed through to the holders as
the payments are received by the issuer of the CMO. CMOs may be issued in a
variety of classes or series ("tranches") that may have different maturities and
other different characteristics. For example, the principal value of certain CMO
tranches may be more volatile than other types of mortgage-related securities,
because of the possibility that the principal value of the CMO may be prepaid
earlier than the maturity of the CMO as a result of prepayments of the
underlying mortgage loans by the borrowers.
The Fund may invest in "stripped" mortgage-backed securities or CMOs or
other securities issued by agencies or instrumentalities of the U.S. Government.
Stripped mortgage-backed securities usually have two classes. The classes
receive different proportions of the interest and principal distributions on the
pool of mortgage assets that act as collateral for the security. In certain
cases, one class will receive all of the interest payments (and is known as an
"I/O"), while the other class will receive all of the principal value on
maturity (and is known as a "P/O").
The yield to maturity on the class that receives only interest is
extremely sensitive to the rate of payment of the principal on the underlying
mortgages. Principal prepayments increase that sensitivity. Stripped securities
that pay "interest only" are therefore subject to greater price volatility when
interest rates change, and they have the additional risk that if the underlying
mortgages are prepaid, the Fund will lose the anticipated cash flow from the
interest on the prepaid mortgages. That risk is increased when general interest
rates fall, and in times of rapidly falling interest rates, the Fund might
receive back less than its investment.
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The value of "principal only" securities generally increases as
interest rates decline and prepayment rates rise. The price of these securities
is typically more volatile than that of coupon- bearing bonds of the same
maturity.
Stripped securities are generally purchased and sold by institutional
investors through investment banking firms. At present, established trading
markets have not yet developed for these securities. Therefore, some stripped
securities may be deemed "illiquid." If the Fund holds illiquid stripped
securities, the amount it can hold will be subject to the Fund's investment
policy limiting investments in illiquid securities to 10% of the Fund's assets.
The Fund may also enter into "forward roll" transactions with banks or
other buyers that provide for future delivery of the mortgage-backed securities
in which the Fund may invest. The Fund would be required to segregate liquid
assets of any type, including equity and debt securities of any grade to its
custodian bank in an amount equal to its purchase payment obligation under the
roll.
o GNMA Certificates. Certificates of the Government National Mortgage
Association ("GNMA Certificates") are mortgage-backed securities which evidence
an undivided interest in a pool or pools of mortgages. The GNMA Certificates
that the Fund may purchase are of the "modified pass-through" type, which
entitle the holder to receive timely payment of all interest and principal
payments due on the mortgage pool, net of fees paid to the "issuer" and GNMA,
regardless of whether the mortgagor actually makes the payment.
The National Housing Act authorizes GNMA to guarantee the timely
payment of principal and interest on securities backed by a pool of mortgages
insured by the Federal Housing Administration ("FHA") or guaranteed by the
Veterans Administration ("VA"). The GNMA guarantee is backed by the full faith
and credit of the U.S. Government. GNMA is also empowered to borrow without
limitation from the U.S. Treasury if necessary to make any payments required
under its guarantee.
The average life of a GNMA Certificate is likely to be substantially
shorter than the original maturity of the mortgages underlying the securities.
Prepayment of principal by mortgagors and mortgage foreclosures will usually
result in the return of the greater part of principal investment long before the
maturity of the mortgages in the pool. Foreclosures impose no risk to principal
investment because of the GNMA guarantee, except to the extent that the Fund has
purchased the certificates at a premium in the secondary market.
o FHLMC Securities. The Federal Home Loan Mortgage
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Corporation ("FHLMC") was created to promote development of a nationwide
secondary market for conventional residential mortgages. FHLMC issues two types
of mortgage pass-through securities ("FHLMC Certificates"): mortgage
participation certificates ("PCs") and guaranteed mortgage certificates
("GMCs"). PCs resemble GNMA Certificates in that each PC represents a pro rata
share of all interest and principal payments made and owned on the underlying
pool. FHMLC guarantees timely monthly payment of interest on PCs and the
ultimate payment of principal.
GMCs also represent a pro rata interest in a pool of mortgages.
However, these instruments pay interest semi-annually and return principal once
a year in guaranteed minimum payments. The expected average life of these
securities is approximately ten years. The FHLMC guarantee is not backed by the
full faith and credit of the U.S. Government.
o FNMA Securities. The Federal National Mortgage Association ("FNMA")
was established to create a secondary market in mortgages insured by the FHA.
FNMA issues guaranteed mortgage pass-through certificates ("FNMA Certificates").
FNMA Certificates resemble GNMA Certificates in that each FNMA Certificates
represents a pro rata share of all interest and principal payments made and owed
on the underlying pool FNMA guarantees timely payment of interest and principal
on FNMA Certificates. The FNMA guarantee is not backed by the full faith and
credit of the U.S. Government.
o Other Securities.
o Corporate Securities
The corporate fixed-income securities in which the Fund may invest
include securities issued by domestic and foreign corporations and issuers and
may be denominated in U.S. dollars or in non-U.S. currencies. These investments
may include non-convertible debt obligations such as bonds, debentures and
notes. The corporate fixed-income investments of the Fund may also include
preferred and convertible preferred stocks of domestic corporations and issuers.
Investment in foreign securities involves considerations and risks not
associated with investment in securities of U.S. issuers.
o Preferred Stocks. Preferred stocks, like common stocks, represent
ownership interests in a corporation. However, unlike common stock, preferred
stock offers a stated dividend rate payable from a corporation's earnings.
Dividends on some preferred stocks may be "cumulative" if stated dividends from
prior periods have not been paid. Preferred stock also generally has a
preference over common stock on the distribution of a corporation's assets in
the event of liquidation of the corporation, and may be "participating," which
means that it may be entitled to a dividend
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exceeding the stated dividend in certain cases. The rights of preferred stocks
are generally subordinate to rights associated with a corporation's debt
securities.
o Convertible Securities. Convertible fixed-income securities may
include convertible debt obligations and preferred stocks, and can provide a
potential for current income through interest and dividend payments and at the
same time provide an opportunity for capital appreciation by virtue of their
convertibility into common stock.
Convertible securities rank senior to common stock in a corporation's
capital structure and, therefore, may entail less risk than the corporation's
common stock. The value of a convertible security is a function of its
"investment value" (its value without considering its conversion privilege) and
its "conversion value" (the security's worth if it were to be exchanged pursuant
to its conversion privilege for the underlying security at the market value of
the underlying security). Convertible securities generally offer lower interest
or dividend yields than non-convertible debt securities of similar quality.
To the extent that a convertible security's investment value is greater
than its conversion value, its price will be primarily a reflection of such
investment value and its price will be likely to increase when interest rates
fall and decrease when interest rates rise as with other fixed-income securities
(the credit standing of the issuer and other factors may also have an effect on
the convertible security's value). If the conversion value exceeds the
investment value, the price of the convertible security will rise above its
investment value and, in addition, will sell at some premium over its conversion
value, which represents the price investors are willing to pay for the privilege
of purchasing a fixed-income security with a possibility of capital appreciation
due to the conversion privilege. At such times the price of the convertible
security will tend to fluctuate directly with the price of the underlying equity
security. Convertible securities may be purchased by the Fund at varying price
levels above their investment values and/or their conversion values in keeping
with the Fund's objectives.
o Money Market Instruments
The Fund may invest in U.S. dollar-denominated debt obligations
maturing in one year or less to maintain liquidity deemed necessary by the
Adviser for investment purposes. In addition, the Fund may invest in such
instruments for defensive purposes, to minimize the impact of fluctuating
interest rates on the net asset value of the Fund during periods of adverse
market conditions. These obligations include:
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(1) U.S. Government Securities: Debt instruments of the type
described under "U.S. Government Securities" above. Instruments in
money market instruments will be viewed by the Fund as U.S.
Government Securities to the extent that the securities or, in the
case of repurchase agreements, the securities collateralizing the
agreements, are U.S. Government Securities.
(2) Bank Obligations and Instruments Secured Thereby: The bank
obligations the Fund may invest in include time deposits, certificates of
deposit, and bankers' acceptances if they are: (i) obligations of a domestic
bank with total assets of at least $1 billion or (ii) obligations of a foreign
bank with total assets of at least U.S. $1 billion. The Fund may also invest in
instruments secured by such obligations (e.g., debt which is guaranteed by the
bank). For purposes of this section, the term "bank" includes commercial banks,
savings banks, and savings and loan associations which may or may not be members
of the Federal Deposit Insurance Corporation.
Time deposits are non-negotiable deposits in a bank for a specified
period of time at a stated interest rate, whether or not subject to withdrawal
penalties. However, time deposits that are subject to withdrawal penalties,
other than those maturing in seven days or less, are subject to the limitation
on investments by the Fund in illiquid investments, set forth in the Prospectus
under "Illiquid and Restricted Securities."
Banker's acceptances are marketable short-term credit instruments used
to finance the import, export, transfer or storage of goods. They are deemed
"accepted" when a bank guarantees their payment at maturity.
(3) Commercial Paper: Obligations rated "A-1", "A-2" or "A-3" by
Standard & Poor's or Prime-1, Prime-2 or Prime-3 by Moody's or if not rated,
issued by a corporation or a foreign government, subdivision, agency or
instrumentality having an existing debt security rated "A" or better by Standard
& Poor's or Moody's.
(4) Corporate Obligations: Corporate debt obligations (including master
demand notes but not including commercial paper) if they are issued by domestic
corporations and are rated "A" or better by Standard & Poor's or Moody's or
unrated securities which are of comparable quality in the opinion of the
Adviser.
(5) Other Obligations: Obligations other than those listed in (1)
through (4) above, but not satisfying the standards set forth therein, if they
are: (i) subject to repurchase agreements; or (ii) guaranteed as to principal
and interest by a domestic or foreign bank having total assets in excess of $1
billion, by a corporation whose commercial paper may be purchased by the Fund,
or by a foreign government, subdivision, agency or instrumentality having
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an existing debt security rated "A" or better by Standard & Poor's, Duff &
Phelps or Moody's.
(6) Board Approved Instruments: Other short-term investments of a type
which the Board determines presents minimal credit risks and which are of "high
quality" as determined by any major rating service or, in the case of an
instrument that is not rated, of comparable qualify as determined by the Board.
Appendix B to the Prospectus dated November 23, 1988 contains a general
description of securities ratings.
Bankers' acceptances are marketable short-term credit instruments used
to finance the import, export, transfer or storage of goods. They are deemed
"accepted" when a bank guarantees their payment at maturity.
Bank time deposits may be non-negotiable until expiration and may
impose penalties for early withdrawal. Master demand notes are corporate
obligations which permit the investment of fluctuating amounts by the Fund at
varying rates of interest pursuant to direct arrangements between the Fund, as
lender, and the borrower. They permit daily changes in the amounts borrowed. The
Fund has the right to increase the amount under the note at any time up to the
full amount provided by the note agreement, or to decrease the amount, and the
borrower may repay up to the full amount of the note without penalty. These
notes may or may not be backed by bank letters of credit. Because these notes
are direct lending arrangements between the lender and borrower, it is not
generally contemplated that they will be traded, and there is no secondary
market for them, although they are redeemable (and thus immediately repayable by
the borrower) at principal amount, plus accrued interest, at any time. The Fund
has no limitations on the type of issuer from whom these notes will be
purchased; however, in connection with such purchase and on an ongoing basis,
subject to policies established by the Board of Trustees, the Adviser will
consider the earning power, cash flow and other liquidity ratios of the issuer,
and its ability to pay principal and interest on demand, including a situation
in which all holders of such notes made demand simultaneously. Investments in
bank time deposits and master demand notes are subject to the 15% investment
limitation on securities that are not readily marketable as set forth below.
o Asset-Backed Securities
The Fund may invest in securities that represent undivided fractional
interests in pools of consumer loans, similar in structure to the
mortgage-backed securities in which the Fund may invest described above.
Payments of principal and interest are passed through to holders of asset-backed
securities and are
-13-
<PAGE>
typically supported by some form of credit enhancement, such as a letter of
credit, surety bond, limited guarantee by another entity or having a priority to
certain of the borrower's other obligations. The degree of credit enhancement
varies and generally applies, until exhausted, to only a fraction of the
asset-backed security's par value. If the credit enhancement of any asset-
backed security held by the Fund has been exhausted, and if any required
payments of principal and interest are not made with respect to the underlying
loans, the Fund may then experience losses or delays in receiving payment and a
decrease in the value of the asset-backed security.
The value of asset-backed securities is affected by changes in the
market's perception of the asset backing the security, the creditworthiness of
the servicing agent for the loan pool, the originator of the loans, or the
financial institution providing any credit enhancement, and is also affected if
any credit enhancement is exhausted. The risks of investing in asset-backed
securities are ultimately dependent upon payment of the underlying consumer
loans by the individuals, and the Fund would generally have no recourse to the
entity that originated the loans in the event of default by a borrower. The
underlying loans are subject to prepayments that shorten the weighted average
life of asset-backed securities and may lower their return in the same manner as
described above for prepayments of a pool of mortgage loans underlying
mortgage-backed securities.
o Participation Interests
The Fund may acquire participation interests in loans that are made to
U.S. or foreign companies or to foreign governments (the "borrower"). They may
be interests in, or assignments of, the loan and are acquired from banks or
brokers that have made the loan or are members of the lending syndicate. No more
than 5% of the Fund's net assets can be invested in participation interest of
the same borrower. The Adviser has set certain creditworthiness standards for
issuers of loan participations, and monitors their creditworthiness. The value
of loan participation interests depends primarily upon the creditworthiness of
the borrower, and its ability to pay interest and principal. Borrowers may have
difficulty making payments. If a borrower fails to make scheduled interest or
principal payments, the Fund could experience a decline in the net asset value
of its shares. Some borrowers may have senior securities rated as low as "C" by
Moody's or "D" by Standard & Poor's or Duff & Phelps, but may be deemed
acceptable credit risks. Participation interests are subject to the Fund's
limitations on investments in illiquid securities.
Other Investment Techniques and Strategies. In pursuing its
investment objectives, the Fund may engage in the following special
-14-
<PAGE>
investment techniques.
o Direct Placements and Other Illiquid Securities. The Fund may invest
up to 10% of its assets in illiquid securities, which are those securities that
are not readily marketable. These include securities purchased in direct
placements and securities subject to statutory or contractual restrictions and
delays on resale (restricted securities). This policy does not limit the
acquisition of restricted securities eligible for resale pursuant to Rule 144A
under the Securities Act of 1933 that are determined to be liquid by the Board
of Trustees or the Adviser under Board- approved guidelines. Such guidelines
take into account trading activity for such securities and the availability of
reliable pricing information, among other factors. If there is a lack of trading
interest in particular Rule 144A securities, the Fund's holdings of those
securities may be illiquid. Restricted securities may generally be resold only
in privately-negotiated transactions with a limited number of purchasers or in a
public offering registered under the Securities Act of 1933 and are, therefore,
unlike securities which are traded in the open market and can be expected to be
sold immediately if the market demand is adequate. If restricted securities are
substantially comparable to registered securities of the same issuer which are
readily marketable, the Fund may not purchase them unless they are offered at a
discount from the market price of the registered securities. No restricted
securities will be purchased unless the issuer has agreed to register the
securities at its expense within a specific time period. Adverse conditions in
the public securities market at certain times may preclude a public offering of
an issuer's unregistered securities. There may be undesirable delays in selling
restricted securities at prices representing fair value.
Other illiquid securities in which the Fund may invest include bank
time deposits, master demand notes and certain puts and calls which are traded
in the over-the-counter markets.
o Repurchase Agreements. In order to increase income, any of the
securities permissible for purchase may be acquired by the Fund subject to
repurchase agreements with commercial banks with total assets in excess of $1
billion or securities dealers with a net worth in excess of $50 million. In a
repurchase transaction, at the time the Fund acquires a security, it
simultaneously resells it to the vendor and must deliver that security to the
vendor on a specific future date. The repurchase price exceeds the purchase
price by an amount that reflects an agreed-upon interest rate effective for the
period during which the repurchase agreement is in effect. The majority of these
transactions run from day to day, and delivery pursuant to the resale typically
will occur within one to five days of the purchase. The Fund will not enter into
a repurchase transaction of more than seven days. Repurchase agreements are
considered "loans" under the Investment Company Act
-15-
<PAGE>
of 1940 (the "1940 Act"), collateralized by the underlying security. The Fund's
repurchase agreements will require that at all times while the repurchase
agreement is in effect, the collateral's value must equal or exceed the
repurchase price to collateralize the loan fully. The Adviser will monitor the
collateral daily and, in the event its value declines below the repurchase
price, will immediately demand additional collateral be deposited. If such
demand is not met within one day, the existing collateral will be sold.
Additionally, the Adviser will consider the creditworthiness of the vendor. If
the vendor fails to pay the agreed-upon resale price on the delivery date, the
Fund's risks in such event may include any decline in value of the collateral to
an amount which is less than 100% of the repurchase price, any costs of
disposing of such collateral, and loss from any delay in foreclosing on the
collateral. There is no limit on the amount of the Fund's assets that may be
subject to repurchase agreements.
o When-Issued and Delayed Delivery Transactions. The Fund may purchase
mortgage-backed securities, municipal bonds and other debt securities on a
"when-issued" basis, and may purchase or sell such securities on a "delayed
delivery" basis. "When-issued" or "delayed delivery" refers to securities whose
terms and indenture are available and for which a market exists, but which are
not available for immediate delivery. Although the Fund will enter into such
transactions for the purpose of acquiring securities for its portfolio for
delivery pursuant to option contracts it has entered into, the Fund may dispose
of a commitment prior to settlement. The Fund does not intend to make such
purchases for speculative purposes. When such transactions are negotiated, the
price (which is generally expressed in yield terms) is fixed at the time the
commitment is made, but delivery and payment for the securities take place at a
later date. During the period between commitment by the Fund and settlement
(generally between two months and 120 days), no payment is made for the
securities purchased, and no interest accrues to the Fund from the transaction.
Such securities are subject to market fluctuations; the value at delivery may be
less than the purchase price. The Fund will maintain a segregated account with
its custodian, consisting of liquid assets of any type, including equity and
debt securities of any grade at least equal to the value of purchase commitments
until payment is made. Such securities may bear interest at a lower rate than
longer term securities. The commitment to purchase a security for which payment
will be made on a future date may be deemed a separate security and involve a
risk of loss if the value of the security declines prior to the settlement date,
which risk is in addition to the risk of decline of the Fund's other assets.
o Hedging. The Fund may certain kinds of futures contracts;
forward contracts; call and put options on securities, futures,
indices and foreign currencies; and enter into interest rate swap
agreements These are referred to as "Hedging Instruments". Hedging
-16-
<PAGE>
Instruments may be used to attempt to protect against possible declines in the
market value of the Fund's portfolio from downward trends in securities markets
(generally due to a rise in interest rates), to protect the Fund's unrealized
gains in the value of its securities which have appreciated, to facilitate
selling securities for investment reasons, to establish a position in the
securities markets as a temporary substitute for purchasing particular
securities, or to reduce the risk of adverse currency fluctuations. The Fund's
strategy of hedging with Futures and options on Futures will be incidental to
the Fund's activities in the underlying cash market. Covered calls and puts may
also be written on securities to attempt to increase the Fund's income. A call
or put may be purchased only if, after such purchase, the value of all call and
put options held by the Fund would not exceed 5% of the Fund's total assets. The
Hedging Instruments the Fund may use are described below. As of the date of this
Registration Statement, the Fund does not intend to enter into Futures, Forward
Contracts and options on Futures if after any such purchase, the sum of margin
deposits on Futures and premiums paid on Futures options would exceed 5% of the
value of the Fund's total assets.
o Futures. The Fund may buy and sell futures contracts that relate to
(1) stock indices (referred to as Stock Index Futures), other securities indices
(together with Stock Index Futures, refereed to as Financial Futures), (3)
interest rates (referred to as Interest Rate Futures), or (4) foreign currencies
(referred to as Forward Contracts). An Interest Rate Future obligates the seller
to deliver and the purchaser to take a specific type of debt security at a
specific future date for a fixed price. That obligation may be satisfied by
actual delivery of the debt security or by entering into an offsetting contract.
A bond index assigns relative values to the bonds included in that index and is
used as a basis for trading long-term Bond Index Futures contracts. Bond Index
Futures reflect the price movements of bonds included in the index. They differ
from Interest Rate Futures in that settlement is made in cash rather than by
delivery; or settlement may be made by entering into an offsetting contract.
o Calls on Securities and Futures. The Fund may write (i.e., sell) or
purchase call options ("calls") on securities that were traded on U.S. and
foreign securities and over-the-counter markets. All such calls written by the
Fund must be "covered" while the call is outstanding. That means the Fund owns
the securities on which the call was written or the Fund owns and segregates
liquid assets to satisfy its obligation if the call is exercised. Calls on
Futures must be covered by deliverable securities or by liquid assets segregated
to satisfy the Futures contract. If a call written by the Fund is exercised, the
Fund forgoes any possible profit from an increase in the market price of the
underlying
-17-
<PAGE>
security over the exercise price.
o Puts on Securities and Futures. The Fund may purchase put options
("puts") which relate to securities (whether or not it holds such securities in
its portfolio) or Futures. It may also write puts on securities or Futures if
such puts are covered by segregated liquid assets. The Fund will not write puts
if, as a result, more than 50% of the Fund's assets would be required to be
segregated liquid assets. In writing puts, there is the risk that the Fund may
be required to buy the underlying security at a disadvantageous price.
o Foreign Currency Options. The Fund may purchase and write puts and
calls on foreign currencies that are traded on a securities or commodities
exchange or quoted by major recognized dealers in such options, for the purpose
of protecting against declines in the dollar value of foreign securities and
against increases in the dollar cost of foreign securities to be acquired. If a
rise is anticipated in the dollar value of a foreign currency in which
securities to be acquired are denominated, the increased cost of such securities
may be partially offset by purchasing calls or writing puts on that foreign
currency. If a decline in the dollar value of a foreign currency is anticipated,
the decline in value of portfolio securities denominated in that currency may be
partially offset by writing calls or purchasing puts on that foreign currency.
However, in the event of currency rate fluctuations adverse to the Fund's
position, it would either lose the premium it paid and incur transaction costs,
or purchase or sell the foreign currency at a disadvantageous price.
o Forward Contracts. The Fund may enter into foreign currency exchange
contracts ("Forward Contracts"), which obligate the seller to deliver and the
purchaser to take a specific foreign currency at a specific future date for a
fixed price. The Fund may enter into a Forward Contract in order to "lock in"
the U.S. dollar price of a security denominated in a foreign currency which it
has purchased or sold but which has not yet settled, or to protect against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and a foreign currency. There is a risk that use of Forward
Contracts may reduce the gain that would otherwise result from a change in the
relationship between the U.S. dollar and a foreign currency. Forward contracts
include standardized foreign currency futures contracts which are traded on
foreign exchanges and are subject to procedures and regulations applicable to
other Futures. The Fund may also enter into a Forward Contract to sell a foreign
currency denominated in a currency other than that in which the underlying
security is denominated. This is done in the expectation that there is a greater
correlation between the foreign currency of the Forward Contract and the foreign
currency of the underlying investment than
-18-
<PAGE>
between the U.S. dollar and the currency of the underlying investment. This
technique is referred to as "cross hedging". The success of cross hedging is
dependent on many factors, including the ability of the Adviser to correctly
identify and monitor the correlation between foreign currencies and the U.S.
dollar. To the extent that the correlation is not identical, the Fund may
experience losses or gains on both the underlying security and the cross
currency hedge.
The Fund will not speculate in foreign currency exchange contracts.
There is no limitation as to the percentage of the Fund's assets that may be
committed to foreign currency exchange contracts. The Fund does not enter into
such Forward Contracts or maintain a net exposure in such contracts to the
extent that the Fund would be obligated to deliver an amount of foreign currency
in excess of the value of the Fund's assets denominated in that currency or
enter into a "cross-hedge" unless it is denominated in a currency or currencies
that the Adviser believes will have price movements that tend to correlate
closely with the currency.
o Interest Rate Swaps. In an interest rate swap, the Fund and another
party exchange their right to receive or their obligation to pay interest on a
security. For example, they may swap a right to receive floating rate payments
for fixed rate payments. The Fund enters into swaps only on securities it owns.
The Fund may not enter into swaps with respect to more than 25% of its total
assets. Also, the Fund will segregate liquid assets of any type, including
equity and debt securities of any grade to cover any amounts it could owe under
swaps that exceed the amounts it is entitled to receive, and it will adjust that
amount daily, as needed.
Hedging instruments can be volatile investments and may involve special
risks. The use of hedging instruments requires special skills and knowledge of
investment techniques that are different than what is required for normal
portfolio management. If the Adviser uses a hedging instrument at the wrong time
or judges market conditions incorrectly, hedging strategies may reduce the
Fund's return. The Fund could also experience losses if the prices of its
futures and options positions were not correlated with its other investments or
if it could not close out a position because of an illiquid market for the
future or option.
Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. If a covered call written by the Fund is exercised on a security
that has increased in value, the Fund will be required to sell the security at
the call price and will not be able to realize any profit if the security has
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<PAGE>
increased in value above the call price. For example, the use of forward
contracts may reduce the gain that would otherwise result from a change in the
relationship between the U.S. dollar and a foreign currency. To limit its
exposure in foreign currency exchange contracts, the Fund limits its exposure to
the amount of its assets denominated in the foreign currency. Interest rate
swaps are subject to credit risks (if the other party fails to meet its
obligations) and also to interest rate risks. The Fund could be obligated to pay
more under its swap agreements than it receives under them, as a result of
interest rate changes.
o Derivative Investments. The Fund can invest in a number of different
kinds of "derivative investments." In general, a "derivative investment" is a
specially designed investment whose performance is linked to the performance of
another investment or security, such as an option, future, index, currency or
commodity. The Fund may not purchase or sell physical commodities or commodity
contracts; however this does not prevent the Fund from buying or selling options
and futures contracts or from investing in securities or other instruments
backed by physical commodities. In the broadest sense, derivative investments
include exchange-traded options and futures contracts. The risks of investing in
derivative investments include not only the ability of the company issuing the
instrument to pay the amount due on the maturity of the instrument, but also the
risk that the underlying investment or security might not perform the way the
Adviser expected it to perform. The performance of derivative investments may
also be influenced by interest rate changes in the U.S. and abroad. All of this
can mean that the Fund will realize less principal and/or income than expected.
Certain derivative investments held by the Fund may trade in the
over-the-counter market and may be illiquid.
Derivative investments used by the Fund are used in some cases for
hedging purposes and in other cases for "non-hedging" investment purposes to
seek income or total return. In the broadest sense, exchange-traded options and
futures contracts (discussed in "Hedging," above) may be considered "derivative
investments." The Fund may invest in types of derivatives, generally
known as "Structured Investments." "Index-linked or commodity -linked" notes are
debt securities of companies that call for interest payments and/or payment on
the maturity of the note in different terms than the typical note where the
borrower agrees to make fixed interest payments and to pay a fixed sum on the
maturity of the note. Principal and/or interest payments on an index-linked note
depends on the performance of one or more market indices, such as the S&P 500
Index or a weighted index of commodity futures , such as crude oil, gasoline and
natural gas. Further examples of derivative investments the Fund may invest in
include "debt
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<PAGE>
exchangeable for common stock" of an issuer or "equity-linked debt securities"
of an issuer. At maturity, the principal amount of the security is exchanged for
common stock of the issuer or is payable in an amount based on the issuer's
common stock price at the time of maturity. In either case there is a risk that
the amount payable at maturity will be less than the principal amount of the
debt.
The Fund may also invest in currency-indexed securities. Typically
these are short-term or intermediate-term debt securities having a value at
maturity, and/or interest rates determined by reference to one or more specified
foreign currencies. Certain currency-indexed securities purchased by the Fund
may have a payout factor tied to a multiple of the movement of the U.S. dollar
(or the foreign currency in which the security is denominated) against the
movement in the U.S. dollar, the foreign currency, another currency, or an
index. Such securities may be subject to increased principal risk and increased
volatility than comparable securities without a payout factor in excess of one,
but the Adviser believes the increased yield justifies the increased risk.
o Loans of Portfolio Securities. To attempt to increase its income, the
Fund may lend its portfolio securities if, after any loan, the value of the
securities loaned does not exceed 25% of the total value of its assets. Under
applicable regulatory requirements (which are subject to change), the loan
collateral must, on each business day, be at least equal to the value of the
loaned securities and must consist of cash, bank letters of credit or U.S.
Government Securities. To be acceptable as collateral, letters of credit must
obligate a bank to pay amounts demanded by the Fund if the demand meets the
terms of the letter. Such terms and the issuing bank must be satisfactory to the
Fund. The Fund receives an amount equal to the dividends or interest on loaned
securities and also receives one or more of (a) negotiated loan fees, (b)
interest on securities used as collateral, or (c) interest on short-term debt
securities purchased with such loan collateral; either type of interest may be
shared with the borrower. The Fund may also pay reasonable finder's, custodian
and administrative fees. The terms of the Fund's loans must meet certain tests
under the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"
or the "Code"), and permit the Fund to reacquire loaned securities on five days'
notice or in time to vote on any important matter. The Fund will make such loans
only to banks and securities dealers with whom it may enter into repurchase
transactions. If the borrower fails to return the loaned security the Fund's
risks include: (1) any costs in disposing of the collateral; (2) loss from a
decline in value of the collateral to an amount less than 100% of the securities
loaned; (3) being unable to exercise its voting or consent rights with respect
to the
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<PAGE>
security; and (4) any loss arising from the Fund being unable to timely settle a
sale of such securities.
o Borrowing. From time to time, the Fund may increase its ownership of
securities by borrowing up to 10% of the value of its net assets from banks and
investing the borrowed funds (on which the Fund will pay interest). After any
such borrowing, the Fund's total assets, less its liabilities other than
borrowings, must remain equal to at least 300% of all borrowings, as set forth
in the Investment Company Act. Interest on borrowed money is an expense the Fund
would not otherwise incur, so that it may have substantially reduced net
investment income during periods of substantial borrowings. The Fund's ability
to borrow money from banks subject to the 300% asset coverage requirement is a
fundamental policy. Subject to the 10% limit (which is a fundamental policy),
the Fund may also borrow to finance repurchases and/or tenders of its shares and
may also borrow for temporary purposes in an amount not exceeding 5% of the
value of the Fund's total assets. Any investment gains made with the proceeds
obtained from borrowings in excess of interest paid on the borrowings will cause
the net income per share or the net asset value per share of the Fund's Shares
to be greater than would otherwise be the case. On the other hand, if the
investment performance of the securities purchased fails to cover their cost
(including any interest paid on the money borrowed) to the Fund, then the net
income per share or net asset value per share of the Fund's Shares will be less
than would otherwise have been the case. This speculative factor is known as
"leverage." Although such borrowings would therefore involve additional risk to
the Fund, the Fund will only borrow if such additional risk of loss of principal
is considered by the Adviser to be appropriate in relation to the Fund's primary
investment objective of high current income consistent with preservation of
capital. The Adviser will make this determination by examining both the market
for securities in which the Fund invests and interest rates in general to
ascertain that the climate is sufficiently stable to warrant borrowing. Because
the Fund will limit its borrowings to finance repurchases of and/or tenders for
its Shares to 10% of the value of its net assets, the Fund may not be able to
purchase as many Shares as it would have if its borrowing power extended to the
maximum limit allowed under the 1940 Act.
o Defensive Strategies. There may be times when, in the Adviser's
judgment, conditions in the securities markets would make pursuing the Fund's
primary investment strategy inconsistent with the best interests of its
shareholders. At such times, the Fund may employ alternative strategies
primarily seeking to reduce fluctuations in the value of the Fund's assets. In
implementing these defensive strategies, the Fund may increase the portion of
its assets invested in U.S. Government Securities up to 100% and/or
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<PAGE>
nonconvertible high-grade debt securities up to 35%. The Fund may also hold up
to 100% of its assets in cash or cash equivalents. It is impossible to predict
when, or for how long, alternative strategies will be utilized.
Other Investment Restrictions. The Fund has adopted the following
investment restrictions, which together with its investment objective, are
fundamental policies changeable only with the approval of the holders of a
"majority" of the Fund's outstanding voting securities, defined in the
Investment Company Act of 1940 as the affirmative vote of the lesser of (a) more
than 50% of the outstanding Shares of the Fund, or (b) 67% or more of the Shares
present or represented by proxy at a meeting if more than 50% of the Fund's
outstanding Shares are represented at the meeting in person or by proxy. Unless
it is specifically stated that a percentage restriction applies on an ongoing
basis, it applies only at the time the Fund makes an investment, and the Fund
need not sell securities to meet the percentage limits if the value of the
investment increases in proportion to the size of the Fund. Other investment
restrictions are listed in the Statement of Additional Information. Under these
restrictions, the Fund will not do any of the following:
o As to 75% of its total assets, the Fund cannot invest in
securities of any one issuer (other than the United States
Government, its agencies or instrumentalities) if after any
such investment either (a) more than 5% of the Fund's total
assets would be invested in the securities of that issuer, or
(b) the Fund would then own more than 10% of the voting
securities of that issuer;
o The Fund cannot concentrate investments to the extent of
more than 25% of its total assets in securities of
issuers in the same industry; provided that this
limitation shall not apply with respect to investments in
U.S. Government Securities;
o The Fund cannot make loans except through (a) the purchase of
debt securities in accordance with its investment objectives
and policies; (b) the lending of portfolio securities as
described above; or (c) the acquisition of securities subject
to repurchase agreements;
o The Fund cannot borrow money, except in conformity with
the restrictions stated above under "Borrowing";
o The Fund cannot pledge, hypothecate, mortgage or otherwise
encumber its assets, except to secure permitted borrowings or
for the escrow arrangements contemplated in
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<PAGE>
connection with the use of Hedging Instruments;
o The Fund cannot participate on a joint or joint and
several basis in any securities trading account;
o The Fund cannot invest in companies for the purpose of
exercising control or management thereof;
o The Fund cannot make short sales of securities or
maintain a short position, unless at all times when a
short position is open it owns an equal amount of such
securities or by virtue of ownership of other securities
has the right, without payment of any further
consideration, to obtain an equal amount of the
securities sold short ("short sales against the box");
short sales may be made to defer realization of gain or
loss for Federal income tax purposes;
o The Fund cannot invest in (a) real estate, except that it
may purchase and sell securities of companies which deal
in real estate or interests therein; (b) commodities or
commodity contracts (except that the Fund may purchase
and sell Hedging Instruments whether or not they are
considered to be a commodity or commodity contract); or
(c) interests in oil, gas or other mineral exploration or
development programs;
o The Fund cannot act as an underwriter of securities, except
insofar as the Fund might be deemed to be an underwriter for
purposes of the Securities Act of 1933 in the resale of any
securities held for its own portfolio; or
o The Fund cannot purchase securities on margin, except that the
Fund may make margin deposits in connection with any of the
Hedging Instruments it may use.
5. The shares of beneficial interest of the Fund, $.01 par value per
share (the "Shares"), are listed and traded on The New York Stock Exchange (the
"NYSE"). The following table sets forth for the Shares for the periods
indicated: (a) the per Share high sales price on the NYSE, the net asset value
per Share as of the last day of the week immediately preceding the day for which
the high sales price on the NYSE is reported, and the premium or discount
(expressed as a percentage of net asset value) represented by the difference
between such high sales price and the corresponding net asset value and (b) the
per Share low sales price on the NYSE, the net asset value per Share as of the
last day of the week immediately preceding the day for which the low sales price
on the NYSE is reported, and the premium or discount (expressed as a percentage
of net asset value) represented by the
-24-
<PAGE>
difference between such low sales price and the corresponding net
asset value.
<TABLE>
<CAPTION>
Market Price High;(1) Market Price Low;(1)
NAV and Premium/ NAV and Premium/
Ended (Discount) That Day(2) (Discount) That Day(2)
- - ----- --------------------- ---------------------
<S> <C> <C>
1/31/94 Market: $8.50 Market: $7.75
NAV: $8.57 NAV: $8.54
Premium/(Discount):(.82)% Premium/(Discount): (9.25)%
4/30/94 Market: $8.25 Market: $7.375
NAV: $8.61 NAV: $8.13
Premium/(Discount):(4.18)% Premium/(Discount): (9.29)%
7/31/94 Market: $7.875 Market: $7.25
NAV: $8.07 NAV: $8.01
Premium/(Discount):(2.42)% Premium/(Discount): (9.49)%
10/31/94 Market: $7.625 Market: $6.625
NAV: $8.05 NAV: $7.88
Premium/(Discount):(5.28)% Premium/(Discount): (15.93)%
1/31/95 Market: $7.25 Market: $6.625
NAV: $7.86 NAV: $7.84
Premium/(Discount): (7.76)% Premium/(Discount): (15.50)%
4/30/95 Market: $7.375 Market: $6.5
NAV: $7.58 NAV: $7.68
Premium/(Discount): (2.70)% Premium/(Discount): (15.36)%
7/31/95 Market: $7.25 Market: $6.5
NAV: $7.85 NAV: $7.84
Premium/(Discount): (7.64)% Premium/(Discount): (17.09)%
10/31/95 Market: $7.125 Market: $6.625
NAV: $7.87 NAV: $7.87
Premium/(Discount): (9.47)% Premium/(Discount): (15.82)%
1/31/96 Market: $7.375 Market: $6.75
NAV: $8.04 NAV: $7.91
Premium/(Discount): (8.27)% Premium/(Discount): (14.66)%
4/30/96 Market: $7.63 Market: $7.00
NAV: $8.11 NAV: $7.93
Premium/(Discount): (5.89)% Premium/(Discount): (11.73)%
7/31/96 Market: $7.25 Market: $7.00
NAV: $8.10 NAV: $7.97
Premium/(Discount): (10.49)% Premium/(Discount): (12.17)%
10/31/96 Market: $7.63 Market: $7.00
NAV: $8.31 NAV: $8.11
Premium/(Discount): (8.24)% Premium/(Discount): (13.69)%
1/31/97 Market: $7.50 Market: $7.13
NAV: $8.42 NAV:$8.29
-25-
<PAGE>
Premium/(Discount):(10.93)% Premium/(Discount): (14.05)%
</TABLE>
- - --------------
(1)As reported by the NYSE.
(2)The Fund's computation of net asset value (NAV) is as of the close of trading
on the last day of the week immediately preceding the day for which the high and
low market price is reported and the premium or discount (expressed as a
percentage of net asset value) is calculated based on the difference between the
high or low market price and the corresponding net asset value for that day,
divided by the net asset value.
The Board of Trustees of the Fund has determined that it may be in the
interests of Fund shareholders for the Fund to take action to attempt to reduce
or eliminate a market value discount from net asset value. To that end, the Fund
may, from time to time, either repurchase Shares in the open market or, subject
to conditions imposed from time to time by the Board, make a tender offer for a
portion of the Fund's Shares at their net asset value per Share. Subject to the
Fund's fundamental policy with respect to borrowings, the Fund may incur debt to
finance repurchases and/or tenders. Interest on any such borrowings will reduce
the Fund's net income. In addition, the acquisition of Shares by the Fund will
decrease the total assets of the Fund and therefore will have the effect of
increasing the Fund's expense ratio. If the Fund must liquidate portfolio
securities to purchase Shares tendered, the Fund may be required to sell
portfolio securities for other than investment purposes and may realize gains
and losses. Gains realized on securities held for less than three months may
affect the Fund's ability to retain its status as a regulated investment company
under the Internal Revenue Code.
In addition to open-market Share purchases and tender offers, the Board
could also seek shareholder approval to convert the Fund to an open-end
investment company if the Fund's Shares trade at a substantial discount. If the
Fund's Shares have traded on the NYSE at an average discount from net asset
value of more than 10%, determined on the basis of the discount as of the end of
the last trading day in each week during the period of 12 calendar weeks ending
October 31 in such year, the Trustees will consider recommending to shareholders
a proposal to convert the Fund to an open-end company. If during a year in which
the Fund's Shares trade at the average discount stated, and for the period
described, in the preceding sentence the Fund also receives written requests
from the holders of 10% or more of the Fund's outstanding Shares that a proposal
to convert to an open end company be submitted to the Fund's shareholders,
within six months the Trustees will submit a proposal to the Fund's
shareholders, to the extent consistent with the 1940 Act, to amend the Fund's
Declaration of Trust to convert the Fund from a closed-end to an open-end
investment company. If the Fund converted to an open-end investment company, it
would be able continuously to issue and offer its Shares for sale, and each
Share of the Fund could be
-26-
<PAGE>
tendered to the Fund for redemption at the option of the shareholder, at a
redemption price equal to the current net asset value per Share. To meet such
redemption request, the Fund could be required to liquidate portfolio
securities. Its Shares would no longer be listed on the NYSE. The Fund cannot
predict whether any repurchase of Shares made while the Fund is a closed-end
investment company would decrease the discount from net asset value at which the
Shares trade. To the extent that any such repurchase decreased the discount from
net asset value to an amount below 10% during the measurement period described
above, the Fund would not be required to submit to shareholders a proposal to
convert the Fund to an open-end investment company.
Item 9. Management
1(a). The Fund is governed by a Board of Trustees, which is responsible
under Massachusetts law for protecting the interests of shareholders. The
Trustees meet periodically throughout the year to oversee the Fund's activities,
review its performance, and review the actions of the Adviser. The Fund is
required to hold annual shareholder meetings for the election of trustees and
the ratification of its independent auditors. The Fund may also hold shareholder
meetings from time to time for other important matters, and shareholders have
the right to call a meeting to remove a Trustee or to take other action
described in the Fund's Declaration of Trust.
1(b). The Adviser, a Colorado corporation with its principal offices at
Two World Trade Center, New York, New York 10048-0203, acts as investment
manager for the Fund under an investment advisory agreement (the "Advisory
Agreement") under which it provides ongoing investment advice and conducts the
investment operations of the Fund, including purchases and sales of its
portfolio securities, under the general supervision and control of the Trustees
of the Fund. The Adviser also acts as accounting agent for the Fund.
The Adviser has operated as an investment company adviser since April
30, 1959. It and its affiliates currently manage investment companies with
assets in excess of $62 billion as of December 31, 1996, and held in more than 3
million shareholder accounts. The Adviser is owned by Oppenheimer Acquisition
Corp., a holding company owned in part by senior management of the Adviser, and
ultimately controlled by Massachusetts Mutual Life Insurance Company.
The Adviser provides office space and investment advisory services for
the Fund and pays all compensation of those Trustees and officers of the Fund
who are affiliated persons of the Adviser. Under the Advisory Agreement, the
Fund pays the Adviser an advisory
-27-
<PAGE>
fee computed and paid weekly at an annual rate of .65 of 1% of the net assets of
the Fund at the end of that week. The Fund also pays the Adviser an annual fee
of $18,000, plus out-of-pocket costs and expenses reasonably incurred, for
performing limited accounting services for the Fund. During the fiscal years
ended October 31, 1994, 1995 and 1996, the Fund paid management fees to the
Adviser of $353,510, $332,730 and $346,262, respectively. The Fund incurred
approximately $16,934 in expenses for the fiscal year ended October 31, 1996 for
services provided by Shareholder Financial Services, Inc. ("SFSI").
Under the Advisory Agreement, the Fund pays certain of its other costs
not paid by the Adviser, including (a) brokerage and commission expenses, (b)
Federal, state, local and foreign taxes, including issue and transfer taxes,
incurred by or levied on the Fund, (c) interest charges on borrowings, (d) the
organizational and offering expenses of the Fund, whether or not advanced by the
Adviser, (e) fees and expenses of registering the Shares of the Fund under the
appropriate Federal securities laws and of qualifying Shares of the Fund under
applicable state securities laws, (f) fees and expenses of listing and
maintaining the listings of the Fund's Shares on any national securities
exchange, (g) expenses of printing and distributing reports to shareholders, (h)
costs of shareholder meetings and proxy solicitation, (i) charges and expenses
of the Fund's Administrator, custodian and Registrar, Transfer and Dividend
Disbursing Agent, (j) compensation of the Fund's Trustees who are not interested
persons of the Adviser, (k) legal and auditing expenses, (l) the cost of
certificates representing the Fund's Shares, (m) costs of stationery and
supplies, and (n) insurance premiums. The Adviser has advanced certain of the
Fund's organizational and offering expenses, which were repaid by the Fund.
There is no expense limitation provision.
1(c). The Portfolio Managers of the Fund are Thomas Reedy, David
Rosenberg and Ashwin Vasan, who also serve as Vice Presidents of the Fund and of
the Adviser, and are officers of certain mutual funds managed by the Adviser
("Oppenheimer Funds"). Messrs. Reedy, Rosenberg and Vasan Have been the persons
principally responsible for the day-to-day management of the Fund's portfolio
since August 1993, June 1994 and August 1993, respectively. During the past five
years, Mr. Reedy served as a securities analyst for the Adviser, and, prior to
joining the Adviser, Mr. Rosenberg served as an officer and portfolio manager
for Delaware Investment Advisors and one of its mutual funds and Mr. Vasan
served as a securities analyst for Citibank, N.A.
1(d). The Administrator for the Fund is Mitchell Hutchins
Asset Management Inc. (the "Administrator"), a Delaware corporation
with principal offices at 1285 Avenue of the Americas, New York,
New York 10019 and an affiliate of PaineWebber Incorporated.
-28-
<PAGE>
Because of the services rendered to the Fund by the Administrator and
the Adviser, the Fund itself requires no employees other than its officers, none
of whom receives compensation from the Fund and all of whom are employed by the
Adviser or the Administrator. In connection with its responsibilities as
Administrator and in consideration of its administrative fee, subject to the
supervision of the Board of Trustees the Administrator will: (i) prepare all
quarterly, semi-annual and annual reports required to be sent to Fund
shareholders, and arrange for the printing and dissemination of such reports to
shareholders; (ii) assemble and file all reports required to be filed by the
Fund with the Securities and Exchange Commission ("SEC") on Form N-SAR, or such
other form as the SEC may substitute for Form N-SAR; (iii) review the provision
of services by the Fund's independent accountants, including but not limited to
the examination by such accountants of financial statements of the Fund and the
review of the Fund's Federal, state and local tax returns; and make such reports
and recommendations to the Board of Trustees concerning the performance of the
independent accountants as the Board reasonably requests or as it deems
appropriate; (iv) file with the appropriate authorities all required Federal,
state and local tax returns; (v) arrange for the dissemination to shareholders
of the Fund's proxy materials, and oversee the tabulation of proxies by the
Fund's transfer agent; (vi) negotiate the terms and conditions under which
custodian services will be provided to the Fund and the fees to be paid by the
Fund in connection therewith; (vii) recommend an accounting agent (which may or
may not be the Fund's custodian or its affiliate) to the Board, which agent
would be responsible for computing the Fund's net asset value in accordance with
the Fund's registration statement under the 1940 Act and the Securities Act of
1933, as amended; (vii) negotiate the terms and conditions under which such
accounting agent would compute the Fund's net asset value, and the fees to be
paid by the Fund in connection therewith; review the provision of such
accounting services to the Fund and make such reports and recommendations to the
Board concerning the provisions of such services as the Board reasonably
requests or the Administrator deems appropriate; (ix) negotiate the terms and
conditions under which the transfer agency and dividend disbursing services will
be provided to the Fund, and the fees to be paid by the Fund in connection
therewith; review the provision of transfer agency and dividend disbursing
services to the Fund; and make such reports and recommendations to the Board
concerning the performance of the Fund's transfer and dividend disbursing agent
as the Board reasonably requests or the Administrator deems appropriate; (x)
establish the accounting policies of the Fund; reconcile accounting issues which
may arise with respect to the Fund's operations; consult with the Fund's
independent accountants, legal counsel, custodian, accounting agent and transfer
and dividend disbursing agent as necessary in connection therewith; (xi)
determine the amounts available for distribution as dividends and distributions
-29-
<PAGE>
to shareholders; prepare and arrange for the printing of dividend notices to the
shareholders; and provide the Fund's transfer and dividend disbursing agent and
custodian with such information as is required for such parties to effect the
payment of dividends and distributions and to implement the Fund's dividend
reinvestment plan; (xii) review the Fund's bills and authorize payments of such
bills by the Fund's custodian; and (xiii) if requested by the Board, designate
one of its employees to serve as an officer of the Fund, and such person shall
not be compensated by the Fund for so serving.
For the services rendered to the Fund and related expenses borne by the
Administrator, the Fund pays the Administrator a fee, calculated and paid
weekly, at the annualized rate of .20% of the Fund's net assets at the end of
that week. During the fiscal years ended October 31, 1994, 1995 and 1996, the
Fund paid administration fees to the Administrator of $108,772, $102,379 and
$106,520, respectively.
1(e). The Bank of New York, 48 Wall Street, New York, New York, acts as
the custodian (the "Custodian") for the Fund's assets held in the United States.
The Adviser and its affiliates have banking relationships with the Custodian.
The Adviser has represented to the Fund that its banking relationships with the
Custodian have been and will continue to be unrelated to and unaffected by the
relationship between the Fund and the Custodian. It will be the practice of the
Fund to deal with the Custodian in a manner uninfluenced by any banking
relationship the Custodian may have with the Adviser and its affiliates. Rules
adopted under the 1940 Act permit the Fund to maintain its securities and cash
in the custody of certain eligible banks and securities depositories. Pursuant
to those Rules, the Fund's portfolio of securities and cash, when invested in
foreign securities, will be held in foreign banks and securities depositories
approved by the Trustees of the Fund in accordance with the rules of the
Securities and Exchange Commission.
SFSI, a subsidiary of the Adviser, acts as primary transfer agent,
shareholder servicing agent and dividend paying agent for the Fund. Fees paid to
SFSI are based on the number of shareholder accounts and the number of
shareholder transactions, plus out-of-pocket costs and expenses. United Missouri
Trust Company of New York acts as co-transfer agent and co-registrar with SFSI
to provide such services as SFSI may request.
1(f). See 1(b) above.
1(g). Inapplicable.
2. Inapplicable.
-30-
<PAGE>
3. None as of February 6, 1996.
Item 10. Capital Stock, Long-Term Debt, and Other Securities.
1. The Fund is authorized to issue an unlimited number of Shares of
beneficial interest, $.01 par value. The Fund's Shares have no preemptive,
conversion, exchange or redemption rights. Each Share has equal voting,
dividend, distribution and liquidation rights. All Shares outstanding are, and,
when issued, those offered hereby will be, fully paid and nonassessable.
Shareholders are entitled to one vote per Share. All voting rights for the
election of Trustees are noncumulative, which means that the holders of more
than 50% of the Shares can elect 100% of the Trustees then nominated for
election if they choose to do so and, in such event, the holders of the
remaining Shares will not be able to elect any Trustees. Under the rules of the
NYSE applicable to listed companies, the Fund is required to hold an annual
meeting of shareholders in each year.
Under Massachusetts law, under certain circumstances shareholders could
be held personally liable for the obligations of the Fund. However, the
Declaration of Trust disclaims shareholder liability for actions or obligations
of the Fund and requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Fund. The
Declaration of Trust provides for indemnification by the Fund for all losses and
expenses of any shareholder held personally liable for obligations of the Fund.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Fund would be
unable to meet its obligations. The likelihood of such circumstances is remote.
Pursuant to the Trust's Dividend Reinvestment and Cash Purchase Plan
(the "Plan"), all dividends and capital gains distributions ("Distributions")
declared by the Trust will be automatically reinvested in additional full and
fractional shares of the Trust ("Shares") unless (i) a shareholder elects to
receive cash or (ii) Shares are held in nominee name, in which event the nominee
should be consulted as to participation 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"), and 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
-31-
<PAGE>
payment of the Distribution in additional Shares at the greater of the Trust's
net asset value 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
-32-
<PAGE>
calling 1-800-647-7374. Shareholders holding Shares in nominee name should
contact their brokerage firm or other nominee for more information.
The Fund presently has provisions in its Declaration of Trust and
By-Laws (together, the "Charter Documents") which could have the effect of
limiting (i) the ability of other entities or persons to acquire control of the
Fund, (ii) the Fund's freedom to engage in certain transactions or (iii) the
ability of the Fund's Trustees or shareholders to amend the Charter Documents or
effect changes in the Fund's management. Those provisions of the Charter
Documents may be regarded as "anti-takeover" provisions. Specifically, under the
Fund's Declaration of Trust, the affirmative vote of the holders of not less
than two thirds (66-2/3%) of the Fund's Shares outstanding and entitled to vote
is required to authorize the consolidation of the Fund with another entity, a
merger of the Fund with or into another entity (except for certain mergers in
which the Fund is the successor), a sale or transfer of all or substantially all
of the Fund's assets, the dissolution of the Fund, the conversion of the Fund to
an open-end company, and any amendment of the Fund's Declaration of Trust that
would affect any of the other provisions requiring a two-thirds vote. However, a
"majority" shareholder vote, as defined in the Charter Documents, shall be
sufficient to approve any of the foregoing transactions that have been
recommended by two-thirds of the Trustees. Notwithstanding the foregoing, if a
corporation, person or entity is directly, or indirectly through its affiliates,
the beneficial owner of more than 5% of the outstanding shares of the Fund, the
affirmative vote of 80% (which is higher than that required under the 1940 Act)
of the outstanding Shares of the Fund is required generally to authorize any of
the following transactions or to amend the provisions of the Declaration of
Trust relating to transactions involving: (i) a merge or consolidation of the
Fund with or into any such corporation or entity, (ii) the issuance of any
securities of the Fund to any such corporation, person or entity for cash; (iii)
the sale, lease or exchange of all or any substantial part of the assets of the
Fund to any such corporation, entity or person (except assets having an
aggregate market value of less than $1,000,000); or (iv) the sale, lease or
exchange to the Fund, in exchange for securities of the Fund, of any assets of
any such corporation, entity or person (except assets having an aggregate fair
market value of less than $1,000,000). If two-thirds of the Board of Trustees
has approved a memorandum of understanding with such beneficial owner, however,
a majority shareholder vote will be sufficient to approve the foregoing
transactions. Reference is made to the Charter Documents of the Fund, on file
with the Securities and Exchange Commission, for the full text of these
provisions.
2. Inapplicable.
-33-
<PAGE>
3. Inapplicable.
4. The Fund qualified for treatment as, and elected to be, a regulated
investment company ("RIC") under Subchapter M of the Internal Revenue Code for
its taxable year ended October 31, 1996, and intends to continue to qualify as a
RIC for each subsequent taxable year. However, the Fund reserves the right not
to qualify under Subchapter M as a RIC in any year or years.
For each taxable year that the Fund qualifies for treatment as a RIC,
the Fund (but not its shareholders) will not be required to pay Federal income
tax. Shareholders will normally have to pay Federal income taxes, and any state
income taxes, on the dividends and distributions they receive from the Fund.
Such dividends and distributions derived from net investment income or
short-term capital gains are taxable to the shareholder as ordinary dividend
income regardless of whether the shareholder receives such distributions in
additional Shares or in cash. Since the Fund's income is expected to be derived
primarily from interest rather than dividends, only a small portion, if any, of
such dividends and distributions is expected to be eligible for the Federal
dividends-received deduction available to corporations. The Fund does not
anticipate that any portion of its dividends or distributions will qualify for
pass-through treatment as "exempt-interest dividends" since less than 50% of its
assets is permitted to be invested in municipal obligations.
Long-term or short-term capital gains may be generated by the sale of
portfolio securities and by transactions in options and futures contracts.
Distributions of long-term capital gains, if any, are taxable to shareholders as
long-term capital gains regardless of how long a shareholder has held the Fund's
shares and regardless of whether the distribution is received in additional
shares or in cash. For Federal income tax purposes, if a capital gain
distribution is received with respect to Shares held for six months or less, any
loss on a subsequent sale or exchange of such Shares will be treated as
long-term capital loss to the extent of such long-term capital gain
distribution. Capital gains distributions are not eligible for the
dividends-received deduction.
Any dividend or capital gains distribution received by a shareholder
from an investment company will have the effect of reducing the net asset value
of the shareholder's stock in that company by the exact amount of the dividend
or capital gains distribution. Furthermore, capital gains distributions and
dividends are subject to Federal income taxes. If the net asset value of the
Shares should be reduced below a shareholder's cost as a result of the payment
of dividends or realized long-term capital gains, such payment would be a return
of the shareholder's
-34-
<PAGE>
investment capital to the extent of such reduction below the shareholder's cost,
but nonetheless could be fully taxable.
The tax treatment of listed put and call options written or purchased
by the Fund on debt securities and of future contracts entered into by the Fund
will be governed by Section 1256 of the Internal Revenue Code. Absent a tax
election to the contrary, each such position held by the Fund will be
marked-to-market (i.e., treated as if it were closed out) on the last business
day of each taxable year of the Fund, and all gain or loss associated with
transactions in such positions will be treated as 60% long-term capital gain or
loss and 40% short-term capital gain or loss. Positions of the Fund which
consist of at least one debt security and at least one option or futures
contract which substantially diminishes the Fund's risk of loss with respect of
such debt security could be treated as "mixed straddles" which are subject to
the straddle rules of Section 1092 of the Code, the operation of which may cause
deferral of losses, adjustments in the holding periods of debt securities and
conversion of short-term capital losses into long-term capital losses. Certain
tax elections exist for mixed straddles which reduce or eliminate the operation
of the straddle rules. Furthermore, as a regulated investment company, the Fund
would be subject to the requirement that less than 30% of its gross income be
derived from gains on the sale or other disposition of securities held for less
than three months. This requirement may limit the Fund's ability to engage in
options and futures transactions. The Fund will monitor its transactions in
options and futures contracts and may make certain tax elections in order to
mitigate the effect of these rules and prevent disqualification of the Fund as a
regulated investment company under Subchapter M of the Code. Such tax election
may result in an increase in distribution of ordinary income (relative to
long-term capital gains) to shareholders.
The Internal Revenue Code requires that a holder (such as the Fund) of
a zero coupon security accrue a portion of the discount at which the security
was purchased as income each year even though the Fund receives no interest
payment in cash on the security during the year. As an investment company, the
Fund must pay out substantially all of its net investment income each year.
Accordingly, the Fund may be required to pay out as an income distribution each
year an amount which is greater than the total amount of cash interest the Fund
actually received. Such distributions will be made from the cash assets of the
Fund or by liquidation of portfolio securities, if necessary. If a distribution
of cash necessitates the liquidation of portfolio securities, the Adviser will
select which securities to sell. The Fund may realize a gain or loss from such
sales. In the event the Fund realizes net capital gains from such transactions,
its shareholders may receive a larger capital gain distribution than they would
in the absence of such transactions.
-35-
<PAGE>
It is the Fund's present policy, which may be changed by the Board of
Trustees, to pay monthly dividends to shareholders from net investment income of
the Fund. The Fund intends to distribute all of its net investment income on an
annual basis. The Fund will distribute all of its net realized long-term and
short-term capital gains, if any, at least once per year. The Fund may, but is
not required to, make such distributions on a more frequent basis to the extent
permitted by applicable law and regulations.
Under the Internal Revenue Code, by December 31 each year, the Fund
must distribute a specified minimum percentage (currently 98%) of its taxable
investment income earned from January 1 through December 31 of that year and 98%
of its capital gains realized in the period from November 1 of the prior year
through October 31 of that year, or else the Fund must pay an excise tax on
amounts not distributed. While it is presently anticipated that the Fund will
meet those requirements, the Fund's Board and the Adviser might determine in a
particular year it would be in the best interests of the Fund not to make such
distributions at the mandated level and to pay the excise tax which would reduce
the amount available for distributions to shareholders. If the Fund pays a
dividend in January which was declared in the previous December to shareholders
of record on a date in December, then such dividend or distribution will be
treated for tax purposes as being paid in December and will be taxable to
shareholders as if received in December.
Under the Plan, all of the Fund's dividends and distributions to
shareholders will be reinvested in full and fractional Shares. With respect to
distributions made in Shares issued by the Fund pursuant to the Plan, the amount
of the distribution for tax purposes is the fair market value of the Shares
issued on the reinvestment date. In the case of Shares purchased on the open
market, a participating shareholder's tax basis in each Share is its cost. In
the case of Shares issued by the Fund, the shareholder's tax basis in each Share
received is its fair market value on the reinvestment date.
Distributions of investment company taxable income to shareholders who
are nonresident alien individuals or foreign corporations will generally be
subject to a 30% United States withholding tax under provisions of the Internal
Revenue Code applicable to foreign individuals and entities, unless a reduced
rate of withholding or a withholding exemption is provided under an applicable
treaty.
Under Section 988 of the Code, foreign currency gain or loss with
respect to foreign currency-denominated debt instruments and other foreign
currency-denominated positions held or entered into by the Fund will be ordinary
income or loss. In addition, foreign currency gain or loss realized with respect
to certain foreign currency "hedging" transactions will be treated as ordinary
income
-36-
<PAGE>
or loss.
5. The following information is provided as of January 31,
1997:
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Amount Amount
Held by Outstanding
Registrant Exclusive of
Amount or for its Amount Shown
Title of Class Authorized Account Under (3)
- - -------------- ---------- ---------- ------------
<S> <C> <C> <C>
Shares of Beneficial Unlimited None 6,615,505
Interest, $.01 par value
</TABLE>
Item 11. Defaults and Arrears on Senior Securities.
Inapplicable.
Item 12. Legal Proceedings.
Inapplicable.
Item 13. Table of Contents of the Statement of Additional
Information.
Reference is made to Item 15 of the Statement of Additional
Information.
-37-
<PAGE>
APPENDIX A
Descriptions of Ratings Categories
Municipal Bonds
|X| Moody's Investor Services, Inc. The ratings of Moody's Investors Service,
Inc. ("Moody's") for Municipal Bonds are Aaa, Aa, A, Baa, Ba, B, Caa, Ca and C.
Municipal Bonds rated "Aaa" are judged to be of the "best quality." The rating
of Aa is assigned to bonds which are of "high quality by all standards," but as
to which margins of protection or other elements make long-term risks appear
somewhat larger than "Aaa" rated Municipal Bonds. The "Aaa" and "Aa" rated bonds
comprise what are generally known as "high grade bonds." Municipal Bonds which
are rated "A" by Moody's possess many favorable investment attributes and are
considered "upper medium grade obligations." Factors giving security to
principal and interest of A rated bonds are considered adequate, but elements
may be present which suggest a susceptibility to impairment at some time in the
future. Municipal Bonds rated "Baa" are considered "medium grade" obligations.
They are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. Bonds which are rated "Ba" are
judged to have speculative elements; their future cannot be considered as well
assured. Often the protection of interest and principal payments may be very
moderate and thereby not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes bonds in this class. Bonds
which are rated "B" generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small. Bonds which are rated
"Caa" are of poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest. Bonds which
are rated "Ca" represent obligations which are speculative in a high degree.
Such issues are often in default or have other marked shortcomings. Bonds which
are rated "C" are the lowest rated class of bonds, and issues so rated can be
regarded as having extremely poor prospects of ever attaining any real
investment standing. Those bonds in the Aa, A, Baa, Ba and B groups which
Moody's believes possess the strongest investment attributes are designated Aa1,
A1, Baa1, Ba1 and B1 respectively.
In addition to the alphabetic rating system described above, Municipal
Bonds rated by Moody's which have a demand feature that provides the holder with
the ability to periodically tender ("put") the portion of the debt covered by
the demand feature, may also have a short-term rating assigned to such demand
feature. The short-term rating uses the symbol VMIG to distinguish
-38-
<PAGE>
characteristics which include payment upon periodic demand rather than fund or
scheduled maturity dates and potential reliance upon external liquidity, as well
as other factors. The highest investment quality is designated by the VMIG 1
rating and the lowest by VMIG 4.
|X| Standard & Poor's Corporation. The ratings of Standard & Poor's Corporation
("S&P") for Municipal Bonds are AAA (Prime), AA (High Grade), A (Good Grade),
BBB (Medium Grade), BB, B, CCC, CC, and C (speculative grade). Bonds rated in
the top four categories (AAA, AA, A, BBB) are commonly referred to as
"investment grade." Municipal Bonds rated AAA are "obligations of the highest
quality." The rating of AA is accorded issues with investment characteristics
"only slightly less marked than those of the prime quality issues." The rating
of A describes "the third strongest capacity for payment of debt service."
Principal and interest payments on bonds in this category are regarded as safe.
It differs from the two higher ratings because, with respect to general
obligations bonds, there is some weakness, either in the local economic base, in
debt burden, in the balance between revenues and expenditures, or in quality of
management. Under certain adverse circumstances, any one such weakness might
impair the ability of the issuer to meet debt obligations at some future date.
With respect to revenue bonds, debt service coverage is good, but not
exceptional. Stability of the pledged revenues could show some variations
because of increased competition or economic influences on revenues. Basic
security provisions, while satisfactory, are less stringent. Management
performance appears adequate. The BBB rating is the lowest "investment grade"
security rating. The difference between A and BBB ratings is that the latter
shows more than one fundamental weakness, or one very substantial fundamental
weakness, whereas the former shows only one deficiency among the factors
considered. With respect to revenue bonds, debt coverage is only fair. Stability
of the pledged revenues could show variations, with the revenue flow possibly
being subject to erosion over time. Basic security provisions are no more than
adequate. Management performance could be stronger. Bonds rated "BB" have less
near-term vulnerability to default than other speculative issues. However, it
faces major ongoing uncertainties or exposure to adverse business, financial, or
economic conditions which would lead to inadequate capacity to meet timely
interest and principal payments. Bonds rated "B" have a greater vulnerability to
default, but currently has the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions will likely
impair capacity or willingness to pay interest and repay principal. Bonds rated
"CCC" have a current identifiable vulnerability to default, and is dependent
upon favorable business, financial, and economic conditions to meet timely
payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. Bonds noted "CC" typically are
debt subordinated to senior debt which is assigned on actual or implied
-39-
<PAGE>
"CCC" debt rating. Bonds rated "C" typically are debt subordinated to senior
debt which is assigned an actual or implied "CCC-" debt rating. The "C" rating
may be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued. Bonds rated "D" are in payment default. The
"D" rating category is used when interest payments or principal payments are not
made on the date due even if the applicable grace period has not expired, unless
S&P believes that such payments will be made during the grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
The ratings from AA to CCC may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.
|X| Fitch. The ratings of Fitch Investors Service, Inc. for Municipal Bonds are
AAA, AA, A, BBB, BB, B, CCC, CC, C, DDD, DD, and D. Municipal Bonds rated AAA
are judged to be of the "highest credit quality." The rating of AA is assigned
to bonds of "very high credit quality." Municipal Bonds which are rated A by
Fitch are considered to be of "high credit quality." The rating of BBB is
assigned to bonds of "satisfactory credit quality." The A and BBB rated bonds
are more vulnerable to adverse changes in economic conditions than bonds with
higher ratings. Bonds rated AAA, AA, A and BBB are considered to be of
investment grade quality. Bonds rated below BBB are considered to be of
speculative quality. The ratings of "BB" is assigned to bonds considered by
Fitch to be "speculative." The rating of "B" is assigned to bonds considered by
Fitch to be "highly speculative." Bonds rated "CCC" have certain identifiable
characteristics which, if not remedied, may lead to default. Bonds rated "CC"
are minimally protected. Default in payment of interest and/or principal seems
probable over time. Bonds rated "C" are in imminent default in payment of
interest or principal. Bonds rated "DDD", "DD" and "D" are in default on
interest and/or principal payments. DDD represents the highest potential for
recovery on these bonds, and D represents the lowest potential for recovery.
o Duff & Phelps. The ratings of Duff & Phelps are as follows: AAA which are
judged to be the "highest credit quality". The risk factors are negligible,
being only slightly more than for risk-free US Treasury debt. AA+, AA & AA- High
credit quality protection factors are strong. Risk is modest but may vary
slightly from time to time because of economic conditions. A+, A & A-Protection
factors are average but adequate. However, risk factors are more variable and
greater in periods of economic stress. BBB+, BBB & BBB- Below average protection
factors but still considered sufficient for prudent investment. Considerable
variability in risk during economic cycles. BB+, BB & BB- Below investment grade
but deemed to meet obligations when due. Present or prospective financial
protection factors fluctuate according to industry conditions or company
fortunes. Overall quality may move up or down frequently within the category.
B+, B & B- Below investment
-40-
<PAGE>
grade and possessing risk that obligations will not be met when due. Financial
protection factors will fluctuate widely according to economic cycles, industry
conditions and/or company fortunes. Potential exists for frequent changes in the
rating within this category or into a higher of lower rating grade. CCC Well
below investment grade securities. Considerable uncertainty exists as to timely
payment of principal interest or preferred dividends. Protection factors are
narrow and risk can be substantial with unfavorable economic industry
conditions, and/or with unfavorable company developments. DD Defaulted debt
obligations issuer failed to meet scheduled principal and/or interest payments.
DP Preferred stock with dividend averages.
Municipal Notes
|X| Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade ("MIG"). Notes bearing the
designation MIG-1 are of the best quality, enjoying strong protection from
established cash flows of funds for their servicing or from established and
broad-based access to the market for financing. Notes bearing the designation
"MIG-2" are of high quality with ample margins of protection, although not as
large as notes rated "MIG." Such short-term notes which have demand features may
also carry a rating using the symbol VMIG as described above, with the
designation MIG-1/VMIG 1 denoting best quality, with superior liquidity support
in addition to those characteristics attributable to the designation MIG-1.
|X| S&P's rating for Municipal Notes due in three years or less are
SP-1, SP-2, and SP-3. SP-1 describes issues with a very strong capacity to pay
principal and interest and compares with bonds rated A by S&P; if modified by a
plus sign, it compares with bonds rated AA or AAA by S&P. SP-2 describes issues
with a satisfactory capacity to pay principal and interest, and compares with
bonds rated BBB by S&P. SP-3 describes issues that have a speculative capacity
to pay principal and interest.
|X| Fitch's rating for Municipal Notes due in three years or less are
F-1+, F-1, F-2, F-3, F-S and D. F-1+ describes notes with an exceptionally
strong credit quality and the strongest degree of assurance for timely payment.
F-1 describes notes with a very strong credit quality and assurance of timely
payment is only slightly less in degree than issues rated F-1+. F-2 describes
notes with a good credit quality and a satisfactory assurance of timely payment,
but the margin of safety is not as great for issues assigned F-1+ or F-1
ratings. F-3 describes notes with a fair credit quality and an adequate
assurance of timely payment, but near-term adverse changes could cause such
securities to be rated below investment grade. F-S describes notes with weak
credit quality. Issues rated D are in actual or imminent payment default.
-41-
<PAGE>
Corporate Debt
The "other debt securities" included in the definition of temporary
investments are corporate (as opposed to municipal) debt obligations. The
Moody's, S&P and Fitch corporate debt ratings shown do not differ materially
from those set forth above for Municipal Bonds.
Commercial Paper
|X| Moody's The ratings of commercial paper by Moody's are Prime-1,
Prime-2, Prime-3 and Not Prime. Issuers rated Prime-1 have a superior capacity
for repayment of short-term promissory obligations. Issuers rated Prime-2 have a
strong capacity for repayment of short-term promissory obligations. Issuers
rated Prime-3 have an acceptable capacity for repayment of short-term promissory
obligations. Issuers rated Not Prime do not fall within any of the Prime rating
categories.
|X| S&P The ratings of commercial paper by S&P are A-1, A-2, A-3, B, C,
and D. A-1 indicates that the degree of safety regarding timely payment is
strong. A-2 indicates capacity for timely payment is satisfactory. However, the
relative degree of safety is not as high as for issues designated A-1. A-3
indicates an adequate capacity for timely payments. They are, however, more
vulnerable to the adverse effects of changes in circumstances than obligations
carrying the higher designations. B indicates only speculative capacity for
timely payment. C indicates a doubtful capacity for payment. D is assigned to
issues in default.
|X| Fitch The ratings of commercial paper by Fitch are similar to its
ratings of Municipal Notes, above.
-42-
<PAGE>
Oppenheimer World Bond Fund
(formerly "Oppenheimer Multi-Government Trust")
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated March 31, 1997
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated March 31, 1997. It should be read
together with the Prospectus, and the Registration Statement on Form N-2, of
which the Prospectus and this Statement of Additional Information are a part,
can be inspected and copied at public reference facilities maintained by the
Securities and Exchange Commission (the "SEC") in Washington, D.C. and certain
of its regional offices, and copies of such materials can be obtained at
prescribed rates from the Public Reference Branch, Office of Consumer Affairs
and Information Services, SEC, Washington, D.C., 20549.
TABLE OF CONTENTS
Page
Investment Objective and Policies*
Management................................................................44
Control Persons and Principal Holders of Securities......45.
Investment Advisory and Other Services*
Brokerage Allocation and Other Practices.....................53
Tax Status*
Financial Statements.....................................................54
- - --------------------
*See Prospectus
-43-
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL
INFORMATION
Item 14. Cover Page.
Reference is made to the preceding page.
Item 15. Table of Contents.
Reference is made to the preceding page and to Items 16 through 23 of
the Statement of Additional Information set forth below.
Item 16. General Information and History.
Inapplicable.
Item 17. Investment Objective and Policies.
Reference is made to Item 8 of the Prospectus.
Item 18. Management.
1 and 2.The Fund's Trustees and officers and their principal
occupations and business affiliations during the past five years are set forth
below. The address for each Trustee and officer is Two World Trade Center, New
York, New York 10048-0203, unless another address is listed below. All of the
Trustees are also trustees or directors of Oppenheimer Fund, Oppenheimer Growth
Fund, Oppenheimer Enterprise Fund, Oppenheimer Municipal Bond Fund, Oppenheimer
Money Market Fund, Inc., Oppenheimer Capital Appreciation Fund (formerly named
"Oppenheimer Target Fund"), Oppenheimer U.S. Government Trust, Oppenheimer New
York Municipal Fund, Oppenheimer California Municipal Fund, Oppenheimer Multi-
State Municipal Trust, Oppenheimer Asset Allocation Fund, Oppenheimer Gold &
Special Minerals Fund, Oppenheimer Global Fund, Oppenheimer International Growth
Fund, Oppenheimer Developing Markets Fund, Oppenheimer Series Fund, Inc.,
Oppenheimer Global Growth & Income Fund, Oppenheimer Global Emerging Growth Fund
and Oppenheimer Multi-Sector Income Trust (collectively, the "New York- based
Oppenheimer funds"), except that Ms. Macaskill is not a director of Oppenheimer
Money Market Fund, Inc. As of January 31, 1997 the Trustees and officers of the
Fund as a group owned of record or beneficially less than 1% of the shares of
the Fund. That statement does not include ownership of shares held of record by
an employee benefit plan for employees of the Adviser (one of the Trustees of
the Fund listed below, Ms. Macaskill, and one of the officers, Mr. Donohue are
trustees of that plan), other than the shares beneficially owned under that plan
by officers of the Fund listed below.
-44-
<PAGE>
Leon Levy, Chairman of the Board of Trustees; Age: 71
31 West 52nd Street, New York, New York 10019
General Partner of Odyssey Partners, L.P. (investment partnership)
and Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Trustee*; Age: 63
Vice Chairman of the Adviser; formerly he held the following positions: Vice
President and Counsel of Oppenheimer Acquisition Corp. ("OAC"), the Adviser's
parent holding company; Executive Vice President & General Counsel of the
Adviser and OppenheimerFunds Distributor, Inc., a director of the Adviser and
the Distributor, Vice President and a director of HarbourView Asset Management
Corporation ("HarbourView") and Centennial Asset Management Corporation
("Centennial"), investment advisory subsidiaries of the Adviser, a director of
Shareholder Financial Services, Inc. ("SFSI") and Shareholder Services, Inc.
("SSI"), transfer agent subsidiaries of the Adviser and an officer of other
Oppenheimer funds.
Benjamin Lipstein, Trustee; Age: 73
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; a director of Sussex
Publishers, Inc. (Publishers of Psychology Today and Mother Earth
News) and Spy Magazine, L.P.
Bridget A. Macaskill, President and Trustee*; Age: 48 President, CEO and a
director of the Adviser; Chairman and a director of SSI and SFSI; President and
a director of OAC and HarbourView and Oppenheimer Partnership Holdings, Inc., a
holding company subsidiary of the Adviser, a director of Oppenheimer Real Asset
Management, Inc.; formerly an Executive Vice President of the Adviser.
Elizabeth B. Moynihan, Trustee; Age: 67
801 Pennsylvania Avenue, N.W., Washington, DC 20004
Author and architectural historian; a trustee of the Freer Gallery
of Art (Smithsonian Institution), the Institute of Fine Arts (New
York University), National Building Museum; a member of the
Trustees Council, Preservation League of New York State and the
Indo-U.S. Sub-Commission on Education and Culture.
Kenneth A. Randall, Trustee; Age: 69
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding
company), Dominion Energy, Inc. (electric power and oil & gas
producer), Enron-Dominion Cogen Corp. (cogeneration company),
Kemper Corporation (insurance and financial services company), and
Fidelity Life Association (mutual life insurance company); formerly
-45-
<PAGE>
Chairman of the Board of ICL, Inc. (information systems),
President and Chief Executive Officer of The Conference Board, Inc.
(international economic and business research), and a director of
Lumbermen Mutual Casualty Company, American Motorists Insurance
Company and American Manufacturers Mutual Insurance Company.
Edward V. Regan, Trustee; Age: 66
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New York; Senior
Fellow of Jerome Levy Economics Institute, Bard College; a member of the U.S.
Competitiveness Policy Council; a director of GranCare, Inc. (healthcare
provider); formerly New York State Comptroller and trustee, New York State and
Local Retirement Fund.
Russell S. Reynolds, Jr., Trustee; Age: 65
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directorship, Inc. (corporate governance
consulting); a director of Professional Staff Limited (U.K.); a
trustee of Mystic Seaport Museum, International House and Greenwich
Historical Society.
Donald W. Spiro, Vice Chairman and Trustee;* Age: 71
Chairman Emeritus and a director of the Adviser; formerly Chairman
of the Adviser and the Distributor.
Pauline Trigere, Trustee; Age: 84
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and
sale of women's fashions).
Clayton K. Yeutter, Trustee; Age: 66
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel, Hogan & Hartson (a law firm); a director of B.A.T.
Industries, Ltd. (tobacco and financial services), Caterpillar,
Inc. (machinery), ConAgra, Inc. (food and agricultural products),
Farmers Insurance Company (insurance), FMC Corp. (chemicals and
machinery), IMC Global, Inc. (chemicals and animal feed) and Texas
Instruments, Inc. (electronics); formerly (in descending
chronological order) Counsellor to the President (Bush) for
Domestic Policy, Chairman of the Republican National Committee,
Secretary of the U.S. Department of Agriculture, and U.S. Trade
Representative.
- - ----------------------
*A Trustee who is an "interested person" of the Fund as defined in
the Investment Company Act.
Andrew J. Donohue, Secretary; Age: 46
Executive Vice President and General Counsel of the Adviser and the
-46-
<PAGE>
Distributor; President and a director of Centennial; Executive Vice President,
General Counsel and a director of HarbourView, SSI, SFSI, and Oppenheimer
Partnership Holdings, Inc.; President and a director of Oppenheimer Real Asset
Management, Inc.; General Counsel of OAC; Executive Vice President, Chief Legal
Officer and a director of MultiSource Services, Inc. (a broker-dealer); an
officer of other Oppenheimer funds; formerly Senior Vice President and Associate
General Counsel of the Adviser and the Distributor, Partner in Kraft & McManimon
(a law firm), an officer of First Investors Corporation (a broker-dealer) and
First Investors Management Company, Inc. (broker-dealer and investment adviser);
and director and an officer of First Investors Family of Funds and First
Investors Life Insurance Company.
George C. Bowen, Treasurer; Age: 60
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer of the Adviser; Vice President and Treasurer
of the Distributor and HarbourView; Senior Vice President, Treasurer and
Assistant Secretary and a director of Centennial; Senior Vice President,
Treasurer and Secretary of SSI; Vice President, Treasurer of SFSI; Treasurer of
OAC; Vice President and Treasurer of Oppenheimer Real Asset Management, Inc.;
Chief Executive Officer, Treasurer and director of MultiSource Services, Inc. (a
broker-dealer); and an officer of other Oppenheimer funds.
Thomas P. Reedy, Vice President and Portfolio Manager; Age 35 Vice President of
the Adviser; an officer of other Oppenheimer funds; formerly a Securities
Analyst of the Adviser.
David Rosenberg, Vice President and Portfolio Manager; Age 38 Vice President of
the Adviser; an officer of other Oppenheimer funds; formerly Vice President and
Portfolio Manager for Delaware Investment Advisors.
Ashwin Vasan, Vice President and Portfolio Manager; Age 34 Vice President of the
Adviser; an officer of other Oppenheimer funds; formerly a Securities Analyst
for the Adviser, prior to which he was a Securities Analyst for Citibank, N.A.
Robert G. Zack, Assistant Secretary; Age: 48
Senior Vice President and Associate General Counsel of the Adviser; Assistant
Secretary of SSI and SFSI; an officer of other Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age: 38
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Adviser/Mutual Fund Accounting; an officer of other
Oppenheimer funds; formerly a Fund Controller for the Adviser, prior to which he
was an Accountant for Yale & Seffinger, P.C., an accounting firm, and previously
an Accountant and Commissions Supervisor for Stuart James Company Inc., a
broker-dealer.
Scott T. Farrar, Assistant Treasurer; Age: 31
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Adviser/Mutual Fund Accounting; an officer of other
Oppenheimer funds; formerly a Fund Controller for the Adviser.
The Board of Trustees does not have an executive or investment
committee. The Trustees of the Fund have appointed a study committee consisting
of Mr. Lipstein (Chairman)and Mrs. Moynihan, neither of whom is an "interested
person" of the Adviser or the Fund and Mr. Galli. The study committee's function
is to report to the Board on matters that include (i) legal and regulatory
developments, (ii) periodic renewals of the Advisory Agreement, (iii) review of
the transfer agent and registrar agreement, (iv) review of the administrative
services provided by Mitchell Hutchins Asset Management, Inc., (v) portfolio
management, (vi) valuation of portfolio securities, (vii) custodian
relationships and use of foreign subcustodians, (viii) code of ethics matters,
policy on use of insider information, (ix) consideration of tender offers and
other repurchases of fund shares and possible conversion to open-end status, and
(x) indemnification and insurance of the Fund's officers and trustees.
3. Inapplicable.
4. The officers of the Fund and certain Trustees of the Fund (Ms.
Macaskill and Messrs. Galli and Spiro; Ms. Macaskill is also an officer) who are
affiliated with the Adviser receive no salary or fees from the Fund. The
remaining Trustees of the Fund received the compensation shown below from the
Fund. The compensation from the Fund was paid during its fiscal year ended
October 31, 1996. The compensation from all of the New York-based Oppenheimer
funds includes the Fund and is compensation received as a director, trustee or
member of a committee of the Board of those funds during the calendar year 1996.
<TABLE>
<CAPTION>
Retirement
Aggregate Benefits Total Compensation
Compensation Accrued as From All
Name and from Part of Fund New York-based
Position Fund Expenses Oppenheimer funds1
<S> <C> <C> <C>
Leon Levy $3,708 $6,237 $152,750
Chairman and
Trustee
-47-
<PAGE>
Benjamin Lipstein $2,267 $3,813 $ 91,350
Study
Committee
Chairman, Audit
Committee Member
and Trustee2
Elizabeth B. Moynihan $2,267 $3,813 $ 91,350
Study
Committee
Member and
Trustee
Kenneth A. Randall $2,062 $3,468 $ 83,450
Audit
Committee
Chairman and
Trustee
Edward V. Regan $1,809 $3,043 $ 78,150
Proxy Committee
Chairman,
Audit
Committee
Member and
Trustee
Russell S. Reynolds, Jr. $1,370 $2,305 $58,800
Proxy Committee
Member and
Trustee
Pauline Trigere $1,370 $2,305 $ 55,300
Trustee
Clayton K. Yeutter $1,370 $2,305 $ 58,800
Proxy Committee
Member and
Trustee
</TABLE>
- - ----------------------
1For the 1996 calendar year.
2Committee position held during a portion of the period shown.
The Fund has adopted a retirement plan that provides for payment to a
retired Trustee of up to 80% of the average compensation paid during that
Trustee's five years of service in which the highest compensation was received.
A Trustee must serve in that capacity for any of the New York-based Oppenheimer
funds for at least 15 years to be eligible for the maximum payment. Because each
Trustee's retirement benefits will depend on the amount of the Trustee's future
compensation and length of service, the amount of those benefits cannot be
determined at this time, nor can the Fund estimate the number of years of
credited service that will be used to determine those benefits.
Item 19. Control Persons and Principal Holders of Securities.
1. Inapplicable.
2. As of January 31, 1997, no person owned of record or was
known by the Fund to own beneficially 5% or more of the outstanding
-48-
<PAGE>
Shares except:
3. As of January 31, 1997, the trustees and officers of the
Fund as a group owned less than 1% of the outstanding Shares.
Item 20. Investment Advisory and Other Services.
Reference is made to Item 9 of the Prospectus.
Item 21. Brokerage Allocation and Other Practices.
1 and 2. The Fund paid brokerage commissions during the fiscal years
ended October 31, 1994, 1995 and 1996 in the amounts of $405, $1,333 and $4,239,
respectively. The Fund will not effect portfolio transactions through any broker
(i) which is an affiliated person of the Fund, (ii) which is an affiliated
person of such affiliated person or (iii) an affiliated person of which is an
affiliated person of the Fund or its Adviser. There is no principal underwriter
of shares of the Fund. As most purchases of portfolio securities made by the
Fund are principal transactions at net prices, the Fund incurs little or no
brokerage costs. The Fund deals directly with the selling or purchasing
principal or market maker without incurring charges for the services of a broker
on its behalf unless it is determined that a better price or execution may be
obtained by using the services of a broker. Purchases of portfolio securities
from underwriters include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers include a spread between the bid and
asked price. Transactions in foreign securities markets generally involve the
payment of fixed brokerage commissions, which are usually higher than those in
the United States. The Fund seeks to obtain prompt execution of orders at the
most favorable net price.
3. The Advisory Agreement between the Fund and the Adviser (the
"Advisory Agreement") contains provisions relating to the selection of brokers,
dealers and futures commission merchants (collectively referred to as "brokers")
for the Fund's portfolio transactions. The Adviser is authorized by the Advisory
Agreement to employ brokers as may, in its best judgment based on all relevant
factors, implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution at the most favorable price
obtainable) of such transactions. The Adviser need not seek competitive bidding
but is expected to minimize the commissions paid to the extent consistent with
the interests and policies of the Fund.
Certain other investment companies advised by the Adviser and
-49-
<PAGE>
its affiliates have investment objectives and policies similar to those of the
Fund. If possible, concurrent orders to purchase or sell the same security by
more than one of the accounts managed by the Adviser or its affiliates are
combined. The transactions effected pursuant to such combined orders are
averaged as to price and allocated in accordance with the purchase or sale
orders actually placed for each account. If transactions on behalf of more than
one fund during the same period increase the demand for securities being
purchased or the supply of securities being sold, there may be an adverse effect
on price or quantity. When the Fund engages in an option transaction, ordinarily
the same broker will be used for the purchase or sale of the option and any
transactions in the security to which the option relates.
Under the Advisory Agreement, if brokers are used for portfolio
transactions, the Adviser may select brokers for their execution and/or research
services, on which no dollar value can be placed. Information received by the
Adviser for those other accounts may or may not be useful to the Fund. The
commissions paid to such dealers may be higher than another qualified dealer
would have charged if a good faith determination is made by the Adviser that the
commission is reasonable in relation to the services provided. Subject to
applicable regulations, sales of shares of the Fund and/or investment companies
advised by the Adviser or its affiliates may also be considered as a factor in
directing transactions to brokers, but only in conformity with the price,
execution and other considerations and practices discussed above.
Such research, which may be provided by a broker through a third party,
includes information on particular companies and industries as well as market,
economic or institutional activity areas. It serves to broaden the scope and
supplement the research activities of the Adviser, to make available additional
views for consideration and comparisons, and to enable the Adviser to obtain
market information for the valuation of securities held in the Fund's portfolio
or being considered for purchase.
4. During the fiscal year ended October 31, 1996, there were no
commissions related to brokerage transactions that were directed to brokers
because of research provided.
5. Inapplicable.
Item 22. Tax Status.
Reference is made to Item 10 of the Prospectus.
Item 23. Financial Statements.
-50-
<PAGE>
1. Statement of Investments
2. Statement of Assets and Liabilities
3. Statement of Operations
4. Statements of Changes in Net Assets
5. Financial Highlights
6. Notes to Financial Statements
7. Independent Auditors' Report
8. Independent Auditors' Consent
-51-
<PAGE>
Statement of Investments October 31, 1996
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Face Amount Value
(1) See Note 1
<S> <C> <C>
Mortgage-Backed Obligations -- 22.4%
Government Agency -- 20.7%
FHLMC/FNMA/Sponsored -- 7.2%
Federal Home Loan
Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates, Series 1343, Cl. LA, 8%,
8/15/22................................................. $ 229,000 $ 237,588
Interest-Only Stripped Mtg.-Backed Security, Trust 177,
Cl. B, 6.698%-6.972%, 7/15/26 (2)....................... 8,535,380 3,044,730
Mtg.-Backed Certificates, 11.50%, 1/1/18.................. 128,299 145,205
Mtg.-Backed Certificates, 13%, 5/1/19..................... 476,877 562,081
----------
3,989,604
----------
GNMA/Guaranteed -- 13.5%
Government National Mortgage Assn.:
6%, 11/15/26 (3).......................................... 500,000 500,938
7%, 1/15/24-5/15/24....................................... 3,504,944 3,458,009
7.50%, 5/15/24-1/15/26.................................... 601,915 604,468
7.50%, 11/15/26 (3)....................................... 2,500,000 2,507,825
11%, 11/15/26 (3)......................................... 160,610 182,843
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates, Series
1994-5, Cl. PQ, 7.493%, 7/16/24......................... 150,000 151,031
----------
7,405,114
----------
Private -- 1.7%
Commercial -- 1.3%
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through
Certificates, Series 1996-C1, Cl. E, 7.51%, 2/15/28
(4)(5).................................................... 553,342 449,590
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates, Series 1995-C1, Cl. F, 6.90%, 2/25/27....... 189,088 160,843
Structured Asset Securities Corp., Multiclass Pass-Through
Certificates, Series 1995-C4, Cl. E, 8.80%, 6/25/26
(4)(5).................................................... 100,000 83,344
----------
693,777
----------
Multi-Family -- 0.4%
Mortgage Capital Funding, Inc., Multifamily Mtg.
Pass-Through Certificates, Series 1996-MC1, Cl. G, 7.15%,
6/15/06 (5)............................................... 250,000 197,813
----------
Total Mortgage-Backed Obligations (Cost $11,977,642)........ 12,286,308
----------
U.S. Government Obligations -- 8.4%
U.S. Treasury Nts.:
6.25%, 2/15/03 (6)(14).................................... 3,275,000 3,287,281
6.375%, 8/15/02........................................... 1,331,000 1,345,818
----------
Total U.S. Government Obligations (Cost $4,562,243)......... 4,633,099
----------
</TABLE>
-52-
<PAGE>
Statement of Investments October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Face Amount Value
(1) See Note 1
<S> <C> <C>
Foreign Government Obligations -- 33.5%
Argentina -- 1.4% Argentina (Republic of):
Par Bonds, 5.25%, 3/31/23 (7)............................. $ 500,000 $ 296,250
Treasury Bills, Zero Coupon, 10.156%, 11/15/96 (8)
(ARP)................................................... 250,000 249,490
Buenos Aires (Province of) Bonds, 10%, 3/5/01 (DEM)......... 332,000 230,425
----------
776,165
----------
Australia -- 1.8%
First Australia National Mortgage Acceptance Corp. Ltd.
Bonds, Series 22, 11.40%, 12/15/01 (AUD).................. 432,650 376,312
New South Wales Treasury Corp. Gtd. Bonds,
12%, 12/1/01 (14)(AUD).................................... 660,000 630,207
----------
1,006,519
----------
Brazil -- 2.2%
Banco Estado Minas Gerais, 8.25%, 2/10/00................... 500,000 475,000
Brazil (Federal Republic of) Nts.,
Banco Estado Minas Gerais, 7.875%, 2/10/99................ 20,000 19,225
Telecomunicacoes Brasileiras SA Bonds, 13%, 2/5/99 (ITL).... 1,050,000,000 738,327
----------
1,232,552
----------
Bulgaria -- 1.4% Bulgaria (Republic of):
Front-Loaded Interest Reduction Bearer Bonds,
Tranche A, 2.25%, 7/28/12 (7)........................... 1,600,000 511,500
Interest Arrears Bonds, 6.688%, 7/28/11 (4)............... 525,000 231,000
----------
742,500
----------
Canada -- 3.1%
Canada (Government of) Real Return Debs.,
4.517%, 12/1/21 (9)(14) (CAD)............................. 2,055,000 1,676,399
----------
Costa Rica -- 0.5%
Central Bank of Costa Rica Interest Claim Bonds, Series A,
6.344%, 5/21/05 (4)....................................... 306,965 293,919
----------
Denmark -- 1.7%
Denmark (Kingdom of) Bonds, 8%, 11/15/01 (DKK).............. 4,960,000 934,535
----------
Great Britain -- 4.9%
United Kingdom Treasury Nts., 13%, 7/14/00 (14) (GBP)....... 1,385,000 2,676,798
----------
Italy -- 1.4% Italy (Republic of):
Sr. Unsec. Unsub. Global Bonds, 0.563%, 7/26/99 (4)
(JPY)................................................... 54,000,000 477,259
Treasury Bonds, Buoni del Tesoro Poliennali, 10.50%,
7/15/00 (ITL)........................................... 430,000,000 311,650
----------
788,909
----------
</TABLE>
-53-
<PAGE>
Statement of Investments October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Face Amount Value
(1) See Note 1
<S> <C> <C>
Jordan -- 2.1%
Hashemite Kingdom of Jordan Interest Arrears Bonds, 6.625%,
12/23/05 (4).............................................. $ 1,300,000 $1,153,750
----------
Mexico -- 5.7%
Banco Nacional de Comercio Exterior SNC International
Finance BV Gtd. Nts., 8%, 8/5/03.......................... 725,000 642,078
Bonos de la Tesoreria de la Federacion, Zero Coupon:
29.172%, 7/3/97 (8) (MXP)................................. 2,400,000 249,306
28.589%, 7/31/97 (8) (MXP)................................ 1,400,000 142,727
27.799%, 9/4/97 (8) (MXP)................................. 2,435,000 242,775
United Mexican States Bonds, 10.375%, 1/29/03 (DEM)......... 2,685,000 1,866,180
----------
3,143,066
----------
Norway -- 1.2%
Norwegian Government Bonds, 9.50%, 10/31/02 (NOK)........... 3,720,000 674,829
----------
Panama -- 1.1% Panama (Republic of):
Debs., 6.629%, 5/10/02 (4)................................ 276,923 266,539
Interest Reduction Bonds, 3.50%, 7/17/14 (7).............. 500,000 328,750
----------
595,289
----------
Poland -- 1.0%
Poland (Republic of) Treasury Bills, Zero Coupon:
21.469%, 12/4/96 (8)(PLZ)................................. 750,000 262,449
20.376%, 3/19/97 (8)(PLZ)................................. 800,000 265,489
----------
527,938
----------
Portugal -- 1.1%
Portugal (Republic of) Bonds, Obrigicion do tes Medio Prazo,
11.875%, 2/23/00 (PTE).................................... 83,000,000 622,079
----------
Sweden -- 1.7%
Sweden (Kingdom of) Bonds, Series 1030, 13%, 6/15/01
(SEK)..................................................... 4,800,000 917,090
----------
Venezuela -- 1.2%
Venezuela (Republic of):
Front-Loaded Interest Reduction Bonds, Series A, 6.375%,
3/31/07 (4)............................................. 300,000 250,125
Front-Loaded Interest Reduction Bonds, Series B, 6.50%,
3/31/07 (4)............................................. 250,000 208,438
New Money Bonds, Series B, 6.625%, 12/18/05 (4)........... 250,000 206,875
----------
665,438
----------
Total Foreign Government Obligations (Cost $17,649,231)..... 18,427,775
----------
</TABLE>
-54-
<PAGE>
Statement of Investments October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Face Amount Value
(1) See Note 1
<S> <C> <C>
Loan Participations -- 5.0%
Algeria (Republic of) Reprofiled Debt Loan Participation,
Tranche A, 6.625%, 9/4/06 (4)(5).......................... $ 1,500,000 $1,068,750
Colombia (Republic of) Concorde Loan Participation, 8.625%,
1/31/98 (4)(5)............................................ 70,000 69,300
Jamaica (Government of) 1990 Refinancing Agreement Nts.:
Tranche A, 5.531%, 10/16/00 (4)(5)........................ 145,833 140,729
Tranche B, 6.312%, 11/15/04 (4)(5)........................ 660,000 561,000
Morocco (Kingdom of) Loan Participation Agreement:
Tranche A, 6.437%, 1/1/09 (4)............................. 510,000 404,653
Tranche B, 6.437%, 1/1/04 (4)............................. 88,235 78,309
Trinidad & Tobago Loan Participation Agreement, Tranche A,
1.772%, 9/30/00 (4)(5)(JPY)............................... 48,000,000 375,593
United Mexican States, Combined Facility 3, Loan
Participation Agreement, Tranche A, 6.563%, 9/20/97
(4)(5).................................................... 33,360 28,815
----------
Total Loan Participations (Cost $2,462,804)................. 2,727,149
----------
Corporate Bonds and Notes -- 20.6%
Basic Industry -- 2.4%
Chemicals -- 0.4%
ISP Holdings, Inc., 9% Sr. Nts., 10/15/03 (10).............. 200,000 203,000
----------
Metals/Mining -- 0.4%
Royal Oak Mines, Inc., 11% Sr. Sub. Nts., 8/15/06 (10)...... 200,000 207,000
----------
Paper -- 1.6%
APP International Finance Co. BV, 11.75% Gtd. Sec. Nts.,
10/1/05................................................... 100,000 103,250
Asia Pulp & Paper International Finance Co., Zero Coupon
Asian Currency Nts., 16.551%, 5/15/97 (8)(IDR)............ 700,000,000 274,273
Buckeye Cellulose Corp., 9.25% Sr. Sub. Nts., 9/15/08
(14)...................................................... 200,000 204,000
Indah Kiat International Finance Co. BV, 12.50% Sr. Sec.
Gtd. Nts., Series C, 6/15/06.............................. 100,000 108,000
Repap Wisconsin, Inc., 9.25% First Priority Sr. Sec. Nts.,
2/1/02.................................................... 100,000 101,500
Riverwood International Corp., 10.25% Sr. Nts., 4/1/06...... 75,000 72,844
SD Warren Co., 12% Sr. Sub. Nts., Series B, 12/15/04........ 25,000 26,937
----------
890,804
----------
Consumer Related -- 3.4%
Consumer Products -- 0.9%
Coleman Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 11.623%, 5/27/98 (8)............................ 100,000 86,500
E & S Holdings Corp., 10.375% Sr. Sub. Nts., 10/1/06 (10)... 150,000 154,687
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05
(10)...................................................... 250,000 283,750
----------
524,937
----------
</TABLE>
-55-
<PAGE>
Statement of Investments October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Face Amount Value
(1) See Note 1
<S> <C> <C>
Food/Beverages/Tobacco -- 0.2%
Doane Products Co., 10.625% Sr. Nts., 3/1/06................ $ 50,000 $ 52,250
Foodbrands America, Inc., 10.75% Sr. Sub. Nts., 5/15/06..... 50,000 51,625
----------
103,875
----------
Healthcare -- 0.7%
Genesis Health Ventures, Inc. 9.25% Sr. Sub. Nts., 10/1/06
(10)...................................................... 150,000 151,125
Magellan Health Services, Inc., 11.25% Sr. Sub. Nts., Series
A, 4/15/04 200,000 219,000
----------
370,125
----------
Hotel/Gaming -- 1.1%
Capital Gaming International, Inc., Promissory Nts., 8/1/95
(11)...................................................... 2,000 --
Empress River Casino Finance Corp., 10.75% Sr. Gtd. Nts.,
4/1/02.................................................... 200,000 215,000
Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts.,
12/1/03................................................... 100,000 98,875
HMH Properties, Inc., 9.50% Sr. Sec. Nts., Series B,
5/15/05................................................... 100,000 101,500
Station Casinos, Inc., 10.125% Sr. Sub. Nts., 3/15/06....... 200,000 196,500
----------
611,875
----------
Textile/Apparel -- 0.5%
Consoltex Group, Inc., 11% Sr. Sub. Gtd. Nts., Series B,
10/1/03................................................... 100,000 99,000
Polysindo International Finance Co. BV, 11.375% Gtd. Sec.
Nts., 6/15/06............................................. 50,000 53,313
WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05.... 150,000 152,250
----------
304,563
----------
Energy -- 2.3%
Chesapeake Energy Corp.:
10.50% Sr. Nts., 6/1/02................................... 100,000 107,375
9.125% Sr. Nts., 4/15/06.................................. 50,000 50,500
Mariner Energy, Inc., 10.50% Sr. Sub. Nts., 8/1/06 (10)..... 275,000 286,000
Mesa Operating Co.:
0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06 (12).......... 250,000 166,250
10.625% Gtd. Sr. Sub. Nts., 7/1/06........................ 50,000 53,125
Moran Energy, Inc., 8.75% Cv. Sub. Debs., 1/15/08........... 200,000 167,750
Petroleum Heat & Power Co., Inc.:
12.25% Sub. Debs., 2/1/05................................. 49,000 54,145
9.375% Sub. Debs., 2/1/06................................. 150,000 145,500
TransTexas Gas Corp., 11.50% Sr. Sec. Gtd. Nts., 6/15/02.... 200,000 213,500
----------
1,244,145
----------
</TABLE>
-56-
<PAGE>
Statement of Investments October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Face Amount Value
(1) See Note 1
<S> <C> <C>
Financial Services -- 4.4%
Banco Bamerindus do Brasil SA:
10.50% Debs., 6/23/97..................................... $ 275,000 $ 273,109
9% Unsec. Unsub. Bonds, 10/29/98.......................... 90,000 85,275
Banco de Colombia, 5.20% Cv. Jr. Sub. Unsec. Nts., 2/1/99... 250,000 237,500
Banco Itamarati SA, 11.625% Sr. Unsec. Debs., 11/23/97...... 250,000 256,719
Banco Mexicano SA, 8% Sr. Unsec. Unsub. Exchangeable Medium-
Term Nts., 11/4/98........................................ 100,000 98,938
Bank Internationale Indonesia, Zero Coupon Negotiable CD,
15.912%, 1/6/97 (8)(IDR).................................. 720,000,000 300,928
First Nationwide Escrow Corp., 10.625% Sr. Sub. Nts.,
10/1/03 (10).............................................. 150,000 158,625
PT Inti Indorayon Utama, Zero Coupon Promissory Nts.,
17.234%, 2/12/97 (8)(IDR)................................. 700,000,000 286,901
Siam Commercial Bank Public Ltd., Zero Coupon Debs.,
10.581%, 11/18/96 (8)(THB)................................ 2,500,000 97,703
Snap Ltd., 11.50% Sec. Bonds, 1/29/09 (DEM)................. 900,000 589,960
----------
2,385,658
----------
Housing Related -- 0.6%
NVR, Inc., 11% Sr. Gtd. Nts., 4/15/03....................... 100,000 103,500
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11
(10)...................................................... 250,000 207,031
----------
310,531
----------
Manufacturing -- 1.5%
Aerospace/Electronics/Computers -- 0.3%
Unisys Corp., 11.75% Sr. Nts., 10/15/04..................... 150,000 153,000
----------
Automotive -- 0.8%
Hayes Wheels International, Inc., 11% Sr. Sub. Nts.,
7/15/06................................................... 165,000 172,013
Lear Corp., 9.50% Sub. Nts., 7/15/06 (14)................... 250,000 258,750
----------
430,763
----------
Capital Goods -- 0.4%
Mettler Toledo, Inc., 9.75% Gtd. Sr. Unsec. Unsub. Nts.,
10/1/06................................................... 200,000 205,500
----------
Media -- 2.0%
Broadcasting -- 0.2%
SFX Broadcasting, Inc., 10.75% Sr. Sub. Nts., Series B,
5/15/06................................................... 100,000 103,375
----------
</TABLE>
-57-
<PAGE>
Statement of Investments October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Face Amount Value
(1) See Note 1
<S> <C> <C>
Cable Television -- 1.4%
American Telecasting, Inc., 0%/14.50% Sr. Disc. Nts.,
6/15/04 (12).............................................. $ 99,579 $ 68,212
Bell Cablemedia plc, 0%/11.875% Sr. Disc. Nts., 9/15/05
(12)...................................................... 300,000 225,000
Cablevision Systems Corp.:
10.50% Sr. Sub. Debs., 5/15/16............................ 50,000 49,125
10.75% Sr. Sub. Debs., 4/1/04............................. 200,000 204,500
International CableTel, Inc., 0%/11.50% Sr. Deferred Coupon
Nts., Series B, 2/1/06 (12)............................... 100,000 61,000
TeleWest plc, 0%/11% Sr. Disc. Debs., 10/1/07 (12).......... 250,000 161,250
----------
769,087
----------
Diversified Media -- 0.4%
Universal Outdoor, Inc., 9.75% Sr. Sub. Nts., 10/15/06...... 200,000 198,500
----------
Other -- 0.8%
CE Casecnan Water & Energy, Inc., 11.95% Sr. Nts., Series B,
11/15/10.................................................. 200,000 223,250
Iron Mountain, Inc., 10.125% Sr. Sub. Nts., 10/1/06......... 50,000 51,625
Protection One Alarm Monitoring, Inc., 0%/13.625% Sr. Disc.
Nts., 6/30/05 (12)........................................ 200,000 185,000
----------
459,875
----------
Retail -- 0.3%
Ralph's Grocery Co., 10.45% Sr. Nts., 6/15/04............... 150,000 152,625
----------
Transportation -- 0.2%
Railroads -- 0.1%
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr.
Disc. Nts., Series B, 12/15/03 (12)....................... 100,000 76,500
----------
Shipping -- 0.1%
Trans Ocean Container Corp., 12.25% Sr. Sub. Nts., 7/1/04... 50,000 58,500
----------
Utilities -- 2.7%
Electric Utilities -- 0.4%
CalEnergy, Inc., 9.50% Sr. Nts., 9/15/06 (10)............... 75,000 76,031
Calpine Corp., 10.50% Sr. Nts., 5/15/06 (10)................ 50,000 52,125
El Paso Electric Co., 9.40% First Mtg. Bonds, Series E,
5/1/11.................................................... 100,000 104,000
----------
232,156
----------
</TABLE>
-58-
<PAGE>
Statement of Investments October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Face Amount Value
(1) See Note 1
<S> <C> <C>
Telecommunications -- 2.3%
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04 (5)(12)...... $ 250,000 $ 200,000
Cellular Communications International, Inc., Zero Coupon Sr.
Disc. Nts., 12.154%, 8/15/00.............................. 100,000 66,500
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03
(12)...................................................... 150,000 129,750
MFS Communications Co., Inc., 0%/9.375% Sr. Disc. Nts.,
1/15/04 (12).............................................. 200,000 170,750
Omnipoint Corp., 11.625% Sr. Nts., 8/15/06 (10)............. 200,000 204,000
PriCellular Wireless Corp., 0%/12.25% Sr. Sub. Disc. Nts.,
10/1/03 (12).............................................. 200,000 163,500
Teleport Communications Group, Inc., 0%/11.125% Sr. Disc.
Nts., 7/1/07 (12)......................................... 250,000 161,875
Western Wireless Corp., 10.50% Sr. Sub. Nts., 2/1/07 (5).... 200,000 200,750
----------
1,297,125
----------
Total Corporate Bonds and Notes (Cost $10,990,842).......... 11,293,519
----------
Shares
-------------
Common Stocks -- 0.0%
Finlay Enterprises, Inc. (13)............................... 333 4,995
Grand Union Co. (13)........................................ 1,767 11,927
----------
Total Common Stocks (Cost $32,539).......................... 16,922
----------
Units
Rights, Warrants and Certificates -- 0.0%
American Telecasting, Inc. Wts., Exp. 6/99.................. 500 1,750
Capital Gaming International, Inc. Wts., Exp. 2/99 (5)...... 3,538 106
Cellular Communications International, Inc. Wts., Exp. 8/03
(5)....................................................... 100 2,000
IntelCom Group, Inc. Wts., Exp. 9/05 (5).................... 495 7,673
Protection One, Inc. Wts., Exp. 6/05 (5).................... 640 8,400
----------
Total Rights, Warrants and Certificates (Cost $16,236)...... 19,929
----------
Face Amount
(1)
-------------
Structured Instruments -- 9.6%
Bayerische Landesbank Girozentrale, New York Branch:
6.28% Deutsche Mark Currency Protected Yield Curve CD,
7/25/97................................................... 250,000 249,737
14% CD Linked Nts., 12/17/96 (indexed to the cross
currency rates of Greek Drachma and European Currency
Unit)................................................... 250,000 247,150
Canadian Imperial Bank, 10% CD British Pound Sterling
Maximum Rate Linked Nts., 11/8/96 (indexed to the 3-month
GBP LIBOR, multiplied by 9) (5)........................... 250,000 250,125
</TABLE>
-59-
<PAGE>
Statement of Investments October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Face Amount Value
(1) See Note 1
<S> <C> <C>
Structured Instruments (Continued)
Canadian Imperial Bank of Commerce, New York Branch:
14% CD Linked Nts., 11/25/96 (indexed to the cross
currency rates of Greek Drachma and European Currency
Unit)................................................... $ 550,000 $ 544,610
16.75% CD Linked Nts., 4/16/97 (indexed to the Federation
GKO, Zero Coupon, 4/9/97)............................... 500,000 497,500
17% CD Linked Nts., 2/26/97 (indexed to the Federation
GKO, Zero Coupon, 2/19/97).............................. 250,000 249,250
17% CD Linked Nts., 4/2/97 (indexed to the Russian
Federation GKO, Zero Coupon, 3/26/97)................... 250,000 248,875
17.30% CD Linked Nts., 2/26/97 (indexed to the Federation
GKO, Zero Coupon, 2/19/97).............................. 100,000 99,700
Internationale Nederlanden (U.S.) Capital Holdings Corp., Zero Coupon:
Chilean Peso Linked Nts., 11.122%, 12/11/96 (8)........... 260,000 251,264
Chilean Peso Linked Nts., 11.813%, 6/23/97 (8)............ 140,000 126,728
Indian Rupee Linked Nts., 15.672%, 12/20/96 (8)........... 250,000 245,125
Lehman Brothers, Inc., Zero Coupon Citibank Czech Koruna
Linked Nts., 12.399%, 11/21/96 (3) (8) (CZK).............. 13,500,000 499,309
Morgan Guaranty Trust Co. of New York, Nassau Branch, Zero
Coupon Indian Rupee Currency Linked Nts., 17.392%,
11/27/96 (8).............................................. 125,000 124,071
Salomon Brothers, Inc., Zero Coupon:
Brazilian Credit Linked Nts., 12.38%, 1/3/97 (indexed to
the Brazilian National Treasury Nts., Zero Coupon,
1/2/97) (8)............................................. 400,000 392,920
Brazilian Credit Linked Nts., 12.638%, 1/3/97 (indexed to
the Brazilian National Treasury Nts., Zero Coupon,
1/2/97) (8)............................................. 280,000 275,044
Chilean Peso Indexed Enhanced Access Nts.,
12.145%, 12/11/96 (8)................................... 250,000 242,275
Chilean Peso Indexed Enhanced Access Nts.,
11.792%, 12/11/96 (8)................................... 250,000 242,350
Chilean Peso Indexed Enhanced Access Nts.,
11.792%, 12/18/96 (8)................................... 250,000 241,425
Swiss Bank Corp., New York Branch, 6.05% CD Linked Nts.,
6/20/97 (indexed to the closing Nikkei 225 Index on
1/23/97, 5 yr. & 3 mos. Japanese Yen Swap rate & New
Zealand Dollar)........................................... 250,000 252,312
----------
Total Structured Instruments (Cost $5,311,046).............. 5,279,770
----------
</TABLE>
<TABLE>
<CAPTION>
Expiration
Date Strike Contracts
<S> <C> <C> <C> <C>
Put Options Purchased -- 0.3%
Australian Dollar Put Opt................... 1/97 0.78AUD 630,000 2,646
Bulgaria (Republic of) Interest Arrears
Bonds:
6.688%, 7/28/11 Put Opt................... 11/96 41.10% 500 3,350
6.688%, 7/28/11 Put Opt................... 12/96 40.75% 6,400 63,360
Italy (Republic of) Treasury Bonds, Buoni
del Tesoro Poliennali, 9.50%, 2/1/06 Put
Opt....................................... 7/97 99.96ITL 769 3,385
Swiss Franc Put Opt......................... 1/97 1.256CHF 4,030,266 71,658
-------
Total Put Options Purchased (Cost
$147,375)................................. 144,399
-------
</TABLE>
-60-
<PAGE>
Statement of Investments October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Face Amount Value
(1) See Note 1
<S> <C> <C>
Repurchase Agreement -- 4.7%
Repurchase agreement with Zion First National Bank, 5.52%,
dated 10/31/96, to be repurchased at $2,600,399 on
11/1/96, collateralized by U.S. Treasury Nts.,
5.75%-9.25%, 5/15/97-8/15/04, with a value of $2,654,829
(Cost $2,600,000)......................................... $ 2,600,000 $2,600,000
----------
Total Investments, at Value (Cost $55,749,958).............. 104.5% 57,428,870
Liabilities in Excess of Other Assets....................... (4.5) (2,466,434)
------------- ----------
Net Assets.................................................. 100.0% $54,962,436
------------- ----------
------------- ----------
</TABLE>
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ARP -- Argentine Peso ITL -- Italian Lira
AUD -- Australian Dollar JPY -- Japanese Yen
CAD -- Canadian Dollar MXP -- Mexican Peso
CHF -- Swiss Franc NOK -- Norwegian Krone
CZK -- Czech Koruna PLZ -- Polish Zloty
German Deutsche Portuguese
DEM -- Mark PTE -- Escudo
DKK -- Danish Krone SEK -- Swedish Krona
British Pound
GBP -- Sterling THB -- Thai Baht
IDR -- Indonesian Rupiah
</TABLE>
2. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities
typically decline in price as interest rates decline. Most other fixed
income securities increase in price when interest rates decline. The
principal amount of the underlying pool represents the notional amount on
which current interest is calculated. The price of these securities is
typically more sensitive to changes in prepayment rates than traditional
mortgage-backed securities (for example, GNMA pass-throughs). Interest rates
disclosed represent current yields based upon the current cost basis and
estimated timing and amount of future cash flows.
3. When-issued security to be delivered and settled after October 31, 1996.
4. Represents the current interest rate for a variable rate security.
5. Identifies issues considered to be illiquid -- See Note 8 of Notes to
Financial Statements.
6. Securities with an aggregate market value of $80,300 are held in
collateralized accounts to cover initial margin requirements on open
futures sales contracts. See Note 6 of Notes to Financial Statements.
7. Represents the current interest rate for an increasing rate security.
8. For zero coupon bonds, the interest rate shown is the effective yield on
the date of purchase.
9. Indexed instrument for which the principal amount and/or interest is
affected by the relative value of a foreign index.
10. Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $1,983,374 or 3.61% of the Trust's net
assets, at October 31, 1996.
11. Non-income producing -- issuer is in default of interest payment.
12. Denotes a step bond: a zero coupon bond that converts to a fixed rate of
interest at a designated future date.
13. Non-income producing security.
-61-
<PAGE>
Statement of Investments October 31, 1996 (Continued)
Oppenheimer World Bond Fund
14. A sufficient amount of securities has been designated to cover outstanding
written call options, as follows:
<TABLE>
<CAPTION>
Contracts/Face Market
Subject to Expiration Exercise Premium Value
Call Date Price Received See Note 1
------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Call Option on Australian
Dollar......................... 630,000 11/27/96 1.263AUD $ 3,024 $ 2,646
Call Option on British Pound
Sterling....................... 305,000 1/30/97 0.613GBP 6,869 7,991
Call Option on Bulgaria
(Republic of) Front-Loaded
Interest Reduction Bearer
Bonds, Tranche A, 2.25%,
7/28/12........................ 800 12/4/96 32.75% 6,000 12,400
Call Option on Bulgaria
(Republic of) Front-Loaded
Interest Reduction Bearer
Bonds, Tranche A, 2.25%,
7/28/12........................ 800 11/29/96 32.13% 4,560 16,000
Call Option on Bulgaria
(Republic of)
Interest Arrears Bonds, 6.688%,
7/28/11........................ 500 11/29/96 47.10% 2,850 3,000
Call Option on Swiss Franc...... 2,050,000 1/6/97 1.20CHF 7,984 5,074
--------- ---------
$ 31,287 $ 47,111
--------- ---------
--------- ---------
</TABLE>
Distribution of investments by country of issue, as a percentage of total
investments at value, is as follows:
<TABLE>
<CAPTION>
Market
Country Value Percent
- - ------------------------------------------------------- ----------- -----------
<S> <C> <C>
United States.......................................... $26,650,930 46.4%
Mexico................................................. 3,477,849 6.1
Great Britain.......................................... 3,063,048 5.3
Canada................................................. 2,678,134 4.7
Brazil................................................. 2,515,619 4.4
Jordan................................................. 1,153,750 2.0
Indonesia.............................................. 1,126,665 2.0
Chile.................................................. 1,104,042 1.9
Russia................................................. 1,095,325 1.9
Morocco................................................ 1,072,922 1.9
Algeria................................................ 1,068,750 1.9
Australia.............................................. 1,006,519 1.7
Denmark................................................ 934,536 1.6
Sweden................................................. 917,090 1.6
Bulgaria............................................... 809,210 1.4
Italy.................................................. 792,293 1.4
Argentina.............................................. 776,165 1.3
Jamaica................................................ 701,729 1.2
Norway................................................. 674,829 1.2
Venezuela.............................................. 665,438 1.2
Portugal............................................... 622,079 1.1
Panama................................................. 595,289 1.0
Other.................................................. 3,926,659 6.8
----------- ------
Total.................................................. $57,428,870 100.0%
----------- ------
----------- ------
</TABLE>
See accompanying Notes to Financial Statements.
-62-
<PAGE>
Statement of Assets and Liabilities October 31, 1996
Oppenheimer World Bond Fund
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $55,749,958) -- see accompanying
statement.............................................................. $57,428,870
Cash..................................................................... 34,492
Unrealized appreciation on forward foreign currency exchange
contracts -- Note 5.................................................. 11,763
Receivables:
Investments sold....................................................... 1,781,621
Interest and principal paydowns........................................ 1,209,582
Closed forward foreign currency exchange contracts..................... 97,487
Other.................................................................... 6,700
-----------
Total assets......................................................... 60,570,515
-----------
LIABILITIES:
Options written, at value (premiums received $31,287) -- see
accompanying statement -- Note 7..................................... 47,111
Unrealized depreciation on forward foreign currency exchange
contracts -- Note 5.................................................. 1,345
Payables and other liabilities:
Investments purchased (including $3,677,202 purchased on a when-issued
basis) -- Note 1................................................... 5,382,470
Trustees' fees......................................................... 52,551
Closed forward foreign currency exchange contracts..................... 47,848
Management and administrative fees..................................... 13,057
Other.................................................................. 63,697
-----------
Total liabilities.................................................... 5,608,079
-----------
NET ASSETS............................................................... $54,962,436
-----------
-----------
COMPOSITION OF NET ASSETS:
Par value of shares of beneficial interest............................... $ 66,155
Additional paid-in capital............................................... 59,784,052
Undistributed net investment income...................................... 523,824
Accumulated net realized loss on investments and foreign currency
transactions........................................................... (7,083,779)
Net unrealized appreciation on investments and translation of assets and
liabilities denominated in foreign currencies.......................... 1,672,184
------------
NET ASSETS -- applicable to 6,615,505 shares of beneficial interest
outstanding............................................................ $54,962,436
------------
------------
NET ASSET VALUE PER SHARE................................................ $8.31
See accompanying Notes to Financial Statements.
-63-
<PAGE>
Statement of Operations For the Year Ended October 31, 1996
Oppenheimer World Bond Fund
INVESTMENT INCOME:
Interest.................................................................. $5,494,494
Dividends................................................................. 4,495
----------
Total income........................................................ 5,498,989
----------
EXPENSES:
Management fees -- Note 4............................................... 346,262
Administrative fees -- Note 4........................................... 106,520
Shareholder reports....................................................... 62,296
Custodian fees and expenses............................................... 47,072
Transfer agent and accounting service fees -- Note 4.................... 38,853
Trustees' fees and expenses -- Note 1................................... 38,181
Legal and auditing fees................................................... 25,899
Registration and filing fees.............................................. 13,224
Other..................................................................... 3,334
----------
Total expenses...................................................... 681,641
----------
NET INVESTMENT INCOME..................................................... 4,817,348
----------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments (including premiums on options exercised)................... 1,311,255
Closing of futures contracts............................................ (254,443)
Closing and expiration of options written............................... (123,206)
Foreign currency transactions........................................... 240,445
----------
Net realized gain................................................. 1,174,051
----------
Net change in unrealized appreciation or depreciation on:
Investments............................................................. 1,269,875
Translation of assets and liabilities denominated in foreign
currencies............................................................ (193,128)
----------
Net change.......................................................... 1,076,747
----------
NET REALIZED AND UNREALIZED GAIN.......................................... 2,250,798
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS......................
$7,068,146
----------
----------
</TABLE>
See accompanying Notes to Financial Statements.
-64-
<PAGE>
Statements of Changes in Net Assets
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Year Ended October 31,
1996 1995
---------- ----------
<S> <C> <C>
OPERATIONS:
Net investment income.............................................. $ 4,817,348 $ 4,710,494
Net realized gain (loss)........................................... 1,174,051 (1,281,279)
Net change in unrealized appreciation or depreciation.............. 1,076,747 943,379
----------- -----------
Net increase in net assets resulting from operations......... 7,068,146 4,372,594
----------- -----------
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income............................... (4,445,589) (4,472,033)
----------- -----------
Total increase (decrease).......................................... 2,622,557 (99,439)
NET ASSETS:
Beginning of period................................................ 52,339,879 52,439,318
----------- -----------
End of period [including undistributed (overdistributed) net
investment income of $523,824 and $(79,149), respectively]....... $54,962,436 $52,339,879
----------- -----------
----------- -----------
See accompanying Notes to Financial Statements.
</TABLE>
-65-
<PAGE>
Financial Highlights
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Year Ended October 31,
-----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of
period......................... $ 7.91 $ 7.93 $ 8.54 $ 8.55 $ 8.97
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income.......... .73 .71 .69 .82 .89
Net realized and unrealized
gain (loss).................. .34 (.05) (.61) -- (.39)
--------- --------- --------- --------- ---------
Total income from investment
operations.................. 1.07 .66 .08 .82 .50
--------- --------- --------- --------- ---------
Dividends and distributions to
shareholders:
Dividends from net investment
income....................... (.67) (.68) (.68) (.75) (.92)
Tax return of capital
distribution................. -- -- (.01) (.08) --
--------- --------- --------- --------- ---------
Total dividends and
distributions to
shareholders................ (.67) (.68) (.69) (.83) (.92)
--------- --------- --------- --------- ---------
Net asset value, end of
period......................... $ 8.31 $ 7.91 $ 7.93 $ 8.54 $ 8.55
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Market value, end of period..... $ 7.50 $ 7.00 $ 7.00 $ 8.00 $ 8.63
TOTAL RETURN, AT MARKET
VALUE(1)....................... 16.40% 9.09% (4.84)% 2.22% 0.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)..................... $ 54,962 $ 52,340 $ 52,439 $ 56,526 $ 55,668
Average net assets (in
thousands)..................... $ 53,309 $ 51,207 $ 54,380 $ 55,877 $ 56,970
Ratios to average net assets:
Net investment income........ 9.04% 9.20% 8.90% 9.59% 10.13%
Expenses..................... 1.28% 1.24% 1.24% 1.22% 1.32%
Portfolio turnover rate(2)...... 260.8% 344.2% 315.5% 112.5% 98.4%
</TABLE>
(1) 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.
Total return does not reflect sales charges or brokerage commissions.
(2) 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, 1996 were
$128,034,915 and $123,825,672, respectively. For the years ended October
31, 1995 and 1994, purchases and sales of investment securities included
mortgage 'dollar-rolls.'
See accompanying Notes to Financial Statements.
-66-
<PAGE>
Notes to Financial Statements
Oppenheimer World Bond Fund
1. Significant Accounting Policies
Oppenheimer World Bond Fund (the Fund), formerly named Oppenheimer
Multi-Government Trust, is registered under the Investment Company Act of 1940,
as amended, as a diversified, closed-end management investment company. The
Fund's investment objective is to seek high current income. The Fund's
investment adviser is OppenheimerFunds, Inc. (the Manager). The following is a
summary of significant accounting policies consistently followed by the Fund.
Investment Valuation -- Portfolio securities are valued at the close of the New
York Stock Exchange 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 the last sale price on
the prior trading day. Long-term and short-term 'non-money market' debt
securities are valued by a portfolio pricing service approved by the Board of
Trustees. Such securities which cannot be valued by the approved portfolio
pricing service are valued using dealer-supplied valuations provided the Manager
is satisfied that the firm rendering the quotes is reliable and that the quotes
reflect current market value, or are valued under consistently applied
procedures established by the Board of Trustees to determine fair value in good
faith. Short-term 'money market type' 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. Forward
foreign currency contracts are valued based on the closing prices of the forward
currency contract rates in the London foreign exchange markets on a daily basis
as provided by a reliable bank or dealer. Options are valued based upon the last
sale price on the principal exchange on which the option is traded or, in the
absence of any transactions that day, the value is based upon the last sale
price on the prior trading date if it is within the spread between the closing
bid and asked prices. If the last sale price is outside the spread, the closing
bid is used.
Securities Purchased on a When-Issued Basis -- Delivery and payment for
securities that have been purchased by the Fund on a forward commitment or
when-issued basis can take place a month or more after the transaction date.
During this period, such securities do not earn interest, are subject to market
fluctuation and may increase or decrease in value prior to their delivery. The
Fund maintains, in a segregated account with its custodian, assets with a market
value equal to the amount of its purchase commitments. The purchase of
securities on a when-issued or forward commitment basis may increase the
volatility of the Fund's net asset value to the extent the Fund makes such
purchases while remaining substantially fully invested. As of October 31, 1996,
the Fund had entered into outstanding when-issued or forward commitments of
$3,677,202.
In connection with its ability to purchase securities on a when-issued or
forward commitment basis, the Fund may enter into mortgage 'dollar-rolls' in
which the Fund sells securities for delivery in the current month and
simultaneously contracts with the same counterparty to repurchase similar
(same type coupon and maturity) but not identical securities on a specified
future date. The Fund records each dollar-roll as a sale and a new purchase
transaction.
Security Credit Risk -- The Fund invests in high yield securities, which may be
subject to a greater degree of credit risk, greater market
-67-
<PAGE>
Notes to Financial Statements (Continued)
Oppenheimer World Bond Fund
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 Fund may acquire securities in default, and is not obligated to
dispose of securities whose issuers subsequently default.
Foreign Currency Translation -- The accounting records of the Fund are
maintained in U.S. dollars. Prices of securities denominated in foreign
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 effect of changes in foreign currency exchange rates on
investments is separately identified from the fluctuations arising from changes
in market values of securities held and reported with all other foreign currency
gains and losses in the Fund's Statement of Operations.
Repurchase Agreements -- The Fund 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. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. 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 Fund may be delayed or limited.
Federal Taxes -- The Fund 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 or excise tax provision is required. At October 31, 1996, the
Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $6,951,000, which expires between 1998 and 2003.
Trustees' Fees and Expenses -- The Fund has adopted a nonfunded 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
October 31, 1996, a provision of $15,483 was made for the Fund's projected
benefit obligations and payments of $1,214 were made to retired trustees,
resulting in an accumulated liability of $41,703 at October 31, 1996.
Distributions to Shareholders -- The Fund intends to declare and pay dividends
from net investment income monthly. Distributions from net realized gains on
investments, if any, will be made at least once each year.
Classification of Distributions to Shareholders -- Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of the distributions made during the 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
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gain (loss) was recorded by the
Fund.
During the year ended October 31, 1996, the Fund adjusted the classification of
net investment income and capital gain (loss) to reflect the differences between
financial statement amounts and distributions determined in accordance with
income tax regulations. Accordingly, during the year ended October
-68-
<PAGE>
Notes to Financial Statements (Continued)
Oppenheimer World Bond Fund
31, 1996, amounts have been reclassified to reflect an increase in undistributed
net investment income of $145,857. Accumulated net realized loss on investments
was increased by the same amount. In addition, to properly reflect foreign
currency gain in the components of capital, $85,357 of foreign exchange gain
determined according to U.S. Federal income tax rules has been reclassified from
accumulated net realized loss to undistributed net investment income.
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.
Dividends in kind are recognized as income on the ex-dividend date, at the
current market value of the underlying security. Interest on payment-in-kind
debt instruments is accrued as income at the coupon rate and a market adjustment
is made periodically.
The preparation of financial statements in conformity with 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 $.01 par value shares of
beneficial interest. There were no transactions in shares of beneficial interest
for the years ended October 31, 1996 and 1995.
3. Unrealized Gains and Losses on
Investments
At October 31, 1996 net unrealized appreciation on investments and options
written of $1,663,088 was composed of gross appreciation of $2,061,485, and
gross depreciation of $398,397.
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 Fund which provides for an annual fee of 0.65% on
the Fund's average annual net assets.
Mitchell Hutchins Asset Management Inc. serves as the Fund's Administrator.
The Fund pays the Administrator an annual fee of 0.20% of the Fund's average
annual net assets.
The Manager acts as the accounting agent for the Fund 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 Fund. Fees paid to SFSI are
based on the number of accounts and the number of shareholder transactions, plus
out-of-pocket costs and expenses.
5. Forward Foreign Currency Exchange Contracts
A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future
-69-
<PAGE>
Notes to Financial Statements (Continued)
Oppenheimer World Bond Fund
date, at a negotiated rate. The Fund uses forward contracts to seek to manage
foreign currency risks. They may also be used to tactically shift portfolio
currency risk. The Fund generally enters into forward contracts as a hedge upon
the purchase or sale of a security denominated in a foreign currency. In
addition, the Fund may enter into such contracts as a hedge against changes in
foreign currency exchange rates on portfolio positions.
Forward contracts are valued based on the closing prices of the forward currency
contract rates in the London foreign exchange markets on a daily basis as
provided by a reliable bank or dealer. The Fund will realize a gain or loss upon
the closing or settlement of the forward transaction.
Securities held in segregated accounts to cover net exposure on outstanding
forward contracts are noted in the Statement of Investments where applicable.
Unrealized appreciation or depreciation on forward contracts is reported in the
Statement of Assets and Liabilities. Realized gains and losses are reported with
all other foreign currency gains and losses in the Fund's Statement of
Operations. Risks include the potential inability of the counterparty to meet
the terms of the contract and unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
At October 31, 1996, the Fund had outstanding forward contracts to
purchase and sell currencies as follows:
<TABLE>
<CAPTION>
Valuation as
Contract of
Expiration Amount October 31, Unrealized Unrealized
Contracts to Purchase Date (000s) 1996 Appreciation Depreciation
- - ---------------------------- ------------- --------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Spanish Peseta (ESP)........ 10/20/97 49,220ESP $ 381,596 $ 3,555 $ --
Italian Lira (ITL).......... 10/20/97-
10/30/97 926,437ITL 602,422 4,197 --
Mexican Peso (MXP).......... 11/1/96 1,147MXP 142,258 -- 1,201
---------- --------- -----
$1,126,276 7,752 1,201
---------- --------- -----
----------
Contracts to Sell
Swiss Franc (CHF)........... 10/20/97 920CHF $ 751,304 $ 3,723 $ --
Japanese Yen (JPY).......... 12/20/96-
10/30/97 27,350JPY 250,963 288 144
---------- --------- -----
$1,002,267 4,011 144
---------- --------- -----
----------
Total Unrealized Appreciation and Depreciation $ 11,763 $ 1,345
--------- -----
--------- -----
</TABLE>
6. Futures Contracts
The Fund may buy and sell interest rate futures contracts in order to gain
exposure to or protect against changes in interest rates. The Fund may also buy
or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases in
interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Fund may also purchase futures contracts to gain
exposure to changes in interest rates as it may be
-70-
<PAGE>
Notes to Financial Statements (Continued)
Oppenheimer World Bond Fund
more efficient or cost effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
Securities held in collateralized accounts to cover initial margin requirements
on open futures contracts are noted in the Statement of Investments. The
Statement of Assets and Liabilities reflects a receivable or payable for the
daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
At October 31, 1996, the Fund had outstanding futures contracts to sell debt
securities as follows:
<TABLE>
<CAPTION>
Valuation
as of
Expiration Number of October 31, Unrealized
Date Contracts 1996 Depreciation
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
U.S.
Treasury
Bonds..... 12/96 1 $ 113,000 $ 1,938
</TABLE>
7. Option Activity
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to hedge
against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a
footnote to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Fund may incur a loss if
the market price of the security decreases and the option is exercised. The risk
in buying an option is that the Fund pays a premium whether or not the option is
exercised. The Fund also has the additional risk of not being able to enter into
a closing transaction if a liquid secondary market does not exist.
-71-
<PAGE>
Notes to Financial Statements (Continued)
Oppenheimer World Bond Fund
Written option activity for the year ended October 31, 1996 was as follows:
<TABLE>
<CAPTION>
Call Options Put Options
-------------------- ------------
Number Amount Number Amount
of of of of
Options Premiums Options Premiums
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Options
outstanding at
October 31,
1995.......... 2,837 $ 35,528 -- $ --
Options
written....... 11,204,398 148,271 657 22,747
Options closed
or expired.... (7,874,086) (149,671) (657) (22,747)
Options
exercised..... (346,049) (2,841) -- --
---------- ---------- ----- ----------
Options
outstanding at
October 31,
1996.......... 2,987,100 $ 31,287 -- $ --
--------- --------- ----- ----------
--------- --------- ----- ----------
</TABLE>
8. Illiquid and Restricted Securities
At October 31, 1996, investments in securities included issues that are illiquid
or restricted. Restricted securities are often 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 be considered
illiquid if it lacks a readily-available market or if its valuation has not
changed for a certain period of time. The Fund intends to invest no more than
10% of its net assets (determined at the time of purchase and reviewed from time
to time) in illiquid or restricted securities. Certain restricted securities,
eligible for resale to qualified institutional investors, are not subject to
that limit. The aggregate value of illiquid or restricted securities subject to
this limitation at October 31, 1996 was $3,643,988, which represents 6.63% of
the Fund's net assets. Information concerning restricted securities is as
follows:
<TABLE>
<CAPTION>
Valuation
Per Unit
Cost as of
Acquisition Per October 31,
Security Date Unit 1996
- - --------------------------------------------------------- ----------- --------- -----------
<S> <C> <C> <C>
Canadian Imperial Bank, 10% CD British Pound Sterling
Maximum Rate Linked Nts., 11/8/96....................... 4/28/95 $ 100.00 $ 100.05
</TABLE>
-72-
<PAGE>
Independent Auditors' Report
Oppenheimer World Bond Fund
The Board of Trustees and Shareholders of
Oppenheimer World Bond Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer World Bond Fund (formerly Oppenheimer
Multi-Government Trust) as of October 31, 1996, 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 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. Our procedures included confirmation of securities owned as of
October 31, 1996, 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 World Bond Fund as of October 31, 1996, 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
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Denver, Colorado
November 21, 1996
-73-
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
1. Financial Statements.
(a) Statement of Investments - (See Part B, Statement of
Additional Information): filed herewith.
(b) Statement of Assets and Liabilities - (See Part B,
Statement of Additional Information): filed herewith.
(c) Statement of Operations - (See Part B, Statement of
Additional Information): filed herewith.
(d) Statements of Changes in Net Assets - (See Part B,
Statement of Additional Information): filed herewith.
(e) Financial Highlights - (See Part B, Statement of
Additional Information): filed herewith.
(f) Notes to Financial Statements - (See Part B, Statement of
Additional Information): filed herewith.
(g) Independent Auditors' Report - (See Part B, Statement of
Additional Information): filed herewith.
(h) Independent Auditors' Consent - (See Part B, Statement of
Additional Information): filed herewith.
2. Exhibits:
(a) (1) Declaration of Trust of Registrant - Filed with
Registrant's Registration Statement, 10/7/88, and refiled with
Post-Effective Amendment No. 8 to Registrant's Registration
Statement, 2/27/95, and incorporated herein by reference.
(2) Amendment No. 1 dated as of October 18, 1988 to
Declaration of Trust of Registrant - Filed with Pre-Effective
Amendment No. 2 to Registrant's Registration Statement, 11/12/88,
and refiled with Post-Effective Amendment No. 8 to Registrant's
Registration Statement, 2/27/95, and incorporated herein by
reference.
(3) Amendment No. 2 dated as of November 12, 1988 to
Declaration of Trust of Registrant - Filed with Post-Effective
Amendment No. 1 to Registrant's Registration Statement, 11/25/88,
and refiled with Post-Effective Amendment No. 8 to Registrant's
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<PAGE>
Registration Statement, 2/27/95, and incorporated herein by reference.
(4) Amendment No. 3 dated November 6, 1989 to
Declaration of Trust of Registrant - Filed with Post-Effective
Amendment No. 8 to Registrant's Registration Statement, 2/27/95,
and incorporated herein by reference.
(5) Amendment No. 4 dated July 3, 1996 to Declaration of
Trust of Registrant - Previously filed with Registrant's Post-
Effective Amendment No. 10, 7/26/96, and incorporated herein by
reference.
(b) (1) By-Laws of Registrant - Filed with Registrant's
Registration Statement, 10/7/88, and refiled with Post-Effective
Amendment No. 8 to Registrant's Registration Statement, 2/27/95,
and incorporated herein by reference.
(2) Amendment to By-Laws of Registrant - Filed with
Post-Effective Amendment No. 8 to Registrant's Registration
Statement, 2/27/95, and incorporated herein by reference.
(3) Amendment to By-Laws of Registrant - Previously
filed with Registrant's Post-Effective Amendment No. 10, 7/26/96,
and incorporated herein by reference.
(c) Inapplicable
(d) Specimen certificate for Shares of Beneficial Interest,
$.01 par value -Filed with Post-Effective Amendment No. 10 to
Registrant's Registration Statement.
(e) See Exhibit (k)(2).
(f) Inapplicable
(g) (1) Investment Advisory Agreement with Oppenheimer
Management Corporation dated 10/22/90 - Filed with Post-Effective
Amendment No. 5 to Registrant's Registration Statement dated
2/28/91 and refiled with Post-Effective Amendment No. 8 to
Registrant's Registration Statement, 2/27/95, and incorporated
herein by reference.
(2) Form of Administration Agreement with Mitchell
Hutchins Asset Management Inc. - Filed with Pre-Effective Amendment
No. 2 to Registrant's Registration Statement, 11/12/88, and refiled
with Post-Effective Amendment No. 8 to Registrant's Registration
Statement, 2/27/95, and incorporated herein by reference.
-75-
<PAGE>
(h) Inapplicable
(i) Retirement Plan for Non-Interested Trustees or Directors
(adopted by Registrant on 6/7/90) - Filed with Post-Effective
Amendment No. 45 to the Registration Statement of Oppenheimer
Special Fund (Reg. No. 2-14586) dated 10/21/94, and refiled with
Post-Effective Amendment No. 8 to Registrant's Registration
Statement, 2/27/95, and incorporated herein by reference.
(j) Co-Custody Agreement - Filed with Post-Effective
Amendment No. 7 to Registrant's Registration Statement, dated
2/26/93, and refiled with Post-Effective Amendment No. 8 to
Registrant's Registration Statement, 2/27/95, and incorporated
herein by reference.
(k) (1) Accounting Service Agreement - Filed with Post-
Effective Amendment No. 8 to Registrant's Registration Statement,
2/27/95, and incorporated herein by reference.
(2) Registrar, Transfer Agency and Service Agreement -
Filed with Post-Effective Amendment No. 8 to Registrant's
Registration Statement, 2/27/95, and incorporated herein by
reference.
(3) Co-Transfer Agent and Co-Registrar Agreement - Filed
with Post-Effective Amendment No. 8 to Registrant's Registration
Statement, 2/27/95, and incorporated herein by reference.
(l) Inapplicable.
(m) Inapplicable
(n) Inapplicable
(o) Inapplicable
(p) Inapplicable
(q) Inapplicable
(r) Financial Data Schedule - Filed herewith
Item 25. Marketing Arrangements.
Inapplicable.
Item 26. Other Expenses of Issuance and Distribution.
Inapplicable.
Item 27. Persons Controlled by or under Common Control.
-76-
<PAGE>
None.
Item 28. Number of Holders of Securities.
(1) (2)
Number of
Record Holders at
Title of Class January 31, 1997
Shares of Beneficial Interest, 1,112
$.01 par value
Item 29. Indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer, or controlling person of the Registrant
in connection with the successful defense of any action, suit or proceeding) is
asserted against the Registrant by such trustee, officer or controlling person,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act, and will be governed by the final adjudication of such
issue.
The Registrant hereby undertakes that it will apply the indemnification
provision of its By-laws in a manner consistent with Release 11330 of the
Securities and Exchange Commission under the Investment Company Act of 1940, so
long as the interpretation therein of Sections 17(h) and 17(i) of the Investment
Company Act remains in effect.
Registrant, in conjunction with the Registrant's Trustees, and other
registered management investment companies managed by the Adviser, generally
maintains insurance on behalf of any person who is or was a Trustee, officer,
employee, or agent of Registrant. However, in no event will Registrant pay that
portion of the premium, if any, for insurance to indemnify any such person for
any act for which Registrant itself is not permitted to indemnify him.
Item 30. Business and Other Connections of Investment Adviser.
(a) OppenheimerFunds, Inc. is the investment adviser of the
-77-
<PAGE>
Registrant; it and certain subsidiaries and affiliates act in the same capacity
to other registered investment companies as described in Parts A and B hereof
and listed in Item 28(b) below.
(b) There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each officer
and director of OppenheimerFunds, Inc. is, or at any time during the past two
fiscal years has been, engaged for his/her own account or in the capacity of
director, officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- - --------------------------- -------------------------------
<S> <C>
Mark J.P. Anson,
Vice President Vice President of Oppenheimer
Real Asset Management, Inc.
("ORAMI"); formerly Vice
President of Equity Derivatives
at Salomon Brothers, Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; a Chartered Financial
Analyst; Senior Vice President of
HarbourView; prior to March, 1996
he was the senior equity
portfolio manager for the
Panorama Series Fund, Inc. (the
"Company") and other mutual funds
and pension funds managed by G.R.
Phelps & Co. Inc. ("G.R.
Phelps"), the Company's former
investment adviser, which was a
subsidiary of Connecticut Mutual
Life Insurance Company; was also
responsible for managing the
common stock department and
common stock investments of
Connecticut Mutual Life Insurance
Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
-78-
<PAGE>
Vice President An officer
and/or portfolio
manager of certain
Oppenheimer funds;
formerly a Vice
President and Senior
Portfolio Manager at
First of America
Investment Corp.
Ellen Batt,
Assistant Vice President None
Kathleen Beichert,
Assistant Vice President Formerly employed by Smith
Barney, Inc.
David Bernard,
Vice President Previously a Regional Sales
Director for Retirement Plan
Services at Charles Schwab & Co.,
Inc.
Rajeev Bhaman,
Assistant Vice President Formerly Vice President of Asian
Equities for Barclays de Zoete
Wedd, Inc.
Robert J. Bishop,
Vice President Assistant Treasurer of the
Oppenheimer Funds (listed below);
previously a Fund Controller for
OppenheimerFunds, Inc. (the
"Adviser").
George Bowen, Senior Vice
President & Treasurer Treasurer of the New York-based
Oppenheimer Funds; Vice
President, Assistant Secretary
and Treasurer of the Denver-based
Oppenheimer Funds. Vice President
and Treasurer of OppenheimerFunds
Distributor, Inc. (the
"Distributor") and HarbourView
Asset Management Corporation
("HarbourView"), an investment
adviser subsidiary of the
Adviser; Senior Vice President,
Treasurer, Assistant Secretary
and a director of Centennial
Asset Management Corporation
("Centennial"), an investment
adviser subsidiary of the
Adviser; Vice President,
Treasurer and Secretary of
Shareholder Services, Inc.
("SSI") and Shareholder Financial
Services, Inc. ("SFSI"), transfer
agent subsidiaries of the
Adviser; Director, Treasurer and
-79-
<PAGE>
Chief Executive
Officer of MultiSource
Services, Inc.; Vice
President and
Treasurer of
Oppenheimer Real Asset
Management, Inc.;
President, Treasurer
and Director of
Centennial Capital
Corporation; Vice
President and
Treasurer of Main
Street Advisers.
Scott Brooks,
Assistant Vice President None.
Susan Burton,
Assistant Vice President Previously a Director of
Educational Services for H.D.
Vest Investment Securities, Inc.
Michael A. Carbuto,
Vice President An officer
and/or portfolio
manager of certain
Oppenheimer funds;
Vice President of
Centennial.
Ruxandra Chivu,
Assistant Vice President None.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed
Income for State Street Research
& Management Co.
Robert A. Densen,
Senior Vice President None.
Sheri Devereux,
Assistant Vice President None.
Robert Doll, Jr.,
Executive Vice President and
Director An officer and/or
portfolio manager of
certain Oppenheimer
funds.
John Doney,
Vice President An officer
and/or portfolio
manager of certain
Oppenheimer funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Secretary of the New York-based
Oppenheimer Funds; Vice President
and Secretary of the Denver-based
Oppenheimer Funds; Secretary of
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<PAGE>
the Oppenheimer Quest
and Oppenheimer
Rochester Funds;
Executive Vice
President, Director
and General Counsel of
the Distributor;
President and a
Director of
Centennial; Chief
Legal Officer and a
Director of
MultiSource Services,
Inc.; President and a
Director of
Oppenheimer Real Asset
Management, Inc.;
Executive Vice
President, General
Counsel and Director
of SFSI and SSI;
formerly Senior Vice
President and
Associate General
Counsel of the Adviser
and the Distributor.
George Evans,
Vice President An officer
and/or portfolio
manager of certain
Oppenheimer funds.
Scott Farrar,
Vice President Assistant Treasurer of the New
York-based and Denver-based
Oppenheimer funds.
Leslie A. Falconio,
Assistant Vice President None.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of
OppenheimerFunds Distributor,
Inc.; Secretary of HarbourView
Asset Management Corporation,
MultiSource Services, Inc. and
Centennial Asset Management
Corporation; Secretary, Vice
President and Director of
Centennial Capital Corporation;
Vice President and Secretary of
ORAMI.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director and/or
portfolio manager of certain
Oppenheimer funds. Formerly
Chairman of the Board and
Director of Rochester Fund
Distributors, Inc. ("RFD"),
President and Director of
Fielding Management Company, Inc.
("FMC"), President and Director
of Rochester Capital Advisors,
-81-
<PAGE>
Inc. ("RCAI"), Managing Partner
of Rochester Capital Advisors,
L.P., President and Director of
Rochester Fund Services, Inc.
("RFS"), President and Director
of Rochester Tax Managed Fund,
Inc.
John Fortuna,
Vice President None.
Patricia Foster,
Vice President Formerly she held the following
positions: An officer of certain
Oppenheimer funds; Secretary and
General Counsel of Rochester
Capital Advisors, L.P. and
Secretary of Rochester Tax
Managed Fund, Inc.
Jennifer Foxson,
Assistant Vice President None.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds; Vice President
and Counsel of OAC; formerly he
held the following positions:
Vice President and a director of
HarbourView and Centennial, a
director of SFSI and SSI, an
officer of other Oppenheimer
Funds.
Linda Gardner,
Assistant Vice President None.
Jill Glazerman, None.
Assistant Vice President
Ginger Gonzalez,
Vice President, Director of
Marketing Communications
Formerly 1st Vice
President / Director
of Graphic and Print
Communications for
Shearson Lehman
Brothers.
-82-
<PAGE>
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy
Consultant for the Private Client
Division of Merrill Lynch.
Caryn Halbrecht,
Vice President An officer
and/or portfolio
manager of certain
Oppenheimer funds;
formerly Vice
President of Fixed
Income Portfolio
Management at Bankers
Trust.
Glenna Hale,
Director of Investor Marketing Formerly Vice President (1994-
1997) of Retirement Plans
Services for OppenheimerFunds
Services.
Barbara Hennigar,
Executive Vice President and
President and Chief Executive
Officer of OppenheimerFunds
Services, a division of the
Adviser President and Director of SFSI;
President and Chief Executive
Officer of SSI.
Dorothy Hirshman,
Assistant Vice President None.
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
-83-
<PAGE>
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with
Robinson, Lake/Sawyer Miller.
Ronald Jamison,
Vice President Formerly Vice President and
Associate General Counsel at
Prudential Securities, Inc.
Frank Jennings,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly a Managing
Director of Global Equities at
Paine Webber's Mitchell Hutchins
division.
Heidi Kagan,
Assistant Vice President None.
Thomas W. Keffer,
Vice President Formerly Senior Managing Director
of Van Eck Global.
Avram Kornberg,
Vice President Formerly a Vice President with
Bankers Trust.
Joseph Krist,
Assistant Vice President None.
Paul LaRocco,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly a Securities
Analyst for Columbus Circle
Investors.
-84-
<PAGE>
Michael Levine,
Assistant Vice President None.
Shanquan Li,
Assistant Vice President Director of Board (since 2/96),
Chinese Finance Society; formerly
Chairman (11/94-2/96)), Chinese
Finance Society; and Director
(6/94-6/95), Greater China
Business Networks.
Stephen F. Libera,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; a Chartered Financial
Analyst; a Vice President of
HarbourView; prior to March, 1996
he was the senior bond portfolio
manager for Panorama Series Fund,
Inc., other mutual funds and
pension accounts managed by G.R.
Phelps; was also responsible for
managing the public fixed-income
securities department at
Connecticut Mutual Life Insurance
Co.
Mitchell J. Lindauer,
Vice President None.
David Mabry,
Assistant Vice President None.
Loretta McCarthy,
Executive Vice President None.
Bridget Macaskill,
President, Chief Executive
Officer and Director President, Director and Trustee
of the New York-based and the
Denver-based Oppenheimer funds;
President and a Director of OAC,
HarbourView and Oppenheimer
Partnership Holdings, Inc.;
Director of ORAMI; Chairman and
Director of SSI; a Director of
Oppenheimer Real Asset
Management, Inc.
Timothy Martin,
Assistant Vice President Formerly Vice President, Mortgage
Trading, at S.N. Phelps & Co.,
Salomon Brothers, and Kidder
Peabody.
-85-
<PAGE>
Sally Marzouk,
Vice President None.
Michelle McCann,
Assistant Vice President Formerly Vice President, Quest
for Value Distributors,
Oppenheimer Capital Corporation.
Lisa Migan,
Assistant Vice President, None.
Robert J. Milnamow,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly a Portfolio
Manager with Phoenix Securities
Group.
Denis R. Molleur,
Vice President None.
Linda Moore,
Vice President Formerly Marketing Manager (July,
1995 - November, 1996) for Chase
Investment Services Corp.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President An officer
and/or portfolio
manager of certain
Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Gina M. Palmieri,
Assistant Vice President None.
Robert E. Patterson,
Senior Vice President An
officer and/or
portfolio manager of
certain Oppenheimer
funds.
John Pirie,
Assistant Vice President Formerly a Vice President with
Cohane Rafferty Securities, Inc.
Tilghman G. Pitts III,
Executive Vice President Chairman and Director of the
Distributor.
-86-
<PAGE>
Jane Putnam,
Vice President An officer
and/or portfolio
manager of certain
Oppenheimer funds.
Formerly Senior
Investment Officer and
Portfolio Manager with
Chemical Bank.
Russell Read,
Vice President Consultant for Prudential
Insurance on behalf of the
General Motors Pension Plan.
Thomas Reedy,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly a Securities
Analyst for the Adviser.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President Formerly a Product Manager for
Metropolitan Life Insurance
Company.
Michael S. Rosen
Vice President; President:
Rochester Division An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly Vice President of
RFS, President and Director of
RFD, Vice President and Director
of FMC, Vice President and
director of RCAI, General Partner
of RCA, an officer and/or
portfolio manager of certain
Oppenheimer funds.
David Rosenberg,
Vice President An officer
and/or portfolio
manager of certain
Oppenheimer funds.
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; formerly Vice President
and Portfolio Manager/Security
Analyst for Oppenheimer Capital
Corp., an investment adviser.
Lawrence Rudnick,
Assistant Vice President Formerly Vice President of Dollar
Dry Dock Bank.
-87-
<PAGE>
James Ruff,
Executive Vice President None.
Valerie Sanders,
Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly Vice President of
Citicorp Investment Services.
Diane Sobin,
Vice President An officer
and/or portfolio
manager of certain
Oppenheimer funds;
formerly a Vice
President and Senior
Portfolio Manager for
Dean Witter
InterCapital, Inc.
Richard A. Soper, None.
Assistant Vice President
Nancy Sperte,
Executive Vice President None.
Donald W. Spiro,
Chairman Emeritus and Director
Vice Chairman and
Trustee of the New
York-based Oppenheimer
Funds; formerly
Chairman of the
Adviser and the
Distributor.
Arthur Steinmetz,
Senior Vice President An
officer and/or
portfolio manager of
certain Oppenheimer
funds.
Ralph Stellmacher,
Senior Vice President An
officer and/or
portfolio manager of
certain Oppenheimer
funds.
John Stoma,
Senior Vice President,
Director Retirement Plans Formerly Vice President of U.S.
Group Pension Strategy and
Marketing for Manulife Financial.
Michael C. Strathearn,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; a Chartered Financial
Analyst; a Vice President of
HarbourView; prior to March, 1996
he was an equity portfolio
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<PAGE>
manager for Panorama Series Fund,
Inc. and other mutual funds and
pension accounts managed by G.R.
Phelps.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee,
Director or Managing Partner of
the Denver-based Oppenheimer
Funds; President and a Director
of Centennial; formerly President
and Director of OAMC, and
Chairman of the Board of SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President Vice President of the Adviser;
Vice President and Portfolio
Manager of Oppenheimer Discovery
Fund, Oppenheimer Global Emerging
Growth Fund and Oppenheimer
Enterprise Fund. Formerly
Managing Director of Buckingham
Capital Management.
Gary Tyc, Vice President,
Assistant Secretary and
Assistant Treasurer Assistant Treasurer of the
Distributor and SFSI.
Ashwin Vasan, Vice President
An officer and/or
portfolio manager of
certain Oppenheimer
funds.
Dorothy Warmack,
Vice President An officer
and/or portfolio
manager of certain
Oppenheimer funds.
Jerry A. Webman,
Senior Vice President
Director of New
York-based tax-exempt
fixed income
Oppenheimer Funds;
Formerly Managing
Director and Chief
Fixed Income
Strategist at
Prudential Mutual
Funds.
Christine Wells,
Vice President None.
Joseph Welsh,
Assistant Vice President None.
Kenneth B. White,
-89-
<PAGE>
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; a Chartered Financial
Analyst; Vice President of
HarbourView; prior to March, 1996
he was an equity portfolio
manager for Panorama Series Fund,
Inc. and other mutual funds and
pension funds managed by G.R.
Phelps.
William L. Wilby,
Senior Vice President An
officer and/or
portfolio manager of
certain Oppenheimer
funds; Vice President
of HarbourView.
Carol Wolf,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; Vice President of
Centennial; Vice President,
Finance and Accounting and member
of the Board of Directors of the
Junior League of Denver, Inc.
Robert G. Zack,
Senior Vice President and
Assistant Secretary Associate General Counsel of the
Adviser; Assistant Secretary of
the Oppenheimer Funds; Assistant
Secretary of SSI, SFSI; an
officer of other Oppenheimer
Funds.
Arthur J. Zimmer,
Vice President An officer
and/or portfolio
manager of certain
Oppenheimer funds;
Vice President of
Centennial.
</TABLE>
The Oppenheimer Funds include the New York-based Oppenheimer Funds,
the Denver-based Oppenheimer Funds, and the Quest/Rochester Funds,
set forth below:
New York-based Oppenheimer Funds
- - --------------------------------
Oppenheimer Multiple Strategies Fund
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Discovery Fund
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Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer New York Municipal Fund
Oppenheimer Fund
Oppenheimer Series Fund, Inc.
Oppenheimer Municipal Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Oppenheimer Developing Markets Fund
Denver-based Oppenheimer Funds
- - ------------------------------
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Municipal Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Quest/Rochester Funds
- - ---------------------------------
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Bond Fund For Growth
Rochester Fund Municipals
Limited-Term New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, Quest funds, OppenheimerFunds Distributor, Inc.,
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<PAGE>
HarbourView Asset Management Corp., Oppenheimer Partnership
Holdings, Inc., and Oppenheimer Acquisition Corp. is Two World
Trade Center, New York, New York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder Financial
Services, Inc., Shareholder Services, Inc., OppenheimerFunds Services,
Centennial Asset Management Corporation, Centennial Capital Corp., and
Oppenheimer Real Asset Management, Inc. is 6803 South Tucson Way, Englewood,
Colorado 80112.
The address of MultiSource Services, Inc. is 1700 Lincoln
Street, Denver, Colorado 80203.
The address of Oppenheimer Bond Fund For Growth, Rochester
Fund Municipals and Limited Term New York Municipal Fund is 350
Linden Oaks, Rochester, New York 14625-2807.
Item 31. Location of Accounts and Records.
All accounts, books and other documents, required to be maintained by
the Registrant under Section 31(a) of the Investment Company Act of 1940 and the
Rule thereunder are maintained by OppenheimerFunds, Inc. at its offices at 6803
South Tucson Way, Englewood, Colorado 80112.
Item 32. Management Services.
The Registrant is not a party to any management-related service
contract not discussed in Part A of this Registration Statement.
Item 33. Undertakings.
1. The Registrant undertakes to suspend the offering of the shares
covered hereby until it amends its prospectus if (1) subsequent to the effective
date of this Registration Statement, its net asset value per share declines more
than 10 percent from its net asset value per share as of the effective date of
this Registration Statement, or (2) its net asset value increases to an amount
greater than its net proceeds as stated in the prospectus.
2. Inapplicable
3. Inapplicable
4. Inapplicable
5. Inapplicable
6. Inapplicable
-92-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York and State of New York on the 21st day of February, 1997.
OPPENHEIMER WORLD BOND FUND
By: /s/ Bridget A. Macaskill*
-------------------------------
Bridget A. Macaskill, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities on
the dates indicated:
<TABLE>
<S> <C> <C>
Signatures Title Date
- - ---------- ----- ----
/s/ Leon Levy* Chairman of the
- - -------------- Board of Trustees March 27, 1997
Leon Levy
/s/ Donald W. Spiro* Vice Chairman of the
- - ------------------- Board of Trustees March 27, 1997
Donald W. Spiro
/s/ Bridget A. Macaskill* President & Trustee March 27, 1997
- - ------------------------
Bridget A. Macaskill
/s/ George Bowen* Treasurer and
- - ----------------- Principal Financial
George Bowen Accounting Officer March 27, 1997
/s/ Robert G. Galli* Trustee March 27, 1997
- - -------------------
Robert G. Galli
/s/ Benjamin Lipstein* Trustee March 27, 1997
- - ----------------------
Benjamin Lipstein
/s/ Elizabeth B. Moynihan* Trustee March 27, 1997
- - ---------------------
Elizabeth B. Moynihan
/s/ Kenneth A. Randall* Trustee March 27, 1997
- - ----------------------
Kenneth A. Randall
/s/ Edward V. Regan* Trustee March 27, 1997
- - --------------------
Edward V. Regan
-93-
<PAGE>
/s/ Russell S. Reynolds, Jr.* Trustee March 27, 1997
- - ------------------------
Russell S. Reynolds, Jr.
/s/ Pauline Trigere* Trustee March 27, 1997
- - -------------------
Pauline Trigere
/s/ Clayton K. Yeutter* Trustee March 27, 1997
- - -----------------------
Clayton K. Yeutter
*By: /s/ Robert G. Zack
--------------------------------
Robert G. Zack, Attorney in Fact
</TABLE>
-94-
<PAGE>
OPPENHEIMER WORLD BOND FUND
Registration No. 811-5670
Post-Effective Amendment No. 12
Index to Exhibits
Exhibit No. Description
24(1)(h) Independent Auditor's Consent
-95-
Consent of Independent Auditors
The Board of Trustees
Oppenheimer World Bond Fund
We consent to the use of our report dated November 21, 1996
included herein.
/s/ Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
March 27, 1997
