As filed with the Securities and Exchange
Commission on February 21, 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. 11 /X/
OPPENHEIMER WORLD BOND FUND
(formerly "Oppenheimer Multi-Government Trust")
- -------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048-0203
- -------------------------------------------------------------------
(Address of Principal Executive Offices)
212-323-0200
- -------------------------------------------------------------------
(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
- -------------------------------------------------------------------
(Name and Address of Agent for Service)
<PAGE>
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
- ----------------
* Not applicable or negative answer.
<PAGE>
OPPENHEIMER WORLD BOND FUND
(formerly "Oppenheimer Multi-Government Trust")
PART A
February 21, 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
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
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.
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
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.
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.
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.
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.
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.
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
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.
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:
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.
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
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.
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.
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
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.
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.
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.
FHLMC Securities. The Federal Home Loan Mortgage
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.
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.
Other Securities.
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.
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
exceeding the stated dividend in certain cases. The rights of
preferred stocks are generally subordinate to rights associated
with a corporation's debt securities.
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.
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:
(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
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.
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
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.
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
investment techniques.
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.
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
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.
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.
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
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.
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.
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
security over the exercise price.
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.
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.
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
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.
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
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.
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 or currency. 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.
Examples of derivative investments the Fund may invest in
include, among others, "index-linked" notes which 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 pay a fixed sum on the maturity of the note. The
principal and/or interest payments on maturity of an index-linked
note depends on the performance of one or more market indices, such
as the S & P 500 Index. Further examples of derivative investments
the Fund may invest in include "debt 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.
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
security; and (4) any loss arising from the Fund being unable to
timely settle a sale of such securities.
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.
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
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:
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;
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;
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;
The Fund cannot borrow money, except in conformity with
the restrictions stated above under "Borrowing";
The Fund cannot pledge, hypothecate, mortgage or
otherwise encumber its assets, except to secure permitted
borrowings or for the escrow arrangements contemplated in
connection with the use of Hedging Instruments;
The Fund cannot participate on a joint or joint and
several basis in any securities trading account;
The Fund cannot invest in companies for the purpose of
exercising control or management thereof;
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;
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;
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
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
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
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
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
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.
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
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.
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
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
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.
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
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.
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
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.
<PAGE>
APPENDIX A
Descriptions of Ratings Categories
Municipal Bonds
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
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.
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
"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.
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.
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
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
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.
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.
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.
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
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.
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.
Fitch The ratings of commercial paper by Fitch are similar
to its ratings of Municipal Notes, above.
<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 February 21, 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 February 21, 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 . . . . . . . . . . . . . . . . . . . . . . . . .
Control Persons and Principal Holders of Securities. . . . .
Investment Advisory and Other Services*
Brokerage Allocation and Other Practices . . . . . . . . . .
Tax Status*
Financial Statements . . . . . . . . . . . . . . . . . . . .
- --------------------
*See Prospectus<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.
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
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
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
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
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
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.
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
<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>
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>
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>
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>
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>
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>
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>
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>
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>
Statement of Investments October 31, 1996 (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market
Face Amount Value
(1) See Note 1
<S> <S> <S>
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.
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.......................................... 2$6,650,930 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.................................................. 5$7,428,870 100.0%
----------- ---
----------- ---
</TABLE>
See accompanying Notes to Financial Statements.
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.
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.
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>
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.
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
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
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
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
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> <S> <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.
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>
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
<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
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.
(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.
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
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,
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
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
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,
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.
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.
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.
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.
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.
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.
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
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,
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
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.,
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
<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 February 21, 1997
Leon Levy
/s/ Donald W. Spiro* Vice Chairman of the
- ------------------- Board of Trustees February 21, 1997
Donald W. Spiro
/s/ Bridget A. Macaskill* President & Trustee February 21, 1997
- ------------------------
Bridget A. Macaskill
/s/ George Bowen* Treasurer and
- ----------------- Principal Financial
George Bowen & Accounting Officer February 21, 1997
/s/ Robert G. Galli* Trustee February 21, 1997
- -------------------
Robert G. Galli
/s/ Benjamin Lipstein* Trustee February 21, 1997
- ----------------------
Benjamin Lipstein
/s/ Elizabeth B. Moynihan* Trustee February 21, 1997
- ---------------------
Elizabeth B. Moynihan
/s/ Kenneth A. Randall* Trustee February 21, 1997
- ----------------------
Kenneth A. Randall
/s/ Edward V. Regan* Trustee February 21, 1997
- --------------------
Edward V. Regan
/s/ Russell S. Reynolds, Jr.* Trustee February 21, 1997
- ------------------------
Russell S. Reynolds, Jr.
/s/ Pauline Trigere* Trustee February 21, 1997
- -------------------
Pauline Trigere
/s/ Clayton K. Yeutter* Trustee February 21, 1997
- -----------------------
Clayton K. Yeutter
*By: /s/ Robert G. Zack
--------------------------------
Robert G. Zack, Attorney in Fact
/TABLE
<PAGE>
OPPENHEIMER WORLD BOND FUND
Registration No. 811-5670
Post-Effective Amendment No. 11
Index to Exhibits
Exhibit No. Description
24(1)(h) Independent Auditor's Consent
24(2)(r) Financial Data Schedule
-- Powers of Attorney - For Bridget A. Macaskill
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/ KPMG Peat Marwick LLP
- -------------------------
KPMG Peat Marwick LLP
Denver, Colorado
February 18, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 841057
<NAME> Oppenheimer World Bond Fund
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 55,749,958
<INVESTMENTS-AT-VALUE> 57,428,870
<RECEIVABLES> 3,088,690
<ASSETS-OTHER> 6,700
<OTHER-ITEMS-ASSETS> 46,255
<TOTAL-ASSETS> 60,570,515
<PAYABLE-FOR-SECURITIES> 5,382,470
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 225,609
<TOTAL-LIABILITIES> 5,608,079
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 59,850,207
<SHARES-COMMON-STOCK> 6,615,505
<SHARES-COMMON-PRIOR> 6,615,505
<ACCUMULATED-NII-CURRENT> 523,824
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7,083,779)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,672,184
<NET-ASSETS> 54,962,436
<DIVIDEND-INCOME> 4,495
<INTEREST-INCOME> 5,494,494
<OTHER-INCOME> 0
<EXPENSES-NET> 681,641
<NET-INVESTMENT-INCOME> 4,817,348
<REALIZED-GAINS-CURRENT> 1,174,051
<APPREC-INCREASE-CURRENT> 1,076,747
<NET-CHANGE-FROM-OPS> 7,068,146
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,445,589
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,622,557
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (8,026,616)
<OVERDISTRIB-NII-PRIOR> 79,149
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 346,262
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 681,641
<AVERAGE-NET-ASSETS> 53,309,000
<PER-SHARE-NAV-BEGIN> 7.91
<PER-SHARE-NII> 0.73
<PER-SHARE-GAIN-APPREC> 0.34
<PER-SHARE-DIVIDEND> 0.67
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 8.31
<EXPENSE-RATIO> 1.28
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
constitutes and appoints Andrew J. Donohue or Robert G. Zack, and
each of them, her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for her and in
her capacity as a trustee of OPPENHEIMER WORLD BOND FUND, a
Massachusetts business trust (the "Fund"), to sign on her behalf
any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of
1933, the Investment Company Act of 1940 and any amendments and
supplements thereto, and other documents in connection thereunder,
and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully as to all intents and purposes as she might
or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, and each of them, may lawfully
do or cause to be done by virtue hereof.
Dated this 19th day of February, 1997.
/s/ Bridget A. Macaskill
- ---------------------------------
Bridget A. Macaskill
