<PAGE>
<PAGE>
Dear Shareholder:
Oppenheimer World Bond Fund has had a positive year, particularly during the
past six months. In fact, as of October 31, 1996, the Fund's 1-year total return
at net asset value was 14.14% and its dividend return was 9.11%.(1) The Fund's
success this year can be attributed to all three of its investment allocations:
foreign fixed income securities, U.S. government securities and lower-rated,
high yield domestic corporate bonds.
The success of our foreign exposure stems from several key factors. First, we
were overweighted in emerging markets and high-yielding European markets, two
sectors that performed tremendously, over the period. And, because we were
underweighted in Japan, the slower-than-expected recovery of the Japanese market
has not affected the Fund's performance.
Investment Breakdown:
Oppenheimer World Bond
Fund as of 10/31/96(3)
[graph]
Foreign government obligations: 32.1%
U.S. government obligations: 29.5%
U.S. corporate bonds & notes: 17.0%
Structured notes: 10.2%
Foreign corporate bonds & notes: 6.7%
Short-term securities: 4.5%
The U.S. component of the portfolio also performed well during the period.
Interest rates, which have recently leveled off, rose from 6% in January to
about 7% in July driven by investors' concerns that strong U.S. economic growth
would trigger high inflation. Because a large percentage of the U.S. government
allocation -- about 70% -- was invested in higher-yielding mortgage-backed
securities, the Fund benefited from a reduction in prepayment risk. That's
because when interest rates rise, homeowners are less likely to refinance their
homes. This high concentration of mortgage-backed securities also played a
significant role in protecting principal and enhancing yield.(2)
In addition, the overall average maturity of our U.S. government holdings is
usually limited to three years, but over the last six months, we have taken an
even more conservative approach, maintaining an average maturity of two and a
half years. This positioning can be advantageous to shareholders because shorter
maturities result in lower price sensitivity to fluctuations in interest rates.
Our holdings in lower-rated U.S. high yield corporate bonds have also
reported positive results. Over this past year, cash flows into high yield
mutual funds have continued to climb at a record pace, largely due to pension
fund money from the aging baby boomer generation. Also significant is that
against all odds, the U.S. has continued to experience six years of steady,
noninflationary growth. Finally, much to the surprise of many investors,
default rates were low this year -- currently below 2% -- even on mature
bonds which typically default at higher rates.
<PAGE>
<PAGE>
During the period, we have bean decreasing our holdings in higher-yielding
European markets, specifically Italy, Spain, Sweden and Portugal. As these
markets have rallied, we've been taking profits in those investments that have
done very well. And, as we mentioned earlier, we've had a tremendous run in
emerging markets and have modified our exposure so the Fund can continue to take
advantage of the strong performance in this sector.
Looking forward, we remain optimistic that the global fixed income markets will
continue to offer the potential for higher yields, as well as for capital
appreciation. And we're confident that by diversifying investments throughout
the world, we should be positioned to participate in any economic environment.
Thank you for your confidence in OppenheimerFunds. We look forward to helping
you meet your financial goals in the future.
Sincerely,
[BRIDGET A. MACASKILL]
Bridget A. Macaskill
President
Oppenheimer World Bond Fund
November 21, 1996
Since the Fund's last shareholder report, a shareholder meeting was held at
which the proposed change in the Fund's investment policy was approved so that
the Fund is no longer required to invest at least 65% of its total assets in
U.S. or foreign government securities. The Fund adopted a policy that it shall
invest at least 65% of its assets in bonds, with at least 50% of its total net
assets in foreign securities. Also, the Fund's name was changed to Oppenheimer
World Bond Fund.
1. Total return is based on the change in net asset value per share from
10/31/95 to 10/31/96, without deducting any brokerage costs. Dividend return is
determined by annualizing the October 1996 dividend of $0.056 and dividing by
the closing price on the New York Stock Exchange of $7.38 per share on 10/25/96
(payment date). Past performance does not guarantee future results.
2. Mortgage-backed securities involve risks from early prepayment if underlying
mortgage that can affect the Fund's income and principal value.
3. Portfolio composition is subject to change. Chart is based on total
investments at market value rather than net assets.
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Value
Face Amount (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>
3
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Value
Face Amount (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>
4
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Value
Face Amount (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>
5
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Value
Face Amount (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>
6
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Value
Face Amount (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>
7
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Value
Face Amount (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>
8
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Value
Face Amount (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>
9
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Value
Face Amount (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
-----------
<CAPTION>
Shares
---------------
<S> <C> <C>
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
-----------
<CAPTION>
Units
-----
<S> <C> <C>
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
-----------
<CAPTION>
Face Amount (1)
---------------
<S> <C> <C>
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>
10
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Value
Face Amount (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 0.78 AUD 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 99.96 ITL 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>
11
<PAGE>
<PAGE>
STATEMENT OF INVESTMENTS October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Value
Face Amount (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>
<S> <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
DEM -- German Deutsche Mark PTE -- Portuguese Escudo
DKK -- Danish Krone SEK -- Swedish Krona
GBP -- British Pound 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.
12
<PAGE>
<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 Expiration Exercise Premium Market Value
Subject to 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 1.20 CHF 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>
Country Market 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.
13
<PAGE>
<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
-----------
-----------
</TABLE>
See accompanying Notes to Financial Statements.
14
<PAGE>
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended October 31, 1996
Oppenheimer World Bond Fund
<TABLE>
<S> <C>
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.
15
<PAGE>
<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
----------- -----------
----------- -----------
</TABLE>
See accompanying Notes to Financial Statements.
16
<PAGE>
<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.
17
<PAGE>
<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
18
<PAGE>
<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
19
<PAGE>
<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
20
<PAGE>
<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>
Contract
Amount Valuation as of Unrealized Unrealized
Contracts to Purchase Expiration Date (000s) October 31, 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
21
<PAGE>
<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.
22
<PAGE>
<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>
23
<PAGE>
<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.
KPMG PEAT MARWICK LLP
Denver, Colorado
November 21, 1996
24
<PAGE>
<PAGE>
FEDERAL INCOME TAX INFORMATION (Unaudited)
Oppenheimer World Bond Fund
In early 1997 shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1996. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
Dividends paid by the Fund during the fiscal year ended October 31, 1996 which
are not designated as capital gain distributions should be multiplied by 0.09%
to arrive at the amount eligible for the corporate dividend-received deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax adviser for specific guidance.
SHAREHOLDER MEETING (Unaudited)
On July 19, 1996, an annual shareholder meeting was held at which the five
Trustees identified below were elected, the selection of KPMG Peat Marwick LLP
as the independent auditors of the Fund for the fiscal year beginning November
1, 1995 was ratified (Proposal No. 1) and the change in the investment policy
(Proposal No. 2) was approved. The following is a report of the votes cast:
<TABLE>
<CAPTION>
Withheld/ Broker
Nominee/Proposal For Against Abstain Non-Votes Total
- ------------------------------------------- --------- ------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Bridget A. Macaskill....................... 5,290,193 -- 159,970 66,290 5,516,453
Elizabeth B. Moynihan...................... 5,282,704 -- 167,459 66,290 5,516,453
Sidney M. Robbins.......................... 5,238,525 -- 211,638 66,290 5,516,453
Donald W. Spiro............................ 5,286,183 -- 163,980 66,290 5,516,453
Pauline Trigere............................ 5,240,393 -- 209,770 66,290 5,516,453
Proposal No. 1............................. 5,379,504 17,484 53,175 66,290 5,516,453
Proposal No. 2............................. 3,002,732 197,370 115,378 66,290 3,381,770
</TABLE>
25
<PAGE>
<PAGE>
GENERAL INFORMATION CONCERNING THE FUND
Oppenheimer World Bond Fund (the Fund) is a closed-end diversified management
investment company with a primary investment objective of seeking high current
income. The Fund's secondary investment objective is capital appreciation. In
seeking its objectives, as a non-fundamental policy, the Fund will invest at
least 65% of its total assets in debt instruments issued or guaranteed by the
U.S. Government, its agencies or instrumentalities or by foreign governments,
their political subdivisions, agencies or instrumentalities, including
supranational entities. Additionally, as a non-fundamental policy, the Fund will
invest at least 50% of its net assets in foreign securities.
The Fund may also invest in certain other securities, including fixed income
securities of domestic and foreign corporations certain of which could be
high-yield, 'lower-grade' debt instruments, and participation interests, and may
invest in a number of different kinds of 'derivative investments.' The Fund may
engage in certain special investment techniques, including repurchase
transactions, when-issued and delayed delivery transactions and hedging. The
investment adviser to the Fund is OppenheimerFunds, Inc. (the Manager).
Portfolio Managers of the Fund are Thomas P. Reedy, David A. Rosenberg and
Ashwin K. Vasan, who also serve as Vice Presidents of the Fund and of the
Manager, and are officers of certain mutual funds managed by the Manager
(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 Manager, and, prior to
joining the Manager, Mr. Rosenberg served as an officer and portfolio manager
for Delaware Investment Advisers and one of its mutual funds and Mr. Vasan
served as a securities analyst for Citibank, N.A.
Dividend Reinvestment and Cash Purchase Plan -- Pursuant to the Fund's
Dividend Reinvestment and Cash Purchase Plan (the Plan), as to shares of the
Fund (Shares) not registered in nominee name, all dividends and capital gains
distributions (Distributions) declared by the Fund will be automatically
reinvested in additional full and fractional Shares unless a shareholder elects
to receive cash. If Shares are registered in nominee name, the shareholder
should consult the nominee if the shareholder desires to participate in the
Plan. Shareholders that participate in the Plan (Participants) may, at their
option, make additional cash investments in Shares, semi-annually in amounts of
at least $100, through payment to Shareholder Financial Services, Inc., the
agent for the Plan (the Agent), accompanied by a service fee of $0.75.
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 Fund for payment of the
Distribution in additional Shares at the greater of the Fund'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
26
<PAGE>
<PAGE>
acquired than if the Distribution had been paid in Shares issued by the Fund.
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 Fund. There are no brokerage charges for Shares issued directly
by the Fund. 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 to 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 Fund. Additional information
concerning the Plan may be obtained by shareholders holding Shares registered
directly in their names by writing the Agent, Shareholder Financial Services,
Inc., P.O. Box 173673, Denver, CO 80217-3673 or by calling 1-800-647-7374.
Shareholders holding Shares in nominee name should contact their brokerage firm
or other nominee for more information.
Shareholder Information -- The Shares are traded on the NYSE. Daily market
prices for the Fund's shares are published in the New York Stock Exchange
Composite Transaction section of newspapers under the designation 'OppenWrld
Bnd.' The Fund's NYSE trading symbol is OWB. Weekly net asset value (NAV) and
market price information about the Fund is published each Monday in The Wall
Street Journal and each Sunday in The New York Times and each Saturday in
Barron's, and other newspapers in a table called 'Closed-End Bond Funds.'
27
<PAGE>
<PAGE>
OPPENHEIMER WORLD BOND FUND
Officers And Trustees
Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro, Vice Chairman of the
Board of Trustees
Bridget A. Macaskill, Trustee and President
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Sidney M. Robbins, Trustee
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Thomas P. Reedy, Vice President
David A. Rosenberg, Vice President
Ashwin K. Vasan, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
Investment Adviser
OppenheimerFunds, Inc.
Administrator
Mitchell Hutchins Asset Management Inc.
Transfer Agent and Registrar
Shareholder Financial Services, Inc.
Custodian of Portfolio Securities
The Bank of New York
Independent Auditors
KPMG Peat Marwick LLP
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
This is a copy of a report to shareholders of Oppenheimer World Bond Fund. It
does not offer for sale or solicit orders to buy any securities.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that periodically the Fund may purchase its shares of
beneficial interest in the open market at prevailing market prices.
Shares of Oppenheimer funds are not deposits or obligations of any bank, are not
guaranteed by any bank, and are not insured by the FDIC or any other
agency, and involve investment risks, including possible loss of the
principal amount invested.
RA0675.001.1296 [Logo] Printed on recycled paper
1996 ANNUAL REPORT
OPPENHEIMER
WORLD BOND FUND
OCTOBER 31, 1996
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