--------------------------------
Semiannual Report April 30, 1998
--------------------------------
OPPENHEIMER
World
Bond Fund
[GRAPHIC OMITTED]
[LOGO]
OppenheimerFunds(SM)
THE RIGHT WAY TO INVEST
<PAGE>
Contents
3 President's Letter
4 Fund Performance
6 An Interview with the Fund's Manager
11 Statement of Investments
22 Statement of Assets and Liabilities
24 Statement of Operations
25 Statements of Changes in Net Assets
26 Financial Highlights
28 Notes to Financial Statements
39 Officers and Trustees
40 Information and Services
Report highlights
- --------------------------------------------------------------------------------
o Oppenheimer World Bond Fund converted from a closed-end fund to an open-end
fund at the close of business on April 24, 1998.
o Developed bond markets in the U.S. and Europe generally performed well, but
the emerging markets declined sharply.
o We are finding compelling values in Latin American bonds, which in our opinion
were unfairly punished in the wake of the Asian crisis.
- -----------------------------
Cumulative Total Returns
- -----------------------------
For the 6-Month Period
Ended 4/30/98(1)
Class A
Without With
Sales Chg.(2) Sales Chg.(3)
- -----------------------------
2.87% 2.02%
- -----------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
In reviewing performance and rankings, please remember that past performance
does not guarantee future results. Investment return and principal value of an
investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original cost.
(1). As an open-end fund, the Fund now offers Class B and C shares; however,
these share classes have only been available for purchase since 4/27/98, and no
performance information for those classes is included in this report.
(2). Includes changes in net asset value per share without deducting any sales
charges. This performance is not annualized.
(3). Class A return includes the current maximum initial sales charge of 4.75%.
2 Oppenheimer World Bond Fund
<PAGE>
Dear shareholder,
- --------------------------------------------------------------------------------
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
World Bond Fund
As we move further into 1998, we remain impressed by the remarkable resilience
of the financial markets. Recent efforts by the United States to help support
the Japanese Yen have inspired hope that the fallout of the Asian economic
crisis can be contained. In general, the U.S. and world markets have continued
to build wealth for investors at a virtually unprecedented pace.
At OppenheimerFunds, we are pleased to help our fund shareholders
participate in the potential rewards of today's markets, but we also recognize
that this rate of growth cannot last forever. Because no one can predict exactly
when the next correction or bear market might occur, we think it is prudent to
continually identify, evaluate and manage the risks that may affect our fund
shareholders.
We believe that one of the leading risks facing investors today is that
stock valuations are at the high end of their historical range, while U.S.
corporate earnings growth is slowing. Given these facts, we believe it is
unlikely that stocks will sustain the growth rate of the past three years. Stock
prices could continue trading near current levels until earnings "catch up," or
there could be a market correction. However, we believe that either scenario
would be only a temporary pause on the way to potentially greater long-term
gains.
We are also examining the potential economic effects of the "millennium
problem" that may render many computer systems unable to recognize the year 2000
when it arrives. Solving this problem has required companies to divert
substantial human and financial resources from their core businesses, possibly
constraining global economic growth during 1999 and 2000.
For our part, we can report that OppenheimerFunds has made solid progress
toward ensuring that our shareholder accounting systems are fully "year 2000
compliant," and that all shareholder accounts will make a seamless transition
into the 21st century.
We encourage you to meet with your financial advisor to discuss how a
possible market correction or the millennium problem may affect your
investments. Together, you can prepare your investment portfolio for the
challenges and opportunities of the new century.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
May 21, 1998
3 Oppenheimer World Bond Fund
<PAGE>
Performance update
- --------------------------------------------------------------------------------
- -------------------------------
Avg Annual Total Returns
- -------------------------------
For the Periods Ended 3/31/98(1)
Class A
1 year 5 year
- -------------------------------
15.64% 7.11%
- -------------------------------
- -------------------------------
Cumulative Total Return
- -------------------------------
For the Period Ended 3/31/98(1)
Class A
5 year
- -------------------------------
38.68% $13,868(2)
- -------------------------------
- -------------------------------
Standardized Yields(3)
- -------------------------------
For the 30 Days Ended 4/30/98
Class A
- -------------------------------
7.49%
- -------------------------------
The Fund's performance was negatively impacted by the decline in the Asian
markets which occurred in October 1997. Though the Fund had very little exposure
to Asia in general at the time, the Fund's investments in Latin America, Eastern
Europe, Australia, New Zealand, Russia and other emerging markets were
negatively affected by a "spill-over" effect from the Asian crisis. Accordingly,
when the Asian crisis erupted at the start of the six-month reporting period, we
quickly worked to reduce our emerging-markets exposure. As this area began to
recover toward the end of the six-month period, we slowly and selectively
rebuilt our emerging-markets position.
Growth of $10,000
Over five years(2)
(without sales charges)
[The following table was originally a mountain graph in the printed materials.]
Oppenheimer Salomon Brothers
World Bond Fund World Government
Class A shares Bond Index
-------------- ----------
3/93 10000.0 10000.0
6/93 10153.0 10292.1
9/93 10456.6 10758.1
12/93 10260.0 10754.2
3/94 10254.9 10754.6
6/94 10364.6 10825.4
9/94 10189.4 10952.1
12/94 10291.3 11004.5
3/95 10875.9 12207.7
6/95 11234.8 12859.6
9/95 11643.7 12724.6
12/95 11903.4 13099.8
3/96 12243.8 12854.6
6/96 12744.6 12906.9
9/96 13255.6 13260.2
12/96 13345.8 13575.6
3/97 13780.9 13014.1
6/97 14158.4 13408.6
9/97 14021.1 13579.4
12/97 14241.2 13607.2
3/98 14588.0 13714.1
(1). Total returns include changes in share price and reinvestment of dividends
and capital gains distributions in a hypothetical investment for the periods
shown. Class A return includes the current maximum initial sales charge of
4.75%. Class A shares were first publicly offered on 11/23/88. As an open-end
fund, the Fund now offers Class B and C shares; however, these share classes
have only been available for purchase since 4/27/98, and no performance
information for those classes is included in this report.
4 Oppenheimer World Bond Fund
<PAGE>
Portfolio review
- --------------------------------------------------------------------------------
Oppenheimer World Bond Fund is for investors looking for total return from
foreign bonds.(4)
Regional Allocation(5)
[The following table was originally a pie chart in the printed materials.]
o United States/
Canada 39.1%
o Europe 25.4
o Latin America 16.9
o Middle East/Africa 9.0
o Asia 7.3
o Other 2.3
What We Look For
o Income advantages in both the U.S. and foreign markets.
o Diversification to help lower the risks of emerging market volatility and
exchange-rate uncertainties of foreign securities by spreading investments
across:
--U.S. government securities
--Developed country debt
--Emerging market debt.
Top 10 Country Holdings(5)
.................................................................................
United States 39.1% Ivory Coast 2.9%
.................................................................................
Germany 7.3 Norway 2.9
.................................................................................
Great Britain 4.1 Mexico 2.7
.................................................................................
Brazil 4.1 Korea, Republic of (South) 2.5
.................................................................................
Argentina 3.1 Italy 2.3
.................................................................................
(2). Results of a hypothetical $10,000 investment in Class A shares on March 31,
1993. The Salomon Brothers World Government Bond Index includes a wide range of
foreign government bonds with maturities over 1 year. It is an unmanaged index,
including reinvestment of income, and cannot be purchased directly by investors.
(3). Standardized yield is based on net investment income for the 30-day period
ended 4/30/98. Falling net asset values will tend to artificially raise yields.
(4). The Fund may invest up to 50% of its total assets in below-investment-grade
securities, which carry a greater risk of default. The Fund may invest without
limit in foreign securities, which are subject to special risks such as currency
fluctuations, and political uncertainties.
(5). The Fund's portfolio is subject to change. Percentages are as of April 30,
1998 and are based on total market value of investments.
5 Oppenheimer World Bond Fund
<PAGE>
An interview with your Fund's manager
- --------------------------------------------------------------------------------
"The Fund had very little exposure to Asia."
How has the Fund performed during the period?
Oppenheimer World Bond Fund's Class A shares provided a cumulative total return,
without sales charges, of 2.87% for the six months ended April 30, 1998.(1) We
attribute this weak performance primarily to the effects of the Asian crisis,
which occurred toward the beginning of the six-month period.
International markets experienced sharp declines after the Asian crisis in late
October. What happened?
Although Asian markets sold off sharply between July and November, 1997, the
forces underlying the decline had developed slowly over the past five years.
During that time, so much investment capital flowed into the region that local
businesses began to use the money for speculative purposes, such as building
excess industrial capacity and office buildings.
Unfortunately, the region's economy failed to support these excesses.
Sales of Asian goods began to slow in 1997 when a stronger U.S. dollar made the
Asia's exports more expensive for consumers in the U.S. and Europe. At the same
time, the Japanese yen weakened, making Japan more competitive relative to other
Asian exporters. As a result, several countries were forced to devalue their
currencies. Many Asian companies, already overextended in the debt markets,
incurred severe losses in foreign exchange markets. When investors attempted to
take their money out of the region, securities prices plunged.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance is not annualized and would have been lower if sales
charges were taken into account.
6 Oppenheimer World Bond Fund
<PAGE>
[PHOTO]
Portfolio Management
Team (l to r)
Art Steinmetz
David Negri
Ashwin Vasan
(Portfolio Manager)
How did the Asian crisis affect the Fund's investments?
We began to avoid Asian securities more than two years ago because we became
wary of the region's speculative use of capital. Consequently, the Fund had very
little exposure to Asia in general, and held no securities issued in the nations
hit hardest by currency devaluations, such as Thailand and Malaysia.
However, the Fund's investments in Latin America, Eastern Europe,
Australia, New Zealand, Russia and other emerging markets were negatively
affected by a "spillover" effect from the Asian crisis. Accordingly, when the
Asian crisis erupted at the start of the six-month reporting period, we quickly
worked to reduce our emerging-markets exposure. As this area began to recover
toward the end of the six-month period, we slowly and selectively rebuilt our
emerging-markets position.
How did the U.S. bond markets fare?
The U.S. bond market continued to perform quite well. Although U.S. bond prices
fell in the immediate aftermath of the Asian crisis, they quickly rebounded.
That's because the Asian crisis helped cool off the rate of U.S. economic
growth, which calmed inflation fears and produced lower long-term interest
rates. In addition, the Asian crisis caused a "flight to quality," in which
international fixed-income investors shifted their investments away from
emerging-market debt and into developed-market debt. This shift created a surge
in demand for a limited supply of bonds from U.S. issuers, causing their prices
to rise.
7 Oppenheimer World Bond Fund
<PAGE>
An interview with your Fund's manager
- --------------------------------------------------------------------------------
"Slower economic growth in the U.S. and European markets is expected to help
keep global inflation pressures at bay..."
Within the U.S. bond market, high-yield corporate bonds have experienced a
dramatic rally over the past six months. That's primarily because investors have
chased higher yielding securities in a declining interest-rate environment. This
demand from investors caused the difference in yields between high-yield
corporate bonds and U.S. government securities to narrow to the low end of its
range. Consequently, we took profits in many of our high-yield corporate bond
positions, reducing our high-yield corporate
holdings over the period.
How were the Fund's assets allocated across geographic regions?
As of March 31, 1998, the Fund's assets were allocated 39% to U.S. bonds and 61%
to international bonds. Within the portfolio's international component, 23% was
developed-market debt and approximately 34% was emerging market debt.
The Fund converted from a closed-end fund to an open-end fund. How will this
affect shareholders?
We believe the effect will be positive for shareholders. Prior to conversion,
the Fund traded at a discount to its net asset value. At the time of conversion,
that discount disappeared and shares traded at their net asset value. Existing
shareholders should notice very few changes in the way the Fund is managed. We
intend to employ the same investment strategies that have proven successful
in the past.
8 Oppenheimer World Bond Fund
<PAGE>
"...contributing to higher bond prices over the coming months."
What is your outlook for the future?
We are optimistic regarding the global bond markets in 1998, particularly for
U.S. investors. Although domestic interest rates have already declined
substantially over the past year or so, the U.S. bond market appears to continue
to offer higher yields than are available from most comparable European bonds.
If domestic economic growth slows and European economic growth accelerates as we
expect, yields on long-term U.S. bonds could decline further.
In addition, we are finding very attractive values in the emerging
markets. As more investors realize that non-Asian securities were punished too
severely during last fall's sell-off, their prices could rise substantially. We
are especially bullish about Latin American debt, because compared to Asian
markets, we believe many of Latin America's sovereign issuers have strong
banking systems, manageable fiscal deficits and reasonable borrowing
requirements in the capital markets.
To prepare for this environment, we have gradually extended our U.S. bond
portfolio's average duration, a measure of sensitivity to changes in interest
rates, to maintain current yields for as long as possible and to take advantage
of opportunities for capital appreciation. Overall, we intend to continue to
manage Oppenheimer World Bond Fund according to the approach that has guided us
since the Fund's inception: investing in a diversified portfolio of bonds issued
primarily by U.S. and foreign governments in emerging and developed markets. We
use intensive analysis to help find fixed-income securities that provide income
advantages. In addition, we attempt to manage the risks of global fixed-income
investing by diversifying the Fund's assets across a broad array of countries
and currencies worldwide. In our view, this approach may continue to provide
high income and growth potential for shareholders.
9 Oppenheimer World Bond Fund
<PAGE>
Financials
- --------------------------------------------------------------------------------
10 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
===============================================================================================================
<S> <C> <C>
Mortgage-Backed Obligations--20.7%
- ---------------------------------------------------------------------------------------------------------------
Government Agency--17.0%
- ---------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/Sponsored--15.8%
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation Certificates, Series 1343,
Cl. LA, 8%, 8/15/22 $ 229,000 $ 248,942
- ---------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.-Government National
Mortgage Assn., Gtd. Multiclass Mtg. Participation Certificates,
Series 26, Cl. B, 6%, 5/25/15(2) 2,403,999 2,335,402
- ---------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Interest-Only Stripped
Mtg.-Backed Security:
Series 177, C1. B, 6.492%, 7/1/26(3) 1,249,015 341,918
Series 177, C1. B, 6.973%, 7/1/26(3) 888,267 243,163
- ---------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Mtg.-Backed Certificates:
11.50%, 1/1/18 69,666 78,675
13%, 5/1/19 348,283 413,827
- ---------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6.50%, 5/1/13-5/1/28(4) 2,400,000 2,397,256
7%, 5/25/27(4) 1,520,000 1,536,629
- ---------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates:
Trust 1992-162, Cl. C, 7%, 10/25/21 350,000 355,029
Trust 1997-27, Cl. J, 7.50%, 4/18/27 108,957 113,518
- ---------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Sr. Unsub. Medium-Term Nts.,
6.50%, 7/10/02AUD 40,000 26,806
-----------
8,091,165
- ---------------------------------------------------------------------------------------------------------------
GNMA/Guaranteed--1.2%
Government National Mortgage Assn.:
7.50%, 1/15/26 456,233 468,848
7.50%, 5/15/24(5) 54,734 56,299
11%, 10/20/19 105,986 119,068
-----------
644,215
</TABLE>
11 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Private--3.7%
- ---------------------------------------------------------------------------------------------------------------
Commercial--2.3%
Asset Securitization Corp., Commercial Mtg. Pass-Through Certificates,
Series 1996-MD6, Cl. A5, 7.224%, 11/13/26(6) $ 200,000 $ 205,344
- ---------------------------------------------------------------------------------------------------------------
Commercial Mortgage Acceptance Corp., Interest-Only Stripped
Mtg.-Backed Security, Series 1996-C1, C1. X-2, 0.981%, 12/25/20(3)(5)(7) 6,208,300 161,028
- ---------------------------------------------------------------------------------------------------------------
First Union-Lehman Brothers Commercial Mortgage Trust,
Interest-Only Stripped Mtg.-Backed Security, Series 1997-C1,
7.306%, 4/18/27(3) 878,137 65,826
- ---------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through
Certificates, Series 1996-C1, Cl. E, 7.438%, 2/15/28(6)(7) 553,342 533,456
- ---------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates,
Series 1995-C1, Cl. F, 6.90%, 2/25/27 134,639 127,381
- ---------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Multiclass Pass-Through Certificates,
Series 1995-C4, Cl. E, 8.70%, 6/25/26(6)(7) 100,000 103,094
-----------
1,196,129
- ---------------------------------------------------------------------------------------------------------------
Multi-Family--0.5%
Mortgage Capital Funding, Inc., Multifamily Mtg. Pass-Through
Certificates, Series 1996-MC1, Cl. G, 7.15%, 6/15/06(8) 250,000 234,531
- ---------------------------------------------------------------------------------------------------------------
Residential--0.9%
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through Certificates,
Series 1997-C1, Cl. E, 7.50%, 3/1/11(7) 190,000 199,937
- ---------------------------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through Certificates,
Series 1997-CHL1, 8.035%, 7/25/06(6)(7) 200,000 210,840
- ---------------------------------------------------------------------------------------------------------------
Salomon Brothers, Inc., Series 1997-TZH, Cl. D, 7.902%, 3/25/22(7) 50,000 53,125
-----------
463,902
-----------
Total Mortgage-Backed Obligations (Cost $10,477,742) 10,629,942
===============================================================================================================
U.S. Government Obligations--19.3%
- ---------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, STRIPS:
6.253%, 11/15/21(9) 110,000 26,494
6.09%, 11/15/21(9) 1,555,000 374,536
6.52%, 8/15/22(9) 1,000,000 231,756
- ---------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
5.875%, 2/15/04 1,500,000 1,514,532
6.125%, 8/31/98(2) 2,247,000 2,253,321
6.25%, 2/15/03(10) 707,000 723,792
6.375%, 8/15/02 1,481,000 1,519,878
7.50%, 10/31/99 195,000 200,180
7.75%, 1/31/00(2) 2,385,000 2,469,221
9.25%, 8/15/98(2) 600,000 606,751
-----------
Total U.S. Government Obligations (Cost $9,859,906) 9,920,461
</TABLE>
12 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
===============================================================================================================
<S> <C> <C>
Foreign Government Obligations--45.6%
- ---------------------------------------------------------------------------------------------------------------
Argentina--3.3%
Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas,
Series I, 3.154%, 4/1/07(6)ARP 2,061,040 $ 1,513,894
- ---------------------------------------------------------------------------------------------------------------
Buenos Aires (Province of) Bonds, Series PBA1, 3.154%, 4/1/07(6)ARP 249,068 172,020
-----------
1,685,914
- ---------------------------------------------------------------------------------------------------------------
Australia--0.8%
New South Wales Treasury Corp. Gtd. Bonds, 7%, 4/1/04AUD 490,000 335,922
- ---------------------------------------------------------------------------------------------------------------
Queensland Treasury Corp. Exchangeable Gtd. Nts., 8%, 5/14/03AUD 80,000 57,333
-----------
393,255
- ---------------------------------------------------------------------------------------------------------------
Brazil--3.8%
Brazil (Federal Republic of) Bonds, Series RG, 6.688%, 4/15/12(6) 785,000 625,056
- ---------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Debt Conversion Bonds, 6.688%, 4/15/12(6) 980,000 780,325
- ---------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Multi-Year Discount Facility Agreement
Trust Certificates, Series REGS, 6.563%, 9/15/07(6)(8) 614,193 537,419
-----------
1,942,800
- ---------------------------------------------------------------------------------------------------------------
Bulgaria--1.2%
Bulgaria (Republic of) Disc. Bonds, Tranche A, 6.563%, 7/28/24(6) 742,000 606,585
- ---------------------------------------------------------------------------------------------------------------
Canada--1.5%
Canada (Government of) Bonds:
10.25%, 12/1/98CAD 640,000 461,706
5.50%, 9/1/02CAD 440,000 311,855
-----------
773,561
- ---------------------------------------------------------------------------------------------------------------
Costa Rica--0.3%
Banco Central Costa Rica Interest Claim Bonds, Series A,
6.57%, 5/21/05(6) 160,222 155,015
- ---------------------------------------------------------------------------------------------------------------
Ecuador--1.0%
Ecuador (Republic of) Disc. Bonds, 6.625%, 2/28/25(6) 445,000 326,519
- ---------------------------------------------------------------------------------------------------------------
Ecuador (Republic of) Par Bonds, 3.50%, 2/28/25(6) 345,000 188,887
-----------
515,406
- ---------------------------------------------------------------------------------------------------------------
Germany--1.7%
Germany (Republic of) Bonds:
8.25%, 9/20/01DEM 475,000 294,847
Series JA07, Zero Coupon, 4.255%, 1/4/01(2)(9)DEM 450,000 223,433
Series JA07, Zero Coupon, 5.027%, 1/4/07(9)DEM 255,000 92,934
Series JL07, Zero Coupon, 5.437%, 7/4/07(9)DEM 700,000 246,922
-----------
858,136
</TABLE>
13 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Great Britain--4.4%
United Kingdom Treasury Bonds:
8%, 9/25/09GBP 545,000 $ 1,069,853
9%, 10/13/08GBP 582,000 1,210,298
-----------
2,280,151
- ---------------------------------------------------------------------------------------------------------------
Greece--0.7%
Hellenic Republic Treasury Bonds, 8.80%, 6/19/07GRD 99,300,000 330,321
- ---------------------------------------------------------------------------------------------------------------
Indonesia--0.9%
PT Bank Negara Indonesia Sr. Nts., 7.625%, 2/15/07 650,000 468,407
- ---------------------------------------------------------------------------------------------------------------
Italy--2.6%
Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali,
8.50%, 1/1/04ITL 2,000,000,000 1,321,369
- ---------------------------------------------------------------------------------------------------------------
Ivory Coast--3.2%
Ivory Coast (Government of) Past Due Interest Bonds:
2%, 3/29/18(11) 2,280,000 1,003,200
Series F, 1.90%, 3/29/18(11)FRF 9,845,000 658,486
-----------
1,661,686
- ---------------------------------------------------------------------------------------------------------------
Jordan--1.4%
Hashemite (Kingdom of Jordan) Bonds, Series DEF, 5%, 12/23/23(11) 690,000 495,075
- ---------------------------------------------------------------------------------------------------------------
Hashemite (Kingdom of Jordan) Disc. Bonds, 6.875%, 12/23/23(6) 300,000 243,000
-----------
738,075
- ---------------------------------------------------------------------------------------------------------------
Korea, Republic of (South)--1.1%
Industrial Bank of Korea Unsec. Unsub. Nts., Series 1BR,
2.80%, 7/5/01JPY 49,700,000 334,769
- ---------------------------------------------------------------------------------------------------------------
Korea (Republic of) Bonds, 8.875%, 4/15/08 240,000 236,032
-----------
570,801
- ---------------------------------------------------------------------------------------------------------------
Mexico--2.5%
Bonos de la Tesoreria de la Federacion, Zero Coupon:
21.456%, 2/11/99(9)MXP 1,500,000 152,295
20.342%, 3/11/99(9)MXP 1,500,000 150,270
19.788%, 4/8/99(9)MXP 662,620 65,484
- ---------------------------------------------------------------------------------------------------------------
Petroleos Mexicanos Debs., 14.50%, 3/31/06GBP 100,000 214,016
- ---------------------------------------------------------------------------------------------------------------
United Mexican States Bonds, 11.375%, 9/15/16 610,000 715,225
-----------
1,297,290
- ---------------------------------------------------------------------------------------------------------------
New Zealand--1.1%
New Zealand (Government of) Bonds:
10%, 3/15/02NZD 720,000 434,370
8%, 11/15/06NZD 240,000 142,535
-----------
576,905
</TABLE>
14 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Norway--3.2%
Norway (Government of) Bonds:
5.75%, 11/30/04NOK 9,910,000 $ 1,359,589
9.50%, 10/31/02(2)NOK 1,725,000 270,613
-----------
1,630,202
- ---------------------------------------------------------------------------------------------------------------
Pakistan--0.5%
Pakistan (Republic of) Bonds, 9.856%, 5/30/00(6) 240,000 233,550
- ---------------------------------------------------------------------------------------------------------------
Pakistan (Republic of) Debs., 11.50%, 12/22/99 32,000 32,400
-----------
265,950
- ---------------------------------------------------------------------------------------------------------------
Panama--1.4%
Panama (Government of) Bonds, 8.875%, 9/30/27 150,000 146,062
- ---------------------------------------------------------------------------------------------------------------
Panama (Government of) Past Due Interest Debs., 6.563%, 7/17/16(6) 687,369 572,235
-----------
718,297
- ---------------------------------------------------------------------------------------------------------------
Peru--2.5%
Peru (Republic of) Front-Loaded Interest Reduction Bonds,
3.25%, 3/7/17(6) 1,085,000 676,769
- ---------------------------------------------------------------------------------------------------------------
Peru (Republic of) Sr. Nts., Zero Coupon, 4.534%, 2/28/16(9) 1,330,000 595,042
-----------
1,271,811
- ---------------------------------------------------------------------------------------------------------------
Poland--0.4%
Poland (Republic of) Par Bonds, 3%, 10/27/24(11) 285,000 183,291
- ---------------------------------------------------------------------------------------------------------------
Russia--1.3%
Russia (Government of) Debs., Series 19 yr., 6.719%, 12/15/15(2)(6) 705,000 497,977
- ---------------------------------------------------------------------------------------------------------------
Russia (Government of) Principal Loans Debs., 3.249%, 12/29/49(6)(7) 300,000 190,125
-----------
688,102
- ---------------------------------------------------------------------------------------------------------------
South Africa--1.2%
South Africa (Republic of) Bonds, Series 150, 12%, 2/28/05ZAR 3,095,620 592,924
- ---------------------------------------------------------------------------------------------------------------
Sweden--1.5%
Sweden (Kingdom of) Bonds, Series 1033, 10.25%, 5/5/03(2)SEK 3,700,000 583,948
- ---------------------------------------------------------------------------------------------------------------
Sweden (Kingdom of) Bonds, Series 1037, 8%, 8/15/07SEK 1,300,000 200,079
-----------
784,027
- ---------------------------------------------------------------------------------------------------------------
Turkey--0.6%
Turkey (Republic of) Treasury Bills, Zero Coupon, 98.357%,
9/2/98(9)TRL 106,500,000,000 329,783
- ---------------------------------------------------------------------------------------------------------------
Venezuela--1.5%
Venezuela (Republic of) Bonds, 9.25%, 9/15/27 423,000 373,299
- ---------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Discount Bonds, Series W-B, 6.75%, 3/31/20 250,000 220,000
- ---------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Sr. Unsec. Unsub. Nts., Series REGS,
9.125%, 6/18/07 200,000 197,000
-----------
790,299
-----------
Total Foreign Government Obligations (Cost $23,322,199) 23,430,363
</TABLE>
15 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
===============================================================================================================
<S> <C> <C>
Loan Participations--4.0%
- ---------------------------------------------------------------------------------------------------------------
Algeria (Republic of) Reprofiled Debt Loan Participation:
Tranche 1, 6.688%, 9/4/06(6) $ 640,181 $ 505,344
Tranche A, 7.375%, 3/4/00(6) 313,454 297,096
- ---------------------------------------------------------------------------------------------------------------
Algeria (Republic of) Unrestructured Nts., 6.615%, 1/22/01(7)JPY 63,600,000 462,692
- ---------------------------------------------------------------------------------------------------------------
Jamaica (Government of) 1990 Refinancing Agreement Nts.,
Tranche A, 6.50%, 10/16/00(6)(7) 72,916 71,185
- ---------------------------------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreement:
Tranche A, 2.418%, 1/1/09(6)JPY 41,250,000 270,046
Tranche B, 6.656%, 1/1/04(6)(7) 70,588 65,074
- ---------------------------------------------------------------------------------------------------------------
Trinidad & Tobago Loan Participation Agreement,
Tranche A, 1.807%, 9/30/00(6)(7)JPY 57,326,833 403,496
-----------
Total Loan Participations (Cost $2,142,921) 2,074,933
===============================================================================================================
Corporate Bonds and Notes--15.4%
- ---------------------------------------------------------------------------------------------------------------
Energy--0.6%
Empresa Electric Del Norte, 10.50% Sr. Debs., 6/15/05(7) 100,000 102,500
- ---------------------------------------------------------------------------------------------------------------
Moran Energy, Inc., 8.75% Cv. Sub. Debs., 1/15/08 200,000 192,396
-----------
294,896
- ---------------------------------------------------------------------------------------------------------------
Financial--11.2%
Bakrie Investindo, Zero Coupon Promissory Nts., 3/16/99(7)(12)IDR 850,000,000 26,397
- ---------------------------------------------------------------------------------------------------------------
Export-Import Bank of Japan, 4.375% Unsec. Nts., 10/1/03JPY 52,000,000 457,258
- ---------------------------------------------------------------------------------------------------------------
Hypothekenbank in Essen AG:
4.50% Sec. Nts., Series 478, 5/2/03DEM 2,090,000 1,147,435
5.75% Sec. Nts., Series 447, 10/2/03DEM 2,580,000 1,495,238
- ---------------------------------------------------------------------------------------------------------------
Indah Kiat Finance Mauritius Ltd., 10% Sr. Gtd. Nts., 7/1/07 290,000 238,902
- ---------------------------------------------------------------------------------------------------------------
KFW International Finance, Inc., 6.75% Gtd. Bank Nts.,
6/20/05DEM 900,000 552,314
- ---------------------------------------------------------------------------------------------------------------
Morgan (J.P.), Turkish Lira Certificates of Deposit, 81%,
5/6/98(7)TRL 186,671,028,650 746,621
- ---------------------------------------------------------------------------------------------------------------
Ongko International Finance Co. BV, 10.50% Gtd. Nts.,
3/29/04(8)(13) 185,000 92,962
- ---------------------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa:
Zero Coupon Nts., Series 2, 7/15/98(7)(12)IDR 492,900,000 12,246
Zero Coupon Promissory Nts., 3/16/99(7)(12)IDR 1,000,000,000 31,056
Zero Coupon Promissory Nts., 7/14/98(7)(12) 50,000 17,500
- ---------------------------------------------------------------------------------------------------------------
Republic National Bank of New York (Cayman Islands Branch),
9.65% Debs., 5/1/03(7) 300,000 300,000
- ---------------------------------------------------------------------------------------------------------------
Snap Ltd., 11.50% Sec. Bonds, 1/29/09DEM 889,166 539,472
- ---------------------------------------------------------------------------------------------------------------
Tjiwi Kimia Finance Mauritius Ltd., 10% Gtd. Nts., 8/1/04 100,000 82,125
-----------
5,739,526
</TABLE>
16 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Gaming/Leisure--0.0%
Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/95(13) $ 2,000 $ --
- ---------------------------------------------------------------------------------------------------------------
Housing--0.2%
Internacional de Ceramica SA, 9.75% Gtd. Unsec. Unsub. Nts., 8/1/02(8) 90,000 86,625
- ---------------------------------------------------------------------------------------------------------------
Media/Entertainment-Telecommunications--0.4%
Netia Holdings BV, 0%/11% Gtd. Sr. Disc. Nts., 11/1/07(14)DEM 200,000 80,245
- ---------------------------------------------------------------------------------------------------------------
NTL, Inc., 9.50% Sr. Unsec. Unsub. Nts., Series REGS, 4/1/08GBP 65,000 108,408
-----------
188,653
- ---------------------------------------------------------------------------------------------------------------
Media/Entertainment-Wireless Communications--0.2%
Cellular Communications International, Inc., 0%/9.50% Bonds,
4/1/05(8)(14)XEU 150,000 114,790
- ---------------------------------------------------------------------------------------------------------------
Retail--0.0%
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03(7) 25,000 26,187
- ---------------------------------------------------------------------------------------------------------------
Transportation--2.8%
Red Nacional de los Ferrocarriles Expanoles, 5.825% Gtd. Nts.,
11/19/98(6) 930,000 929,581
- ---------------------------------------------------------------------------------------------------------------
Road King Infrastructure Finance (1997) Ltd., 9.50% Gtd. Unsec
Unsub. Bonds, 7/15/07(7) 400,000 324,360
- ---------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(7) 242,602 187,714
-----------
1,441,655
-----------
Total Corporate Bonds and Notes (Cost $8,693,931) 7,892,332
Shares
===============================================================================================================
Preferred Stocks--0.0%
- ---------------------------------------------------------------------------------------------------------------
Gothic Energy Corp., 7.50% Preferred Stock, Series A (Cost $9,900)(7)(15) 10,250 10,352
===============================================================================================================
Common Stocks--0.1%
- ---------------------------------------------------------------------------------------------------------------
Air New Zealand Ltd., Cl. B 24,000 34,006
- ---------------------------------------------------------------------------------------------------------------
Optel, Inc.(7)(16) 45 --
-----------
Total Common Stocks (Cost $65,398) 34,006
</TABLE>
17 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Units See Note 1
===============================================================================================================
<S> <C> <C>
Rights, Warrants and Certificates--0.1%
- ---------------------------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts., Exp. 6/99(7) 500 $ 5
- ---------------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc. Wts., Exp. 2/99 3,538 --
- ---------------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc. Wts., Exp. 8/03(7) 100 3,762
- ---------------------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts.:
Exp. 1/03(7) 325 3
Exp. 9/04(7) 350 744
- ---------------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/05(7) 495 10,952
- ---------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc. Wts., Exp. 6/06(7) 100 2,612
- ---------------------------------------------------------------------------------------------------------------
Orion Network Systems, Inc. Wts., Exp. 1/07(7) 50 663
- ---------------------------------------------------------------------------------------------------------------
Price Communications Corp. Wts., Exp. 8/07(7) 172 2,666
- ---------------------------------------------------------------------------------------------------------------
Protection One, Inc. Wts., Exp. 6/05(7) 640 6,400
- ---------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Oil Linked Payment Obligation Wts., Exp. 4/20 1,785 --
-----------
Total Rights, Warrants and Certificates (Cost $17,968) 27,807
<CAPTION>
Face
Amount(1)
===============================================================================================================
<S> <C> <C>
Structured Instruments--6.2%
- ---------------------------------------------------------------------------------------------------------------
Citicorp, Indonesian Treasury Bill Linked Nts., Zero Coupon,
46%, 5/27/98(7)(9) $ 150,000 144,110
- ---------------------------------------------------------------------------------------------------------------
Deutsche Morgan Grenfell, Korean Development Bank,
U.S. Dollar/Korean Won Linked Nts., Zero Coupon, 17.746%, 2/26/99(9) 88,888 76,680
- ---------------------------------------------------------------------------------------------------------------
Goldman Sachs Group LP:
Korean Won/Japanese Yen Linked Nts., 5.50%, 4/22/99 300,000 312,300
Taiwanese Dollar Linked Nts., 5.75%, 6/12/98 150,000 155,400
- ---------------------------------------------------------------------------------------------------------------
Korea Development Bank Industrial Finance Bonds Linked Nts.,
Zero Coupon, 3/5/99(7) 150,000 151,500
- ---------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc.:
Chilean Peso/Japanese Yen Linked Nts., 17.50%, 7/28/98 100,000 100,000
Chilean Peso/Japanese Yen Linked Nts., 18%, 7/28/98 75,000 75,000
Greek Drachma/Swiss Franc Linked Nts., 22%, 3/31/99 300,000 307,890
Greek Drachma/Swiss Franc Linked Nts., Zero Coupon, 4/23/99 300,000 299,160
Thailand Baht/Japanese Yen Linked Nts., 22%, 6/29/98 300,000 300,000
- ---------------------------------------------------------------------------------------------------------------
Salomon Smith Barney Holdings, Inc., Korean Development Bank,
Korean Currency Indexed Credit Linked Unsec. Nts.,
Zero Coupon, 18.081%, 3/29/99(9) 90,000 90,666
- ---------------------------------------------------------------------------------------------------------------
Salomon, Inc., Korean Development Bank Linked Nts.,
Zero Coupon, 19.024%, Series 2, 3/29/99(9) 200,000 200,840
- ---------------------------------------------------------------------------------------------------------------
Shoshone Partners Loan Trust Sr. Nts., 7.379%, 4/28/02 (representing
a basket of reference loans and a total return swap between
Chase Manhattan Bank and the Trust)(6)(7) 500,000 545,917
- ---------------------------------------------------------------------------------------------------------------
Standard Chartered Bank:
Philippines Peso/Japanese Yen Linked Nts., 20%, 8/4/98(4) 140,000 140,000
U.S. Dollar/Chinese Yuan Linked Nts., 9.50%, 6/12/98 300,000 300,420
-----------
Total Structured Instruments (Cost $3,083,669) 3,199,883
</TABLE>
18 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Date Strike Contracts See Note 1
====================================================================================================
<S> <C> <C> <C> <C>
Call Options Purchased--0.1%
- ----------------------------------------------------------------------------------------------------
Canadian Dollar Call Opt 5/98 1.43CAD 245,000 $ 911
- ----------------------------------------------------------------------------------------------------
Canadian Dollar Call Opt 5/98 1.44CAD 215,000 1,320
German Mark/Czech Koruna Call Opt 7/98 21.87DEM/CZK 1,059,000 209
German Mark/Japanese Yen Call Opt 10/98 72DEM/JPY 1,110,000 23,631
U.S. Treasury Bonds, 5.50%, 2/15/08 Call Opt 5/98 100.297% 500 176
U.S. Treasury Bonds, 5.50%, 2/15/08 Call Opt 5/98 100.859% 500 39
-----------
Total Call Options Purchased (Cost $29,733) 26,286
====================================================================================================
Put Options Purchased--0.1%
- ----------------------------------------------------------------------------------------------------
Brazilian Real Put Opt. 4/99 1.285BRR 600,000 30,180
- ----------------------------------------------------------------------------------------------------
British Pound Sterling/German Mark Put Opt. 5/98 3.007GBP/DEM 430,000 6,532
Japanese Yen Put Opt. 9/98 136JPY 77,000,000 8,482
- ----------------------------------------------------------------------------------------------------
Total Put Options Purchased (Cost $35,752) 45,194
- ----------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $57,739,119) 111.6% 57,291,559
- ----------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (11.6) (5,956,355)
----- -----------
Net Assets 100.0% $51,335,204
===== ===========
</TABLE>
Distribution of investments by country of issue, as a percentage of total
investments at value, is as follows:
Country Market Value Percent
- --------------------------------------------------------------------------------
United States $21,618,322 37.8%
- --------------------------------------------------------------------------------
Germany 4,053,122 7.1
- --------------------------------------------------------------------------------
Great Britain 2,280,151 4.0
- --------------------------------------------------------------------------------
Brazil 2,242,801 3.9
- --------------------------------------------------------------------------------
Argentina 1,685,914 2.9
- --------------------------------------------------------------------------------
Ivory Coast 1,661,686 2.9
- --------------------------------------------------------------------------------
Norway 1,630,201 2.8
- --------------------------------------------------------------------------------
Mexico 1,571,628 2.7
- --------------------------------------------------------------------------------
Korea, Republic of (South) 1,402,787 2.4
- --------------------------------------------------------------------------------
Italy 1,321,369 2.3
- --------------------------------------------------------------------------------
Peru 1,271,811 2.2
- --------------------------------------------------------------------------------
Algeria 1,265,132 2.2
- --------------------------------------------------------------------------------
Indonesia 1,113,705 1.9
- --------------------------------------------------------------------------------
Turkey 1,076,403 1.9
- --------------------------------------------------------------------------------
Greece 937,371 1.6
- --------------------------------------------------------------------------------
Spain 929,582 1.6
- --------------------------------------------------------------------------------
Morocco 874,592 1.5
- --------------------------------------------------------------------------------
Venezuela 790,298 1.4
- --------------------------------------------------------------------------------
19 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Unaudited) (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Distribution of investments by country of issue (continued):
Country Market Value Percent
- --------------------------------------------------------------------------------
Sweden $ 784,028 1.4%
- --------------------------------------------------------------------------------
Canada 776,174 1.4
- --------------------------------------------------------------------------------
Jordan 738,075 1.3
- --------------------------------------------------------------------------------
Panama 718,298 1.3
- --------------------------------------------------------------------------------
Russia 688,102 1.2
- --------------------------------------------------------------------------------
New Zealand 610,911 1.1
- --------------------------------------------------------------------------------
Bulgaria 606,585 1.1
- --------------------------------------------------------------------------------
South Africa 592,924 1.0
- --------------------------------------------------------------------------------
Ecuador 515,406 0.9
- --------------------------------------------------------------------------------
Japan 457,258 0.8
- --------------------------------------------------------------------------------
Australia 420,061 0.7
- --------------------------------------------------------------------------------
Trinidad & Tobago 403,496 0.7
- --------------------------------------------------------------------------------
Hong Kong 324,360 0.6
- --------------------------------------------------------------------------------
China 300,420 0.5
- --------------------------------------------------------------------------------
Thailand 300,000 0.5
- --------------------------------------------------------------------------------
Chile 277,500 0.5
- --------------------------------------------------------------------------------
Pakistan 265,950 0.5
- --------------------------------------------------------------------------------
Poland 263,536 0.5
- --------------------------------------------------------------------------------
Taiwan 155,400 0.3
- --------------------------------------------------------------------------------
Costa Rica 155,015 0.3
- --------------------------------------------------------------------------------
Philippines 140,000 0.2
- --------------------------------------------------------------------------------
Jamaica 71,185 0.1
----------- -----
Total $57,291,559 100.0%
=========== =====
(1). Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
ARP --Argentine Peso ITL --Italian Lira
AUD --Australian Dollar JPY --Japanese Yen
BRR --Brazilian Real MXP --Mexican Peso
CAD --Canadian Dollar NOK --Norwegian Krone
CZK --Czech Koruna NZD --New Zealand Dollar
DEM --German Mark SEK --Swedish Krona
FRF --French Franc TRL --Turkish Lira
GBP --British Pound Sterling XEU --European Currency Units
GRD --Greek Drachma ZAR --South African Rand
IDR --Indonesian Rupiah
20 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(2). A sufficient amount of liquid assets has been designated to cover
outstanding written options, as follows:
<TABLE>
<CAPTION>
Contracts Expiration Exercise Premium Market Value
Subject to Call/Put Date Price Received See Note 1
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brazilian Real Call Opt 600,000 4/6/99 1.218BRR $ 6,600 $ 1,170
Brazilian Real Put Opt 600,000 4/6/99 1.414BRR 13,680 22,740
British Pound Sterling/German
Mark Call Opt 430,000 5/18/98 3.080GBP/DEM 3,197 400
Canadian Dollar Call Opt 215,000 5/18/98 1.410CAD 122 68
Canadian Dollar Put Opt 245,000 5/28/98 1.441CAD 638 422
German Mark Put Opt 1,110,000 10/2/98 1.850DEM 9,120 2,507
German Mark/Japanese Yen
Put Opt 1,110,000 10/2/98 69.500DEM/JPY 14,968 8,275
Japanese Yen Call Opt 76,985,000 9/28/98 130.000JPY 33,458 18,939
Japanese Yen Put Opt 76,985,000 9/28/98 130.000JPY 13,738 19,708
Mexican Peso Call Opt 300,000 7/22/98 8.741MXP 5,595 5,216
Russian Ruble Put Opt 420 6/24/98 66.000RUR 7,770 4,998
-------- -------
$108,886 $84,443
======== =======
</TABLE>
(3). 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.
(4). When-issued security to be delivered and settled after April 30, 1998.
(5). A sufficient amount of securities has been designated to cover outstanding
forward foreign currency exchange contracts. See Note 5 of Notes to Financial
Statements.
(6). Represents the current interest rate for a variable rate security.
(7). Identifies issues considered to be illiquid or restricted--See Note 8 of
Notes to Financial Statements.
(8). Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $1,066,327 or 2.08% of the Fund's net
assets as of April 30, 1998.
(9). For zero coupon bonds, the interest rate shown is the effective yield on
the date of purchase.
(10). Securities with an aggregate market value of $143,225 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
(11). Represents the current interest rate for an increasing rate security.
(12). Issuer is in default.
(13). Non-income producing--issuer is in default of interest payment.
(14). Denotes a step bond: a zero coupon bond that converts to a fixed or
variable interest rate at a designated future date.
(15). Interest or dividend is paid-in-kind.
(16). Non-income producing security.
See accompanying Notes to Financial Statements.
21 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
===============================================================================
Assets
Investments, at value (cost $57,739,119)--see accompanying
statement $ 57,291,559
- -------------------------------------------------------------------------------
Unrealized appreciation on forward foreign currency
exchange contracts--Note 5 34,271
- -------------------------------------------------------------------------------
Receivables:
Investments sold 2,916,617
Interest 927,158
Daily variation on futures contracts--Note 6 73,250
Shares of beneficial interest sold 48,835
Closed forward foreign currency exchange contracts 7,578
- -------------------------------------------------------------------------------
Other 18,719
------------
Total assets 61,317,987
===============================================================================
Liabilities
Bank overdraft 2,424,813
- -------------------------------------------------------------------------------
Unrealized depreciation on forward foreign currency
exchange contracts--Note 5 27,849
- -------------------------------------------------------------------------------
Options written, at value (premiums received $108,886)--
see accompanying statement--Note 7 84,443
- -------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $4,063,875 purchased on a
when-issued basis)--Note 1 5,890,230
Shares of beneficial interest redeemed 1,344,861
Trustees' fees--Note 1 54,917
Daily variation on futures contracts--Note 6 44,385
Dividends 39,933
Closed forward foreign currency exchange contracts 26,721
Management and administrative fees 8,002
Transfer agent and accounting services fees 2,662
Distribution and service plan fees 1,073
Other 32,894
------------
Total liabilities 9,982,783
===============================================================================
Net Assets $ 51,335,204
============
===============================================================================
Composition of Net Assets
Par value of shares of beneficial interest $ 62,841
- -------------------------------------------------------------------------------
Additional paid-in capital 56,976,467
- -------------------------------------------------------------------------------
Overdistributed net investment income (181,490)
- -------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign
currency transactions (5,144,905)
- -------------------------------------------------------------------------------
Net unrealized depreciation on investments and
translation of assets and liabilities
denominated in foreign currencies (377,709)
------------
Net assets $ 51,335,204
============
22 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $51,333,194 and 6,283,817 shares of beneficial interest outstanding) $8.17
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $8.58
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $1,005 and 123 shares of beneficial interest outstanding) $8.17
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $1,005 and 123 shares of beneficial interest outstanding) $8.17
See accompanying Notes to Financial Statements.
23 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Six Months Ended April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
===============================================================================
Investment Income
Interest (net of foreign withholding taxes of $64,227) $ 2,367,293
- -------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $187) 1,113
-----------
Total income 2,368,406
===============================================================================
Expenses
Management fees--Note 4 175,747
- -------------------------------------------------------------------------------
Administrative fees--Note 4 52,776
- -------------------------------------------------------------------------------
Shareholder reports 35,672
- -------------------------------------------------------------------------------
Custodian fees and expenses 35,030
- -------------------------------------------------------------------------------
Legal and auditing fees 26,871
- -------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 26,283
- -------------------------------------------------------------------------------
Registration and filing fees 8,854
- -------------------------------------------------------------------------------
Transfer agent and accounting services fees--Note 4 3,009
- -------------------------------------------------------------------------------
Insurance expenses 2,691
- -------------------------------------------------------------------------------
Distribution and service plan fees--Note 4 1,073
- -------------------------------------------------------------------------------
Other 1,493
-----------
Total expenses 369,499
===============================================================================
Net Investment Income 1,998,907
===============================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (123,241)
Closing of futures contracts (4,332)
Closing and expiration of options written 87,739
-----------
Net realized loss (39,834)
- -------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (27,128)
Translation of assets and liabilities denominated in
foreign currencies (413,599)
-----------
Net change (440,727)
-----------
Net realized and unrealized loss (480,561)
===============================================================================
Net Increase in Net Assets Resulting from Operations $ 1,518,346
===========
See accompanying Notes to Financial Statements.
24 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1998 October 31,
(Unaudited) 1997
=========================================================================================================
<S> <C> <C>
Operations
Net investment income $ 1,998,907 $ 4,787,360
- ---------------------------------------------------------------------------------------------------------
Net realized gain (loss) (39,834) 1,085,931
Net change in unrealized appreciation or depreciation (440,727) (1,609,166)
------------ ------------
Net increase in net assets resulting from operations 1,518,346 4,264,125
=========================================================================================================
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A (2,263,145) (4,445,641)
Class B (1) --
Class C (1) --
=========================================================================================================
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest
transactions--Note 2:
Class A (2,702,915) --
Class B 1,000 --
Class C 1,000 --
=========================================================================================================
Net Assets
Total decrease (3,445,716) (181,516)
- ---------------------------------------------------------------------------------------------------------
Beginning of period 54,780,920 54,962,436
------------ ------------
End of period [including undistributed (overdistributed)
net investment income of $(181,490) and $82,750, respectively] $ 51,335,204 $ 54,780,920
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
25 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
-------------------------------------
Six Months
Ended
April 30,
1998 Year Ended October 31,
(Unaudited) 1997 1996
=======================================================================================
<S> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $8.28 $8.31 $7.91
- ---------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .30 .72 .73
Net realized and unrealized gain (loss) (.07) (.08) .34
------- ------- -------
Total income from investment operations .23 .64 1.07
- ---------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.34) (.67) (.67)
Tax return of capital distribution -- -- --
------- ------- -------
Total dividends and distributions to shareholders (.34) (.67) (.67)
------- ------- -------
Net asset value, end of period $8.17 $8.28 $8.31
======= ======= =======
Market value, end of period N/A $8.06 $7.50
=======================================================================================
Total Return, at Net Asset Value(2) 2.87% 7.94% 14.14%
=======================================================================================
Total Return, at Market Value(3) N/A 16.42% 16.40%
=======================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $51,333 $54,781 $54,962
- ---------------------------------------------------------------------------------------
Average net assets (in thousands) $54,125 $55,339 $53,309
- ---------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.45%(5) 8.65% 9.04%
Expenses 1.38%(5) 1.20%(6) 1.28%
- ---------------------------------------------------------------------------------------
Portfolio turnover rate(7) 175.4% 289.2% 260.8%
</TABLE>
(1). For the period from April 27, 1998 (inception of offering) to April 30,
1998.
(2). Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last day of the fiscal
period. Sales charges are not reflected in the total returns. Total returns are
not annualized for periods of less than one full year. Prior to April 27, 1998,
the Fund operated as a closed-end investment company and total return was
calculated based on the market value.
(3). Assumes a hypothetical purchase at the current market price on the business
day before the first day of the fiscal period (or inception of offering), 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. Total returns are not annualized for periods of less than one full
year.
26 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Class C
----------------------------- -------------- ------------
Period Period
Ended Ended
April 30, April 30,
1998 1998
1995 1994 1993 (Unaudited)(1) (Unaudited)(1)
============================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $7.93 $8.54 $8.55 $8.15 $8.15
- ------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .71 .69 .82 -- --
Net realized and unrealized gain (loss) (.05) (.61) -- .03 .03
------- ------- ------- ----- -----
Total income from investment operations .66 .08 .82 .03 .03
- ------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.68) (.68) (.75) (.01) (.01)
Tax return of capital distribution -- (.01) (.08) -- --
------- ------- ------- ----- -----
Total dividends and distributions to shareholders (.68) (.69) (.83) (.01) (.01)
------- ------- ------- ----- -----
Net asset value, end of period $7.91 $7.93 $8.54 $8.17 $8.17
======= ======= ======= ===== =====
Market value, end of period $7.00 $7.00 $8.00 N/A N/A
============================================================================================================
Total Return, at Net Asset Value(2) 8.81% 0.98% 10.08% 0.30% 0.30%
============================================================================================================
Total Return, at Market Value(3) 9.09% (4.84)% 2.22% N/A N/A
============================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $52,340 $52,439 $56,526 $1 $1
- ------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $51,207 $54,380 $55,877 $1 $1
- ------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 9.20% 8.90% 9.59% 4.49%(4)(5) 4.49%(4)(5)
Expenses 1.24% 1.24% 1.22% 3.03%(4)(5) 3.03%(4)(5)
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 344.2% 315.5% 112.5% 175.4% 175.4%
</TABLE>
(4). This information may not be representative of future ratios.
(5). Annualized.
(6). The expense ratio reflects the effect of expenses paid indirectly by the
Fund.
(7). 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 and mortgage
dollar-rolls) for the period ended April 30, 1998 were $84,452,422 and
$96,544,240, respectively. Prior to the period ended October 31, 1996, purchases
and sales of investment securities included mortgage dollar-rolls.
See accompanying Notes to Financial Statements.
27 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer World Bond Fund (the Fund) was initially registered under the
Investment Company Act of 1940, as amended, as a diversified, closed-end
management investment company. Effective April 27, 1998, the Fund began
operating as an open-end fund. The Fund's investment objective is to seek high
current income consistent with preservation of capital through investments in
debt securities. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). The Fund offers Class A, Class B and Class C shares. Class A shares
are sold with a front-end sales charge. Class B and Class C shares may be
subject to a contingent deferred sales charge. All classes of shares have
identical rights to earnings, assets and voting privileges, except that each
class has its own distribution and/or service plan, expenses directly
attributable to that class and exclusive voting rights with respect to matters
affecting that class. Class B shares will automatically convert to Class A
shares six years after the date of purchase. The following is a summary of
significant accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. 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 an
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.
28 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Structured Notes. The Fund invests in foreign currency-linked structured notes
whereby the market value and redemption price are linked to foreign currency
exchange rates. The structured notes may be leveraged, which increases the
notes' volatility relative to the face of the security. Fluctuations in values
of the securities are recorded as unrealized gains and losses in the
accompanying financial statements. During the six months ended April 30, 1998,
the market value of these securities comprised an average of 5.27% of the Fund's
net assets, and resulted in realized and unrealized losses of $164,020.
- --------------------------------------------------------------------------------
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 April 30, 1998,
the Fund had entered into outstanding when-issued or forward commitments of
$4,063,875.
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 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. At April 30, 1998, securities with an
aggregate market value of $180,161, representing 0.35% of the Fund's net assets,
were in default.
29 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
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 foreign 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, 1997, the
Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $5,093,000, which expires between 2001 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 six months
ended April 30, 1998, a provision of $16,470 was made for the Fund's projected
benefit obligations and payments of $3,017 were made to retired trustees,
resulting in an accumulated liability of $54,031 at April 30, 1998.
The Board of Trustees has adopted a Deferred Compensation plan for
independent Trustees that enables Trustees to elect to defer receipt of all or a
portion of annual fees they are entitled to receive from the Fund. Under the
plan, the compensation deferred is periodically adjusted as though an equivalent
amount had been invested for the Trustee in shares of one or more Oppenheimer
funds selected by the Trustee. The amount paid to the Trustee under the plan
will be determined based upon the performance of the selected funds. Deferral of
Trustees' fees under the plan will not affect the net assets of the Fund, and
will not materially affect the Fund's assets, liabilities or net income per
share.
30 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Distributions to Shareholders. The Fund intends to declare dividends separately
for Class A, Class B and Class C shares from net investment income each day the
New York Stock Exchange is open for business and pay such dividends monthly.
Distributions from net realized gains on investments, if any, will be declared
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
primarily because of paydown gains and losses and the recognition of certain
foreign currency gains (losses) as ordinary income (loss) for tax purposes. The
character of the distributions made during the year from net investment income
or net realized gains may differ from its 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 fiscal year that the
income or realized gain was recorded by the Fund.
- --------------------------------------------------------------------------------
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.
31 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of $.01 par value shares of
beneficial interest of each class. There were no transactions in shares of
beneficial interest for the year ended October 31, 1997. Transactions in shares
of beneficial interest for the six months ended April 30, 1998 were as follows:
Shares Amount
- -------------------------------------------------------------------------------
Class A:
Sold 6,000 $158,819
Redeemed (337,688) (2,861,734)
-------- -----------
Net decrease (331,688) $(2,702,915)
======== ===========
- -------------------------------------------------------------------------------
Class B:
Sold 123 $1,000
Redeemed -- --
-------- -----------
Net increase 123 $1,000
======== ===========
- -------------------------------------------------------------------------------
Class C:
Sold 123 $1,000
Redeemed -- --
-------- -----------
Net increase 123 $1,000
======== ===========
================================================================================
3. Unrealized Gains and Losses on Investments
At April 30, 1998 net unrealized depreciation on investments and written options
of $423,117 was composed of gross appreciation of $1,037,266, and gross
depreciation of $1,460,383.
32 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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 a fee of 0.75% of the first
$200 million of average annual net assets, 0.72% of the next $200 million, 0.69%
of the next $200 million, 0.66% of the next $200 million, 0.60% of the next $200
million and 0.58% of average annual net assets in excess of $1 billion. Prior to
April 27, 1998, when the Fund was still organized as a closed-end investment
company, management fees were paid to the Manager at an annual fee of 0.65% on
the Fund's average annual net assets.
Mitchell Hutchins Asset Management Inc. served as the Fund's
Administrator until April 24, 1998. The Fund paid 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.
Effective April 27, 1998, OppenheimerFunds Services (OFS), a division
of the Manager, is the transfer and shareholder servicing agent for the Fund and
for other registered investment companies. OFS's total costs of providing such
services are allocated ratably to these companies. Shareholder Financial
Services, Inc. (SFSI), a wholly-owned subsidiary of the Manager, was the
transfer agent and registrar for the Fund until April 27, 1998. Fees paid to
SFSI were based on the number of accounts and the number of shareholder
transactions, plus out-of-pocket costs and expenses.
The Fund has adopted a Service Plan for Class A shares to reimburse
OFDI for a portion of its costs incurred in connection with the personal service
and maintenance of shareholder accounts that hold Class A shares. Reimbursement
is made quarterly at an annual rate that may not exceed 0.25% of the average
annual net assets of Class A shares of the Fund. OFDI uses the service fee to
reimburse brokers, dealers, banks and other financial institutions quarterly for
providing personal service and maintenance of accounts of their customers that
hold Class A shares.
The Fund has adopted Distribution and Service Plans for Class B and
Class C shares to compensate OFDI for its costs in distributing Class B and
Class C shares and servicing accounts. Under the Plans, the Fund pays OFDI an
annual asset-based sales charge of 0.75% per year on Class B shares and Class C
shares for its services rendered in distributing Class B and Class C shares.
OFDI also receives a service fee of 0.25% per year to compensate dealers for
providing personal services for accounts that hold Class B and C shares. Each
fee is computed on the average annual net assets of Class B or Class C shares,
determined as of the close of each regular business day. If either Plan is
terminated by the Fund, the Board of Trustees may allow the Fund to continue
payments of the asset-based sales charge to OFDI for distributing shares before
the Plan was terminated.
33 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
================================================================================
5. Forward Contracts
A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future 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 April 30, 1998, the Fund had outstanding forward contracts as follows:
<TABLE>
<CAPTION>
Expiration Contract Valuation as of Unrealized Unrealized
Dates Amount (000s) April 30, 1998 Appreciation Depreciation
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Contracts to Purchase
- ---------------------
Finnish Markka (FIM) 6/4/98 1,857FIM $ 341,575 $ -- $ 317
German Mark (DEM) 7/9/98-
7/17/98 1,090DEM 610,014 7,003 224
------- -------
7,003 541
------- -------
Contracts to Sell
- -----------------
Australian Dollar (AUD) 5/18/98 245AUD 159,110 5,000 --
Czech Koruna (CZK) 7/9/98-
7/17/98 20,918CZK 621,542 -- 18,307
Japanese Yen (JPY) 5/13/98 1,350JPY 10,216 110 --
Malaysian Ringgit (MYR) 8/28/98-
9/14/98 1,340MYR 350,137 894 9,001
New Zealand Dollar (NZD) 5/29/98-
6/23/98 1,015NZD 561,851 6,009 --
Swiss Franc (CHF) 5/26/98-
6/4/98 2,080CHF 1,392,435 15,255 --
------- -------
27,268 27,308
------- -------
Total Unrealized Appreciation and Depreciation $34,271 $27,849
======= =======
</TABLE>
34 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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 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 (initial margin) in an amount 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
and/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 April 30, 1998, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Unrealized
Expiration Number of Valuation as of Appreciation
Date Contracts April 30, 1998 (Depreciation)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Contracts to Purchase
- ---------------------
Japanese Currency 6/15/98 13 $1,229,638 $ 1,950
U.S. Treasury Bonds, 30 yr. 6/19/98 42 5,049,188 50,875
U.S. Treasury Nts., 10 yr. 6/19/98 11 1,235,438 5,188
--------
58,013
--------
Contracts to Sell
- -----------------
Canadian Bonds, 10 yr. 6/19/98 4 351,179 (1,538)
German Bonds, 10 yr. 6/5/98 5 743,732 6,687
U.S. Treasury Nts., 5 yr. 6/19/98 60 6,533,438 (22,328)
--------
(17,179)
--------
$ 40,834
========
</TABLE>
35 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
================================================================================
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.
Written option activity for the six months ended April 30, 1998 was as follows:
Call Options Put Options
------------------------ -----------------------
Number of Amount of Number of Amount of
Options Premiums Options Premiums
- -------------------------------------------------------------------------------
Options outstanding at
October 31, 1997 216,560,000 $ 25,776 296,705,175 $ 51,903
Options written 82,975,740 89,220 143,852,070 118,601
Options closed or expired (220,495,240) (49,973) (50,976,825) (86,575)
Options exercised (510,500) (16,050) (309,530,000) (24,016)
------------ -------- ------------ ---------
Options outstanding at
April 30, 1998 78,530,000 $ 48,973 80,050,420 $ 59,913
============ ======== ============ =========
36 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
8. Illiquid and Restricted Securities
At April 30, 1998, 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
periodically) 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 April 30, 1998 was $5,108,319, which represents
9.95% of the Fund's net assets.
================================================================================
9. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the period ended April
30, 1998.
37 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited) (Continued)
- --------------------------------------------------------------------------------
================================================================================
10. Shareholder Meeting
On April 16, 1998, a shareholder meeting was held at which the following items
and proposals were approved, as described in the Fund's proxy statement for that
meeting. The following is a report of the votes cast:
<TABLE>
<CAPTION>
Withheld/ Broker
Nominee/Proposal For Against Abstain Total Non-Votes
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The eleven Trustees identified below were elected:
Robert G. Galli 5,718,041.621 93,477.091 0 5,811,518.712 726,488
Leon Levy 5,718,041.621 93,477.091 0 5,811,518.712 726,488
Benjamin Lipstein 5,718,041.621 93,477.091 0 5,811,518.712 726,488
Bridget A. Macaskill 5,718,041.621 93,477.091 0 5,811,518.712 726,488
Elizabeth B. Moynihan 5,718,041.621 93,477.091 0 5,811,518.712 726,488
Kenneth A. Randall 5,718,041.621 93,477.091 0 5,811,518.712 726,488
Edward V. Regan 5,718,041.621 93,477.091 0 5,811,518.712 726,488
Russell S. Reynolds, Jr. 5,718,041.621 93,477.091 0 5,811,518.712 726,488
Donald W. Spiro 5,718,041.621 93,477.091 0 5,811,518.712 726,488
Pauline Trigere 5,718,041.621 93,477.091 0 5,811,518.712 726,488
Clayton K. Yeutter 5,718,041.621 93,477.091 0 5,811,518.712 726,488
1. Approval to change the Fund's sub-classification under the Investment Company
Act of 1940 from a closed-end management investment company to an open-end
management investment company
Proposal No. 1 3,104,822.737 377,437.112 161,629.863 3,643,889.712 3,023,591
2. Approval of changes to certain fundamental investment policies and investment
objective
Proposal No. 2 3,074,656.553 363,822.874 200,813.285 3,639,292.712 3,023,591
3. Approval of the Investment Advisory Agreement between the Fund and
OppenheimerFunds, Inc.
Proposal No. 3 3,098,702.939 349,632.922 194,553.851 3,642,889.712 3,023,592
4. Approval of a new Service Plan and Agreement with OppenheimerFunds
Distributor, Inc. with respect to Class A shares
Proposal No. 4 3,119,193.023 334,165.116 189,689.573 3,643,047.712 3,023,593
5. Approval of the Amendment and Restatement of the Fund's Declaration of Trust
Proposal No. 5 3,187,109.390 340,936.514 185,204.808 3,713,250.712 3,023,591
6. Ratification of the selection of KPMG Peat Marwick LLP as independent public
accountants and auditors of the Fund for the fiscal year beginning November 1,
1997
Proposal No. 6 5,642,255.184 94,018.902 80,275.626 5,816,549.712 726,488
</TABLE>
38 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer World Bond Fund
- --------------------------------------------------------------------------------
================================================================================
Officers and Trustees Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro, Vice Chairman of the Board of Trustees
Bridget A. Macaskill, Trustee and President
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Ashwin K. Vasan, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
================================================================================
Investment Advisor OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
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Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
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Custodian of The Bank of New York
Portfolio Securities
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Independent Auditors KPMG Peat Marwick LLP
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Legal Counsel Gordon Altman Butowsky Weitzen Shalov & Wein
The financial statements included herein have been
taken from the records of the Fund without examination
of the independent auditors.
This is a copy of a report to shareholders of
Oppenheimer World Bond Fund. This report must be
preceded or accompanied by a Prospectus of Oppenheimer
World Bond Fund. For material information concerning
the Fund, see the Prospectus.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any
bank, and are not insured by the FDIC or any other
agency, and involve investment risks, including
possible loss of the principal amount invested.
39 Oppenheimer World Bond Fund
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Information and services
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As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number or by visiting our website. And, by
enrolling in AccountLink, a convenient service that "links" your Oppenheimer
funds accounts and your bank checking or savings account, you can use the
Telephone Transactions number or website to make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today, or visit us at our website at
www.oppenheimerfunds.com--we're here to help.
Internet
24-hr access to account information. Online
trans actions now available
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www.oppenheimerfunds.com
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General Information
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
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1-800-525-7048
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Account Transactions
Mon-Fri 8:30am-8pm ET
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1-800-852-8457
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PhoneLink
24-hr automated information
and automated transactions
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1-800-533-3310
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Telecommunication Device
for the Deaf (TDD)
Mon-Fri 8:30am-2pm ET
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1-800-843-4461
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OppenheimerFunds
Information Hotline
24 hours a day, timely and
insightful messages on the
economy and issues that
affect your investments
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1-800-835-3104
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[LOGO] OppenheimerFunds(SM)
Distributor, Inc.
RS0705.001.0498 June 29, 1998
