<PAGE> 1
[GRAPHIC]
1997 ANNUAL REPORT
OPPENHEIMER
WORLD BOND FUND
OCTOBER 31, 1997
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
DEAR SHAREHOLDER:
As of October 31, 1997, the Fund's one-year total return was 16.42% at market
value and its dividend return was 8.33%.(1)
For most of the year, much of the world enjoyed favorable economic environments
characterized by low inflation. This helped to keep interest rates low, which
in turn fueled a speculative boom in financial assets worldwide. These
advantageous conditions benefited three of the Fund's investment allocations:
foreign fixed-income securities, U.S. government securities and lower-rated,
high-yield domestic corporate bonds.
INVESTMENT BREAKDOWN:
OPPENHEIMER WORLD BOND FUND
AS OF 10/31/97(2)
- - U.S. government obligations: 32.7%
- - Foreign government obligations: 26.9%
- - Foreign corporate bonds & notes: 14.2% [PIE CHART]
- - U.S. corporate bonds & notes: 9.4%
- - Short-term securities: 9.0%
- - Structured notes: 7.3%
- - Equities: 0.5%
The success of our foreign exposure stems from two key factors. The first was
the Fund's hedging strategies. Early in the year, the dollar rallied strongly
against major currencies, such as the yen and the deutschmark. While normally
this would have undermined the value of U.S. investors' foreign holdings, we
were able to help protect the portfolio's assets through currency hedges.
The second factor was our overweighting in the bonds of emerging markets, which
generally performed well up until October's Asian crisis, discussed below.
Unlike developed markets, much of the emerging market debt is U.S.
dollar-denominated, so it is generally not subject to currency exchange rate
risk. Further, when emerging markets exhibit strong growth, as they did last
year, their bonds generally perform well, in contrast to developed market bonds
which often sell off when growth is strong because of inflation fears. Of
course, international investments, especially in emerging markets, entail
greater expenses and risks, such as adverse currency fluctuations. By
diversifying across countries and industries, the Fund was able to help manage
those risks.
We found good fixed-income opportunities in a number of emerging markets. Over
the past year, we increased our allocation in Eastern Europe, which offered
significant yield opportunities. We also shifted a major portion of our Latin
America allocation into other parts of the world. That's
1. Total return is based on the change in market value per share from 10/31/96
to 10/31/97, without deducting any sales charges or brokerage costs. Returns
would have been lower if brokerage costs were deducted. Dividend return is
determined by annualizing the October 1997 dividend of $0.056 and dividing by
the closing market price on the New York Stock Exchange of $8.06 per share on
10/24/97 (payment date). Past performance does not guarantee future results.
2. Portfolio holdings are subject to change. Chart is based on total
investments at market value.
1
<PAGE> 3
because although Latin America has been a very strong performer for the Fund,
yields declined in 1997 and we felt we were no longer being adequately
compensated for the risks of holding these bonds.
While we underweighted markets in Europe and Japan last year, these markets may
provide attractive opportunities going forward. European securities were
generally not appealing last year because the dollar was so strong. If higher
economic growth returns to the area, European bonds may offer good values and
European currencies may strengthen against the U.S. dollar, which would benefit
the Fund's shareholders. Similarly, if the Japanese economy were to climb out
of its recession and resume growing at a sustainable pace, there could be
significant opportunities for capital gains as the yen strengthened against the
dollar.
Although we found some rewarding opportunities in selected areas of Asia, in
general we avoided the majority of markets in Southeast Asia. This turned out
to be a wise policy, as these markets experienced severe difficulties,
including the devaluation of several currencies. By late October, the
difficulties had overwhelmed much of the Asian region, culminating in the
decline of the Hong Kong stock market.
This decline in Asian markets affected bond and stock markets around the world,
and reinforced the importance of selective securities selection and broad
diversification. Going forward, we expect Asia to continue to offer less
attractive investments than other parts of the world. At the same time, we
believe that some developing markets in Latin America may offer opportunities,
because of their strong underlying economic forces, such as population growth,
work force improvements, rising education levels and growing real income. In
the immediate term, however, we expect a shift in the markets that may help
developed nations take the lead. In Europe, for example, constructive
restructuring may lead to some attractive opportunities. Further, as global
economic growth becomes more synchronized, it is possible that foreign central
banks may begin to raise interest rates, as they did very modestly in early
October 1997. This may eventually cause the U.S. dollar to give back some of
its gains. In such an environment, foreign-denominated bonds should produce
above-average returns for U.S. investors.
As always, we appreciate the trust you have placed in OppenheimerFunds, The
Right Way to Invest. We look forward to helping you meet your investment goals
with Oppenheimer World Bond Fund.
Sincerely,
/s/ BRIDGET A. MACASKILL
Bridget A. Macaskill
President
Oppenheimer World Bond Fund
November 21, 1997
2
<PAGE> 4
STATEMENT OF INVESTMENTS October 31, 1997
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
----------- ---------
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS -- 18.6%
GOVERNMENT AGENCY -- 15.1%
FHLMC/FNMA/Sponsored -- 8.8%
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation
Certificates, Series 1343, Cl. LA, 8%, 8/15/22 . . . . . . . . . . . $ 229,000 $ 252,188
Government National Mortgage Assn., Gtd. Multiclass Mtg.
Participation Certificates, Series 26, Cl. B, 6%, 5/25/15(2) . . . . 2,403,999 2,342,857
Interest-Only Stripped Mtg.-Backed Security, Series 177,
Cl. B, 9.554%-10.045%, 7/1/26(3) . . . . . . . . . . . . . . . . . . 2,275,396 704,306
Mtg.-Backed Certificates:
11.50%, 1/1/18 . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,466 87,357
13%, 5/1/19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404,681 479,718
Federal National Mortgage Assn.:
7%, 11/25/27(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220,000 220,688
Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates:
Trust 1992-162, Cl. C, 7%, 10/25/21 . . . . . . . . . . . . . . . . 350,000 355,796
Trust 1997-27, Cl. J, 7.50%, 4/18/27 . . . . . . . . . . . . . . . . 109,540 116,706
Trust 1997-5, Cl. B, 7%, 9/18/17 . . . . . . . . . . . . . . . . . . 232,000 236,899
Sr. Unsub. Medium-Term Nts., 6.50%, 7/10/02(AUD) . . . . . . . . . . . . 40,000 29,011
-----------
4,825,526
-----------
GNMA/Guaranteed -- 6.3%
Government National Mortgage Assn.:
11%, 10/20/19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122,727 140,715
7.50%, 1/15/26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502,789 514,434
7.50%, 11/1/27(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500,000 2,556,250
7.50%, 5/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,110 56,525
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 1994-5, Cl. PQ, 7.493%,
7/16/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 159,377
-----------
3,427,301
-----------
PRIVATE -- 3.5%
Commercial -- 2.1%
Asset Securitization Corp., Commercial Mtg. Pass-Through
Certificates, Series 1996-MD6, Cl. A5, 6.957%, 11/13/26(5) . . . . . . 200,000 209,406
Commercial Mortgage Acceptance Corp., Interest-Only Stripped
Mtg.-Backed Security, Series 1996-C1, Cl. X-2, 0.981%, 12/25/20(3)(6)(7) 6,208,300 180,429
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through
Certificates, Series 1996-C1, Cl. E, 7.51%, 2/15/28(5)(6) . . . . . . . 553,342 538,298
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates,
Series 1995-C1, Cl. F, 6.90%, 2/25/27 . . . . . . . . . . . . . . . . . 153,799 144,319
</TABLE>
3
<PAGE> 5
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
----------- ---------
<S> <C> <C>
Commercial (continued)
Structured Asset Securities Corp., Multiclass Pass-Through
Certificates, Series 1995-C4, Cl. E, 8.776%, 6/25/26(5)(6) . . . . . . $ 100,000 $ 104,250
-----------
1,176,702
-----------
Multi-Family -- 0.4%
Mortgage Capital Funding, Inc., Multifamily Mtg. Pass-Through
Certificates, Series 1996-MC1, Cl. G, 7.15%, 6/15/06(8) . . . . . . . . 250,000 241,250
-----------
Residential -- 1.0%
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through
Certificates, Series 1997-C1, Cl. E, 7.50%, 3/1/11(6) . . . . . . . . . 190,000 193,325
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through
Certificates, Series 1997-CHL1, 8.134%, 7/25/06(5)(6) . . . . . . . . . 200,000 206,812
First Union-Lehman Brothers Commercial Mortgage Trust, Interest-
Only Stripped Mtg.-Backed Security, Series 1997-C1, 6.772%,
4/18/27(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 883,995 70,461
Salomon Brothers, Inc., Series 1997-TZH, Cl. D, 7.902%, 3/25/22(6) . . . . 50,000 53,219
-----------
523,817
-----------
Total Mortgage-Backed Obligations (Cost $9,909,465) . . . . . . . . . . . . 10,194,596
-----------
U.S. GOVERNMENT OBLIGATIONS -- 15.1%
U.S. Treasury Bonds, STRIPS, Zero Coupon, 6.52%, 8/15/22(9) . . . . . . . . 1,000,000 213,432
U.S. Treasury Nts.:
6.125%, 8/31/98(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 2,247,000 2,257,534
6.25%, 2/15/03(10) . . . . . . . . . . . . . . . . . . . . . . . . . . 707,000 722,024
6.375%, 8/15/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,331,000 1,365,524
7.50%, 10/31/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195,000 201,764
7.75%, 1/31/00(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,385,000 2,488,600
9.25%, 8/15/98(10) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,028,126
-----------
Total U.S. Government Obligations (Cost $8,188,685) . . . . . . . . . . . . 8,277,004
-----------
FOREIGN GOVERNMENT OBLIGATIONS -- 33.0%
Argentina -- 1.2%
Argentina (Republic of) Bonds, 5%, 12/20/02 (JPY) . . . . . . . . . . . . . 65,000,000 499,384
Argentina (Republic of) Floating Rate Bonds, Series L, 6.688%,
3/31/05(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168,000 142,800
-----------
642,184
-----------
Australia -- 1.9%
Queensland Treasury Corp. Exchangeable Gtd. Nts.:
8%, 5/14/03(AUD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 38,840
8%, 8/14/01(AUD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 19,026
Treasury Corp. of Victoria Gtd. Bonds, 8.25%, 10/15/03(AUD) . . . . . . . . 1,230,000 965,697
-----------
1,023,563
-----------
</TABLE>
4
<PAGE> 6
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
----------- ---------
<S> <C> <C>
Canada -- 1.2%
Canada (Government of) Bonds, 5.50%, 9/1/02(CAD). . . . . . . . . . . . . . 880,000 $ 638,748
----------
Cayman Islands -- 0.5%
Pera Financial Services Sec. Nts., 9.375%, 10/15/02(8) . . . . . . . . . . 290,000 271,513
----------
Colombia -- 0.5%
Colombia (Republic of) Unsec. Unsub. Bonds, 8.375%, 2/15/27 . . . . . . . . 125,000 115,155
Financiera Energetica Nacional SA Nts., 9.375%, 6/15/06 . . . . . . . . . . 140,000 141,312
----------
256,467
----------
Costa Rica -- 0.4%
Banco Central Costa Rica Interest Claim Bonds, Series A, 6.539%,
5/21/05(5)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217,150 209,550
----------
Germany -- 5.8%
Germany (Republic of) Bonds:
7.375%, 12/2/02(DEM) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,090,000 696,310
Series 123, 4.50%, 5/17/02(DEM) . . . . . . . . . . . . . . . . . . . . 2,800,000 1,601,764
Series JA07, Zero Coupon, 4.255%, 1/4/01(2)(9)(DEM) . . . . . . . . . . 1,180,000 592,476
Series JA07, Zero Coupon, 5.758%, 1/4/07(9)(DEM) . . . . . . . . . . . . 420,000 147,054
Series JL07, Zero Coupon, 5.66%, 7/4/07(9)(DEM) . . . . . . . . . . . . 450,000 153,114
----------
3,190,718
----------
Great Britain -- 3.1%
United Kingdom Treasury Nts.:
13%, 7/14/00(GBP) . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,000 298,177
8%, 6/10/03(GBP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 790,000 1,405,893
----------
1,704,070
----------
Italy -- 2.6%
Italy (Republic of) Treasury Bonds, Buoni del Tesoro
Poliennali, 12%, 1/1/02(2)(ITL) . . . . . . . . . . . . . . . . . . . . 1,955,000,000 1,414,299
----------
Ivory Coast -- 0.3%
Ivory Coast (Government of) Past Due Interest Bonds, 12/29/49(4) . . . . . 500,000 184,375
----------
Jordan -- 1.1%
Hashemite (Kingdom of Jordan) Disc. Bonds, 6.75%, 12/23/23(5) . . . . . . . 550,000 446,875
Hashemite (Kingdom of Jordan) Par Bonds, 3.934%, 12/23/23(11) . . . . . . . 250,000 173,750
----------
620,625
----------
Mexico -- 0.7%
Petroleos Mexicanos Debs., 14.50%, 3/31/06(GBP) . . . . . . . . . . . . . . 100,000 216,320
United Mexican States Global Bonds, 9.875%, 1/15/07 . . . . . . . . . . . . 150,000 150,375
----------
366,695
----------
</TABLE>
5
<PAGE> 7
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
----------- ---------
<S> <C> <C>
Moldova -- 0.4%
Moldova (Republic of) Sr. Unsub. Nts., 8.465%, 12/10/99(5) . . . . . . . . $ 220,000 $ 220,137
----------
New Zealand -- 2.6%
National Bank of New Zealand, New Zealand Dollar Bank Bill, Zero
Coupon, 7.594%, 12/10/97(9)(17)(NZD). . . . . . . . . . . . . . . . . . . . 1,948,000 1,205,229
New Zealand (Government of) Bonds, 8%, 11/15/06(NZD). . . . . . . . . . . . 330,000 226,228
----------
1,431,457
----------
Norway -- 1.0%
Norway (Government of) Bonds, 9.50%, 10/31/02(2)(NOK) . . . . . . . . . . . 3,190,000 537,014
----------
Pakistan -- 0.5%
Pakistan (Republic of) Debs., 11.50%, 12/22/99 . . . . . . . . . . . . . . 32,000 33,440
Pakistan (Republic of) Bonds, 9.946%, 5/30/00(5) . . . . . . . . . . . . . 220,000 223,300
----------
256,740
----------
Peru -- 0.3%
Peru (Republic of) Front-Loaded Interest Reduction Bonds, 3.25%,
3/7/17(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350,000 177,625
----------
Romania -- 0.5%
Romania (Government of) Bonds, 7.75%, 6/17/02(DEM). . . . . . . . . . . . . 515,000 287,998
----------
Russia -- 0.9%
Ministry of Finance (Russian Government) Debs., 9%,
3/25/04(4)(DEM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425,000 237,051
SBS Agro Finance BV Bonds, 10.25%, 7/21/00 . . . . . . . . . . . . . . . . 250,000 244,063
----------
481,114
----------
South Africa -- 2.3%
South Africa (Republic of) Bonds:
Series 150, 12%, 2/28/05(ZAR) . . . . . . . . . . . . . . . . . . . . . 3,615,620 667,952
Series 162, 12.50%, 1/15/02(ZAR) . . . . . . . . . . . . . . . . . . . . 2,087,360 406,750
Series 175, 9%, 10/15/02(ZAR) . . . . . . . . . . . . . . . . . . . . . 1,242,530 208,539
----------
1,283,241
----------
Spain -- 1.1%
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado,
12.25%, 3/25/00(ESP) . . . . . . . . . . . . . . . . . . . . . . . . . . 78,920,000 626,032
----------
Sweden -- 1.7%
Sweden (Kingdom of) Bonds, Series 1033, 10.25%, 5/5/03(2)(SEK). . . . . . . 5,900,000 941,662
----------
Turkey -- 2.4%
Export Credit Bank of Turkey Bonds, 8.352%, 8/18/00(5) . . . . . . . . . . 240,000 237,300
Halkbank Turkiye Halk Bonds, 8%, 2/26/02(DEM) . . . . . . . . . . . . . . . 500,000 271,620
</TABLE>
6
<PAGE> 8
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
----------- ---------
<S> <C> <C>
Turkey (continued)
Turkey (Republic of) Treasury Bills, Zero Coupon,
93.92%, 3/4/98(9)(TRL) . . . . . . . . . . . . . . . . . . . . . . . . . 195,909,000,000 $ 789,422
-----------
1,298,342
-----------
Total Foreign Government Obligations (Cost $18,097,428) . . . . . . . . . . 18,064,169
-----------
LOAN PARTICIPATIONS -- 1.1%
Colombia (Republic of) Concorde Loan Participation, 8.625%,
1/31/98(5)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 24,375
Jamaica (Government of) 1990 Refinancing Agreement Nts.,
Tranche A, 6.563%, 10/16/00(5)(6) . . . . . . . . . . . . . . . . . . . 87,499 83,563
Morocco (Kingdom of) Loan Participation Agreement,
Tranche B, 6.812%, 1/1/04(5) . . . . . . . . . . . . . . . . . . . . . 76,470 69,875
Trinidad & Tobago Loan Participation Agreement, Tranche A,
1.575%, 9/30/00(5)(6)(JPY) . . . . . . . . . . . . . . . . . . . . . . . 57,326,833 443,285
-----------
Total Loan Participations (Cost $665,588) . . . . . . . . . . . . . . . . . 621,098
-----------
CORPORATE BONDS AND NOTES -- 21.9%
BASIC INDUSTRY -- 1.5%
Chemicals -- 0.3%
ICO, Inc., 10.375% Sr. Nts., 6/1/07(8) . . . . . . . . . . . . . . . . . . 25,000 26,875
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., 9/15/07(8) . . . . . . . . . 25,000 25,125
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07(8) . . . . . . 25,000 24,875
Sovereign Specialty Chemicals, Inc., 9.50% Sr. Sub. Nts., 8/1/07(8) . . . . 25,000 25,500
Sterling Chemicals, Inc.:
11.25% Sr. Sub. Nts., 4/1/07 . . . . . . . . . . . . . . . . . . . . . 15,000 16,425
11.75% Sr. Unsec. Sub. Nts., 8/15/06 . . . . . . . . . . . . . . . . . 25,000 27,812
-----------
146,612
-----------
Containers -- 0.1%
Consumers International, Inc., 10.25% Sr. Sec. Nts., 4/1/05(6) . . . . . . 50,000 54,250
-----------
Paper -- 0.9%
Ainsworth Lumber Ltd., 12.50% Sr. Nts., 7/15/07(8)(12) . . . . . . . . . . 20,000 20,300
Asia Pulp & Paper International Finance Co., Zero Coupon Asian
Currency Nts., 14.712%, 12/8/97(9)(IDR) . . . . . . . . . . . . . . . . 200,000,000 53,552
Four M Corp., 12% Sr. Nts., Series B, 6/1/06(6) . . . . . . . . . . . . . . 20,000 21,400
Indah Kiat International Finance Co. BV, 11.875% Gtd. Sr. Sec. Nts.,
6/15/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97,000 99,425
Pindo Deli Finance Mauritius Ltd., 10.75% Gtd. Nts., 10/1/07(6) . . . . . . 170,000 158,100
Tjiwi Kimia International Finance Co. BV, 13.25% Gtd. Sr. Nts., 8/1/01 . . 130,000 135,720
-----------
488,497
-----------
</TABLE>
7
<PAGE> 9
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
----------- ---------
<S> <C> <C>
Steel -- 0.2%
Algoma Steel, Inc., 12.375% First Mtg. Nts., 7/15/05 . . . . . . . . . . . $25,000 $ 28,875
Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01 . . . . . . . . . . . 25,000 27,000
Keystone Consolidated Industries, Inc., 9.625% Sr. Nts., 8/1/07(8) . . . . 25,000 25,500
---------
81,375
---------
CONSUMER RELATED -- 1.7%
Consumer Products -- 0.1%
Coleman Escrow Corp., Zero Coupon Sr. First Priority Disc. Nts.,
10.823%, 5/15/01(8)(9) . . . . . . . . . . . . . . . . . . . . . . . . 25,000 16,125
Dyersburg Corp., 9.75% Sr. Sub. Nts., 9/1/07(8) . . . . . . . . . . . . . . 25,000 25,625
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts., 10.773%,
3/15/01(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 13,700
---------
55,450
---------
Food/Beverages/Tobacco -- 0.0%
CFP Holdings, Inc., 11.625% Gtd. Sr. Nts., Series B, 1/15/04 . . . . . . . 25,000 24,125
---------
Healthcare -- 0.1%
Integrated Health Services, Inc., 9.50% Sr. Sub. Nts., 9/15/07(8) . . . . . 50,000 51,875
Sun Healthcare Group, Inc., 9.50% Sr. Sub. Nts., 7/1/07(8) . . . . . . . . 25,000 25,375
---------
77,250
---------
Hotel/Gaming -- 0.5%
Capital Gaming International, Inc., Promissory Nts., 8/1/95(13) . . . . . . 2,000 --
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07(8) . . . . . . . . . . . . 25,000 25,281
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., 8/15/03 . . . . . . . 25,000 23,875
Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03 . . . . . . . . 25,000 26,562
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07(8) . . . . . . . . . . 25,000 25,625
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts., Series B,
11/15/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 32,125
Rio Hotel & Casino, Inc., 9.50% Gtd. Sr. Sub. Nts., 4/15/07 . . . . . . . . 25,000 26,125
Showboat Marina Casino Partnership/Showboat Marina Finance
Corp., 13.50% First Mtg. Nts., Series B, 3/15/03 . . . . . . . . . . . 25,000 28,687
Signature Resorts, Inc., 9.75% Sr. Sub. Nts., 10/1/07(8) . . . . . . . . . 20,000 20,300
Station Casinos, Inc., 10.125% Sr. Sub. Nts., 3/15/06 . . . . . . . . . . . 45,000 46,125
---------
254,705
---------
Restaurants -- 0.0%
Ameriking, Inc., 10.75% Sr. Nts., 12/1/06 . . . . . . . . . . . . . . . . . 20,000 21,250
---------
Textile/Apparel -- 1.0%
CMI Industries, Inc., 9.50% Sr. Sub. Nts., 10/1/03(6) . . . . . . . . . . . 25,000 24,500
Consoltex Group, Inc., 11% Gtd. Sr. Sub. Nts., Series B,
10/1/03(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 52,750
Dan River, Inc., 10.125% Sr. Sub. Nts., 12/15/03 . . . . . . . . . . . . . 30,000 32,025
</TABLE>
8
<PAGE> 10
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
----------- ----------
<S> <C> <C>
Textile/Apparel (continued)
Polysindo International Finance Co. BV, 11.375% Gtd. Sec. Nts.,
6/15/06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,000 $ 25,562
PT Polysindo Eka Perkasa, Zero Coupon Promissory Nts.:
9.39%, 7/14/98(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 45,752
30.945%, 3/16/98(9) (IDR). . . . . . . . . . . . . . . . . . . . . . . . 1,000,000,000 246,621
Tultex Corp., 9.625% Sr. Unsec. Nts., 4/15/07 . . . . . . . . . . . . . . . 50,000 51,625
WestPoint Stevens, Inc., 9.375% Sr. Sub. Debs., 12/15/05 . . . . . . . . . 25,000 26,375
William Carter Co., 10.375% Sr. Sub. Nts., Series A, 12/1/06 . . . . . . . 50,000 52,750
--------
557,960
--------
ENERGY -- 1.0%
Belden & Blake Corp., 9.875% Sr. Sub. Nts., 6/15/07(8) . . . . . . . . . . 50,000 51,250
Canadian Forest Oil Ltd., 8.75% Sr. Sub. Nts., 9/15/07(8) . . . . . . . . . 5,000 4,986
Chesapeake Energy Corp., 9.125% Sr. Unsec. Nts., 4/15/06 . . . . . . . . . 25,000 25,875
Dailey International, Inc., 9.75% Gtd. Sr. Unsec. Nts., 8/15/07(8) . . . . 25,000 26,125
Forcenergy, Inc.:
8.50% Sr. Sub. Nts., Series B, 2/15/07 . . . . . . . . . . . . . . . . 25,000 25,000
9.50% Sr. Sub. Nts., 11/1/06 . . . . . . . . . . . . . . . . . . . . . 25,000 26,312
Gothic Energy Corp., Units (each unit consists of $1,000 principal
amount of 0%/12.25% sr. disc. nts., 9/1/04 and 14 warrants to
purchase one ordinary share)(8)(14)(15) . . . . . . . . . . . . . . . . 25,000 26,625
J. Ray McDermott SA, 9.375% Sr. Sub. Bonds, 7/15/06 . . . . . . . . . . . . 25,000 26,625
Moran Energy, Inc., 8.75% Cv. Sub. Debs., 1/15/08 . . . . . . . . . . . . . 200,000 194,750
Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06(6) . . . . . . 25,000 23,250
Pogo Producing Co., 8.75% Sr. Sub. Nts., 5/15/07 . . . . . . . . . . . . . 25,000 25,500
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07(8) . . . . . . . . . . . . 50,000 49,875
Wiser Oil Co., 9.50% Sr. Sub. Nts., 5/15/07 . . . . . . . . . . . . . . . . 15,000 15,000
--------
521,173
--------
FINANCIAL SERVICES -- 2.9%
Banks & Thrifts -- 0.9%
Banco de Colombia, 5.20% Cv. Jr. Unsec. Sub. Nts., 2/1/99 . . . . . . . . . 250,000 261,875
First Nationwide Holdings, Inc., 10.625% Sr. Sub. Nts., 10/1/03 . . . . . . 30,000 33,150
Ongko International Finance Co. BV, 10.50% Gtd. Nts., 3/29/04(8) . . . . . 185,000 170,662
Western Financial Bank, 8.875% Sub. Bonds, 8/1/07 . . . . . . . . . . . . . 25,000 25,115
--------
490,802
--------
Diversified Financial -- 1.8%
Amresco, Inc., 10% Sr. Sub. Nts., Series 97-A, 3/15/04 . . . . . . . . . . 25,000 26,250
Bakrie Investindo, Zero Coupon Promissory Nts., 17.257%,
3/16/98(9)(IDR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 850,000,000 206,777
Emergent Group, Inc., 10.75% Sr. Nts., 9/15/04(8) . . . . . . . . . . . . . 25,000 24,625
Pycsa Panama SA, 10.28% Sr. Sec. Bonds, 12/15/12(6) . . . . . . . . . . . . 255,000 237,150
</TABLE>
9
<PAGE> 11
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
----------- ---------
<S> <C> <C>
Diversified Financial (continued)
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Sec. Nts.,
Series B, 4/1/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,000 $ 26,687
Shoshone Partners Loan Trust, 7.50% Sr. Nts., 5/31/02(5)(6) . . . . . . . . 476,000 488,931
----------
1,010,420
----------
Insurance -- 0.2%
Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03 . . . . . . . . . . . . . 125,000 130,000
----------
HOUSING RELATED -- 0.4%
Building Materials -- 0.1%
Building Materials Corp. of America, 8.625% Sr. Nts., Series B,
12/15/06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 25,500
Nortek, Inc.:
9.125% Sr. Nts., 9/1/07(8) . . . . . . . . . . . . . . . . . . . . . . 20,000 20,200
9.25% Sr. Nts., Series B, 3/15/07 . . . . . . . . . . . . . . . . . . . 25,000 25,437
----------
71,137
----------
Homebuilders/Real Estate -- 0.3%
International de Ceramica SA, 9.75% Gtd. Unsec. Unsub. Nts.,
8/1/02(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000 84,600
Standard Pacific Corp., 8.50% Sr. Nts., 6/15/07 . . . . . . . . . . . . . . 50,000 50,500
----------
135,100
----------
MANUFACTURING -- 1.0%
Aerospace -- 0.1%
Amtran, Inc., 10.50% Sr. Nts., 8/1/04(8) . . . . . . . . . . . . . . . . . 25,000 25,312
----------
Automotive -- 0.3%
Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., 7/15/07(8) . . . . . . . 50,000 52,250
Collins & Aikman Products Co., 11.50% Gtd. Sr. Sub. Nts., 4/15/06 . . . . . 25,000 28,500
Hayes Wheels International, Inc., 9.125% Sr. Sub. Nts., 7/15/07 . . . . . . 25,000 25,750
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 . . . . . . . . 50,000 52,375
Oxford Automotive, Inc., 10.125% Sr. Sub. Nts., 6/15/07(8) . . . . . . . . 25,000 26,250
----------
185,125
----------
Capital Goods -- 0.6%
Burke Industries, Inc., 10% Sr. Nts., 8/15/07(8) . . . . . . . . . . . . . 25,000 26,000
Clark-Schwebel, Inc., 12.50% Debs., 7/15/07(8)(12) . . . . . . . . . . . . 45,994 50,823
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts.,
8/1/07(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 51,875
Insilco Corp., 10.25% Sr. Sub. Nts., 8/15/07(8) . . . . . . . . . . . . . . 25,000 26,250
International Wire Group, Inc., 11.75% Sr. Sub. Nts., Series B,
6/1/05(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 27,437
Mettler Toledo, Inc., 9.75% Gtd. Sr. Sub. Nts., 10/1/06 . . . . . . . . . . 100,000 113,000
</TABLE>
10
<PAGE> 12
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
----------- ---------
<S> <C> <C>
Capital Goods (continued)
Roller Bearing Co. (America), 9.625% Sr. Sub. Nts., 6/15/07(6) . . . . . . $ 25,000 $ 25,250
Titan Wheel International, Inc., 8.75% Sr. Sub. Nts., 4/1/07 . . . . . . . 25,000 26,000
---------
346,635
---------
MEDIA -- 2.0%
Broadcasting -- 0.8%
Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07 . . . . . 25,000 25,250
Chancellor Radio Broadcasting Co., 8.75% Sr. Sub. Nts., 6/15/07(8) . . . . 25,000 25,250
Conecel Holdings Ltd., Units (each unit consists of $1,000
principal amount of 14% sec. nts., 10/1/00 and one warrant to
buy class B common stock)(6)(15) . . . . . . . . . . . . . . . . . . . 135,000 136,350
Consorcio Ecuatoriano, 14% Nts., 5/1/02(6) . . . . . . . . . . . . . . . . 135,000 137,700
Jacor Communications Co., 8.75% Gtd. Sr. Sub. Nts., 6/15/07(8) . . . . . . 20,000 20,100
SFX Broadcasting, Inc., 10.75% Sr. Sub. Nts., Series B, 5/15/06 . . . . . . 50,000 54,750
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 . . . . . . . . 25,000 26,313
Spanish Broadcasting Systems, Inc., 11% Sr. Nts., 3/15/04 . . . . . . . . . 25,000 27,125
---------
452,838
---------
Cable Television -- 0.6%
Adelphia Communications Corp.:
9.25% Sr. Nts., 10/1/02(8) . . . . . . . . . . . . . . . . . . . . . . 25,000 24,875
9.875% Sr. Nts., Series B, 3/1/07 . . . . . . . . . . . . . . . . . . . 25,000 25,750
Cablevision Systems Corp., 9.875% Sr. Sub. Nts., 5/15/06 . . . . . . . . . 50,000 53,500
EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec. Disc.
Nts., 3/15/04(14) . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 19,875
FrontierVision Holdings LP, 0%/11.875% Sr. Disc. Nts., 9/15/07(8)(14) . . . 20,000 13,750
Marcus Cable Operating Co. LP/Marcus Cable Capital Corp.,
0%/13.50% Gtd. Sr. Sub. Disc. Nts., Series II, 8/1/04(14) . . . . . . . 50,000 45,250
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05 . . . . . . . . . . . . . . . 20,000 20,700
Rogers Communications, Inc.:
8.75% Sr. Nts., 7/15/07(CAD) . . . . . . . . . . . . . . . . . . . . . . 80,000 57,099
8.875% Sr. Nts., 7/15/07 . . . . . . . . . . . . . . . . . . . . . . . 25,000 24,813
TCI Satellite Entertainment, Inc., 10.875% Sr. Sub. Nts., 2/15/07(8) . . . 15,000 15,525
---------
301,137
---------
Diversified Media -- 0.4%
Hollywood Theaters, Inc., 10.625% Sr. Sub. Nts., 8/1/07(8) . . . . . . . . 25,000 26,375
ITT Promedia CVA, 9.125% Sr. Sub. Nts., 9/15/07(8)(DEM) . . . . . . . . . . 100,000 58,972
ITT Publimedia BV, 9.375% Sr. Sub. Nts., 9/15/07(8) . . . . . . . . . . . . 25,000 25,625
Katz Media Corp., 10.50% Sr. Sub. Nts., Series B, 1/15/07 . . . . . . . . . 25,000 27,563
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07(8) . . . . . . . . . . 25,000 25,250
Universal Outdoor, Inc., 9.75% Sr. Sub. Nts., 10/15/06 . . . . . . . . . . 25,000 27,875
---------
191,660
---------
</TABLE>
11
<PAGE> 13
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
----------- ---------
<S> <C> <C>
Publishing/Printing -- 0.2%
Hollinger International Publishing, Inc., 9.25% Gtd. Sr. Sub. Nts.,
3/15/07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,000 $ 51,750
Sun Media Corp., 9.50% Sr. Sub. Nts., 2/15/07 . . . . . . . . . . . . . . . 75,000 79,500
--------
131,250
--------
OTHER -- 0.6%
Conglomerates -- 0.2%
Mechala Group Jamaica Ltd., 12.75% Gtd. Sr. Sec. Sub. Nts.,
Series B, 12/30/99 . . . . . . . . . . . . . . . . . . . . . . . . . . 125,000 118,750
--------
Services -- 0.4%
Borg-Warner Security Corp., 9.625% Sr. Sub. Nts., 3/15/07 . . . . . . . . . 25,000 25,875
Coinstar, Inc., 0%/13% Sr. Disc. Nts., 10/1/06(6)(14) . . . . . . . . . . . 25,000 19,750
Energy Corp. of America, 9.50% Sr. Sub. Nts., Series A, 5/15/07 . . . . . . 25,000 25,125
Kindercare Learning Centers, Inc., 9.50% Sr. Sub. Nts., 2/15/09 . . . . . . 50,000 49,375
Protection One Alarm Monitoring, Inc., 0%/13.625% Sr. Disc. Nts.,
6/30/05(14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 106,500
--------
226,625
--------
RETAIL -- 0.5%
Specialty Retailing -- 0.4%
Central Termica Guemes, 12% Bonds, 11/26/01(6) . . . . . . . . . . . . . . 126,000 128,520
Eye Care Centers of America, Inc., 12% Sr. Nts., 10/1/03 . . . . . . . . . 20,000 21,800
Finlay Fine Jewelry Corp., 10.625% Sr. Nts., 5/1/03(6) . . . . . . . . . . 25,000 26,375
Pantry, Inc. (The), 10.25% Sr. Sub. Nts., 10/15/07(6) . . . . . . . . . . . 25,000 24,625
Specialty Retailers, Inc., 9% Gtd. Unsec. Sr. Sub. Nts., 7/15/07 . . . . . 25,000 25,500
--------
226,820
--------
Supermarkets -- 0.1%
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., 7/31/07(8) . . . . . . . . . . . 25,000 26,500
Randall's Food Markets, Inc., 9.375% Sr. Sub. Nts., 7/1/07(8) . . . . . . . 25,000 24,875
Stater Brothers Holdings, Inc., 9% Sr. Sub. Nts., 7/1/04(8) . . . . . . . . 25,000 25,188
--------
76,563
--------
TECHNOLOGY -- 2.5%
Information Technology -- 1.5%
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04(6)(14) . . . . . . . . . . . 125,000 124,375
Cellular Communications International, Inc., Zero Coupon
Sr. Disc. Nts., 12.154%, 8/15/00(9) . . . . . . . . . . . . . . . . . . 25,000 19,875
Cellular, Inc., 0%/11.75% Sr. Sub. Disc. Nts., 9/1/03(14) . . . . . . . . . 50,000 49,500
Clearnet Communications, Inc., 0%/14.75% Sr. Disc. Nts.,
12/15/05(14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 15,400
DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07(8) . . . . . . . . . . . . . 15,000 14,869
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 . . . . . . . . . . . . . . . . 25,000 25,375
</TABLE>
12
<PAGE> 14
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
----------- ---------
<S> <C> <C>
Information Technology (continued)
Globalstar LP/Globalstar Capital Corp., 11.25% Sr. Nts., 6/15/04 . . . . . $25,000 $ 24,500
Microcell Telecommunications, Inc.:
0%/11.125% Sr. Disc. Nts., 10/15/07(8)(14) (CAD) . . . . . . . . . . . . 90,000 35,451
0%/14% Sr. Disc. Nts., Series B, 6/1/06(14) . . . . . . . . . . . . . . 25,000 16,750
Millicom International Cellular SA, 0%/13.50% Sr. Disc. Nts.,
6/1/06(14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,000 34,088
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts.,
10/31/07(8)(14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 27,875
Omnipoint Corp., 11.625% Sr. Nts., Series A, 8/15/06 . . . . . . . . . . . 50,000 51,750
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(14) . . . . 50,000 37,000
Pierce Leahy Corp., 11.125% Sr. Sub. Nts., 7/15/06 . . . . . . . . . . . . 61,000 69,235
Price Communications Cellular Holdings, Inc., Units (each unit
consists of $1,000 principal amount of 0%/13.50% sr. sec. disc. nts.,
8/1/07 and 3.44 warrants to purchase one ordinary share)(8)(14)(15) . . 50,000 29,750
Sprint Spectrum LP/Sprint Spectrum Finance Corp.:
0%/12.50% Sr. Disc. Nts., 8/15/06(14) . . . . . . . . . . . . . . . . . 50,000 38,000
11% Sr. Nts., 8/15/06 . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 27,688
Teletrac, Inc., Units (each unit consists of $1,000 principal
amount of 14% sr. nts., 8/1/07 and one warrant to buy
.537495 ordinary shares)(6)(15) . . . . . . . . . . . . . . . . . . . . 25,000 25,375
Tracor, Inc., 8.50% Sr. Sub. Nts., 3/1/07 . . . . . . . . . . . . . . . . . 75,000 76,688
Unisys Corp., 11.75% Sr. Nts., 10/15/04 . . . . . . . . . . . . . . . . . . 25,000 28,375
Wavetek Corp., 10.125% Sr. Sub. Nts., 6/15/07(8) . . . . . . . . . . . . . 25,000 25,625
---------
797,544
---------
Telecommunications/Technology -- 1.0%
American Communications Services, Inc., 13.75% Sr. Nts., 7/15/07(8) . . . . 35,000 39,375
BTI Telecom Corp., 10.50% Sr. Nts., 9/15/07(8) . . . . . . . . . . . . . . 20,000 20,000
Call-Net Enterprises, Inc., 0%/9.27% Sr. Disc. Nts., 8/15/07(14) . . . . . 25,000 16,625
Colt Telecom Group plc, Units (each unit consists of $1,000
principal amount of 0%/12% sr. disc. nts., 12/15/06 and one
warrant to purchase 7.8 ordinary shares)(14)(15) . . . . . . . . . . . 25,000 18,875
Diamond Cable Communications plc, 0%/11.75% Sr. Disc. Nts.,
12/15/05(14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000 55,688
GST USA, Inc., 0%/13.875% Gtd. Sr. Sec. Disc. Nts., 12/15/05(14) . . . . . 30,000 21,450
ICG Holdings, Inc.:
0%/12.50% Gtd. Sr. Disc. Nts., 5/1/06(14). . . . . . . . . . . . . . . . 50,000 36,938
0%/13.50% Sr. Disc. Nts., 9/15/05(14) . . . . . . . . . . . . . . . . . 25,000 19,969
Intermedia Communications, Inc., 0%/11.25% Sr. Disc. Nts., 7/15/07(14) . . 25,000 16,625
IXC Communications, Inc., 12.50% Sr. Nts., Series B, 10/1/05 . . . . . . . 25,000 28,500
McLeodUSA, Inc.:
0%/10.50% Sr. Disc. Nts., 3/1/07(14) . . . . . . . . . . . . . . . . . . 25,000 17,375
9.25% Sr. Nts., 7/15/07(8) . . . . . . . . . . . . . . . . . . . . . . 25,000 25,625
</TABLE>
13
<PAGE> 15
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
----------- ---------
<S> <C> <C>
Telecommunications/Technology (continued)
MGC Communications, Inc., Units (each unit consists of $1,000
principal amount of 13% sr. sec. nts., 10/1/04 and one warrant
to purchase 8.07 shares of common stock at $0.01 per share)(8)(15). . . $ 25,000 $ 24,750
NEXTLINK Communications, Inc., 9.625% Sr. Nts., 10/1/07 . . . . . . . . . . 45,000 45,225
NTL, Inc., 10% Sr. Nts., 2/15/07 . . . . . . . . . . . . . . . . . . . . . 25,000 25,875
Qwest Communications International, Inc., 0%/9.47% Sr. Disc.
Nts., 10/15/07(8)(14) . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 32,250
Teleport Communications Group, Inc., 0%/11.125% Sr. Disc. Nts.,
7/1/07(14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000 59,156
Telewest Communications plc, 0%/11% Sr. Disc. Debs., 10/1/07(14) . . . . . 50,000 37,250
----------
541,551
----------
TRANSPORTATION -- 6.9%
Railroads -- 5.6%
Red Nacional de los Ferrocarriles Espanoles, 5.875% Gtd. Nts.,
11/19/98(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000 2,996,850
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375% Sr.
Disc. Nts., Series B, 12/15/03(14) . . . . . . . . . . . . . . . . . . 100,000 85,750
----------
3,082,600
----------
Shipping -- 0.2%
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg. Nts., 6/30/07(8) . . . . . . . . . . . 50,000 53,750
Units (each unit consists of $1,000 principal amount of 12%
second priority ship mtg. nts., 6/30/07 and one warrant)(8)(15) . . 25,000 27,625
----------
81,375
----------
Trucking -- 1.1%
Coach USA, Inc., 9.375% Gtd. Sr. Sub. Nts., 7/1/07(8) . . . . . . . . . . . 50,000 50,750
Road King Infrastructure Finance (1997) Ltd., 9.50% Gtd. Unsec.
Unsub. Bonds, 7/15/07(6) . . . . . . . . . . . . . . . . . . . . . . . 400,000 373,000
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(8) . . . . . . 246,395 203,893
----------
627,643
----------
UTILITIES -- 0.9%
Electric Utilities -- 0.5%
AES Corp., 8.375% Sr. Sub. Nts., 8/15/07 . . . . . . . . . . . . . . . . . 20,000 19,600
Calpine Corp., 10.50% Sr. Nts., 5/15/06(6) . . . . . . . . . . . . . . . . 50,000 54,250
El Paso Electric Co., 9.40% First Mtg. Bonds, Series E, 5/1/11 . . . . . . 25,000 27,750
Panda Global Energy Co., 12.50% Sr. Nts., 4/15/04(6) . . . . . . . . . . . 150,000 144,750
----------
246,350
----------
</TABLE>
14
<PAGE> 16
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
----------- ---------
<S> <C> <C>
Gas Utilities -- 0.4%
CE Casecnan Water & Energy, Inc., 11.95% Sr. Nts., Series B, 11/15/10 . . . 200,000 $ 207,500
-----------
Total Corporate Bonds and Notes (Cost $12,099,566) . . . . . . . . . . . . 11,987,384
-----------
COMMON STOCKS -- 0.1%
Air New Zealand Ltd., Cl. B . . . . . . . . . . . . . . . . . . . . . . . . 24,000 50,898
Finlay Enterprises, Inc.(16) . . . . . . . . . . . . . . . . . . . . . . . 333 6,994
Optel, Inc.(6)(16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 --
-----------
Total Common Stocks (Cost $70,764) . . . . . . . . . . . . . . . . . . . . 57,892
-----------
PREFERRED STOCKS -- 0.1%
Spanish Broadcasting Systems, Inc., 14.25% Cum. Sr.
Exchangeable Preferred Stock, Non-Vtg. (Cost $26,125)(8)(12) . . . . . . 25 26,562
-----------
OTHER SECURITIES -- 0.2%
SDW Holdings Corp., 15% Cum. Sr. Exchangeable Preferred
(Cost $129,300)(8)(16) . . . . . . . . . . . . . . . . . . . . . . . . 3,600 133,200
-----------
Units
-----------
RIGHTS, WARRANTS AND CERTIFICATES -- 0.0%
American Telecasting, Inc. Wts., Exp. 6/99(6) . . . . . . . . . . . . . . . 500 5
Capital Gaming International, Inc. Wts., Exp. 2/99(6) . . . . . . . . . . . 3,538 --
Cellular Communications International, Inc. Wts., Exp. 8/03(6) . . . . . . 100 1,700
ICG Communications, Inc. Wts., Exp. 9/05(6) . . . . . . . . . . . . . . . . 495 7,425
Microcell Telecommunications, Inc.:
Conditional Wts., Exp. 12/97(6) . . . . . . . . . . . . . . . . . . . . 100 63
Wts., Exp. 12/97(6) . . . . . . . . . . . . . . . . . . . . . . . . . . 100 1,300
Orion Network Systems, Inc. Wts., Exp. 1/07 . . . . . . . . . . . . . . . . 50 625
Protection One, Inc. Wts., Exp. 6/05(6) . . . . . . . . . . . . . . . . . . 640 8,160
Venezuela (Republic of) Oil Linked Payment Obligation
Wts., Exp. 4/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,785 --
-----------
Total Rights, Warrants and Certificates (Cost $18,030) . . . . . . . . . . 19,278
-----------
Face Amount(1)
-----------
STRUCTURED INSTRUMENTS -- 7.8%
Canadian Imperial Bank of Commerce (New York Branch)
Canadian Dollar Three Month Banker's Acceptance Linked
Maximum Rate Nts., 8.66%, 4/13/98 . . . . . . . . . . . . . . . . . . . $300,000 300,960
Canadian Imperial Bank of Commerce, U.S. Dollar Nts. Linked
to the Ministry of Finance of the Russian Federation GKO,
Zero Coupon, 9.857%, 9/17/98(9) . . . . . . . . . . . . . . . . . . . . 315,000 280,602
Credit Suisse First Boston (Cayman) Ltd., City of Moscow, Credit &
Convertibility Linked Nts., Series EM 215, Zero Coupon, 12.046%,
12/30/97(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 145,981
</TABLE>
15
<PAGE> 17
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market Value
Face Amount(1) See Note 1
----------- ---------
<S> <C> <C>
STRUCTURED INSTRUMENTS (CONTINUED)
ING (U.S.) Financial Holdings Corp.:
PT Polysindo Linked Nts., Zero Coupon, 10.426%, 7/15/98(6)(9) . . . . . $150,000 $ 134,704
U.S. Dollar Hedged GKO Pass-Through Nts., Zero Coupon,
13.088%, 12/3/97(6)(9) . . . . . . . . . . . . . . . . . . . . . . . 350,000 346,133
Merrill Lynch & Co., Inc.:
SPIRES Ltd. -- Series XXX, 10.91%, 10/11/06(4) . . . . . . . . . . . . 435,000 435,000
U.S. Dollar Nts. Linked to the Ministry of Finance of Ukraine
OVGZ's, Zero Coupon, 11.45%, 10/19/98(9) . . . . . . . . . . . . . . 640,000 555,328
Morgan Guaranty Trust Co. of New York, Japanese Government
Bond 193 Currency Protected Bank Nts., 8.14%, 4/29/98 . . . . . . . . . 10,000 6,000
Salomon, Inc.:
Colombian Peso Linked Nts., Zero Coupon, 18.174%, 8/20/98(9) . . . . . 350,000 282,800
Russian GKO Linked Nts., Zero Coupon, 9.58%, 6/11/99(9) . . . . . . . . 450,000 358,425
Russian S-Account Credit Linked Nts., Zero Coupon, 14.157%,
5/22/98(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 675,000 624,240
Standard Chartered Bank:
Indian Rupee Linked Nts.:
32.641%, 11/28/97 . . . . . . . . . . . . . . . . . . . . . . . . . 58,000 57,907
35.115%, 11/28/97 . . . . . . . . . . . . . . . . . . . . . . . . . 58,000 57,820
U.S. Dollar/Chinese Yuan Linked Nts.:
11.268%, 11/20/97 . . . . . . . . . . . . . . . . . . . . . . . . . 510,000 506,889
12.903%, 12/5/97 . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 148,110
Union Bank of Switzerland, Indian Rupee Linked Nts., 5.40%,
11/17/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000 35,364
----------
Total Structured Instruments (Cost $4,370,642) . . . . . . . . . . . . . . 4,276,263
----------
</TABLE>
<TABLE>
<CAPTION>
Date Strike Contracts
------ -------------- ---------
<S> <C> <C> <C> <C>
CALL OPTIONS PURCHASED -- 0.2%
Finnish Markka/German Mark Call Opt. . . . . . . 1/98 2.949(FIM/DEM) 1,610,000 68
German Mark Call Opt. . . . . . . . . . . . . . 12/97 19.22(CZK) 275,000 6,325
German Mark/Japanese Yen Call Opt. . . . . . . . 11/97 69.06(DEM/JPY) 1,500,000 5,256
German Mark/Japanese Yen Call Opt. . . . . . . . 11/97 71.00(DEM/JPY) 6,860,000 25,862
Norwegian Krone/German Mark Call Opt. . . . . . 1/98 4.101(NOK/DEM) 2,270,000 24,634
Russian (Government of) Principal Loans
Debs., 5.80%, 12/29/49 Call Opt. . . . . . . . 11/97 75.125% 405 202
Russian (Government of) Principal Loans
Debs., 12/29/49 Call Opt. . . . . . . . . . . 12/97 75.50% 400 200
U.S. Treasury Nts., 6.125%, 8/15/07 Call Opt. . 11/97 100.953% 1,000 14,687
U.S. Treasury Nts., 6.125%, 8/15/07 Call Opt. . 11/97 101.453% 1,000 11,563
----------
Total Call Options Purchased (Cost $85,657) . . . 88,797
----------
</TABLE>
16
<PAGE> 18
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Market Value
Date Strike Contracts See Note 1
------ -------------- --------- ---------
<S> <C> <C> <C> <C>
PUT OPTIONS PURCHASED -- 0.1%
New Zealand Dollar Put Opt. . . . . . . . . . . . 11/97 1.567(NZD) 1,710,000 $ 27,941
Standard & Poor's 500 Index Futures Put Opt. . . 12/97 $935 2 42,200
-----------
Total Put Options Purchased (Cost $42,197) . . . 70,141
-----------
</TABLE>
<TABLE>
<CAPTION>
Face Amount(1)
-----------
<S> <C> <C>
REPURCHASE AGREEMENTS -- 9.7%
Repurchase agreement with First Chicago Capital Markets,
5.69%, dated 10/31/97, to be repurchased at $5,299,512 on
11/3/97, collateralized by U.S. Treasury Nts., 5.75%--8.50%,
5/15/99--11/15/00, with a value of $5,405,702
(Cost $5,297,000). . . . . . . . . . . . . . . . . . . . . . . $5,297,000 5,297,000
-----------
Total Investments, at Value (Cost $59,000,447) . . . . . . . . . 107.9% 59,113,384
Liabilities in Excess of Other Assets . . . . . . . . . . . . . . (7.9) (4,332,464)
---------- -----------
Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% $54,780,920
========== ===========
</TABLE>
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
AUD -- Australian Dollar
CAD -- Canadian Dollar
CZK -- Czech Koruna
DEM -- German Mark
ESP -- Spanish Peseta
FIM -- Finnish Markka
GBP -- British Pound Sterling
IDR -- Indonesian Rupiah
ITL -- Italian Lira
JPY -- Japanese Yen
NOK -- Norwegian Krone
NZD -- New Zealand Dollar
SEK -- Swedish Krona
TRL -- Turkish Lira
ZAR -- South African Rand
2. A sufficient amount of securities have been designated to cover outstanding
written options, as follows:
<TABLE>
<CAPTION>
Face/Contracts Expiration Exercise Premium Market Value
Subject to Call Date Price Received See Note 1
------------- --------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C>
British Pound Sterling Call Opt. . . . . . . 365,000 12/23/97 0.602(GBP) $3,869 $10,549
British Pound Sterling Put Opt. . . . . . . 365,000 12/18/97 0.625(GBP) 4,199 1,422
British Pound Sterling Put Opt. . . . . . . 365,000 12/18/97 0.602(GBP) 4,288 11,177
British Pound Sterling Put Opt. . . . . . . 365,000 12/23/97 0.625(GBP) 3,577 986
Finnish Markka/German Mark Put Opt. . . . . . 1,610,000 1/22/98 3.00(FIM/DEM) 1,858 3,817
German Mark Put Opt. . . . . . . . . . . . . 530,000 11/6/97 1.79(DEM) 1,214 21
German Mark Put Opt. . . . . . . . . . . . . 2,300,000 11/19/97 1.80(DEM) 4,217 872
German Mark Put Opt. . . . . . . . . . . . . 1,065,000 11/20/97 1.82(DEM) 1,276 167
German Mark Put Opt. . . . . . . . . . . . . 1,070,000 11/26/97 1.85(DEM) 1,041 1,002
Japanese Yen Call Opt. . . . . . . . . . . . 73,000,000 1/5/98 115.00(JPY) 3,904 4,380
Japanese Yen Call Opt. . . . . . . . . . . . 68,600,000 11/20/97 118.00(JPY) 3,372 4,891
Japanese Yen Put Opt. . . . . . . . . . . . . 73,000,000 1/5/98 125.00(JPY) 6,366 2,993
Japanese Yen Put Opt. . . . . . . . . . . . . 68,600,000 11/20/97 123.00(JPY) 1,952 2,360
</TABLE>
17
<PAGE> 19
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer World Bond Fund
2. Outstanding written options (continued)
<TABLE>
<CAPTION>
Expiration Exercise Premium Market Value
Face/Contracts Date Price Received See Note 1
------------- --------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C>
Japanese Yen Put Opt. . . . . . . . . . . . . . . . 73,010,000 11/26/97 125.00(JPY) $ 2,044 $ 1,227
Japanese Yen Put Opt. . . . . . . . . . . . . . . . 72,520,000 12/11/97 115.00(JPY) 3,153 3,466
Japanese Yen Put Opt. . . . . . . . . . . . . . . . 72,520,000 12/11/97 123.00(JPY) 4,717 4,670
New Zealand Dollar Call Opt. . . . . . . . . . . . 1,710,000 11/20/97 1.558(NZD) 7,191 1,334
Norwegian Krone/German Mark Put Opt. . . . . . . . 2,270,000 1/23/98 4.18(NOK/DEM) 3,694 6,030
United Mexican States Collateralized Fixed
Rate Par Bonds, Series A, 6.25%, 12/31/19 Put Opt. 175 11/28/97 75.00% 15,750 11,200
------- -------
$77,679 $72,564
======= =======
</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 October 31, 1997.
5. Represents the current interest rate for a variable rate security.
6. Identifies issues considered to be illiquid or restricted -- See Note 8 of
Notes to Financial Statements.
7. A sufficient amount of securities has been designated to cover outstanding
forward foreign currency exchange contracts. See Note 5 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 $2,595,326 or 4.74% of the Fund's
net assets, at October 31, 1997.
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 $388,763 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. Interest or dividend is paid in kind.
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. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, face amount disclosed represents total underlying
principal.
16. Non-income producing security.
17. A sufficient amount of securities has been designated to cover outstanding
interest rate swap transactions. See Note 9 of Notes to Financial
Statements.
See accompanying Notes to Financial Statements.
18
<PAGE> 20
STATEMENT OF INVESTMENTS (Continued)
Oppenheimer World Bond Fund
Distribution of investments by country of issue, as a percentage of total
investments at value, is as follows:
<TABLE>
<CAPTION>
Industry Market Value Percent
----- ------------ -------
<S> <C> <C>
United States ......................................................... $29,193,849 49.3%
Spain ................................................................. 3,622,882 6.1
Germany ............................................................... 3,320,718 5.6
Russia ................................................................ 2,236,896 3.8
Great Britain ......................................................... 1,815,882 3.1
New Zealand ........................................................... 1,482,356 2.5
Italy ................................................................. 1,414,299 2.4
Turkey ................................................................ 1,298,343 2.2
South Africa .......................................................... 1,283,241 2.2
Canada ................................................................ 1,219,133 2.1
Argentina ............................................................. 1,205,704 2.0
Indonesia ............................................................. 1,088,620 1.8
Australia ............................................................. 1,052,574 1.8
Colombia .............................................................. 949,892 1.6
Sweden ................................................................ 941,662 1.6
China ................................................................. 799,749 1.4
Mexico ................................................................ 655,188 1.1
Jordan ................................................................ 620,625 1.1
Other ................................................................. 4,911,771 8.3
----------- -----
Total ................................................................. $59,113,384 100.0%
=========== =====
</TABLE>
See accompanying Notes to Financial Statements.
19
<PAGE> 21
STATEMENT OF ASSETS AND LIABILITIES October 31, 1997
Oppenheimer World Bond Fund
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $59,000,447)--see accompanying statement ........................ $59,113,384
Cash ........................................................................................ 887,563
Unrealized appreciation on forward foreign currency exchange contracts -- Note 5 ............ 93,002
Receivables:
Investments sold .......................................................................... 4,498,209
Closed forward foreign currency exchange contracts ........................................ 2,325,036
Interest, dividends and principal paydowns ................................................ 921,464
Daily variation on futures contracts -- Note 6 ............................................ 15,330
Other ....................................................................................... 2,617
-----------
Total assets ............................................................................ 67,856,605
-----------
LIABILITIES:
Unrealized depreciation on forward foreign currency exchange contracts -- Note 5 ............ 117,592
Options written, at value (premiums received $77,679) -- see accompanying statement -- Note 7 72,564
Open interest rate swap transactions at market value -- Note 9 .............................. 7,560
Payables and other liabilities:
Investments purchased (including $4,448,993 purchased on a when-issued
basis) -- Note 1 ........................................................................ 10,355,155
Closed forward foreign currency exchange contracts ........................................ 2,395,080
Trustees' fees -- Note 1 .................................................................. 43,469
Management and administrative fees ........................................................ 23,554
Daily variation on futures contracts -- Note 6 ............................................ 4,165
Other ....................................................................................... 56,546
-----------
Total liabilities ....................................................................... 13,075,685
-----------
NET ASSETS .................................................................................. $54,780,920
-----------
COMPOSITION OF NET ASSETS:
Par value of shares of beneficial interest .................................................. $66,155
Additional paid-in capital .................................................................. 59,674,068
Undistributed net investment income ......................................................... 82,750
Accumulated net realized loss on investments and foreign currency transactions .............. (5,105,071)
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies ......................................................... 63,018
-----------
NET ASSETS -- applicable to 6,615,505 shares of beneficial interest outstanding ............. $54,780,920
===========
NET ASSET VALUE PER SHARE ................................................................... $8.28
=====
</TABLE>
See accompanying Notes to Financial Statements.
20
<PAGE> 22
STATEMENT OF OPERATIONS For the Year Ended October 31, 1997
Oppenheimer World Bond Fund
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest (net of foreign withholding taxes of $24,070) . . . . . . . . . . . . . . . . . $5,438,948
Dividends (net of foreign withholding taxes of $601) . . . . . . . . . . . . . . . . . . 3,465
----------
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,442,413
----------
EXPENSES:
Management fees -- Note 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359,532
Administrative fees -- Note 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,613
Custodian fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,702
Shareholder reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,947
Transfer agent and accounting services fees -- Note 4 . . . . . . . . . . . . . . . . . . 33,011
Legal and auditing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,915
Registration and filing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,950
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,686
----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 663,356
Less expenses paid indirectly--Note 4 . . . . . . . . . . . . . . . . . . . . . . . . . . (8,303)
----------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 655,053
----------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,787,360
----------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,825,394
Closing of futures contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (185,198)
Closing and expiration of options written . . . . . . . . . . . . . . . . . . . . . . . (72,879)
Foreign currency transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (481,386)
----------
Net realized gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,085,931
----------
Net change in unrealized appreciation or depreciation on:
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,415,140)
Translation of assets and liabilities denominated in foreign currencies . . . . . . . . (194,026)
----------
Net change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,609,166)
----------
NET REALIZED AND UNREALIZED LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . (523,235)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . $4,264,125
==========
</TABLE>
See accompanying Notes to Financial Statements.
21
<PAGE> 23
STATEMENTS OF CHANGES IN NET ASSETS
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Year Ended October 31,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income ................................................... $ 4,787,360 $ 4,817,348
Net realized gain ....................................................... 1,085,931 1,174,051
Net change in unrealized appreciation or depreciation ................... (1,609,166) 1,076,747
------------ ------------
Net increase in net assets resulting from operations ................ 4,264,125 7,068,146
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM
NET INVESTMENT INCOME ................................................... (4,445,641) (4,445,589)
------------ ------------
NET ASSETS:
Total increase (decrease) ............................................... (181,516) 2,622,557
Beginning of period ..................................................... 54,962,436 52,339,879
------------ ------------
End of period (including undistributed net investment
income of $82,750 and $523,824, respectively) ......................... $ 54,780,920 $ 54,962,436
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
22
<PAGE> 24
FINANCIAL HIGHLIGHTS
Oppenheimer World Bond Fund
<TABLE>
<CAPTION>
Year Ended October 31,
-------------------------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period ................ $8.31 $7.91 $7.93 $8.54 $8.55
----- ----- ----- ----- -----
Income (loss) from investment operations:
Net investment income ............................. .72 .73 .71 .69 .82
Net realized and unrealized gain (loss) ........... (.08) .34 (.05) (.61) --
----- ----- ----- ----- -----
Total income from investment operations ......... .64 1.07 .66 .08 .82
----- ----- ----- ----- -----
Dividends and distributions to shareholders:
Dividends from net investment income .............. (.67) (.67) (.68) (.68) (.75)
Tax return of capital distribution ................ -- -- -- (.01) (.08)
----- ----- ----- ----- -----
Total dividends and distributions to shareholders (.67) (.67) (.68) (.69) (.83)
----- ----- ----- ----- -----
Net asset value, end of period ...................... $8.28 $8.31 $7.91 $7.93 $8.54
===== ===== ===== ===== =====
Market value, end of period ......................... $8.06 $7.50 $7.00 $7.00 $8.00
TOTAL RETURN, AT MARKET VALUE(1) 16.42% 16.40% 9.09% (4.84)% 2.22%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) ............ $54,781 $54,962 $52,340 $52,439 $56,526
Average net assets (in thousands) ................... $55,339 $53,309 $51,207 $54,380 $55,877
Ratios to average net assets:
Net investment income ............................. 8.65% 9.04% 9.20% 8.90% 9.59%
Expenses(2) ....................................... 1.20% 1.28% 1.24% 1.24% 1.22%
Portfolio turnover rate(3) .......................... 289.2% 260.8% 344.2% 315.5% 112.5%
</TABLE>
(1) Assumes a hypothetical purchase at the current market price on the business
day before the first day of the fiscal period, with all dividends and
distributions reinvested in additional shares on the reinvestment date, and
a sale at the current market price on the last business day of the period.
Total return does not reflect sales charges or brokerage commissions.
(2) Beginning in fiscal 1997, the expense ratio reflects the effect of expenses
paid indirectly by the Fund. Prior year expense ratios have not been
adjusted.
(3) 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
October 31, 1997 were $144,978,367 and $142,251,536, 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.
23
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS
Oppenheimer World Bond Fund
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer World Bond Fund (the Fund) is registered under the Investment
Company Act of 1940, as amended, as a diversified, closed-end management
investment company. The Fund's investment objective is to seek high current
income consistent with preservation of capital through investments in debt
securities. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). The following is a summary of significant accounting policies
consistently followed by the Fund.
Investment Valuation -- Portfolio securities are valued at the close of the New
York Stock Exchange on the last day of each week on which day the New York Stock
Exchange is open. Listed and unlisted securities for which such information is
regularly reported are valued at the last sale price of the day or, in the
absence of sales, at values based on the closing bid or the last sale price on
the prior trading day. Long-term and short-term "non-money market" debt
securities are valued by a portfolio pricing service approved by the Board of
Trustees. Such securities which cannot be valued by 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.
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 year ended October 31, 1997, the
market value of these securities comprised an average of 9% of the Fund's net
assets, and resulted in realized and unrealized losses of $573,017.
Securities Purchased on a When-Issued Basis -- Delivery and payment for
securities that have been purchased by the Fund on a forward commitment or
when-issued basis can take place a month or more after the transaction date.
During this period, such securities do not earn interest, are subject to market
fluctuation and may increase or decrease in value prior to their delivery. The
Fund maintains, in a segregated account with its custodian, assets with a market
value equal to the amount of its purchase commitments. The purchase of
securities on a when-issued or forward commitment basis may increase the
volatility of the Fund's net asset value to the extent the Fund makes such
purchases while remaining substantially fully invested. As of October 31, 1997,
the Fund had entered into outstanding when-issued or forward commitments of
$4,448,993.
24
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer World Bond Fund
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.
Foreign Currency Translation -- The accounting records of the Fund are
maintained in U.S. dollars. Prices of securities denominated in foreign
currencies are translated into U.S. dollars at the closing rates of exchange.
Amounts related to the purchase and sale of securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions. The effect of changes in foreign currency exchange rates on
investments is separately identified from the fluctuations arising from changes
in market values of securities held and reported with all other foreign currency
gains and losses in the Fund's Statement of Operations.
Repurchase Agreements -- The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
Federal Taxes -- The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. At October 31, 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 year ended
October 31, 1997, a provision of $384 was made for the Fund's projected benefit
obligations and payments of $1,509 were made to retired trustees, resulting in
an accumulated liability of $40,578 at October 31, 1997.
Distributions to Shareholders -- The Fund intends to declare and pay dividends
from net investment income monthly. Distributions from net realized gains on
investments, if any, will be made at least once each year.
Classification of Distributions to Shareholders -- Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
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
25
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer World Bond Fund
year from net investment income or net realized gains may differ from their
ultimate characterization for federal income tax purposes. Also, due to timing
of dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gain was recorded by the Fund.
The Fund adjusts the classification of distributions to shareholders to reflect
the differences between financial statement amounts and distributions determined
in accordance with income tax regulations. Accordingly, during the year ended
October 31, 1997, amounts have been reclassified to reflect a decrease in
accumulated net realized loss on investments of $892,777, a decrease in
undistributed net investment income of $782,793, and a decrease in additional
paid-in capital of $109,984.
Other -- Investment transactions are accounted for on the date the investments
are purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the life of
the respective securities, in accordance with federal income tax requirements.
Realized gains and losses on investments and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the same basis
used for federal income tax purposes. Dividends in kind are recognized as income
on the ex-dividend date, at the current market value of the underlying security.
Interest on payment-in-kind debt instruments is accrued as income at the coupon
rate and a market adjustment is made periodically.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $.01 par value shares of
beneficial interest. There were no transactions in shares of beneficial interest
for the years ended October 31, 1997 and 1996.
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At October 31, 1997 net unrealized appreciation on investments and written
options of $118,052 was composed of gross appreciation of $1,304,632, and gross
depreciation of $1,186,580.
4. MANAGEMENT AND ADMINISTRATIVE FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for an annual fee of 0.65% on
the Fund's average annual net assets.
Mitchell Hutchins Asset Management Inc. serves as the Fund's Administrator. The
Fund pays the Administrator an annual fee of 0.20% of the Fund's average annual
net assets.
The Manager acts as the accounting agent for the Fund at an annual fee of
$18,000, plus out-of-pocket costs and expenses reasonably incurred.
Shareholder Financial Services, Inc. (SFSI), a wholly-owned subsidiary of the
Manager, is the transfer agent and registrar for the Fund. Fees paid to SFSI
are based on the number of accounts and the number of shareholder transactions,
plus out-of-pocket costs and expenses.
26
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer World Bond Fund
Expenses paid indirectly represent a reduction of custodian fees for earnings on
cash balances maintained at the custodian bank by the Fund.
5. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future date, at a negotiated rate.
The Fund uses forward contracts to manage foreign currency risks. They may also
be used to tactically shift portfolio currency risk. The Fund generally enters
into forward contracts as a hedge upon the purchase or sale of a security
denominated in a foreign currency. In addition, the Fund may enter into such
contracts as a hedge against changes in foreign currency exchange rates on
portfolio positions.
Forward contracts are valued based on the closing prices of the forward currency
contract rates in the London foreign exchange markets on a daily basis as
provided by a reliable bank or dealer. The Fund will realize a gain or loss upon
the closing or settlement of the forward transaction.
Securities held in segregated accounts to cover net exposure on outstanding
forward contracts are noted in the Statement of Investments where applicable.
Unrealized appreciation or depreciation on forward contracts is reported in the
Statement of Assets and Liabilities. Realized gains and losses are reported with
all other foreign currency gains and losses in the Fund's Statement of
Operations.
Risks include the potential inability of the counterparty to meet the terms of
the contract and unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
At October 31, 1997, the Fund had outstanding forward contracts as follows:
<TABLE>
<CAPTION>
Contract
Expiration Amount Valuation as of Unrealized Unrealized
Dates (000s) October 31, 1997 Appreciation Depreciation
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Contracts to Purchase
- ---------------------
German Mark (DEM) ............................ 11/4/97-11/28/97 1,824 DEM $1,059,970 $14,977 $ 133
Italian Lira (ITL) ........................... 1/6/98 521,884 ITL 308,005 6,944 --
Portuguese Escudo (PTE) ...................... 12/17/97 116,707 PTE 661,552 13,723 --
Spanish Peseta (ESP) ......................... 12/17/97 97,001 ESP 665,351 17,522 --
------- --------
53,166 133
------- --------
Contracts to Sell
- -----------------
Australian Dollar (AUD) ...................... 1/29/98 880 AUD 618,288 -- 12,584
British Pound Sterling (GBP) ................. 11/28/97 275 GBP 460,866 -- 13,989
German Mark (DEM) ............................ 12/19/97 100 DEM 58,184 -- 2,082
Indonesian Rupiah (IDR) ...................... 2/10/98 1,642,500 IDR 437,498 2,532 --
Japanese Yen (JPY) ........................... 11/12/97 6,100 JPY 50,836 963 --
New Zealand Dollar (NZD) ..................... 11/28/97 650 NZD 404,558 14,229 --
South African Rand (ZAR) ..................... 12/29/97 5,724 ZAR 1,167,848 22,112 --
Swiss Franc (CHF) ............................ 12/17/97-1/16/98 2,765 CHF 1,988,063 -- 88,804
------- --------
39,836 117,459
------- --------
Total Unrealized Appreciation and Depreciation ................................................ $93,002 $117,592
======= ========
</TABLE>
27
<PAGE> 29
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer World Bond Fund
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 in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
Securities held in collateralized accounts to cover initial margin requirements
on open futures contracts are noted in the Statement of Investments. The
Statement of Assets and Liabilities reflects a receivable 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 October 31, 1997, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Valuation
Number as of Unrealized
Expiration of Futures October 31, Appreciation
Date Contracts 1997 (Depreciation)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Contracts to Purchase
- ---------------------
Nikkei 225 .................. 12/97 2 $273,717 $(23,780)
U.S. Treasury Bonds, 30 yr .. 12/97 44 5,212,625 70,938
U.S. Treasury Nts., 10 yr ... 12/97 4 447,000 11,375
--------
58,533
--------
Contracts to Sell
- -----------------
Hang Seng Index ............. 11/97 4 274,015 (13,059)
Nikkei 225 .................. 12/97 4 328,000 11,300
U.S. Treasury Nts., 2 yr .... 12/97 4 415,750 (2,906)
U.S. Treasury Nts., 5 yr .... 12/97 48 5,203,500 (85,500)
--------
(90,165)
--------
$(31,632)
========
</TABLE>
28
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer World Bond Fund
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 year ended October 31, 1997 was as follows:
<TABLE>
<CAPTION>
Call Options Put Options
----------------------------- -----------------------------
Number Amount Number Amount
of of of of
Options Premiums Options Premiums
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at October 31, 1996 ... 2,987,100 $ 31,287 -- $ --
Options written ........................... 246,935,296 386,760 417,367,263 237,990
Options closed or expired ................. (30,612,016) (354,360) (116,766,978) (164,324)
Options exercised ......................... (2,750,380) (37,911) (3,895,110) (21,763)
------------ --------- ------------ ---------
Options outstanding at October 31, 1997 ... 216,560,000 $ 25,776 296,705,175 $ 51,903
============ ========= ============ =========
</TABLE>
29
<PAGE> 31
NOTES TO FINANCIAL STATEMENTS (Continued)
Oppenheimer World Bond Fund
8. ILLIQUID AND RESTRICTED SECURITIES
At October 31, 1997, 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 October 31, 1997 was $4,901,847, which represents
8.95% of the Fund's net assets.
9. INTEREST RATE SWAP TRANSACTIONS
The Fund may enter into an interest rate swap transaction to seek to maintain a
total return or yield spread on a particular investment or portion of its
portfolio, or for other non-speculative purposes. Interest rate swaps involve
the exchange of commitments to pay or receive interest, e.g., an exchange of
floating rate payments for fixed rate payments. The coupon payments are based on
an agreed upon principal amount and a specified index. Because the principal
amount is not exchanged, it represents neither an asset nor a liability to
either counterparty, and is referred to as a notional principal amount. The Fund
records an increase or decrease to interest income, the amount due or owed by
the Fund at termination or settlement. The Fund enters into swaps only on
securities it owns. Interest rate swaps are subject to credit risks (if the
other party fails to meet its obligations) and also to interest rate risks. The
Fund could be obligated to pay more under its swap agreements than it receives
under them, as a result of interest rate changes. The Fund segregates liquid
assets to cover any amounts it could owe under swaps that exceed the amounts it
is entitled to receive.
As of October 31, 1997, the Fund had entered into the following interest rate
swap agreements:
<TABLE>
<CAPTION>
Swap Notional Rate Paid by the Floating Rate Received Floating Termination Net
Counterparty Principal Fund at 10/31/97 by the Fund at 10/31/97 Rate Index Date Unrealized Loss
- ------------ --------- ---------------- ----------------------- ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Morgan $1,920,000 7.65% 7.287% Three- 3/8/01 $7,560
Guaranty month
Trust Co. New Zealand
of New York Dollar Bank
Bills
</TABLE>
10. OTHER MATTERS
On October 9, 1997, the Board of Trustees of Oppenheimer World Bond Fund
approved the conversion of the Fund to an open-end fund, subject to shareholder
approval. If approved by shareholders, the conversion would occur during the
first quarter of calendar 1998.
30
<PAGE> 32
INDEPENDENT AUDITORS' REPORT
Oppenheimer World Bond Fund
The Board of Trustees and Shareholders of
Oppenheimer World Bond Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer World Bond Fund as of October 31, 1997, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the years in the two-year period then ended
and the financial highlights for each of the years in the five-year period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997, by correspondence with the custodian and brokers; and where
confirmations were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Oppenheimer World Bond Fund as of October 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Denver, Colorado
November 21, 1997
31
<PAGE> 33
FEDERAL INCOME TAX INFORMATION (Unaudited)
Oppenheimer World Bond Fund
In early 1998 shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1997. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because
of the complexity of the federal regulations which may affect your individual
tax return and the many variations in state and local tax regulations, we
recommend that you consult your tax advisor for specific guidance.
32
<PAGE> 34
SHAREHOLDER MEETING (Unaudited)
On May 5, 1997, an annual shareholder meeting was held at which the three
Trustees identified below were elected, the selection of KPMG Peat Marwick LLP
as the independent certified public accountants and auditors of the Fund for the
fiscal year beginning November 1, 1996 was ratified (Proposal No. 1) and the
Investment Advisory Agreement between the Fund and OppenheimerFunds, Inc. was
approved (Proposal No. 2) 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 Non-Votes Total
- ---------------- --------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C>
Trustees
Leon Levy .............. 5,257,990 17,829 1,069,981 5,275,819
Bridget A. Macaskill ... 5,261,308 14,511 1,069,981 5,275,819
Clayton K. Yeutter ..... 5,256,990 18,829 1,069,981 5,275,819
Proposal No. 1 ......... 5,236,797 14,613 24,409 1,069,981 5,275,819
Proposal No. 2 ......... 5,211,615 31,043 33,161 1,069,981 5,275,819
</TABLE>
33
<PAGE> 35
OPPENHEIMER WORLD BOND FUND
GENERAL INFORMATION CONCERNING THE FUND
Oppenheimer World Bond Fund (the Fund) is a closed-end diversified management
investment company with a primary investment objective of seeking high current
income consistent with preservation of capital. The Fund's secondary investment
objective is capital appreciation. In seeking its objectives, as a
non-fundamental policy, the Fund will invest at least 65% of its total assets in
debt instruments issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or by foreign governments, their political subdivisions,
agencies or instrumentalities, including supranational entities. Additionally,
as a non-fundamental policy, the Fund will invest at least 50% of its net assets
in foreign securities.
The Fund may also invest in certain other securities, including fixed-income
securities of domestic and foreign corporations certain of which could be
high-yield, "lower-grade" debt instruments, and participation interests, and may
invest in a number of different kinds of "derivative investments." The Fund may
engage in certain special investment techniques, including repurchase
transactions, when-issued and delayed delivery transactions and hedging. The
investment advisor to the Fund is OppenheimerFunds, Inc. (the Manager).
Portfolio Managers of the Fund are Thomas P. Reedy and Ashwin K. Vasan, who also
serve as Vice Presidents of the Fund and of the Manager, and are officers of
certain mutual funds managed by the Manager. Messrs. Reedy and Vasan have been
the persons principally responsible for the day-to-day management of the Fund's
portfolio since June 1993. Prior to that, Mr. Reedy served as a securities
analyst for the Manager and Mr. Vasan served as a securities analyst for
Citibank, N.A.
Dividend Reinvestment and Cash Purchase Plan -- Pursuant to the Fund's Dividend
Reinvestment and Cash Purchase Plan (the Plan), as to shares of the Fund
(Shares) not registered in nominee name, all dividends and capital gains
distributions (Distributions) declared by the Fund will be automatically
reinvested in additional full and fractional Shares unless a shareholder elects
to receive cash. If Shares are registered in nominee name, the shareholder
should consult the nominee if the shareholder desires to participate in the
Plan. Shareholders that participate in the Plan (Participants) may, at their
option, make additional cash investments in Shares, semi-annually in amounts of
at least $100, through payment to Shareholder Financial Services, Inc., the
agent for the Plan (the Agent), accompanied by a service fee of $0.75.
Depending upon the circumstances hereinafter described, Plan Shares will be
acquired by the Agent for the Participant's account through receipt of newly
issued Shares or the purchase of outstanding Shares on the open market. If the
market price of Shares on the relevant date (normally the payment date) equals
or exceeds their net asset value, the Agent will ask the Fund for payment of the
Distribution in additional Shares at the greater of the Fund's net asset value
determined as of the date of purchase or 95% of the then-current market price.
If the market price is lower than net asset value, the Distribution will be paid
in cash, which the Agent will use to buy Shares on The New York Stock Exchange
(the NYSE), or otherwise on the open market to the extent available. If the
market price exceeds the net asset value before the Agent has completed its
purchases, the average purchase price per Share paid by the Agent may exceed the
net asset value, resulting in fewer Shares being acquired than if the
Distribution had been paid in Shares issued by the Fund.
34
<PAGE> 36
OPPENHEIMER WORLD BOND FUND
Participants may elect to withdraw from the Plan at any time and thereby receive
cash in lieu of Shares by sending appropriate written instructions to the Agent.
Elections received by the Agent will be effective only if received more than ten
days prior to the record date for any Distribution; otherwise, such termination
will be effective shortly after the investment of such Distribution with respect
to any subsequent Distribution. Upon withdrawal from or termination of the Plan,
all Shares acquired under the Plan will remain in the Participant's account
unless otherwise requested. For full Shares, the Participant may either: (1)
receive without charge a share certificate for such Shares; or (2) request the
Agent (after receipt by the Agent of signature guaranteed instructions by all
registered owners) to sell the Shares acquired under the Plan and remit the
proceeds less any brokerage commissions and a $2.50 service fee. Fractional
Shares may either remain in the Participant's account or be reduced to cash by
the Agent at the current market price with the proceeds remitted to the
Participant.
Shareholders who have previously withdrawn from the Plan may rejoin at any time
by sending written instructions signed by all registered owners to the Agent.
There is no direct charge for participation in the Plan; all fees of the Agent
are paid by the Fund. There are no brokerage charges for Shares issued directly
by the Fund. However, each Participant will pay a pro rata share of brokerage
commissions incurred with respect to open market purchases of Shares to be
issued under the Plan. Participants will receive tax information annually for
their personal records and to assist in federal income tax return preparation.
The automatic reinvestment of Distributions does not relieve Participants of any
income tax that may be payable to Distributions.
The Plan may be terminated or amended at any time upon 30 days' prior written
notice to Participants which, with respect to a Plan termination, must precede
the record date of any Distribution by the Fund. Additional information
concerning the Plan may be obtained by shareholders holding Shares registered
directly in their names by writing the Agent, Shareholder Financial Services,
Inc., P.O. Box 173673, Denver, CO 80217-3673 or by calling 1-800-647-7374.
Shareholders holding Shares in nominee name should contact their brokerage firm
or other nominee for more information.
Shareholder Information -- The Shares are traded on the NYSE. Daily market
prices for the Fund's shares are published in the New York Stock Exchange
Composite Transaction section of newspapers under the designation "OppenWrld
Bnd" The Fund's NYSE trading symbol is OWB. Weekly net asset value (NAV) and
market price information about the Fund is published each Monday in The Wall
Street Journal and each Sunday in The New York Times and each Saturday in
Barron's, and other newspapers in a table called "Closed-End Bond Funds."
35
<PAGE> 37
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
Thomas P. Reedy, Vice President
Ashwin K. Vasan, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
Investment Advisor
OppenheimerFunds, Inc.
Administrator
Mitchell Hutchins Asset Management Inc.
Transfer Agent and Registrar
Shareholder Financial Services, Inc.
Custodian of Portfolio Securities
The Bank of New York
Independent Auditors
KPMG Peat Marwick LLP
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
This is a copy of a report to shareholders of Oppenheimer
World Bond Fund. It does not offer for sale or solicit orders
to buy any securities.
Notice is hereby given in accordance with Section 23(c)
of the Investment Company Act of 1940 that periodically
the Fund may purchase its shares of beneficial interest in
the open market at prevailing market prices.
Shares of Oppenheimer funds are not deposits or obligations
of any bank, are not guaranteed by any bank, and are not
insured by the FDIC or any other agency, and involve investment
risks, including possible loss of the principal amount invested.
RA0675.001.1097 Printed on recycled paper
