<PAGE>
------------------------------
Annual Report October 31, 1998
------------------------------
OPPENHEIMER
World
Bond Fund
[GRAPHIC]
[LOGO]
OppenheimerFunds(R)
THE RIGHT WAY TO INVEST
<PAGE>
Contents
3 President's Letter
4 An Interview with Your Fund's Manager
8 Fund Performance
- --------------------------------------------------------------------------------
13 Financial Statements
40 Independent Auditors' Report
- --------------------------------------------------------------------------------
41 Federal Income Tax Information
42 Officers and Trustees
44 Information and Services
Report highlights
- --------------------------------------------------------------------------------
.. The global financial crisis has generally hurt all but the most creditworthy
fixed income investments.
.. The Fund increased its cash reserves and restructured its emerging markets
portfolio to emphasize financially strong nations.
.. Careful research has led us to attractive values in what we believe are
fundamentally sound investments throughout the world.
Avg Annual Total Returns
For the 1-Year Period
Ended 10/31/98
Class A
Without With
Sales Chg.(1) Sales Chg.(2)
- ---------------------------
- -3.25% -7.85%
- ---------------------------
Cumulative Total Returns
For the Period from 4/27/98
to 10/31/98
Class B
Without With
Sales Chg.(1) Sales Chg.(2)
- ---------------------------
- -5.93% -10.44%
- ---------------------------
Class C
Without With
Sales Chg.(1) Sales Chg.(2)
- ---------------------------
- -6.09% -6.99%
- ---------------------------
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
In reviewing performance and rankings, please remember that past performance
does not guarantee future results. Investment return and principal value of an
investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original cost. Because of ongoing
market volatility, the Fund's performance may be subject to substantial
short-term changes. For updates on the Fund's performance, please contact your
financial advisor, call us at 1-800-525-7048 or visit our website,
www.oppenheimerfunds.com. As an open-end fund, the Fund now offers Class B and C
shares, however these share classes have only been available for purchase since
4/27/98.
1. Includes changes in net asset value per share without deducting any sales
charges.
2. Class A return includes the current maximum initial sales charge of 4.75%.
Class B return includes the applicable contingent deferred sales charge of 5%.
Class C return includes the applicable contingent deferred sales charge of 1%.
An explanation of the different performance calculations is in the Fund's
prospectus.
2 Oppenheimer World Bond Fund
<PAGE>
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
World Bond Fund
Dear shareholder,
- --------------------------------------------------------------------------------
In retrospect, 1998 has been an unsettling year for the financial markets.
Around the world, stock and bond markets experienced considerable instability,
with particular tumult being felt in Southeast Asia, Russia and Latin America.
The U.S. stock market was not immune from the extreme volatility, as it climbed
to record levels through July before correcting sharply in the third quarter and
rebounding to new highs in the fourth quarter. In the bond market, yields on
U.S. Treasury securities declined to record lows before rising modestly late in
the year.
Does the swift recovery of the U.S. stock market and the favorable
economic environment for the bond market mean that domestic stocks and bonds
will continue to prosper? We are optimistic over the long term, but we do expect
that concerns about corporate earnings growth in a slow-growth economy will
contribute to more stock market volatility in 1999. In the bond market, the
Federal Reserve Board's decisions to reduce short-term interest rates should
help create a positive climate for fixed-income securities. While lower interest
rates are generally good for bond prices, it will become more difficult for bond
funds to maintain their dividends at current levels if yields decline further.
As an Oppenheimer fund shareholder, you may wonder how this potential
volatility will affect you. If you maintain a long-term perspective, as we do,
short-term volatility over the coming months should have little bearing on your
ability to achieve your future financial goals. That's why we continue to
suggest that you adhere to your long-term investment plan. In fact, we are very
encouraged that most of our shareholders stayed the course during last summer's
stock market correction, avoiding the temptation of selling into a temporarily
declining market.
Finally, I would like to thank those shareholders who contacted us about
our revised account statement. Response has been very positive, and we are
pleased that many of you find the new format easier to read and more
informative. If you have any questions about the new statement or any other
matter, please don't hesitate to call us at 1-800-525-7048. In the meantime,
thank you for choosing OppenheimerFunds, The Right Way to Invest.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
November 20, 1998
3 Oppenheimer World Bond Fund
<PAGE>
"We have
restructured our
emerging markets
portfolio,
emphasizing
nations that we
believe have the
financial strength
to withstand
the current
credit crunch."
An interview with your Fund's manager
- --------------------------------------------------------------------------------
How did the Fund perform over the 12-month period that ended October 31, 1998?
The past twelve-month period has been an extremely difficult environment for
virtually all securities, including U.S. stocks and bonds. Fixed income
securities from the emerging markets were especially hard-hit when the global
financial crisis spread from Asia to Latin America and Eastern Europe. Because
the Fund's portfolio includes emerging markets securities, its net asset value
was hurt by these events. On the other hand, the Fund's holdings of U.S.
Treasury securities performed well, partially offsetting the weakness in
emerging market bonds.
Why have the global financial markets experienced such turmoil?
The world is facing a currency and banking crisis that began in Southeast Asia
in 1997. Faced with slowing economic growth at home and competitive pressures
overseas, Asian countries were forced to devalue their currencies. In response,
investors pulled their money out of the region, creating a scarcity of capital
for loans and other forms of financing. This forced "de-leveraging" of Asia's
banking system caused many Asian financial institutions and companies to fail.
In mid-1998, the credit crunch spread from Asia to Russia, and is now
threatening Latin America. When it became clearer that economic weakness in Asia
would likely affect economies in other areas of the world, many investors
reacted dramatically and decisively by selling investments that they perceived
as risky, regardless of the fundamental strengths of individual markets and
issuers. These suddenly risk-averse investors generally avoided all investments
except those considered the most creditworthy in the world. Even AAA-rated
bonds, such as U.S.
4 Oppenheimer World Bond Fund
<PAGE>
[PHOTO]
Portfolio Management
Team (l to r)
Art Steinmetz
David Negri
Ashwin Vasan
(Portfolio Manager)
government agency securities and high-quality corporate bonds were punished in
this "flight to quality." In fact, only the direct obligations of Germany, Japan
and the United States escaped virtually unscathed.
How have you managed the Fund in this difficult environment?
We have restructured our emerging markets portfolio, emphasizing nations that we
believe have the financial strength to withstand the current credit crunch.
Countries such as Korea, Thailand, the Philippines, Jordan, Morocco and Poland
are generally fiscally sound, and have little need to borrow. In contrast,
nations such as Brazil, Argentina, Mexico, Venezuela and Indonesia are highly
leveraged, requiring access to credit to operate their economies.
In addition, we have increasingly focused on emerging market bonds that
are denominated in U.S. dollars rather than local currencies. Dollar-denominated
bonds have been particularly hard hit recently, and we have found very
attractive values in fundamentally creditworthy investments. Accordingly, we
expect these bonds to provide attractive returns when the current instability
ends.
Have you also made changes to the Fund's investments in the developed markets?
Yes, we reviewed our entire portfolio because the global credit crunch has
affected even highly developed economies. Countries such as Italy, Spain and
Denmark were negatively affected by the flight to quality despite good credit
characteristics. We have taken advantage of opportunities to capture attractive
values in these bonds
5 Oppenheimer World Bond Fund
<PAGE>
Avg Annual Total Returns
For the Periods Ended 9/30/98/1/
Class A
Since
1 year 5 year Inception
- ------------------------------
- -10.20% 4.60% 6.77%
- ------------------------------
Cumulative Total Returns
For the Period from 4/27/98
to 9/30/98/1/
Class B
Since
Inception
- ------------------------------
-11.59%
- ------------------------------
Class C
Since
Inception
- ------------------------------
-8.16%
- ------------------------------
Standardized Yields/2/
For the 30 Days Ended 10/31/98
- ------------------------------
Class A 9.25%
- ------------------------------
Class B 8.82%
- ------------------------------
Class C 8.27%
- ------------------------------
An interview with your Fund's manager
- --------------------------------------------------------------------------------
by shifting assets from our holdings of German government bonds into some of the
smaller, high-quality nations.
Although Japanese bonds have performed relatively well over the past
several months, we continued to avoid them because we are concerned about the
persistence of Japan's recession. In our view, Japan needs to restructure its
banking system before it can solve its economic problems. We believe that this
process is likely to have negative implications for existing Japanese bonds.
A significant portion of the Fund's assets are invested in U.S. government
securities, which has helped the Fund offset some of the weakness in foreign
bonds. When the flight to quality began, we shifted assets in this segment away
from corporate bonds and mortgage-backed securities into U.S. Treasury
securities. This move helped us take advantage of the rally in U.S. Treasury
securities when yields on 30-year bonds dropped below 5% for the first time in
more than 30 years, causing prices to rise. We have focused our holdings in this
sector primarily on longer term bonds, which we believe may help us maintain
higher yields if interest rates continue to fall.
1. Total returns include changes in share price and reinvestment of dividends
and capital gains distributions in a hypothetical investment for the periods
shown. Class A average annual total returns include the current maximum initial
sales charge of 4.75%. Class A shares were first publicly offered on 11/23/88 as
a closed-end fund. Effective April 27, 1998, the Fund began operating as an
open-end fund. Class B total return is a cumulative total return and includes
the applicable contingent deferred sales charge of 5% since inception. Class C
total return is a cumulative total return and includes the contingent deferred
sales charge of 1%. Class B and C shares have an inception date of 4/27/98, and
are subject to an annual 0.75% asset-based sales charge. An explanation of the
different performance calculations is in the Fund's prospectus.
2. Standardized yield is based on net investment income for the 30-day period
ended 10/31/98. Falling net asset values will tend to artificially raise yields.
6 Oppenheimer World Bond Fund
<PAGE>
Regional Allocation/3/
pie chart omitted
[GRAPHIC]
.. United States/
Canada 45.0%
.. Europe 17.9
.. Asia 11.6
.. Middle East/
Africa 10.9
Latin America 9.5
Emerging Europe 5.1
What is your outlook for the foreseeable future?
We believe that global fixed income markets should rally when the current
instability ends. In our view, two events need to occur: Brazil must stabilize,
proving to the world that providing credit to emerging markets is safe; and
Japan must reform its banking system, returning the world's second largest
economy to good health and providing an anchor for stability in Asia.
When we see evidence that these events are likely to occur, we will be
more comfortable with a relatively aggressive stance in the world's bond
markets. That's because the credit crunch has created areas of enormous value in
which high-quality securities are selling at bargain prices. In the meantime,
however, we prefer to exercise caution by emphasizing the higher quality, fixed
income investments in the United States and around the world. In turbulent
markets like these, we believe prudence is an important part of The Right Way to
Invest.
Top 10 Country Holdings/3/
- --------------------------------------------------------------------------------
United States 43.8%
- --------------------------------------------------------------------------------
Spain 4.4
- --------------------------------------------------------------------------------
Korea, Republic of (South) 4.0
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Italy 3.7
- --------------------------------------------------------------------------------
Ivory Coast 3.1
- --------------------------------------------------------------------------------
Great Britain 2.9
- --------------------------------------------------------------------------------
Algeria 2.9
- --------------------------------------------------------------------------------
Turkey 2.8
- --------------------------------------------------------------------------------
Denmark 2.7
- --------------------------------------------------------------------------------
Jordan 2.1
- --------------------------------------------------------------------------------
3. Portfolio is subject to change. Percentages are as of October 31, 1998, and
are based on total market value of investments.
7 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Fund performance
How Has the Fund Performed? Below is a discussion, by the Manager, of the Fund's
performance during its fiscal year ended October 31,1998, followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index.
. Management's Discussion of Performance
During the Fund's fiscal year that ended October 31, 1998, Oppenheimer World
Bond Fund's performance was negatively influenced by the spread of the global
financial crisis from Southeast Asia to Eastern Europe and Latin America. In
addition, the Fund's holdings of U.S. government agency securities and corporate
bonds experienced price weakness as the world's fixed income investors focused
almost exclusively on direct obligations of the United States, Germany and
Japan. The Fund's holdings of U.S. Treasury securities benefited from the rally
in this market sector, partially offsetting some of the declines in other global
bond markets. The Fund's policy of seeking to maintain a steady dividend for its
Class A shares did not materially affect portfolio management strategies during
its last fiscal year. The Fund's portfolio holdings, allocations and our
management strategies are subject to change.
8 Oppenheimer World Bond Fund
<PAGE>
. Comparing the Fund's Performance to the Market
The graphs that follow show the performance of a hypothetical $10,000 investment
in each class of shares of the Fund held until October 31, 1998. In the case of
Class A shares, performance is measured from the inception of the Class on
November 23, 1988. Performance information is based on the performance of the
Fund's shares as a closed-end fund with different expenses. In the case of Class
B and Class C, performance is measured from inception of those classes on April
27, 1998. The Fund's performance reflects the deduction of the 4.75% maximum
initial sales charge on Class A shares, and the applicable contingent deferred
sales charge for Class B, and Class C shares. The graphs assume that all
dividends and capital gains distributions were reinvested in additional shares.
The Fund's performance is compared to that of Salomon Brothers World
Government Bond Index. This index is an inclusive index of institutionally
traded bonds, including fixed-rate bonds, with a remaining maturity of one year
or longer with amounts outstanding of at least the equivalent of $25 million
dollars. Floating- or variable-rate bonds and private placement-type securities
are not included. The index is designed to measured the total return performance
of the domestic and foreign government bond markets.
Index performance reflects the reinvestment of dividends but does not
consider the effect of capital gains or transaction costs, and none of the data
in the graphs shows the effect of taxes. The Fund's performance reflects the
effects of Fund business and operating expenses. While index comparisons may be
useful to provide a benchmark for the Fund's performance, it must be noted that
the Fund's investments are not limited to the securities in the index.
9 Oppenheimer World Bond Fund
<PAGE>
Fund performance
- --------------------------------------------------------------------------------
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investements in:
Oppenheimer World Bond Fund (Class A) and Salomon Brothers World Government
Bond Index
The following information was represented by a line graph in the printed
materials
[GRAPHIC]
Oppenheimer World Salomon Brothers World
Bond Fund Class A Government Bond Index
11/23/88 9,525 10,000
10/31/89 10,241 10,110
10/31/90 10,924 11,262
10/31/91 12,662 12,533
10/31/92 13,389 14,273
10/31/93 14,740 15,985
10/31/94 14,884 16,562
10/31/95 16,196 19,079
10/31/96 18,486 20,105
10/31/97 19,953 20,631
10/31/98 19,304 23,219
Average Annual Total Return of Class A Shares of the Fund at 10/31/98(1)
1 Year -7.85% 5 Year 4.52% Life 6.84%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investements in:
Oppenheimer World Bond Fund (Class B) and Salomon Brothers World Government
Bond Index
The following information was represented by a line graph in the printed
materials
[GRAPHIC]
Oppenheimer World Salomon Brothers World
Bond Fund Class B Government Bond Index
4/27/98 10,000 10,000
10/31/98 8,957 11,196
Cumulative Total Return of Class B Shares of the Fund at 10/31/98(2)
Life -10.44%
10 Oppenheimer World Bond Fund
<PAGE>
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investements in:
Oppenheimer World Bond Fund (Class C) and Salomon Brothers World Government
Bond Index
The following information was represented by a line graph in the printed
materials
[GRAPHIC]
Oppenheimer World Salomon Brothers World
Bond Fund Class C Government Bond Index
4/27/98 10,000 10,000
10/31/98 9,301 11,196
Cumulative Total Return of Class C Shares of the Fund at 10/31/98(3)
Life -6.99%
The returns and the ending account values in the graphs show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance information for Salomon Brothers World Government Bond Index in
the graphs begins on 11/30/88 for Class A and on 4/30/98 for both Class B and
Class C.
1. The inception date of the Fund's Class A shares is 11/23/88. The average
annual total returns are shown net of the applicable 4.75% maximum initial sales
charge.
2. Class B shares of the Fund were first publicly offered on 4/27/98. The total
return and ending account value are shown net of the applicable 5% contingent
deferred sales charges.
3. Class C shares of the Fund were first publicly offered on 4/27/98. The total
return and ending account value are shown net of the applicable 1% contingent
deferred sales charge.
Past performance is not predictive of future performance. Graphs are not drawn
to the same scale.
11 Oppenheimer World Bond Fund
<PAGE>
Financials
- --------------------------------------------------------------------------------
12 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments October 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
=====================================================================================================
<S> <C> <C>
Mortgage-Backed Obligations--17.3%
- -----------------------------------------------------------------------------------------------------
Asset Securitization Corp., Commercial Mtg. Pass-Through
Certificates, Series 1996-MD6, Cl. A5, 6.955%, 11/13/26(2) $ 200,000 $ 204,281
- -----------------------------------------------------------------------------------------------------
Commercial Mortgage Acceptance Corp., Interest-Only
Stripped Mtg.-Backed Security, Series 1996-C1, Cl. X-2,
1%, 12/25/20(3)(4) 6,208,300 128,046
- -----------------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through
Certificates, Series 1997-C1, Cl. E, 7.50%, 3/1/11(4) 190,000 189,703
- -----------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Collateralized Mtg
Obligations, Gtd. Multiclass Mtg. Participation Certificates,
Series 1343, Cl. LA, 8%, 8/15/22 229,000 250,970
- -----------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg
Investment Conduit Pass-Through Certificates, Series 2054,
Cl. TE, 6.25%, 4/15/24 109,000 110,771
- -----------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Interest-Only Stripped
Mtg.-Backed Security:
Series 197, Cl. IO, 15.402%, 4/1/28(3) 1,480,216 344,382
Series 199, Cl. IO, 6.50%, 8/1/28(3) 1,426,245 311,768
- -----------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Mtg.-Backed Certificates:
11.50%, 1/1/18 55,039 61,805
13%, 5/1/19 308,213 361,649
- -----------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.-Government National
Mortgage Assn., Gtd. Multiclass Mtg. Participation Certificates,
Series 26, Cl. B, 6%, 5/25/15 2,403,999 2,434,795
- -----------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Real Estate Mtg
Investment Conduit Pass-Through Certificates,
Trust 1992-162, Cl. C, 7%, 10/25/21 350,000 366,625
- -----------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Principal-Only Stripped
Mtg.-Backed Security, Trust 294, Cl. 1, 5.536%, 2/1/28(5) 471,757 406,448
- -----------------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg
Pass-Through Certificates, Series 1997-CHL1, 8.131%, 7/25/06(2)(4) 200,000 201,437
- -----------------------------------------------------------------------------------------------------
First Union-Lehman Brothers Commercial Mortgage Trust,
Interest-Only Stripped Mtg.-Backed Security, Series 1997-C1,
9.008%, 4/18/27(3) 872,766 57,906
- -----------------------------------------------------------------------------------------------------
Government National Mortgage Assn.:
7.50%, 5/15/24-1/15/26 453,691 467,172
11%, 10/20/19 80,660 91,802
- -----------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through
Certificates, Series 1996-C1, Cl. E, 7.436%, 2/15/28(2)(4) 553,342 539,336
- -----------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., Multifamily Mtg. Pass-Through
Certificates, Series 1996-MC1, Cl. G, 7.15%, 6/15/06(6) 250,000 205,703
- -----------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates, Series 1995-C1, Cl. F, 6.90%, 2/25/27 119,601 112,930
- -----------------------------------------------------------------------------------------------------
Salomon Brothers, Inc., Series 1997-TZH, Cl. D, 7.902%, 3/25/22(4) 50,000 51,313
</TABLE>
13 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Mortgage-Backed Obligations (continued)
Structured Asset Securities Corp., Multiclass Pass-Through
Certificates, Series 1995-C4, Cl. E, 8.713%, 6/25/26(2)(4) $ 100,000 $ 98,000
----------
Total Mortgage-Backed Obligations (Cost $6,681,702) 6,996,842
=====================================================================================================
U.S. Government Obligations--18.6%
- -----------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, STRIPS, 6.80%, 8/15/22(7) 750,000 202,089
- -----------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
5.875%, 2/15/04(8) 2,925,000 3,130,666
6.25%, 2/15/03(9)(10) 707,000 758,479
6.375%, 8/15/02(8) 1,481,000 1,582,357
6.50%, 5/15/05 1,500,000 1,669,219
7.50%, 10/31/99(9) 195,000 200,728
----------
Total U.S. Government Obligations (Cost $7,120,657) 7,543,538
=====================================================================================================
Foreign Government Obligations--40.9%
- -----------------------------------------------------------------------------------------------------
Argentina--0.3%
Buenos Aires (Province of) Bonds, Series PBA1, 3.048%, 4/1/07(2)ARP 235,108 126,720
- -----------------------------------------------------------------------------------------------------
City of Buenos Aires Bonds, Series 3, 10.50%, 5/28/04 ARP 10,000 6,602
----------
133,322
- -----------------------------------------------------------------------------------------------------
Australia--0.8%
Australia (Government of) Bonds, Series 904, 9%, 9/15/04AUD 410,000 311,300
- -----------------------------------------------------------------------------------------------------
Brazil--1.7%
Banco Nac de Desen Econo Nts.:
10.30%, 6/16/08(2)(6) 140,000 98,350
10.80%, 6/16/08(2) 455,000 319,637
- -----------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Debt Conversion Bonds,
6.188%, 4/15/12(2) 530,000 261,025
----------
679,012
- -----------------------------------------------------------------------------------------------------
Bulgaria--1.0%
Bulgaria (Republic of) Front-Loaded Interest Reduction
Bearer Bonds, Tranche A, 2.56%, 7/28/12(11) 750,000 409,687
- -----------------------------------------------------------------------------------------------------
Canada--1.2%
Canada (Government of) Bonds:
5.50%, 9/1/02CAD 175,000 116,595
10.25%, 12/1/98CAD 560,000 365,280
----------
481,875
- -----------------------------------------------------------------------------------------------------
Colombia--0.8%
Financiera Energetica Nacional SA Nts., 9.375%, 6/15/06 435,000 325,163
</TABLE>
14 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Costa Rica--0.2%
Banco Central Costa Rica Interest Claim Bonds, Series A,
6.568%, 5/21/05(2) $ 105,218 $ 101,273
- -----------------------------------------------------------------------------------------------------
Croatia--0.4%
Croatia (Republic of) Bonds, Series B, 6.563%, 7/31/06(2) 208,099 164,919
- -----------------------------------------------------------------------------------------------------
Denmark--2.6%
Denmark (Kingdom of) Bonds:
7%, 12/15/04DKK 3,210,000 579,617
8%, 5/15/03DKK 2,680,000 490,779
----------
1,070,396
- -----------------------------------------------------------------------------------------------------
France--0.9%
France (Government of) Bonds, Obligations Assimilables du
Tresor, 5.50%, 4/25/29FRF 1,850,000 347,330
- -----------------------------------------------------------------------------------------------------
Germany--1.2%
Germany (Republic of) Bonds, 6.25%, 4/26/06DEM 705,000 484,210
- -----------------------------------------------------------------------------------------------------
Great Britain--2.9%
United Kingdom Treasury Bonds, 6.75%, 11/26/04GBP 250,000 456,775
- -----------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts., 8%, 6/10/03GBP 385,000 721,874
----------
1,178,649
- -----------------------------------------------------------------------------------------------------
Indonesia--0.6%
PT Bank Negara Indonesia Sr. Nts., 7.625%, 2/15/07 440,000 236,500
- -----------------------------------------------------------------------------------------------------
Italy--3.7%
Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali,
8.50%, 1/1/04ITL 2,020,000,000 1,486,056
- -----------------------------------------------------------------------------------------------------
Ivory Coast--3.0%
Ivory Coast (Government of) Front Loaded Interest
Reduction Bonds, 2%, 3/29/18(11) 850,000 211,438
- -----------------------------------------------------------------------------------------------------
Ivory Coast (Government of) Past Due Interest Bonds:
2%, 3/29/18(2)(6) 1,708,375 516,783
Series 20 yr., 2%, 3/29/18(11) 474,000 143,385
Series F, 1.90%, 3/29/18(11)FRF 7,944,437 361,632
----------
1,233,238
- -----------------------------------------------------------------------------------------------------
Jordan--2.1%
Hashemite (Kingdom of Jordan) Bonds, Series DEF, 5%,
12/23/23(11) 1,240,000 660,300
- -----------------------------------------------------------------------------------------------------
Hashemite (Kingdom of Jordan) Disc. Bonds, 6.563%,
12/23/23(2) 300,000 171,750
----------
832,050
</TABLE>
15 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Korea, Republic of (South)--3.6%
Export-Import Bank of Korea Unsec. Unsub. Bonds, 7.125%, 9/20/01 $ 460,000 $ 363,400
- -----------------------------------------------------------------------------------------------------
Industrial Bank of Korea Unsec. Unsub. Nts., Series 1BR, 2.80%,
7/5/01JPY 49,700,000 341,210
- -----------------------------------------------------------------------------------------------------
Korea (Republic of) Nts., 7.813%, 4/8/00(2)(4) 355,000 323,938
- -----------------------------------------------------------------------------------------------------
Korea Electric Power Nts., 7%, 10/1/02 515,000 430,370
----------
1,458,918
- -----------------------------------------------------------------------------------------------------
Mexico--1.3%
Bonos de la Tesoreria de la Federacion, Zero Coupon,
34.13%, 11/26/98(7)MXP 1,780,000 171,726
- -----------------------------------------------------------------------------------------------------
Fideicomiso Petacalco Trust Nts., 10.16%, 12/23/09 200,000 161,000
- -----------------------------------------------------------------------------------------------------
Petroleos Mexicanos Debs., 14.50%, 3/31/06GBP 100,000 187,567
----------
520,293
- -----------------------------------------------------------------------------------------------------
Morocco--0.7%
Morocco (Kingdom of) Loan Participation Agreement,
Tranche A, 2.418%, 1/1/09(2)JPY 41,250,000 266,382
- -----------------------------------------------------------------------------------------------------
Nigeria--1.4%
Central Bank of Nigeria Gtd. Bonds, Series WW, 6.25%, 11/15/20 500,000 314,375
- -----------------------------------------------------------------------------------------------------
Nigeria (Federal Republic of) Promissory Nts., Series RC,
5.092%, 1/5/10 456,887 244,816
----------
559,191
- -----------------------------------------------------------------------------------------------------
Norway--1.0%
Norway (Government of) Bonds, 9.50%, 10/31/02NOK 2,655,000 414,099
- -----------------------------------------------------------------------------------------------------
Peru--1.6%
Peru (Republic of) Front-Loaded Interest Reduction Bonds,
3.25%, 3/7/17(11) 220,000 112,200
- -----------------------------------------------------------------------------------------------------
Peru (Republic of) Sr. Nts., Zero Coupon, 4.53%, 2/28/16(7) 1,310,549 551,479
----------
663,679
- -----------------------------------------------------------------------------------------------------
Philippines--0.4%
Philippines (Republic of) Debs., 6.563%, 12/1/09(2) 230,000 163,875
- -----------------------------------------------------------------------------------------------------
Poland--0.4%
Poland (Republic of) Treasury Bills, Series 26, Zero Coupon,
16.50%, 2/10/99(7)PLZ 530,000 147,660
- -----------------------------------------------------------------------------------------------------
Russia--0.3%
City of St. Petersburg Unsec. Nts., 9.50%, 6/18/02 170,000 33,575
- -----------------------------------------------------------------------------------------------------
Russia (Government of) Unsec. Unsub. Bonds, 8.75%, 10/3/02(4) 430,000 86,000
----------
119,575
</TABLE>
16 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
South Africa--0.0%
South Africa (Republic of) Bonds, Series 150, 12%, 2/28/05ZAR 190 $ 29
- -----------------------------------------------------------------------------------------------------
Spain--4.5%
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado:
6%, 1/31/29ESP 100,760,000 764,880
6.75%, 4/15/00ESP 48,600,000 360,551
10%, 2/28/05ESP 73,410,000 686,367
----------
1,811,798
- -----------------------------------------------------------------------------------------------------
Turkey--1.8%
Turkey (Republic of) Treasury Bills, Zero Coupon:
78.74%, 2/3/99(7)TRL 129,414,000,000 353,574
85%, 1/27/99(7)TRL 139,000,000,000 384,576
----------
738,150
- -----------------------------------------------------------------------------------------------------
Vietnam--0.5%
Vietnam (Government of) Bonds, 3%, 3/12/28(2) 815,000 201,713
----------
Total Foreign Government Obligations (Cost $17,685,999) 16,540,342
=====================================================================================================
Loan Participations--4.5%
- -----------------------------------------------------------------------------------------------------
Algeria (Republic of) Reprofiled Debt Loan Participation Nts.:
Tranche 1, 6.375%, 9/4/06(2) 1,115,181 532,499
Tranche A, 7.188%, 3/4/00(2) 403,090 340,612
- -----------------------------------------------------------------------------------------------------
Algeria (Republic of) Unrestructured Nts., 6.615%, 1/22/01(4)JPY 40,500,000 274,573
- -----------------------------------------------------------------------------------------------------
Colombia (Republic of) Sr. Nts., 6.875%, 10/26/03(2)(12) 425,000 242,250
- -----------------------------------------------------------------------------------------------------
Jamaica (Government of) 1990 Refinancing Agreement Nts.,
Tranche A, 6.188%, 10/16/00(2)(4) 58,333 53,375
- -----------------------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreement,
Tranche B, 6.563%, 1/1/04(2)(4) 64,705 52,412
- -----------------------------------------------------------------------------------------------------
Trinidad & Tobago Loan Participation Agreement,
Tranche A, 1.497%, 9/30/00(2)(4)JPY 47,772,361 338,225
----------
Total Loan Participations (Cost $2,138,361) 1,833,946
=====================================================================================================
Corporate Bonds and Notes--4.9%
- -----------------------------------------------------------------------------------------------------
Bakrie Investindo, Zero Coupon Promissory Nts.,
3/16/99(4)(13)IDR 850,000,000 27,778
- -----------------------------------------------------------------------------------------------------
Capital Gaming International, Inc., 11.50% Promissory Nts.,
8/1/95(13) 2,000 --
- -----------------------------------------------------------------------------------------------------
Cellular Communications International, Inc., 0%/9.50%
Bonds, 4/1/05(14)XEU 150,000 125,665
- -----------------------------------------------------------------------------------------------------
Empresa Electric Del Norte, 10.50% Sr. Debs., 6/15/05(4) 100,000 66,750
- -----------------------------------------------------------------------------------------------------
European Bank Reconstruction & Development, Zero Coupon
Sr. Unsub. Nts., Series EMTN, 13.60%, 12/31/18(7)ZAR 12,145,000 125,837
- -----------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., 6.875% Sr. Unsec. Nts., 6/7/02GBP 290,000 505,090
</TABLE>
17 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Corporate Bonds and Notes (continued)
Industrial Finance Corp. (Thailand), 6.875% Sr. Nts., 4/1/03 $ 230,000 $ 182,486
- -----------------------------------------------------------------------------------------------------
Internacional de Ceramica SA, 9.75% Unsec. Unsub
Nts., 8/1/02(6) 90,000 62,325
- -----------------------------------------------------------------------------------------------------
Moran Energy, Inc., 8.75% Cv. Sub. Debs., 1/15/08 200,000 189,549
- -----------------------------------------------------------------------------------------------------
Netia Holdings BV, 0%/11% Sr. Disc. Nts., 11/1/07(14)DEM 200,000 58,267
- -----------------------------------------------------------------------------------------------------
NTL, Inc., 9.50% Sr. Unsub. Nts., Series REGS, 4/1/08GBP 65,000 87,629
- -----------------------------------------------------------------------------------------------------
Ongko International Finance Co. BV, 10.50% Gtd. Nts., 3/29/04(4)(13) 185,000 11,562
- -----------------------------------------------------------------------------------------------------
PT Polysindo Eka Perkasa:
11% Nts., 6/18/03 50,000 6,000
24% Nts., 6/19/03IDR 492,900,000 7,732
Zero Coupon Promissory Nts., 3/16/99(4)(13)IDR 1,000,000,000 15,686
- -----------------------------------------------------------------------------------------------------
Reliance Industries Ltd., 10.50% Bonds, 8/6/46(6) 235,000 188,226
- -----------------------------------------------------------------------------------------------------
Snap Ltd., 11.50% Sec. Bonds, 1/29/09DEM 449,166 230,526
- -----------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(4) 195,659 110,059
----------
Total Corporate Bonds and Notes (Cost $2,894,510) 2,001,167
<CAPTION>
Shares
=====================================================================================================
<S> <C> <C>
Common Stocks--0.1%
- -----------------------------------------------------------------------------------------------------
Air New Zealand Ltd., Cl. B 24,000 31,765
- -----------------------------------------------------------------------------------------------------
Optel, Inc.(15) 45 --
----------
Total Common Stocks (Cost $65,398) 31,765
<CAPTION>
Units
=====================================================================================================
<C> <C>
Rights, Warrants and Certificates--0.0%
- -----------------------------------------------------------------------------------------------------
American Telecasting, Inc. Wts., Exp. 6/99(4) 500 5
- -----------------------------------------------------------------------------------------------------
Capital Gaming International, Inc. Wts., Exp. 2/99 3,538 --
- -----------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts., Exp. 1/03(6) 325 3
- -----------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts., Exp. 9/04(4) 350 394
- -----------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/05(4) 495 7,385
- -----------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc. Wts., Exp. 6/06(4) 100 1,813
- -----------------------------------------------------------------------------------------------------
Orion Network Systems, Inc. Wts., Exp. 1/07(4) 50 625
- -----------------------------------------------------------------------------------------------------
Price Communications Corp. Wts., Exp. 8/07(4) 172 5,160
- -----------------------------------------------------------------------------------------------------
Protection One, Inc. Wts., Exp. 6/05(4) 640 6,400
- -----------------------------------------------------------------------------------------------------
Venezuela (Republic of) Oil Linked Payment Obligation Wts.,
Exp. 4/20 1,785 --
----------
Total Rights, Warrants and Certificates (Cost $17,968) 21,785
</TABLE>
18 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
=====================================================================================================
<S> <C> <C>
Structured Instruments--7.6%
- -----------------------------------------------------------------------------------------------------
Citibank, Greek Drachma Linked Nts., 11.30%, 11/30/98 $ 175,000 $ 179,882
- -----------------------------------------------------------------------------------------------------
Deutsche Morgan Grenfell, GKO Linked Nts., Zero Coupon,
5/19/99(4)(13)RUR 1,760,000 21,078
- -----------------------------------------------------------------------------------------------------
Korea Development Bank, Industrial Bank Finance Linked Nts.,
Zero Coupon, 11.50% 3/5/99(4)(7) 150,000 160,695
- -----------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., Russian S-Account
Credit Linked Nts., Zero Coupon, 1/20/99(4)(13)RUR 1,400,000 16,767
- -----------------------------------------------------------------------------------------------------
Morgan Guaranty Trust Co. of New York (Nassau Branch),
Turkish Lira Currency Linked Nts., 74.10%, 11/6/98 400,000 388,066
- -----------------------------------------------------------------------------------------------------
Salomon Smith Barney Holdings, Inc./Citigroup, Inc.,
Argentine Peso Linked Nts., Zero Coupon, 65.61%, 11/30/98(7) 525,000 520,800
- -----------------------------------------------------------------------------------------------------
Standard Chartered Bank, Chinese Renminbi Currency Linked Nts.:
9.50%, 11/5/98 340,000 340,034
10%, 11/4/98 340,000 340,000
- -----------------------------------------------------------------------------------------------------
Standard Chartered Bank, Philippines Peso Linked Nts.,
14.127%, 12/14/98 270,000 287,010
- -----------------------------------------------------------------------------------------------------
Standard Chartered Bank, Philippines Peso/Japanese Yen
Currency Linked Nts.:
16.45%, 1/21/99 74,000 78,840
20.25%, 11/9/98 170,000 139,485
- -----------------------------------------------------------------------------------------------------
Standard Chartered Bank, Philippines Peso/Japanese Yen
Linked Nts., 22.83%, 1/19/99 170,000 135,728
- -----------------------------------------------------------------------------------------------------
Standard Chartered Bank, Thai Baht/Japanese Yen Linked Nts.:
21.70%, 11/9/98 180,000 154,728
23.80%, 11/4/98 170,000 149,447
27.30%, 11/13/98 170,000 148,750
----------
Total Structured Instruments (Cost $3,447,389) 3,061,310
</TABLE>
<TABLE>
<CAPTION>
Date Strike Contracts
==============================================================================================
<S> <C> <C> <C> <C>
Call Options Purchased--0.0%
- ----------------------------------------------------------------------------------------------
Russia (Government of)
Principal Loan Debs.,
Series 24 yr., 6.625%,
12/15/20 Call Opt 11/98 22.000% 340 --
- ----------------------------------------------------------------------------------------------
Russia (Government of)
Principal Loan Debs.,
Series 24 yr., 6.625%,
12/15/20 Call Opt 11/98 33.500 340 --
- ----------------------------------------------------------------------------------------------
Russia (Government of)
Principal Loan Debs.,
Series 24 yr., 6.625%,
12/15/20 Call Opt 11/98 38.875 690 --
---------
Total Call Options Purchased (Cost $58,330) --
</TABLE>
19 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Date Strike Contracts See Note 1
================================================================================================
<S> <C> <C> <C> <C>
Put Options Purchased--0.3%
- ------------------------------------------------------------------------------------------------
Argentina (Republic of) Bonds,
Series L, 6.188%, 3/31/05
Put Opt 12/98 77.56% 648 $ 8,873
- ------------------------------------------------------------------------------------------------
Brazil (Federal Republic of)
Interest Due & Unpaid Bonds,
6.75%, 1/1/01 Put Opt 12/98 84.85 369 5,926
- ------------------------------------------------------------------------------------------------
Brazilian Real Put Opt 12/98 1.24BRR 340,000 5,950
- ------------------------------------------------------------------------------------------------
Brazilian Real Put Opt 4/99 1.285BRR 600,000 65,340
- ------------------------------------------------------------------------------------------------
British Pound/German
Mark Put Opt 11/98 2.80GBP/DEM 405,000 17,456
- ------------------------------------------------------------------------------------------------
British Pound/German
Mark Put Opt 11/98 2.80GBP/DEM 480,000 4,800
- ------------------------------------------------------------------------------------------------
British Pound Put Opt 11/98 1.66GBP 405,000 4,792
- ------------------------------------------------------------------------------------------------
Hong Kong Dollar Put Opt 3/99 7.96HKD 5,430,000 3,212
- ------------------------------------------------------------------------------------------------
Japan (Government of)
10 yr. Bonds, Series 203,
1.80%, 6/20/08 Put Opt 1/99 107.82%JPY 35,300 2,817
- ------------------------------------------------------------------------------------------------
Japanese Yen Put Opt 12/98 137JPY 232,900,000 361
-----------
Total Put Options Purchased (Cost $180,249) 119,527
</TABLE>
<TABLE>
<CAPTION>
Face
Amount(1)
===================================================================================================
<S> <C> <C>
Repurchase Agreements--5.1%
- ---------------------------------------------------------------------------------------------------
Repurchase agreement with PaineWebber, Inc., 5.35%,
dated 10/30/98, to be repurchased at $2,050,914 on 11/2/98,
collateralized by U.S. Treasury Nts., 5.625%-6.625%,
5/31/99-2/15/03, with a value of $2,096,114 (Cost $2,050,000) $2,050,000 2,050,000
- ---------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $42,340,563) 99.3% 40,200,222
- ---------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.7 269,618
---------- -----------
Net Assets 100.0% $40,469,840
========== ===========
</TABLE>
20 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Distribution of investments by country of issue, as a percentage of total
investments at value, is as follows:
Country Market Value Percent
- --------------------------------------------------------------------------------
United States $17,634,993 43.8%
- --------------------------------------------------------------------------------
Spain 1,811,798 4.4
- --------------------------------------------------------------------------------
Korea, Republic of (South) 1,619,612 4.0
- --------------------------------------------------------------------------------
Italy 1,486,056 3.7
- --------------------------------------------------------------------------------
Ivory Coast 1,233,238 3.1
- --------------------------------------------------------------------------------
Great Britain 1,178,649 2.9
- --------------------------------------------------------------------------------
Algeria 1,147,684 2.9
- --------------------------------------------------------------------------------
Turkey 1,126,216 2.8
- --------------------------------------------------------------------------------
Denmark 1,070,397 2.7
- --------------------------------------------------------------------------------
Jordan 832,050 2.1
- --------------------------------------------------------------------------------
Philippines 804,938 2.0
- --------------------------------------------------------------------------------
Mexico 692,677 1.7
- --------------------------------------------------------------------------------
China 680,034 1.7
- --------------------------------------------------------------------------------
Brazil 679,013 1.7
- --------------------------------------------------------------------------------
Peru 663,679 1.7
- --------------------------------------------------------------------------------
Argentina 654,122 1.6
- --------------------------------------------------------------------------------
Thailand 635,411 1.6
- --------------------------------------------------------------------------------
Colombia 567,413 1.4
- --------------------------------------------------------------------------------
Nigeria 559,191 1.4
- --------------------------------------------------------------------------------
Morocco 549,320 1.4
- --------------------------------------------------------------------------------
Germany 484,210 1.2
- --------------------------------------------------------------------------------
Canada 483,687 1.2
- --------------------------------------------------------------------------------
Norway 414,099 1.0
- --------------------------------------------------------------------------------
Bulgaria 409,688 1.0
- --------------------------------------------------------------------------------
France 347,330 0.9
- --------------------------------------------------------------------------------
Trinidad & Tobago 338,225 0.8
- --------------------------------------------------------------------------------
Australia 311,300 0.8
- --------------------------------------------------------------------------------
Indonesia 305,258 0.8
- --------------------------------------------------------------------------------
Other 1,479,934 3.7
----------- -----
Total $40,200,222 100.0%
=========== =====
21 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
ARP--Argentine Peso IDR--Indonesian Rupiah
AUD--Australian Dollar ITL--Italian Lira
BRR--Brazilian Real JPY--Japanese Yen
CAD--Canadian Dollar MXP--Mexican Peso
DEM--German Mark NOK--Norwegian Krone
DKK--Danish Krone PLZ--Polish Zloty
ESP--Spanish Peseta RUR--Russian Ruble
FRF--French Franc TRL--Turkish Lira
GBP--British Pound ZEU--European Currency Units
HKD--Hong Kong Dollar ZAR--South African Rand
2. Represents the current interest rate for a variable rate security.
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. Identifies issues considered to be illiquid or restricted--See Note 8 of
Notes to Financial Statements.
5. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
6. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $1,071,390 or 2.65% of the Fund's net
assets as of October 31, 1998.
22 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
8. A sufficient amount of liquid assets has been designated to cover outstanding
written options, as follows:
<TABLE>
<CAPTION>
Contracts Expiration Exercise Premium Market Value
Subject to Call/Put Date Price Received See Note 1
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Argentine Peso Put Opt. 649 12/7/98 64.563ARP $ 15,891 $ 466
- ---------------------------------------------------------------------------------------------------
Brazilian Real Call Opt. 600,000 4/6/99 1.218BRR 6,600 6,390
- ---------------------------------------------------------------------------------------------------
Brazilian Real Put Opt. 600,000 4/6/99 1.414BRR 13,680 46,830
- ---------------------------------------------------------------------------------------------------
British Pound Call Opt. 400,000 12/30/98 1.700GBP 10,200 5,960
- ---------------------------------------------------------------------------------------------------
British Pound Call Opt. 480,000 11/3/98 1.702GBP 8,782 72
- ---------------------------------------------------------------------------------------------------
British Pound Call Opt. 405,000 11/25/98 1.710GBP 2,544 2,156
- ---------------------------------------------------------------------------------------------------
British Pound/German
Mark Call Opt. 405,000 11/13/98 2.900GBP/DEM 4,180 122
- ---------------------------------------------------------------------------------------------------
Japanese Yen Call Opt. 214,625,000 12/18/98 126.250JPY 21,505 206,040
- ---------------------------------------------------------------------------------------------------
Russian Ruble Put Opt. 340 11/9/98 29.500RUR 17,170 74,290
-------- --------
$100,552 $342,326
======== ========
</TABLE>
9. Securities with an aggregate market value of $201,663 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
10. A sufficient amount of securities has been designated to cover outstanding
forward foreign currency exchange contracts. See Note 5 of Notes to Financial
Statements.
11. Represents the current interest rate for an increasing rate security.
12. When-issued security to be delivered and settled after October 31, 1998.
13. Non-income producing--issuer is in default.
14. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
15. Non-income producing security.
See accompanying Notes to Financial Statements.
23 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
===================================================================================
<S> <C>
Assets
Investments, at value (cost $42,340,563)--see accompanying statement $40,200,222
- -----------------------------------------------------------------------------------
Cash 28,816
- -----------------------------------------------------------------------------------
Unrealized appreciation on forward foreign currency
exchange contracts--Note 5 29,917
- -----------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 1,609,261
Interest, dividends and principal paydowns 706,904
Closed forward foreign currency exchange contracts 60,596
Shares of beneficial interest sold 36,768
Daily variation on futures contracts--Note 6 1,006
Other 7,620
------------
Total assets 42,681,110
===================================================================================
Liabilities
Unrealized depreciation on forward foreign currency
exchange contracts--Note 5 127,254
- -----------------------------------------------------------------------------------
Options written, at value (premiums received $100,552)--
see accompanying statement--Note 7 342,326
- -----------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $242,250 purchased on a
when-issued basis)--Note 1 1,242,299
Dividends 243,396
Trustees' fees--Note 1 78,126
Closed forward foreign currency exchange contracts 70,270
Shares of beneficial interest redeemed 41,912
Daily variation on futures contracts--Note 6 26,500
Distribution and service plan fees 16,223
Shareholder reports 7,174
Other 15,790
------------
Total liabilities 2,211,270
====================================================================================
Net Assets $40,469,840
============
===================================================================================
Composition of Net Assets
Par value of shares of capital stock $ 55,194
- -----------------------------------------------------------------------------------
Additional paid-in capital 50,476,440
- -----------------------------------------------------------------------------------
Undistributed net investment income 56,324
- -----------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (7,700,278)
- -----------------------------------------------------------------------------------
Net unrealized depreciation on investments and translation of
assets and liabilities denominated in foreign currencies (2,417,840)
------------
Net assets $40,469,840
============
</TABLE>
24 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share
(based on net assets of $38,949,707 and 5,312,076
shares of beneficial interest outstanding) $7.33
Maximum offering price per share (net asset value
plus sales charge of 4.75% of offering price) $7.70
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $932,824 and
127,160 shares of beneficial interest outstanding) $7.34
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $587,309 and 80,130
shares of beneficial interest outstanding) $7.33
See accompanying Notes to Financial Statements.
25 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended October 31, 1998
- --------------------------------------------------------------------------------
================================================================================
Investment Income
Interest (net of foreign withholding taxes of $60,881) $ 5,130,024
- --------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $196) 2,389
-----------
Total income 5,132,413
================================================================================
Expenses
Management fees--Note 4 341,029
- --------------------------------------------------------------------------------
Shareholder reports 95,863
- --------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 63,106
- --------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 55,413
Class B 1,728
Class C 1,287
- --------------------------------------------------------------------------------
Administrative fees--Note 4 52,776
- --------------------------------------------------------------------------------
Custodian fees and expenses 28,903
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 24,943
- --------------------------------------------------------------------------------
Legal, auditing and other professional fees 21,906
- --------------------------------------------------------------------------------
Registration and filing fees:
Class A 17,783
Class B 306
Class C 191
- --------------------------------------------------------------------------------
Accounting service fees--Note 4 18,000
- --------------------------------------------------------------------------------
Insurance expenses 4,997
- --------------------------------------------------------------------------------
Other 35,826
-----------
Net expenses 764,057
================================================================================
Net Investment Income 4,368,356
================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (3,257,168)
Closing of futures contracts 14,588
Closing and expiration of option contracts written--Note 7 188,603
-----------
Net realized loss (3,053,977)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (2,738,173)
Translation of assets and liabilities denominated in
foreign currencies 257,315
-----------
Net change (2,480,858)
-----------
Net realized and unrealized loss (5,534,835)
================================================================================
Net Decrease in Net Assets Resulting from Operations $(1,166,479)
===========
See accompanying Notes to Financial Statements.
26 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended October 31,
1998 1997
======================================================================================
<S> <C> <C>
Operations
Net investment income $ 4,368,356 $ 4,787,360
- --------------------------------------------------------------------------------------
Net realized gain (loss) (3,053,977) 1,085,931
- --------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (2,480,858) (1,609,166)
------------ ------------
Net increase (decrease) in net assets resulting
from operations (1,166,479) 4,264,125
======================================================================================
Dividends to Shareholders
Dividends from net investment income:
Class A (3,921,503) (4,445,641)
Class B (8,405) --
Class C (6,104) --
- --------------------------------------------------------------------------------------
Tax return of capital:
Class A (313,635) --
Class B (7,511) --
Class C (4,729) --
======================================================================================
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting
from beneficial interest transactions--Note 2:
Class A (10,446,596) --
Class B 963,214 --
Class C 600,668 --
======================================================================================
Net Assets
Total decrease (14,311,080) (181,516)
- --------------------------------------------------------------------------------------
Beginning of period 54,780,920 54,962,436
------------ ------------
End of period (including undistributed net investment
income of $56,324 and $82,750, respectively) $ 40,469,840 $ 54,780,920
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
27 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Class A
--------------------------
Year Ended October 31,
1998 1997
================================================================================
Per Share Operating Data
Net asset value, beginning of period $8.28 $8.31
- --------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .72 .72
Net realized and unrealized gain (loss) (.97) (.08)
----- -----
Total income (loss) from investment operations (.25) .64
- --------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.64) (.67)
Tax return of capital distribution (.06) --
----- -----
Total dividends and distributions to shareholders (.70) (.67)
- --------------------------------------------------------------------------------
Net asset value, end of period $7.33 $8.28
===== =====
Market value, end of period N/A $8.06
===== =====
================================================================================
Total Return, at Net Asset Value(2) (3.25)% 7.94%
================================================================================
Total Return, at Market Value(3) N/A 16.42%
================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $38,950 $54,781
- --------------------------------------------------------------------------------
Average net assets (in thousands) $48,542 $55,339
- --------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.94% 8.65%
Expenses 1.56% 1.20%(6)
- --------------------------------------------------------------------------------
Portfolio turnover rate(7) 343.7% 289.2%
1. For the period from April 27, 1998 (inception of offering) to October 31,
1998.
2. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year. Prior to
April 27, 1998, the Fund operated as a closed-end investment company and total
return was calculated based on market value.
3. Assumes a hypothetical purchase at the current market price on the business
day before the first day of the fiscal period (or inception of offering), with
all dividends and distributions reinvested in additional shares on the
reinvestment date, and a sale at the current market price on the last business
day of the period. Total return does not reflect sales charges or brokerage
commissions. Total returns are not annualized for periods of less than one full
year.
28 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Class C
- ------------------------------------- ------- -------
Period Period
Ended Ended
Oct. 31, Oct. 31,
1996 1995 1994 1998(1) 1998(1)
==========================================================================
$7.91 $7.93 $8.54 $8.15 $8.15
- --------------------------------------------------------------------------
.73 .71 .69 .25 .34
.34 (.05) (.61) (.73) (.83)
----- ----- ----- ----- -----
1.07 .66 .08 (.48) (.49)
- --------------------------------------------------------------------------
(.67) (.68) (.68) (.27) (.27)
-- -- (.01) (.06) (.06)
----- ----- ----- ----- -----
(.67) (.68) (.69) (.33) (.33)
- --------------------------------------------------------------------------
$8.31 $7.91 $7.93 $7.34 $7.33
===== ===== ===== ===== =====
$7.50 $7.00 $7.00 N/A N/A
===== ===== ===== ===== =====
==========================================================================
14.14% 8.81% 0.98% (5.93)% (6.09)%
==========================================================================
16.40% 9.09% (4.84)% N/A N/A
==========================================================================
$54,962 $52,340 $52,439 $933 $587
- --------------------------------------------------------------------------
$53,309 $51,207 $54,380 $340 $253
- --------------------------------------------------------------------------
9.04% 9.20% 8.90% 10.97%(4)(5) 9.24%(4)(5)
1.28% 1.24% 1.24% 2.74%(4)(5) 2.62%(4)(5)
- --------------------------------------------------------------------------
260.8% 344.2% 315.5% 343.7% 343.7%
4. This information may not be representative of future ratios.
5. Annualized.
6. The expense ratio reflects the effect of expenses paid indirectly by the
Fund.
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities and mortgage
dollar-rolls) for the period ended October 31, 1998, were $147,777,693 and
$174,181,562, 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.
29 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer World Bond Fund (the Fund) was initially registered under the
Investment Company Act of 1940, as amended, as a diversified, closed-end
management investment company. Effective April 27, 1998, the Fund began
operating as an open-end fund. The Fund's investment objective is to seek high
current income consistent with preservation of capital through investments in
debt securities. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). The Fund offers Class A, Class B and Class C shares. Class A shares
are sold with a front-end sales charge. Class B and Class C shares may be
subject to a contingent deferred sales charge. All classes of shares have
identical rights to earnings, assets and voting privileges, except that each
class has its own distribution and/or service plan, expenses directly
attributable to that class and exclusive voting rights with respect to matters
affecting that class. Class B shares will automatically convert to Class A
shares six years after the date of purchase. The following is a summary of
significant accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. Forward foreign currency contracts are valued based on the
closing prices of the forward currency contract rates in the London foreign
exchange markets on a daily basis as provided by a reliable bank or dealer.
Options are valued based upon the last sale price on the principal exchange on
which the option is traded or, in the absence of any transactions that day, the
value is based upon the last sale price on the prior trading date if it is
within the spread between the closing bid and asked prices. If the last sale
price is outside the spread, the closing bid is used.
- --------------------------------------------------------------------------------
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, 1998, the
market value of these securities comprised an average of 13% of the Fund's net
assets, and resulted in realized and unrealized losses of $2,330,886.
30 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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, 1998,
the Fund had entered into outstanding when-issued or forward commitments of
$242,250.
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. As of October 31, 1998, securities with an
aggregate market value of $92,869, representing 0. 23% of the Fund's net assets,
were in 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 foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The effect of changes in foreign currency exchange rates on
investments is separately identified from the fluctuations arising from changes
in market values of securities held and reported with all other foreign currency
gains and losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
31 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
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. As of October 31, 1998, the
Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $7,574,000, which expires between 2002 and 2006.
- --------------------------------------------------------------------------------
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, 1998, a provision of $40,565 was made for the Fund's projected
benefit obligations and payments of $3,017 were made to retired trustees,
resulting in an accumulated liability of $78,126 as of October 31, 1998.
The Board of Trustees has adopted a deferred compensation plan for
independent Trustees that enables Trustees to elect to defer receipt of all or a
portion of annual fees they are entitled to receive from the Fund. Under the
plan, the compensation deferred is periodically adjusted as though an equivalent
amount had been invested for the Trustee in shares of one or more Oppenheimer
funds selected by the Trustee. The amount paid to the Trustee under the plan
will be determined based upon the performance of the selected funds. Deferral of
Trustees' fees under the plan will not affect the net assets of the Fund, and
will not materially affect the Fund's assets, liabilities or net income per
share.
- --------------------------------------------------------------------------------
Distributions to Shareholders. The Fund intends to declare dividends separately
for Class A, Class B and Class C shares from net investment income each day the
New York Stock Exchange is open for business and pay such dividends monthly.
Distributions from net realized gains on investments, if any, will be declared
at least once each year.
32 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of paydown gains and losses and the recognition of certain
foreign currency gains (losses) as ordinary income (loss) for tax purposes. The
character of the distributions made during the year from net investment income
or net realized gains may differ from its ultimate characterization for federal
income tax purposes. Also, due to timing of dividend distributions, the fiscal
year in which amounts are distributed may differ from the fiscal year that the
income or realized gain was recorded by the Fund.
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, 1998, amounts have been reclassified to reflect a
decrease in additional paid-in capital of $325,875, a decrease in undistributed
net investment income of $132,895, and a decrease in accumulated net realized
loss on investments of $458,770.
- --------------------------------------------------------------------------------
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.
33 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of $.01 par value shares of
beneficial interest of each class. There were no transactions in shares of
beneficial interest for the year ended October 31, 1997, since the Fund operated
as a closed-end fund. Transactions in shares of beneficial interest for the year
ended October 31, 1998 were as follows:
Shares Amount
- --------------------------------------------------------------------------------
Class A:
Sold 286,833 $ 2,178,396
Dividends reinvested 74,607 566,615
Redeemed (1,664,869) (13,191,607)
---------- ------------
Net decrease (1,303,429) $(10,446,596)
========== ============
- --------------------------------------------------------------------------------
Class B:
Sold 131,607 $ 995,498
Dividends reinvested 1,934 14,358
Redeemed (6,381) (46,642)
---------- ------------
Net increase 127,160 $ 963,214
========== ============
- --------------------------------------------------------------------------------
Class C:
Sold 118,968 $ 899,891
Dividends reinvested 738 5,675
Redeemed (39,576) (304,898)
---------- ------------
Net increase 80,130 $ 600,668
========== ============
================================================================================
3. Unrealized Gains and Losses on Investments
As of October 31, 1998, net unrealized depreciation on investments and options
written of $2,382,115 was composed of gross appreciation of $1,643,667, and
gross depreciation of $4,025,782.
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 0.75% of the first
$200 million of average annual net assets, 0.72% of the next $200 million, 0.69%
of the next $200 million, 0.66% of the next $200 million, 0.60% of the next $200
million and 0.58% of average annual net assets in excess of $1 billion. Prior to
April 27, 1998, when the Fund was still organized as a closed-end investment
company, management fees were paid to the Manager at an annual fee of 0.65% on
the Fund's average annual net assets. 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.
34 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
For the year ended October 31, 1998, commissions (sales charges paid by
investors) on sales of Class A shares totaled $23,884, of which $6,486 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and
Class C shares totaled $22,555 and $4,345, respectively, of which $1,804 was
paid to an affiliated broker/dealer for Class B shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund and other Oppenheimer
funds. OFS's total costs of providing such services are allocated ratably to
these funds.
The Fund has adopted a Service Plan for Class A shares to reimburse
OFDI for a portion of its costs incurred in connection with the personal service
and maintenance of shareholder accounts that hold Class A shares. Reimbursement
is made quarterly at an annual rate that may not exceed 0.25% of the average
annual net assets of Class A shares of the Fund. OFDI uses the service fee to
reimburse brokers, dealers, banks and other financial institutions quarterly for
providing personal service and maintenance of accounts of their customers that
hold Class A shares.
The Fund has adopted Distribution and Service Plans for Class B and
Class C shares to compensate OFDI for its costs in distributing Class B and
Class C shares and servicing accounts. Under the Plans, the Fund pays OFDI an
annual asset-based sales charge of 0.75% per year on Class B and Class C shares,
for its services rendered in distributing Class B and Class C shares. OFDI also
receives a service fee of 0.25% per year to compensate dealers for providing
personal services for accounts that hold Class B and Class C shares. Each fee is
computed on the average annual net assets of Class B or Class C shares,
determined as of the close of each regular business day. During the year ended
October 31, 1998, OFDI retained $1,344 as compensation for Class B sales
commissions and service fee advances, as well as financing costs. If either Plan
is terminated by the Fund, the Board of Trustees may allow the Fund to continue
payments of the asset-based sales charge to OFDI for distributing shares before
the Plan was terminated. As of October 31, 1998, OFDI had incurred excess
distribution and servicing costs of $27,180 for Class B and $7,246 for Class C.
35 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
================================================================================
5. Forward Contracts
A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future date, at a negotiated rate.
The Fund uses forward contracts to seek to manage foreign currency
risks. They may also be used to tactically shift portfolio currency risk. The
Fund generally enters into forward contracts as a hedge upon the purchase or
sale of a security denominated in a foreign currency. In addition, the Fund may
enter into such contracts as a hedge against changes in foreign currency
exchange rates on portfolio positions.
Forward contracts are valued based on the closing prices of the
forward currency contract rates in the London foreign exchange markets on a
daily basis as provided by a reliable bank or dealer. The Fund will realize a
gain or loss upon the closing or settlement of the forward transaction.
Securities held in segregated accounts to cover net exposure on
outstanding forward contracts are noted in the Statement of Investments where
applicable. Unrealized appreciation or depreciation on forward contracts is
reported in the Statement of Assets and Liabilities. Realized gains and losses
are reported with all other foreign currency gains and losses in the Fund's
Statement of Operations.
Risks include the potential inability of the counterparty to meet
the terms of the contract and unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
As of October 31, 1998, the Fund had outstanding forward contracts as follows:
<TABLE>
<CAPTION>
Contract
Amount Valuation as of Unrealized Unrealized
Contract Description Expiration Dates (000s) October 31, 1998 Appreciation Depreciation
=========================================================================================================
<S> <C> <C> <C> <C> <C>
Contracts to Purchase
French Franc (FRF) 11/3/98 2FRF $ 410 $ -- $ 3
German Mark (DEM) 11/17/98 1,615DEM 975,463 -- 5,205
Japanese Yen (JPY) 11/13/98 195,300JPY 1,678,845 28,732 --
------- ----------
28,732 5,208
------- ----------
Contracts to Sell
Australian Dollar (AUD) 11/17/98 610AUD 380,907 215 --
Brazilian Real (BRR) 11/16/98-3/4/99 1,380BRR 1,096,665 -- 107,297
Canadian Dollar (CAD) 12/7/98 725CAD 470,033 -- 1,475
South African Rand (ZAR) 11/16/98 820ZAR 145,960 -- 13,274
Swedish Krona (SEK) 11/9/98 3,210SEK 410,860 970 --
------- ----------
1,185 122,046
------- ----------
Total Unrealized Appreciation and Depreciation $29,917 $ 127,254
======= ==========
</TABLE>
36 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
6. Futures Contracts
The Fund may buy and sell interest rate futures contracts in order to gain
exposure to or protect against changes in interest rates. The Fund may also buy
or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against
increases in interest rates and the resulting negative effect on the value of
fixed rate portfolio securities. The Fund may also purchase futures contracts to
gain exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to
deposit either cash or securities (initial margin) in an amount equal to a
certain percentage of the contract value. Subsequent payments (variation margin)
are made or received by the Fund each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Fund recognizes a realized gain or loss when the contract
is closed or expires.
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable
and/or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options)
include the possibility that there may be an illiquid market and that a change
in the value of the contract or option may not correlate with changes in the
value of the underlying securities.
As of October 31, 1998, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Unrealized
Number of Valuation as of Appreciation
Contract Description Expiration Date Contracts October 31, 1998 (Depreciation)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Contracts to Purchase
German Mark 12/14/98 10 $ 757,000 $ 55,875
United Kingdom Gilt 12/29/98 1 191,971 4,287
U.S. Treasury Nts., 20 yr. 12/21/98 30 3,867,188 (4,602)
----------
$ 55,560
==========
</TABLE>
37 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
================================================================================
7. Option Activity
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call
options to hedge against adverse movements in the value of portfolio holdings.
When an option is written, the Fund receives a premium and becomes obligated to
sell or purchase the underlying security at a fixed price, upon exercise of the
option.
Options are valued daily based upon the last sale price on the
principal exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in
the Statement of Investments where applicable. Shares subject to call,
expiration date, exercise price, premium received and market value are detailed
in a footnote to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Fund may incur
a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
Written option activity for the year ended October 31, 1998 was as follows:
<TABLE>
<CAPTION>
Call Options Put Options
-------------------------- --------------------------
Number of Amount of Number of Amount of
Options Premiums Options Premiums
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding as of
October 31, 1997 216,560,000 $ 25,776 296,705,175 $ 51,903
Options written 744,924,275 200,116 549,616,063 192,139
Options closed or expired (744,058,775) (156,030) (534,735,249) (169,657)
Options exercised (510,500) (16,050) (310,985,000) (27,645)
------------ --------- ------------ ---------
Options outstanding as of
October 31, 1998 216,915,000 $ 53,812 600,989 $ 46,740
============ ========= ============ =========
</TABLE>
38 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
8. Illiquid and Restricted Securities
As of October 31, 1998, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may be considered
illiquid if it lacks a readily available market or if its valuation has not
changed for a certain period of time. The Fund intends to invest no more than
10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid or restricted securities
subject to this limitation at October 31, 1998 was $2,788,515, which represents
6.89% of the Fund's net assets.
================================================================================
9. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the period ended
October 31, 1998.
39 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
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, 1998, 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, 1998, 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, 1998, 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 20, 1998
40 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Federal Income Tax Information (Unaudited)
- --------------------------------------------------------------------------------
================================================================================
In early 1999 shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1998. 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.
41 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
Oppenheimer World Bond Fund
- --------------------------------------------------------------------------------
================================================================================
Officers and Trustees Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro, Vice Chairman of the Board of Trustees
Bridget A. Macaskill, Trustee and President
Robert G. Galli, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Ashwin K. Vasan, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
================================================================================
Investment Advisor OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
================================================================================
Transfer and OppenheimerFunds Services
Shareholder
Servicing Agent
================================================================================
Custodian of The Bank of New York
Portfolio Securities
================================================================================
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. This report must be
preceded or accompanied by a Prospectus of Oppenheimer
World Bond Fund. For material information concerning
the Fund, see the Prospectus.
Shares of Oppenheimer funds are not deposits or
obligations of any bank, are not guaranteed by any
bank, are not insured by the FDIC or any other agency,
and involve investment risks, including the possible
loss of the principal amount invested.
42 Oppenheimer World Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
OppenheimerFunds Family
- --------------------------------------------------------------------------------
================================================================================
Real Asset Funds
- --------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
================================================================================
Global Stock Funds
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Developing Markets Fund International Growth Fund Quest Global Value Fund
International Small Global Fund Global Growth & Income
Company Fund Fund
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Stock Funds
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Enterprise Fund MidCap Fund Growth Fund
Discovery Fund Capital Appreciation Fund Disciplined Value Fund
Quest Small Cap Value Fund Quest Capital Value Fund Quest Value Fund
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Stock & Bond Funds
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Main Street Income & Total Return Fund Disciplined Allocation
Growth Fund Quest Balanced Fund
Quest Opportunity Value Fund1 Multiple Strategies
Value Fund Equity Income Fund Fund
Convertible Securities
Fund2
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Taxable Bond Funds
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International Bond Fund Champion Income Fund U.S. Government Trust
World Bond Fund Strategic Income Fund Limited-Term Government
High Yield Fund Bond Fund Fund
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Municipal Bond Funds
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California Municipal Fund3 Pennsylvania Municipal Rochester Division:
Florida Municipal Fund3 Fund3 Rochester Fund
New Jersey Municipal Fund3 Municipal Bond Fund Municipals
New York Municipal Fund3 Insured Municipal Fund Limited Term New York
Intermediate Municipal Municipal Fund
Fund
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Money Market Funds4
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Money Market Fund Cash Reserves
1. On 5/18/98, the Fund's name was changed from "Quest Growth & Income Value
Fund."
2. On 4/28/98, the Fund's name was changed from "Bond Fund for Growth."
3. Available only to investors in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds may seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in these funds.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two
World Trade Center, New York, NY 10048-0203.
(C) Copyright 1998 OppenheimerFunds, Inc. All rights reserved.
43 Oppenheimer World Bond Fund
<PAGE>
Information and services
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As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only a
toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling our
toll-free Telephone Transactions number or by visiting our website. And, by
enrolling in AccountLink, a convenient service that "links" your Oppenheimer
funds accounts and your bank checking or savings account, you can use the
Telephone Transactions number or website to make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today, or visit us at our website at www.oppenheimerfunds.com--
we're here to help.
Internet
24-hr access to account
information. Online
transactions now available
www.oppenheimerfunds.com
General Information
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
1-800-525-7048
Account Transactions
Mon-Fri 8:30am-8pm ET
1-800-852-8457
PhoneLink
24-hr automated information
and automated transactions
1-800-533-3310
Telecommunication Device
for the Deaf (TDD)
Mon-Fri 8:30am-2pm ET
1-800-843-4461
OppenheimerFunds
Information Hotline
24 hours a day, timely and
insightful messages on the
economy and issues that
affect your investments
1-800-835-3104
RA0705.001.1098 December 30, 1998
[LOGO] OppenheimerFunds(R)
Distributor, Inc.
