UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-07255
Oppenheimer International Bond Fund
(Exact name of registrant as specified in charter)
6803 South Tucson Way, Centennial, Colorado 80112-3924
(Address of principal executive offices)
(Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
498 Seventh Avenue, New York, New York 10018
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
--------------
Date of fiscal year end: September 30
Date of reporting period: October 1, 2002 - September 30, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
FUND PERFORMANCE DISCUSSION
How has the Fund performed? Below is a discussion by OppenheimerFunds, Inc., of
the Fund's performance during its fiscal year ended September 30, 2003, followed
by a graphical comparison of the Fund's performance to an appropriate
broad-based market index.
Management's Discussion of Fund Performance. The Fund's positive returns during
its fiscal year were driven primarily by its investments in emerging-market
bonds. Debt securities from some Latin American nations rallied strongly after
languishing before the reporting period. High levels of liquidity and declining
interest rates in most industrialized nations caused investors to look elsewhere
for high yields, which they found in emerging-markets debt securities. In
addition, the Federal Reserve Board's accommodative monetary policy provided
liquidity to support substantial capital flows from the United States and Europe
into the emerging markets. As demand for emerging-market bonds strengthened,
their prices rose sharply. As a result, the Fund benefited from emerging-markets
fixed-income investments denominated in U.S. dollars, euros and local
currencies.
The Fund received particularly strong returns from its investments in
Brazil's debt securities and currency-related instruments, such as interest-rate
swaps, as it became clearer that Brazil's new government was likely to pursue a
sound economic policy. The Fund also achieved gains in Indonesian bonds, which
recovered from depressed prices in the wake of a terrorist attack in Bali and
rising international reserve. The Fund also received positive contributions to
performance through its investments in the local currencies of some Asian
nations.
The Fund's investments in developed-market debt did not contribute
substantially to its performance. Volatile changes in the exchange rate between
the euro and a generally weakening U.S. dollar largely offset gains in local
currency terms. Euro-denominated debt comprised a portion of the Fund's
developed-market exposure during the reporting period.
After signs of stronger global growth began to emerge and sovereign emerging
markets spreads tightened to historical lows, making bonds less attractive, the
Fund established positions in equity securities designed to provide
participation in potential gains in international stock markets. In the few
months since those positions were established, the Fund has enjoyed strong
returns from its diversified investments in the stock markets of Asia, Russia
and Brazil.
In addition, the Fund's relatively short duration--a measure of sensitivity
to changing interest rates--helped it avoid the full brunt of the international
bond markets' declines in July and August, when signs of a more robust economic
recovery convinced many investors that U.S. interest rates had reached their
lows for the current economic cycle. Of course, the Fund's duration-management
strategy and its composition may change as
5 | OPPENHEIMER INTERNATIONAL BOND FUND
FUND PERFORMANCE DISCUSSION
economic and market conditions evolve. The Fund's holdings, strategies and
management are subject to change.
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 September 30, 2003. In the case of Class A, Class B and Class C
shares, performance is measured from inception of the Class on June 15, 1995. In
the case of Class N shares, performance is measured from inception of the Class
on March 1, 2001.
The Fund's performance reflects the deduction of the maximum initial sales
charge on Class A shares, the applicable contingent deferred sales charge on
Class B, Class C and Class N shares, and reinvestments of all dividends and
capital gains distributions.
The performance of each class of the Fund's shares is compared to two indices
because the Fund invests in debt securities issued by governments in both
developed countries and emerging market countries and in debt securities issued
by companies located in those countries. In the Manager's view, no single index
adequately combines both types of investments.
Performance is compared to the Citigroup Non-US Dollar World Government Bond
Index (formerly Salomon Brothers Non-US Dollar World Government Bond Index), a
subset of the Citigroup World Government Bond Index. The Citigroup Non-US Dollar
World Government Bond Index is a market capitalization weighted benchmark that
tracks the performance of 13 government bond markets including Australia,
Canada, Japan and 10 European countries. Thus, the index does not reflect the
performance of the fixed income markets in either the United States or in any
emerging market countries. In addition, it is comprised of only government bonds
and does not reflect the performance of corporate bonds.
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 that follow shows the effect of taxes. Indices may not be
purchased directly by investors and indices performance does not depict or
predict actual Fund performance. 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 or countries in the indices.
6 | OPPENHEIMER INTERNATIONAL BOND FUND
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer International Bond Fund (Class A)
Citigroup Non-US Dollar World Government Bond Index
Oppenheimer International Citigroup Non-USD
Date Bond Fund (Class A) World Government Bond Index
06/15/1995 $ 9,525 $10,000
06/30/1995 9,570 10,050
09/30/1995 10,014 9,806
12/31/1995 10,473 10,009
03/31/1996 10,860 9,840
06/30/1996 11,362 9,879
09/30/1996 11,898 10,201
12/31/1996 12,492 10,418
03/31/1997 12,584 9,815
06/30/1997 12,934 10,092
09/30/1997 13,246 10,114
12/31/1997 12,799 9,974
03/31/1998 12,978 10,015
06/30/1998 12,850 10,182
09/30/1998 11,591 11,160
12/31/1998 12,242 11,748
03/31/1999 12,216 11,179
06/30/1999 12,635 10,678
09/30/1999 12,818 11,331
12/31/1999 13,589 11,152
03/31/2000 14,150 11,023
06/30/2000 13,986 10,935
09/30/2000 13,962 10,441
12/31/2000 14,519 10,858
03/31/2001 14,144 10,326
06/30/2001 14,206 10,122
09/30/2001 14,157 10,907
12/31/2001 14,830 10,474
03/31/2002 15,149 10,279
06/30/2002 16,368 11,715
09/30/2002 16,532 12,047
12/31/2002 17,917 12,777
03/31/2003 18,452 13,254
06/30/2003 19,889 13,812
09/30/2003 20,941 14,192
Average Annual Total Returns of Class A Shares of the Fund at 9/30/03*
1-Year 20.65% 5-Year 11.47% Since Inception 9.32%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer International Bond Fund (Class B)
Citigroup Non-US Dollar World Government Bond Index
Oppenheimer International Citigroup Non-USD
Date Bond Fund (Class B) World Government Bond Index
06/15/1995 $10,000 $10,000
06/30/1995 10,045 10,050
09/30/1995 10,492 9,806
12/31/1995 10,929 10,009
03/31/1996 11,312 9,840
06/30/1996 11,837 9,879
09/30/1996 12,350 10,201
12/31/1996 12,943 10,418
03/31/1997 13,014 9,815
06/30/1997 13,352 10,092
09/30/1997 13,649 10,114
12/31/1997 13,165 9,974
03/31/1998 13,324 10,015
06/30/1998 13,168 10,182
09/30/1998 11,852 11,160
12/31/1998 12,496 11,748
03/31/1999 12,447 11,179
06/30/1999 12,850 10,678
09/30/1999 13,013 11,331
12/31/1999 13,773 11,152
03/31/2000 14,318 11,023
06/30/2000 14,094 10,935
09/30/2000 14,046 10,441
12/31/2000 14,614 10,858
03/31/2001 14,208 10,326
06/30/2001 14,252 10,122
09/30/2001 14,203 10,907
12/31/2001 14,878 10,474
03/31/2002 15,198 10,279
06/30/2002 16,421 11,715
09/30/2002 16,585 12,047
12/31/2002 17,974 12,777
03/31/2003 18,512 13,254
06/30/2003 19,954 13,812
09/30/2003 21,009 14,192
Average Annual Total Returns of Class B Shares of the Fund at 9/30/03*
1-Year 20.48% 5-Year 11.43% Since Inception 9.37%
*See Notes on page 9 for further details.
The performance information for the Citigroup Non-US Dollar World Government
Bond Index in the graphs begins on 5/31/95 for Class A, B and C and 2/28/01 for
Class N.
Past performance cannot guarantee future results. Graphs are not drawn to same
scale.
7 | OPPENHEIMER INTERNATIONAL BOND FUND
FUND PERFORMANCE DISCUSSION
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer International Bond Fund (Class C)
Citigroup Non-US Dollar World Government Bond Index
Oppenheimer International Citigroup Non-USD
Date Bond Fund (Class C) World Government Bond Index
06/15/1995 $10,000 $10,000
06/30/1995 10,045 10,050
09/30/1995 10,473 9,806
12/31/1995 10,929 10,009
03/31/1996 11,311 9,840
06/30/1996 11,814 9,879
09/30/1996 12,350 10,201
12/31/1996 12,943 10,418
03/31/1997 12,990 9,815
06/30/1997 13,352 10,092
09/30/1997 13,649 10,114
12/31/1997 13,165 9,974
03/31/1998 13,324 10,015
06/30/1998 13,169 10,182
09/30/1998 11,853 11,160
12/31/1998 12,497 11,748
03/31/1999 12,448 11,179
06/30/1999 12,852 10,678
09/30/1999 13,014 11,331
12/31/1999 13,774 11,152
03/31/2000 14,319 11,023
06/30/2000 14,097 10,935
09/30/2000 14,049 10,441
12/31/2000 14,617 10,858
03/31/2001 14,210 10,326
06/30/2001 14,246 10,122
09/30/2001 14,169 10,907
12/31/2001 14,779 10,474
03/31/2002 15,105 10,279
06/30/2002 16,292 11,715
09/30/2002 16,422 12,047
12/31/2002 17,724 12,777
03/31/2003 18,221 13,254
06/30/2003 19,607 13,812
09/30/2003 20,606 14,192
Average Annual Total Returns of Class C Shares of the Fund at 9/30/03*
1-Year 24.48% 5-Year 11.69% Since Inception 9.11%
Class N Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer International Bond Fund (Class N)
Citigroup Non-US Dollar World Government Bond Index
Oppenheimer International Citigroup Non-USD
Date Bond Fund (Class N) World Government Bond Index
03/01/2001 $10,000 $10,000
03/31/2001 9,706 9,598
06/30/2001 9,747 9,409
09/30/2001 9,712 10,139
12/31/2001 10,144 9,736
03/31/2002 10,380 9,554
06/30/2002 11,208 10,889
09/30/2002 11,287 11,198
12/31/2002 12,225 11,877
03/31/2003 12,583 12,320
06/30/2003 13,552 12,838
09/30/2003 14,257 13,192
Average Annual Total Returns of Class N Shares of the Fund at 9/30/03*
1-Year 25.31% Since Inception 14.73%
*See Notes on page 9 for further details.
The performance information for the Citigroup Non-US Dollar World Government
Bond Index in the graphs begins on 5/31/95 for Class A, B and C and 2/28/01 for
Class N.
Past performance cannot guarantee future results. Graphs are not drawn to same
scale.
8 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES
In reviewing performance and rankings, please remember that past performance
cannot 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
fluctuations, and current performance may be more or less than the results
shown. For updates on the Fund's performance, visit our website at
www.oppenheimerfunds.com.
Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares. For more complete information
about the Fund, including charges, expenses and risks, please refer to the
prospectus. To obtain a copy, call your financial advisor, call OppenheimerFunds
Distributor, Inc. at 1.800.CALL OPP (1.800.225.5677) or visit the
OppenheimerFunds website at www.oppenheimerfunds.com. Read the prospectus
carefully before you invest or send money.
Class A shares of the Fund were first publicly offered on 6/15/95. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 4.75%.
Class B shares of the Fund were first publicly offered on 6/15/95. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to
Class A shares 72 months after purchase, the "since inception" return for Class
B uses Class A performance for the period after conversion. Class B shares are
subject to an annual 0.75% asset-based sales charge.
Class C shares of the Fund were first publicly offered on 6/15/95. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for the 1-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.
Class N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
9 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS September 30, 2003
Principal Market Value
Amount See Note 1
- ---------------------------------------------------------------------------------------------------------------
Foreign Government Obligations--77.4%
- ---------------------------------------------------------------------------------------------------------------
Argentina--2.3%
Argentina (Republic of) Bonds:
1.162%, 8/3/12 1 $14,025,000 $ 8,462,839
1.278%, 5/3/05 2,3 693,000 637,560
Series PRE8, 2%, 1/3/10 2,3,4 [ARP] 5,820,000 1,763,485
Series PR12, 2%, 1/3/16 2,3,4 [ARP] 11,505,972 2,676,497
- ---------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Disc. Bonds, 2.345%, 3/31/23 2,3 660,000 326,700
- ---------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Treasury Bills, 14.75%, 10/8/04 5 [ARP] 412,000 125,050
- ---------------------------------------------------------------------------------------------------------------
Buenos Aires (Province of) Bonds, Bonos de Consolidacion de Deudas,
Series PBA1, 3.257%, 4/1/07 2,4 [ARP] 2,237,889 739,657
- ---------------------------------------------------------------------------------------------------------------
JPMorgan Chase Bank, Argentina (Republic of) Treasury Bills,
8.84%, 2/20/04 4 [ARP] 785,000 257,669
--------------
14,989,457
- ---------------------------------------------------------------------------------------------------------------
Austria--1.0%
Austria (Republic of) Nts.:
3.40%, 10/20/04 [EUR] 1,580,000 1,864,093
5.50%, 10/20/07 [EUR] 2,440,000 3,109,597
Series 98-3, 3.90%, 10/20/05 [EUR] 1,435,000 1,723,861
--------------
6,697,551
- ---------------------------------------------------------------------------------------------------------------
Belgium--3.4%
Belgium (Kingdom of) Bonds:
5%, 9/28/11 [EUR] 1,950,000 2,449,816
Series 19, 6.50%, 3/31/05 [EUR] 7,460,000 9,231,381
Series 28, 5.75%, 3/28/08 [EUR] 8,405,000 10,840,255
--------------
22,521,452
- ---------------------------------------------------------------------------------------------------------------
Brazil--4.0%
Brazil (Federal Republic of) Bonds:
11.50%, 4/2/09 [EUR] 6,930,000 8,521,259
Series 15 yr., 2.188%, 4/15/09 1 21,177 19,139
- ---------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Sr. Unsec. Unsub. Nts., 12%, 11/17/06 [EUR] 5,730,000 7,390,203
- ---------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Unsec. Bonds, 10%, 7/30/07 [GBP] 5,495,000 8,809,865
- ---------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Unsec. Unsub. Bonds:
10%, 8/7/11 1,314,000 1,294,290
11%, 8/17/39 200 190
Cl. B, 8.875%, 4/15/24 81,000 64,881
--------------
26,099,827
- ---------------------------------------------------------------------------------------------------------------
Canada--0.7%
Canada (Government of) Bonds, 5.50%, 6/1/10 [CAD] 6,000,000 4,789,685
- ---------------------------------------------------------------------------------------------------------------
Colombia--1.9%
Colombia (Republic of) Sr. Unsec. Unsub. Bonds, 11.25%, 10/20/05 [EUR] 9,535,000 12,494,755
- ---------------------------------------------------------------------------------------------------------------
Denmark--0.8%
Denmark (Kingdom of) Nts., 4%, 8/15/08 [DKK] 33,200,000 5,343,283
- ---------------------------------------------------------------------------------------------------------------
Dominican Republic--0.2%
Dominican Republic Unsec. Unsub. Bonds, 9.50%, 9/27/06 1,570,000 1,554,300
10 | OPPENHEIMER INTERNATIONAL BOND FUND
Principal Market Value
Amount See Note 1
- ---------------------------------------------------------------------------------------------------------------
Finland--2.2%
Finland (Republic of) Bonds, 5%, 4/25/09 [EUR] 1,680,000 $ 2,120,726
- ---------------------------------------------------------------------------------------------------------------
Finland (Republic of) Sr. Unsec. Unsub. Bonds:
2.75%, 7/4/06 [EUR] 3,470,000 4,059,273
5%, 7/4/07 [EUR] 6,915,000 8,641,711
--------------
14,821,710
- ---------------------------------------------------------------------------------------------------------------
France--4.0%
France (Government of) Obligations Assimilables du Tresor Bonds,
5.50%, 10/25/07 [EUR] 3,615,000 4,605,152
- ---------------------------------------------------------------------------------------------------------------
France (Government of) Treasury Nts.:
3.50%, 7/12/04 [EUR] 5,180,000 6,100,774
3 yr., 3.50%, 1/12/05 [EUR] 7,090,000 8,402,594
5 yr., 4.75%, 7/12/07 [EUR] 6,085,000 7,545,193
--------------
26,653,713
- ---------------------------------------------------------------------------------------------------------------
Germany--6.7%
Germany (Republic of) Bonds:
2%, 6/17/05 [EUR] 7,865,000 9,127,126
3%, 12/10/04 [EUR] 2,385,000 2,806,892
5.375%, 1/4/10 [EUR] 5,630,000 7,227,136
Series 01, 5%, 7/4/11 [EUR] 3,635,000 4,572,212
Series 02, 5%, 7/4/12 [EUR] 4,200,000 5,274,572
Series 140, 4.50%, 8/17/07 6 [EUR] 12,380,000 15,202,859
--------------
44,210,797
- ---------------------------------------------------------------------------------------------------------------
Great Britain--1.5%
United Kingdom Treasury Nts., 7.50%, 12/7/06 7,8 [GBP] 5,325,000 9,684,762
- ---------------------------------------------------------------------------------------------------------------
Greece--5.2%
Greece (Republic of) Bonds:
3.50%, 4/18/08 [EUR] 20,740,000 24,463,486
5.35%, 5/18/11 [EUR] 7,520,000 9,611,087
--------------
34,074,573
- ---------------------------------------------------------------------------------------------------------------
Guatemala--0.4%
Guatemala (Republic of) Nts.:
10.25%, 11/8/11 9 160,000 184,000
10.25%, 11/8/11 1,940,000 2,231,000
--------------
2,415,000
- ---------------------------------------------------------------------------------------------------------------
Italy--4.1%
Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali:
3.50%, 1/15/08 [EUR] 4,500,000 5,326,417
4%, 3/1/05 [EUR] 1,135,000 1,355,998
4.50%, 7/1/04 [EUR] 5,870,000 6,961,004
5%, 10/15/07 6 [EUR] 10,625,000 13,319,901
--------------
26,963,320
11 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS Continued
Principal Market Value
Amount See Note 1
- ---------------------------------------------------------------------------------------------------------------
Ivory Coast--0.1%
Ivory Coast (Government of) Past Due Interest Bonds,
1.90%, 3/29/18 2,3,4 [FRF] 16,007,500 $ 507,986
- ---------------------------------------------------------------------------------------------------------------
Japan--22.3%
Japan (Government of) Bonds, 5 yr., Series 14, 0.40%, 6/20/06 6 [JPY] 16,372,800,000 146,911,860
- ---------------------------------------------------------------------------------------------------------------
Mexico--0.3%
United Mexican States Bonds, 6.75%, 6/6/06 6 [JPY] 120,000,000 1,229,164
- ---------------------------------------------------------------------------------------------------------------
United Mexican States Unsec. Unsub. Nts., Series 6 BR, 6.75%, 6/6/06 [JPY] 85,000,000 870,657
--------------
2,099,821
- ---------------------------------------------------------------------------------------------------------------
Nigeria--0.3%
Central Bank of Nigeria Gtd. Bonds, Series WW, 6.25%, 11/15/20 1,375,000 1,223,750
- ---------------------------------------------------------------------------------------------------------------
Nigeria (Federal Republic of) Promissory Nts., Series RC, 5.092%, 1/5/10 755,202 633,081
--------------
1,856,831
- ---------------------------------------------------------------------------------------------------------------
Peru--0.6%
Peru (Republic of) Sr. Nts., 4.53%, 2/28/16 5 6,568,457 3,916,771
- ---------------------------------------------------------------------------------------------------------------
Philippines--2.2%
Philippines (Republic of) Nts., 9.875%, 3/16/10 540,000 611,550
- ---------------------------------------------------------------------------------------------------------------
Philippines (Republic of) Unsec. Unsub. Nts., 9.375%, 12/7/06 [EUR] 11,075,000 14,088,784
--------------
14,700,334
- ---------------------------------------------------------------------------------------------------------------
Portugal--1.3%
Portugal (Republic of) Obrig Do Tes Medio Prazo Unsec
Unsub. Bonds, 5.85%, 5/20/10 [EUR] 6,465,000 8,505,828
- ---------------------------------------------------------------------------------------------------------------
Russia--3.0%
Ministry Finance of Russia Debs., Series V, 3%, 5/14/08 10,420,000 9,325,900
- ---------------------------------------------------------------------------------------------------------------
Russian Federation Unsec. Unsub. Nts.:
8.75%, 7/24/05 1,430,000 1,578,362
10%, 6/26/07 7,435,000 8,866,238
--------------
19,770,500
- ---------------------------------------------------------------------------------------------------------------
Spain--2.5%
Spain (Kingdom of) Bonds, Bonos y Obligacion del Estado,
4.80%, 10/31/06 [EUR] 5,500,000 6,809,052
- ---------------------------------------------------------------------------------------------------------------
Spain (Kingdom of) Treasury Bills, 2.02%, 10/10/03 5 [EUR] 8,175,000 9,515,434
--------------
16,324,486
- ---------------------------------------------------------------------------------------------------------------
Sweden--2.2%
Sweden (Kingdom of) Debs., Series 1040, 6.50%, 5/5/08 [SEK] 102,770,000 14,753,741
- ---------------------------------------------------------------------------------------------------------------
The Netherlands--3.4%
The Netherlands (Government of) Bonds:
5%, 7/15/11 [EUR] 1,850,000 2,330,648
Series 1, 5.75%, 2/15/07 [EUR] 15,880,000 20,231,396
--------------
22,562,044
- ---------------------------------------------------------------------------------------------------------------
Turkey--0.2%
Turkey (Republic of) Sr. Unsec. Unsub. Nts., 11.875%, 1/15/30 955,000 1,107,800
12 | OPPENHEIMER INTERNATIONAL BOND FUND
Principal Market Value
Amount See Note 1
- ---------------------------------------------------------------------------------------------------------------
Ukraine--0.6%
Ukraine (Government of) Bonds, 7.65%, 6/11/13 $ 2,460,000 $ 2,460,000
- ---------------------------------------------------------------------------------------------------------------
Ukraine (Government of) Sr. Unsec. Nts., 11%, 3/15/07 1,215,212 1,360,734
--------------
3,820,734
- ---------------------------------------------------------------------------------------------------------------
Venezuela--0.0%
Venezuela (Republic of) Collateralized Par Bonds, Series W-B, 6.75%, 3/31/20 159,000 140,715
--------------
Total Foreign Government Obligations (Cost $486,067,431) 510,293,636
- ---------------------------------------------------------------------------------------------------------------
Loan Participations--2.2%
Algeria (Republic of) Loan Participation Bonds, 0.938%, 3/4/10 1,4 [JPY] 230,311,880 1,906,776
- ---------------------------------------------------------------------------------------------------------------
Algeria (Republic of) Loan Participation Nts., 2.063%, 3/4/10 1,4 880,750 846,621
- ---------------------------------------------------------------------------------------------------------------
Algeria (Republic of) Loan Participation Nts., 2.063%, 9/4/06 1,4 985,714 966,000
- ---------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, OAO Gazprom Loan Participation Nts., 6.50%, 8/4/05 3,005,000 3,015,818
- ---------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, Indonesian Rupiah Loan Participation Nts.:
2.636%, 5/21/04 5,390,000 4,945,325
2.636%, 3/25/05 3,155,000 2,736,962
--------------
Total Loan Participations (Cost $13,331,428) 14,417,502
- ---------------------------------------------------------------------------------------------------------------
Corporate Bonds and Notes--2.5%
Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/1995 2,3,4 2,000 --
- ---------------------------------------------------------------------------------------------------------------
Mexican Williams, 1.258% Sr. Nts., 11/15/08 1,4 500,000 521,250
- ---------------------------------------------------------------------------------------------------------------
Ongko International Finance Co. BV, 10.50% Sec. Nts., 3/29/04 2,3,4 550,000 3,438
- ---------------------------------------------------------------------------------------------------------------
Pemex Project Funding Master Trust, 6.625% Bonds, 4/4/10 9 [EUR] 4,950,000 6,134,891
- ---------------------------------------------------------------------------------------------------------------
Petroleos Mexicanos, 7.375% Unsec. Nts., 8/13/07 4 [ITL] 14,895,000,000 9,771,872
--------------
Total Corporate Bonds and Notes (Cost $15,304,663) 16,431,451
Shares
- ---------------------------------------------------------------------------------------------------------------
Common Stocks--2.2%
AO VimpelCom, Sponsored ADR 3 7,375 448,842
- ---------------------------------------------------------------------------------------------------------------
Banco Bradesco SA, Sponsored ADR 14,100 284,397
- ---------------------------------------------------------------------------------------------------------------
Banco Itau Holding Financeira SA, ADR 20,400 738,480
- ---------------------------------------------------------------------------------------------------------------
Bank Pekao SA, Sponsored GDR 19,204 549,868
- ---------------------------------------------------------------------------------------------------------------
Cesky Telecom AS, GDR 3 44,233 435,695
- ---------------------------------------------------------------------------------------------------------------
Companhia de Bebidas das Americas, ADR 48,800 1,056,520
- ---------------------------------------------------------------------------------------------------------------
Companhia Siderurgica Nacional SA, Sponsored ADR 23,600 838,272
- ---------------------------------------------------------------------------------------------------------------
Companhia Vale do Rio Doce, ADR 21,390 873,140
- ---------------------------------------------------------------------------------------------------------------
Gedeon Richter Rt., GDR, S Shares 3,805 372,890
- ---------------------------------------------------------------------------------------------------------------
iShares MSCI Brazil Index Fund 3 70,115 889,759
- ---------------------------------------------------------------------------------------------------------------
iShares MSCI Hong Kong Index Fund 225 2,131
- ---------------------------------------------------------------------------------------------------------------
JSC Mining & Metallurgical Co. Norilsk Nickel, ADR 10,185 505,431
- ---------------------------------------------------------------------------------------------------------------
KGHM Polska Miedz SA, GDR 3 17,559 182,613
- ---------------------------------------------------------------------------------------------------------------
Komercni Banka AS, GDR 29,434 858,001
- ---------------------------------------------------------------------------------------------------------------
LUKOIL, Sponsored ADR 4,785 395,050
13 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS Continued
Market Value
Shares See Note 1
- ---------------------------------------------------------------------------------------------------------------
Common Stocks Continued
Magyar Tavkozlesi Rt, Sponsored ADR 25,098 $ 469,082
- ---------------------------------------------------------------------------------------------------------------
MOL Magyar Olaj-es Gazipari Rt, Sponsored GDR 16,308 451,732
- ---------------------------------------------------------------------------------------------------------------
OAO Gazprom, Sponsored ADR 18,105 449,004
- ---------------------------------------------------------------------------------------------------------------
OTP Bank Ltd., GDR, S Shares 3 31,439 748,248
- ---------------------------------------------------------------------------------------------------------------
Petroleo Brasileiro SA, Sponsored ADR 38,277 877,692
- ---------------------------------------------------------------------------------------------------------------
Polski Koncern Naftowy Orlen SA, GDR 45,128 546,049
- ---------------------------------------------------------------------------------------------------------------
Sibneft, Sponsored ADR 3 15,405 450,596
- ---------------------------------------------------------------------------------------------------------------
Surgutneftegaz, Sponsored ADR 17,405 394,223
- ---------------------------------------------------------------------------------------------------------------
Telekomunikacja Polska SA, GDR 140,595 503,330
- ---------------------------------------------------------------------------------------------------------------
Uniao de Bancos Brasileiros SA (Unibanco), Sponsored ADR 27,000 534,600
- ---------------------------------------------------------------------------------------------------------------
YUKOS, ADR 7,485 464,145
--------------
Total Common Stocks (Cost $13,340,250) 14,319,790
Units
- ---------------------------------------------------------------------------------------------------------------
Rights, Warrants and Certificates--2.8%
Chesapeake Energy Corp. Wts., Exp. 9/1/04 3 66 3
- ---------------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/15/05 3,4 495 5
- ---------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd. Wts., Exp. 1/15/07 3,4 50 --
- ---------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc. All Country Asia Free
(except for Japan) Wts., Exp. 3/4/05 3 427,760 5,500,181
- ---------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc. Basket of countries Wts., Exp. 3/4/05 3 338,332 4,046,045
- ---------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital III, Inc. All Country Asia Free
(except for Japan) Wts., Exp. 3/4/05 3 827,508 8,926,081
- ---------------------------------------------------------------------------------------------------------------
Protection One, Inc. Wts., Exp. 6/30/05 3,4 640 --
- ---------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Oil Linked Payment Obligation Wts., Exp. 4/15/20 3,4 500 --
--------------
Total Rights, Warrants and Certificates (Cost $15,748,122) 18,472,315
Principal
Amount
- ---------------------------------------------------------------------------------------------------------------
Structured Notes--9.2%
Citigroup Global Capital Markets Holdings, Inc., OAO Gazprom
Russia Local Market Unsec. Credit Linked Nts., 15.208%, 11/8/05 1 $ 4,406,270 4,735,194
- ---------------------------------------------------------------------------------------------------------------
Citigroup Global Markets Holdings, Inc., Argentine Peso Linked Nts.,
7/6/04 1,165,000 1,144,263
- ---------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston Corp. (Nassau Branch), U.S. Dollar/
Philippine Peso Linked Nts., 12.50%, 3/5/12 1 [PHP] 119,085,000 2,174,888
- ---------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston International, U.S. Dollar/
South African Rand Linked Nts., Series FBi 43, 1.065%, 5/23/22 1 2,100,000 2,037,210
- ---------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, Basket of Emerging Market Currencies Linked Nts.:
0.85%, 1/20/04 11,340,000 11,490,822
0.85%, 3/24/04 8,490,000 8,532,450
- ---------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, Indonesian Rupiah Linked Nts.:
14%, 6/22/09 3,867,352 4,501,598
14%, 6/22/09 2,145,123 2,360,922
14%, 6/22/09 1,855,000 2,128,983
14 | OPPENHEIMER INTERNATIONAL BOND FUND
Principal Market Value
Amount See Note 1
- ---------------------------------------------------------------------------------------------------------------
Structured Notes Continued
Deutsche Bank AG, Peru Credit Default Linked Nts., 4.716%, 4/29/06 1 $ 2,250,000 $ 2,293,200
- ---------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, Turkish Lira Treasury Bill Linked Nts., 0.985%, 8/20/04 4,730,000 5,169,417
- ---------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, Venezuela (Republic of) Credit Linked Certificate
of Deposit, 8.18%, 9/20/06 1 2,180,000 2,122,666
- ---------------------------------------------------------------------------------------------------------------
Deutsche Bank AG, Venezuela (Republic of) Credit Linked Nts.,
1.094%, 6/15/04 1 2,800,000 2,939,160
- ---------------------------------------------------------------------------------------------------------------
JPMorgan Chase Bank, EMBI Plus/EMBI Global Uruguay Linked
Certificate of Deposit, 0.30%, 10/21/03 1,581,823 1,564,064
- ---------------------------------------------------------------------------------------------------------------
JPMorgan Chase Bank, Venezuela (Republic of) Credit Linked
Certificate of Deposit:
7.79%, 9/20/05 1 2,410,000 2,408,072
7.84%, 9/20/05 1 2,410,000 2,410,241
- ---------------------------------------------------------------------------------------------------------------
JPMorgan Chase Bank, Venezuela (Republic of) Credit Linked
Default Bonds, 7.94%, 9/20/05 1 2,410,000 2,414,579
--------------
Total Structured Notes (Cost $59,229,113) 60,427,729
Dates Strike Contracts
- ---------------------------------------------------------------------------------------------------------------
Options Purchased--0.2%
Chilean Peso Call 3,4 3/22/04 655CLP 6,378,824 134,478
- ---------------------------------------------------------------------------------------------------------------
Euro Call 3,4 4/1/04 1.20EUR 56,025,000 1,042,065
- ---------------------------------------------------------------------------------------------------------------
Japanese Yen Call 3,4 6/1/04 107JPY 1,917,000,000 393,752
- ---------------------------------------------------------------------------------------------------------------
Japanese Yen Put 3,4 2/25/04 122EUR 12,755,000 125,892
--------------
Total Options Purchased (Cost $1,616,881) 1,696,187
Principal
Amount
- ---------------------------------------------------------------------------------------------------------------
Joint Repurchase Agreements--4.1%
Undivided interest of 4.27% in joint repurchase agreement (Principal
Amount/Market Value $626,785,000, with a maturity value of $626,801,192)
with Banc One Capital Markets, Inc., 0.93%, dated 9/30/03, to be repurchased
at $26,770,692 on 10/1/03, collateralized by U.S. Treasury Nts., 7.25%, 5/15/04,
with a value of $53,265,500, U.S. Treasury Bonds, 1.75%--9%, 9/30/05--8/15/23,
with a value of $448,490,782 and U.S. Treasury Bills, 2/5/04--2/19/04, with
a value of $138,244,579 (Cost $26,770,000) $26,770,000 26,770,000
- ---------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $631,407,888) 100.6% 662,828,610
- ---------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (0.6) (3,996,399)
--------------------------------
Net Assets 100.0% $658,832,211
================================
15 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS Continued
Footnotes to Statement of Investments
Principal amount and strike are reported in U.S. Dollars, except for those
denoted in the following currencies:
ARP Argentine Peso GBP British Pound Sterling
CAD Canadian Dollar ITL Italian Lira
CLP Chilean Peso JPY Japanese Yen
DKK Danish Krone PHP Philippines Peso
EUR Euro SEK Swedish Krona
FRF French Franc
1. Represents the current interest rate for a variable or increasing rate
security.
2. Issuer is in default. See Note 1 of Notes to Financial Statements.
3. Non-income producing security.
4. Identifies issues considered to be illiquid or restricted. See Note 11 of
Notes to Financial Statements.
5. Zero coupon bond reflects effective yield on the date of purchase.
6. Delayed settlement security to be delivered and settled after September 30,
2003. See Note 1 of Notes to Financial Statements.
7. A sufficient amount of securities has been designated to cover outstanding
foreign currency contracts. See Note 5 of Notes to Financial Statements.
8. A sufficient amount of liquid assets has been designated to cover outstanding
written options, as follows:
Contracts Expiration Exercise Premium Market Value
Subject to Call Dates Price Received See Note 1
- ------------------------------------------------------------------------------------------------
Chilean Peso 6,378,797 3/22/04 665.00CLP $ 149,901 $ 189,132
Japanese Yen 25,510,000 4/28/04 141.00JPY 355,505 87,244
Japanese Yen 12,755,000 2/25/04 132.00JPY 146,582 197,830
Japanese Yen 9,840,000,000 10/23/03-10/30/03 110.00JPY 896,782 731,752
Thailand Baht 2,660,000 10/27/03 40.00THB 17,423 17,556
--------------------------
1,566,193 1,223,514
==========================
Contracts
Subject to Put
- ------------------------------------------------------------------------------------------------
Japanese Yen 2,161,000,000 6/1/04 120.00JPY 403,387 132,685
Thailand Baht 2,660,000 10/27/03 40.50THB 10,773 6,251
--------------------------
414,160 138,936
--------------------------
$1,980,353 $1,362,450
==========================
9. 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 $6,318,891 or 0.96% of the Fund's net
assets as of September 30, 2003.
16 | OPPENHEIMER INTERNATIONAL BOND FUND
Distribution of investments representing geographic holdings, as a percentage
of total investments at value, is as follows:
Geographic Holdings Market Value Percent
- --------------------------------------------------------------------------
Japan $146,911,860 22.2%
United States 47,828,261 7.2
Germany 44,210,797 6.7
Philippines 36,898,494 5.6
Greece 34,074,573 5.1
Brazil 31,302,928 4.7
Russia 30,628,803 4.6
Italy 26,963,320 4.1
France 26,653,713 4.0
The Netherlands 22,562,044 3.4
Belgium 22,521,452 3.4
Mexico 18,527,834 2.8
Indonesia 16,677,228 2.5
Spain 16,324,486 2.5
Argentina 16,133,720 2.4
Finland 14,821,710 2.2
Sweden 14,753,741 2.2
Colombia 12,494,755 1.9
Venezuela 12,435,433 1.9
Great Britain 9,684,762 1.5
Portugal 8,505,828 1.3
Austria 6,697,551 1.0
Turkey 6,277,217 0.9
Peru 6,209,971 0.9
Denmark 5,343,283 0.8
Canada 4,789,685 0.7
Ukraine 3,820,734 0.6
Algeria 3,719,397 0.6
Guatemala 2,415,000 0.4
Hungary 2,041,952 0.3
South Africa 2,037,210 0.3
Nigeria 1,856,831 0.3
Poland 1,781,860 0.3
Uruguay 1,564,064 0.2
Dominican Republic 1,554,300 0.2
Czech Republic 1,293,696 0.2
Ivory Coast 507,986 0.1
Hong Kong 2,131 --
---------------------------
Total $662,828,610 100.0%
===========================
See accompanying Notes to Financial Statements.
17 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES September 30, 2003
- -----------------------------------------------------------------------------------------------------------
Assets
Investments, at value (cost $631,407,888)--see accompanying statement $662,828,610
- -----------------------------------------------------------------------------------------------------------
Cash--foreign currencies (cost $56,551) 56,910
- -----------------------------------------------------------------------------------------------------------
Cash used for collateral on futures 2,603,000
- -----------------------------------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 10,125,070
- -----------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns 10,008,101
Investments sold 8,278,397
Shares of beneficial interest sold 6,800,655
Swap contract 40,502
Futures margins 30,711
Other 1,318
--------------
Total assets 700,773,274
- -----------------------------------------------------------------------------------------------------------
Liabilities
Bank overdraft 3,051,625
- -----------------------------------------------------------------------------------------------------------
Unrealized depreciation on foreign currency contracts 4,455,025
- -----------------------------------------------------------------------------------------------------------
Options written, at value (premiums received $1,980,353)--see accompanying statement 1,362,450
- -----------------------------------------------------------------------------------------------------------
Swaptions written, at value (premiums received $694,082)--see accompanying statement 385,103
- -----------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $19,627,024 purchased on a delayed settlement basis) 28,851,761
Shares of beneficial interest redeemed 1,478,665
Closed foreign currency contracts 1,411,015
Distribution and service plan fees 358,108
Dividends 323,390
Transfer and shareholder servicing agent fees 109,770
Shareholder reports 69,354
Trustees' compensation 3,818
Other 80,979
--------------
Total liabilities 41,941,063
- -----------------------------------------------------------------------------------------------------------
Net Assets $658,832,211
==============
- -----------------------------------------------------------------------------------------------------------
Composition of Net Assets
Par value of shares of beneficial interest $ 123,769
- -----------------------------------------------------------------------------------------------------------
Additional paid-in capital 605,854,999
- -----------------------------------------------------------------------------------------------------------
Undistributed net investment income 16,341,168
- -----------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (2,526,989)
- -----------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and
liabilities denominated in foreign currencies 39,039,264
--------------
Net Assets $658,832,211
==============
18 | OPPENHEIMER INTERNATIONAL BOND FUND
- -----------------------------------------------------------------------------------------------
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$429,283,472 and 80,561,757 shares of beneficial interest outstanding) $5.33
Maximum offering price per share (net asset value plus sales charge of 4.75% of
offering price) $5.60
- -----------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $134,660,832
and 25,342,022 shares of beneficial interest outstanding) $5.31
- -----------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $90,247,950
and 16,992,803 shares of beneficial interest outstanding) $5.31
- -----------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $4,639,957
and 872,550 shares of beneficial interest outstanding) $5.32
See accompanying Notes to Financial Statements.
19 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF OPERATIONS For the Year Ended September 30, 2003
- --------------------------------------------------------------------------------------------
Investment Income
Interest (net of foreign withholding taxes of $415,233) $ 24,161,698
- --------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $25,472) 210,167
--------------
Total investment income 24,371,865
- --------------------------------------------------------------------------------------------
Expenses
Management fees 3,415,246
- --------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 686,288
Class B 1,191,405
Class C 630,580
Class N 13,217
- --------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 546,180
Class B 288,433
Class C 145,602
Class N 7,552
- --------------------------------------------------------------------------------------------
Custodian fees and expenses 152,643
- --------------------------------------------------------------------------------------------
Shareholder reports 62,606
- --------------------------------------------------------------------------------------------
Trustees' compensation 17,813
- --------------------------------------------------------------------------------------------
Other 67,350
--------------
Total expenses 7,224,915
Less reduction to custodian expenses (10,974)
--------------
Net expenses 7,213,941
- --------------------------------------------------------------------------------------------
Net Investment Income 17,157,924
- --------------------------------------------------------------------------------------------
Realized and Unrealized Gain
Net realized gain on:
Investments (including premiums on options exercised) 30,092,917
Closing of futures contracts 1,352,893
Closing and expiration of option contracts written 464,723
Foreign currency transactions 19,673,918
--------------
Net realized gain 51,584,451
- --------------------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments 14,853,158
Translation of assets and liabilities denominated in foreign currencies 22,000,665
Futures contracts 660,842
--------------
Net change in unrealized appreciation 37,514,665
- --------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $106,257,040
==============
See accompanying Notes to Financial Statements.
20 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30, 2003 2002
- --------------------------------------------------------------------------------------------------------------
Operations
Net investment income $ 17,157,924 $ 11,988,533
- --------------------------------------------------------------------------------------------------------------
Net realized gain 51,584,451 16,219,263
- --------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 37,514,665 6,716,986
--------------------------------
Net increase in net assets resulting from operations 106,257,040 34,924,782
- --------------------------------------------------------------------------------------------------------------
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Class A (11,257,243) (5,960,008)
Class B (3,817,825) (3,128,518)
Class C (1,988,035) (1,038,402)
Class N (94,512) (12,245)
- --------------------------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A -- (1,001,844)
Class B -- (633,014)
Class C -- (212,641)
Class N -- (2,205)
- --------------------------------------------------------------------------------------------------------------
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions:
Class A 193,984,034 50,685,955
Class B 11,875,148 7,421,458
Class C 39,379,694 10,958,666
Class N 2,842,914 1,158,705
- --------------------------------------------------------------------------------------------------------------
Net Assets
Total increase 337,181,215 93,160,689
- --------------------------------------------------------------------------------------------------------------
Beginning of period 321,650,996 228,490,307
--------------------------------
End of period [including undistributed (overdistributed) net
investment income of $16,341,168 and $(896,072), respectively] $ 658,832,211 $ 321,650,996
================================
See accompanying Notes to Financial Statements.
21 | OPPENHEIMER INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS
Class A Year Ended September 30, 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $4.38 $3.95 $4.19 $4.23 $4.32
- ------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .20 .24 .30 .45 .58
Net realized and unrealized gain (loss) .95 .41 (.24) (.08) (.14)
------------------------------------------------------------
Total from investment operations 1.15 .65 .06 .37 .44
- ------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.20) (.19) -- (.21) (.53)
Tax return of capital distribution -- (.03) (.30) (.20) --
------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.20) (.22) (.30) (.41) (.53)
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.33 $4.38 $3.95 $4.19 $4.23
============================================================
- ------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 26.67% 16.78% 1.40% 8.93% 10.58%
- ------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $429,283 $181,456 $118,733 $100,928 $102,236
- ------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $285,391 $134,912 $117,000 $110,968 $101,948
- ------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 3.94% 5.16% 7.10% 10.23% 13.47%
Total expenses 1.22% 1.37% 1.38% 1.31% 1.26%
Expenses after expense reimbursement or fee
waiver and reduction to custodian expenses N/A 3 N/A 3 N/A 3 1.29% 1.25%
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 341% 372% 377% 288% 285%
<FN>
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and 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. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
22 | OPPENHEIMER INTERNATIONAL BOND FUND
Class B Year Ended September 30, 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $4.37 $3.94 $4.17 $4.22 $4.31
- ------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .16 .21 .26 .42 .55
Net realized and unrealized gain (loss) .94 .40 (.22) (.09) (.14)
------------------------------------------------------------
Total from investment operations 1.10 .61 .04 .33 .41
- ------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.16) (.15) -- (.20) (.50)
Tax return of capital distribution -- (.03) (.27) (.18) --
------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.16) (.18) (.27) (.38) (.50)
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.31 $4.37 $3.94 $4.17 $4.22
============================================================
- ------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 25.48% 15.90% 0.85% 7.94% 9.79%
- ------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $134,661 $100,049 $84,427 $ 98,272 $118,632
- ------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $119,232 $ 85,244 $93,455 $115,116 $122,878
- ------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 3.20% 4.41% 6.40% 9.63% 12.70%
Total expenses 2.03% 2.14% 2.14% 2.05% 2.02%
Expenses after expense reimbursement or fee
waiver and reduction to custodian expenses N/A 3 N/A 3 N/A 3 2.03% 2.01%
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 341% 372% 377% 288% 285%
<FN>
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and 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. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
23 | OPPENHEIMER INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS Continued
Class C Year Ended September 30, 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $4.37 $3.94 $4.17 $4.22 $4.31
- ------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .16 .21 .26 .41 .55
Net realized and unrealized gain (loss) .94 .40 (.22) (.08) (.14)
------------------------------------------------------------
Total from investment operations 1.10 .61 .04 .33 .41
- ------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.16) (.15) -- (.19) (.50)
Tax return of capital distribution -- (.03) (.27) (.19) --
------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.16) (.18) (.27) (.38) (.50)
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.31 $4.37 $3.94 $4.17 $4.22
============================================================
- ------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 25.48% 15.90% 0.85% 7.95% 9.80%
- ------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $90,248 $38,865 $25,221 $27,663 $29,456
- ------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $63,198 $28,635 $27,125 $30,710 $28,918
- ------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 3.15% 4.37% 6.39% 9.55% 12.76%
Total expenses 2.02% 2.14% 2.14% 2.05% 2.02%
Expenses after expense reimbursement or fee
waiver and reduction to custodian expenses N/A 3 N/A 3 N/A 3 2.03% 2.01%
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 341% 372% 377% 288% 285%
<FN>
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and 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. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
See accompanying Notes to Financial Statements.
</FN>
24 | OPPENHEIMER INTERNATIONAL BOND FUND
Class N Year Ended September 30, 2003 2002 2001 1
- ------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $4.37 $3.95 $4.23
- ------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .18 .21 .16
Net realized and unrealized gain (loss) .95 .42 (.28)
------------------------------------
Total from investment operations 1.13 .63 (.12)
- ------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.18) (.18) --
Tax return of capital distribution -- (.03) (.16)
------------------------------------
Total dividends and/or distributions
to shareholders (.18) (.21) (.16)
- ------------------------------------------------------------------------------------
Net asset value, end of period $5.32 $4.37 $3.95
====================================
- ------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 26.31% 16.23% (2.88)%
- ------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $4,640 $1,280 $109
- ------------------------------------------------------------------------------------
Average net assets (in thousands) $2,653 $ 297 $ 34
- ------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 3.56% 4.87% 6.56%
Total expenses 1.57% 4 1.57% 4 1.39% 4
- ------------------------------------------------------------------------------------
Portfolio turnover rate 341% 372% 377%
<FN>
1. For the period from March 1, 2001 (inception of offering) to September 30,
2001.
2. Assumes an 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. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
See accompanying Notes to Financial Statements.
</FN>
25 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer International Bond Fund (the Fund) is a registered investment
company organized as a Massachusetts Business Trust. The Fund is registered as
a non-diversified, open-end management investment company under the Investment
Company Act of 1940, as amended. The Fund's investment objective is to seek
total return. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager).
The Fund offers Class A, Class B, Class C and Class N shares. Class A shares
are sold at their offering price, which is normally net asset value plus a
front-end sales charge. Class B, Class C and Class N shares are sold without a
front-end sales charge but may be subject to a contingent deferred sales charge
(CDSC). Class N shares are sold only through retirement plans. Retirement plans
that offer Class N shares may impose charges on those accounts. All classes of
shares have identical rights and voting privileges. Earnings, net assets and
net asset value per share may differ by minor amounts due to each class having
its own expenses directly attributable to that class. Classes A, B, C and N
have separate distribution and/or service plans. 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.
- --------------------------------------------------------------------------------
Securities Valuation. Securities listed or traded on National Stock Exchanges
or other domestic or foreign exchanges are valued based on the last sale price
of the security traded on that exchange prior to the time when the Fund's
assets are valued. Securities traded on NASDAQ are valued based on the closing
price provided by NASDAQ prior to the time when the Fund's assets are valued.
In the absence of a sale, the security is valued at the last sale price on the
prior trading day, if it is within the spread of the closing bid and asked
prices, and if not, at the closing bid price. Securities (including restricted
securities) for which quotations are not readily available are valued primarily
using dealer-supplied valuations, a portfolio pricing service authorized by the
Board of Trustees, or at their fair value. Fair value is determined in good
faith using consistently applied procedures under the supervision of the Board
of Trustees. Short-term "money market type" debt securities with remaining
maturities of sixty days or less are valued at amortized cost (which
approximates market value).
- --------------------------------------------------------------------------------
Structured Notes. The Fund invests in foreign currency-linked structured notes
whose market values and redemption prices are linked to foreign currency
exchange rates. The Fund also invests in "index-linked" notes whose principal
and/or interest payments depend on the performance of an underlying index. The
structured notes are leveraged, increasing the volatility of each note's market
value relative to the change in the underlying foreign currency exchange rate
or underlying index. Fluctuations in value of these securities are recorded as
unrealized gains and losses in the accompanying financial statements. The Fund
records a realized gain or loss when a structured note is sold or matures. As
of September 30, 2003, the market value of these securities comprised 9.2% of
the Fund's net assets and resulted in unrealized gains of $1,198,616. The Fund
also
26 | OPPENHEIMER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
hedges a portion of the foreign currency exposure generated by these
securities, as discussed in Note 5.
- --------------------------------------------------------------------------------
Securities on a Delayed Settlement Basis. Delivery and payment for securities
that have been purchased by the Fund on a delayed settlement basis can take
place a month or more after the trade date. Normally the settlement date occurs
within six months after the trade date; however, the Fund may, from time to
time, purchase securities whose settlement date extends six months or more
beyond trade 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 segregated assets with a market value
equal to or greater than the amount of its purchase commitments. The purchase
of securities on a delayed settlement 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 September 30, 2003, the Fund had
entered into delayed settlement purchase commitments of $19,627,024.
- --------------------------------------------------------------------------------
Security Credit Risk. The Fund invests in high-yield securities, which may be
subject to a greater degree of credit risk, market fluctuations and 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 September 30, 2003, securities with an
aggregate market value of $6,655,323, representing 1.01% of the Fund's net
assets, were in default.
- --------------------------------------------------------------------------------
Foreign Currency Translation. The Fund's accounting records 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.
- --------------------------------------------------------------------------------
Joint Repurchase Agreements. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint
trading accounts on a daily basis. Secured by U.S. government securities, these
balances are invested in one or more repurchase agreements. Securities pledged
as collateral for repurchase agreements are held by a custodian bank until the
agreements mature. Each agreement requires that the market value of the
collateral be sufficient to cover payments of interest and principal. In the
event of default by the other party to the agreement, retention of the
collateral may be subject to legal proceedings.
27 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years
and unrealized appreciation or depreciation of securities and other investments
for federal income tax purposes.
Net Unrealized
Appreciation
Based on Cost of
Securities and
Undistributed Undistributed Accumulated Other Investments
Net Investment Long-Term Loss for Federal Income
Income Gain Carryforward 1,2 Tax Purposes
-------------------------------------------------------------------
$23,532,998 $-- $2,082,181 $33,151,592
1. As of September 30, 2003, the Fund had $2,082,181 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of September 30, 2003,
details of the capital loss carryforwards were as follows:
Expiring
----------------------
2008 $ 783,099
2009 1,299,082
----------
Total $2,082,181
==========
2. During the fiscal years ended September 30, 2003 and September 30, 2002, the
Fund utilized $34,133,620 and $32,731, respectively, of capital loss
carryforwards to offset capital gains realized in the respective fiscal years.
During the fiscal year $3,670,346 of unused capital loss carryforward expired.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly,
the following amounts have been reclassified for September 30, 2003. Net assets
of the Fund were unaffected by the reclassifications.
From From Net
Ordinary Capital Tax Return Investment
Loss Gain of Capital Loss
-------------------------------------------------------
$17,236,931 $20,246,886 $-- $--
28 | OPPENHEIMER INTERNATIONAL BOND FUND
The tax character of distributions paid during the years ended September 30,
2003 and September 30, 2002 was as follows:
Year Ended Year Ended
September 30, 2003 September 30, 2002
---------------------------------------------------------------
Distributions paid from:
Ordinary income $17,157,615 $10,139,173
Return of capital -- 1,849,704
-------------------------------
Total $17,157,615 $11,988,877
===============================
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments
for federal income tax purposes as of September 30, 2003 are noted below. The
primary difference between book and tax appreciation or depreciation of
securities and other investments, if applicable, is attributable to the tax
deferral of losses or tax realization of financial statement unrealized gain or
loss.
Federal tax cost of securities
and other investments $1,073,747,443
==============
Gross unrealized appreciation $ 42,029,461
Gross unrealized depreciation (8,877,869)
--------------
Net unrealized appreciation $ 33,151,592
==============
The Manager believes that an additional ordinary income distribution for tax
purposes is likely to occur in December, 2003. The dollar and per share amounts
cannot be estimated as of September 30, 2003.
- --------------------------------------------------------------------------------
Trustees' Compensation. 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 the annual compensation they are entitled
to receive from the Fund. Under the plan, deferred amounts are treated as
though equal dollar amounts had been invested in shares of the Fund or are
invested in other selected Oppenheimer 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 investment income per share.
Amounts will be deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income distributions, if any, are
declared daily and paid monthly. Capital gain distributions, if any, are
declared and paid annually.
- --------------------------------------------------------------------------------
Investment Income. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and
amortization of premium, is accrued as earned.
29 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
Expense Offset Arrangement. The reduction of custodian fees represents earnings
on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Security Transactions. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
Other. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
- --------------------------------------------------------------------------------
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
Year Ended September 30, 2003 Year Ended September 30, 2002
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------
Class A
Sold 66,619,226 $ 327,783,210 29,697,373 $ 129,350,915
Dividends and/or
distributions reinvested 1,800,877 8,831,110 1,145,883 4,834,797
Redeemed (29,286,342) (142,630,286) (19,476,112) (83,499,757)
----------------------------------------------------------------
Net increase 39,133,761 $ 193,984,034 11,367,144 $ 50,685,955
================================================================
- ---------------------------------------------------------------------------------------------
Class B
Sold 14,881,963 $ 71,989,537 9,030,170 $ 39,252,375
Dividends and/or
distributions reinvested 560,961 2,725,698 515,987 2,162,691
Redeemed (13,006,585) (62,840,087) (8,090,580) (33,993,608)
----------------------------------------------------------------
Net increase 2,436,339 $ 11,875,148 1,455,577 $ 7,421,458
================================================================
- ---------------------------------------------------------------------------------------------
Class C
Sold 12,729,289 $ 62,063,352 4,734,148 $ 20,471,644
Dividends and/or
distributions reinvested 292,444 1,431,897 180,877 759,597
Redeemed (4,932,108) (24,115,555) (2,420,774) (10,272,575)
----------------------------------------------------------------
Net increase 8,089,625 $ 39,379,694 2,494,251 $ 10,958,666
================================================================
- ---------------------------------------------------------------------------------------------
Class N
Sold 682,672 $ 3,342,355 292,426 $ 1,277,397
Dividends and/or
distributions reinvested 15,660 77,211 2,942 12,571
Redeemed (118,748) (576,652) (29,964) (131,263)
----------------------------------------------------------------
Net increase 579,584 $ 2,842,914 265,404 $ 1,158,705
================================================================
30 | OPPENHEIMER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended September 30, 2003, were
$1,553,007,279 and $1,297,399,494, respectively.
- --------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with
the investment advisory agreement with the Fund which provides for fee at an
annual rate of 0.75% of the first $200 million of average annual net assets of
the Fund, 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 0.50% of average
annual net assets in excess of $1 billion.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the
Manager, acts as the transfer and shareholder servicing agent for the Fund. The
Fund pays OFS a per account fee. For the year ended September 30, 2003, the
Fund paid $933,703 to OFS for services to the Fund.
OFS has voluntarily agreed to limit transfer and shareholder servicing agent
fees for all classes, up to an annual rate of 0.35% of average net assets per
class. This undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
Distribution and Service Plan (12b-1) Fees. Under its General Distributor's
Agreement with the Manager, OppenheimerFunds Distributor, Inc. (the
Distributor) acts as the Fund's principal underwriter in the continuous public
offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the
period indicated.
Aggregate Class A Concessions Concessions Concessions Concessions
Front-End Front-End on Class A on Class B on Class C on Class N
Sales Charges Sales Charges Shares Shares Shares Shares
on Class A Retained by Advanced by Advanced by Advanced by Advanced by
Year Ended Shares Distributor Distributor 1 Distributor 1 Distributor 1 Distributor 1
- ----------------------------------------------------------------------------------------------------------
September 30, 2003 $1,607,039 $328,223 $366,872 $1,414,536 $474,412 $21,566
<FN>
1. The Distributor advances concession payments to dealers for certain sales of
Class A shares and for sales of Class B, Class C and Class N shares from its
own resources at the time of sale.
</FN>
Class A Class B Class C Class N
Contingent Contingent Contingent Contingent
Deferred Deferred Deferred Deferred
Sales Charges Sales Charges Sales Charges Sales Charges
Retained by Retained by Retained by Retained by
Year Ended Distributor Distributor Distributor Distributor
- --------------------------------------------------------------------------------
September 30, 2003 $10,937 $475,852 $57,864 $6,737
- --------------------------------------------------------------------------------
Service Plan for Class A Shares. The Fund has adopted a Service Plan for Class
A shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. For the
31 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates Continued
year ended September 30, 2003, expense under the Class A Plan totaled $686,288,
all of which were paid by the Distributor to recipients, which included $523
retained by the Distributor and $24,208 which was paid to an affiliate of the
Manager. Any unreimbursed expenses the Distributor incurs with respect to Class
A shares in any fiscal year cannot be recovered in subsequent years.
- --------------------------------------------------------------------------------
Distribution and Service Plans for Class B, Class C and Class N Shares. The
Fund has adopted Distribution and Service Plans for Class B, Class C and Class
N shares. Under the plans, the Fund pays the Distributor an annual asset-based
sales charge of 0.75% per year on Class B shares and on Class C shares and the
Fund pays the Distributor an annual asset-based sales charge of 0.25% per year
on Class N shares. The Distributor also receives a service fee of 0.25% per
year under each plan.
Distribution fees paid to the Distributor for the year ended September 30,
2003, were as follows:
Distributor's
Distributor's Aggregate
Aggregate Uncompensated
Uncompensated Expenses as %
Total Expenses Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
- --------------------------------------------------------------------------------
Class B Plan $1,191,405 $892,047 $5,656,823 4.20%
Class C Plan 630,580 290,571 1,803,279 2.00
Class N Plan 13,217 11,378 56,311 1.21
- --------------------------------------------------------------------------------
5. Foreign Currency Contracts
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into
foreign currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation
or depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gain or loss. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
32 | OPPENHEIMER INTERNATIONAL BOND FUND
As of September 30, 2003, the Fund had outstanding foreign currency contracts
as follows:
Contract Valuation
Expiration Amount as of Unrealized Unrealized
Contract Description Dates (000s) Sept. 30, 2003 Appreciation Depreciation
- --------------------------------------------------------------------------------------------------------------
Contracts to Purchase
Argentine Peso [ARP] 5/27/04-7/16/04 32,730ARP $ 10,539,381 $ 197,932 $125,478
British Pound Sterling [GBP] 11/20/03 4,310GBP 7,134,689 329,199 --
Chilean Peso [CLP] 11/25/03 4,402,364CLP 6,656,299 368,555 --
Euro [EUR] 11/26/03-6/17/04 50,030EUR 58,111,611 2,885,159 --
Japanese Yen [JPY] 10/14/03-3/17/04 17,543,000JPY 157,573,070 6,247,851 4,062
Swiss Franc [CHF] 10/29/03 5,430CHF 4,114,960 79,586 --
Turkish Lira [TRL] 10/27/03 1,831,456,000TRL 1,291,176 -- 9,573
---------------------------
10,108,282 139,113
===========================
Contracts to Sell
Australian Dollar [AUD] 10/29/03 6,765AUD 4,564,176 14,376 --
British Pound Sterling [GBP] 10/29/03 2,345GBP 3,887,686 -- 9,642
Euro [EUR] 10/14/03-4/27/04 102,245EUR 118,707,215 -- 4,075,920
Indonesia Rupiah [IDR] 11/12/03 38,581,800IDR 4,595,825 -- 191,912
Japanese Yen [JPY] 4/27/04 89,000JPY 802,059 -- 38,438
New Zealand Dollar [NZD] 10/29/03 7,310NZD 4,326,936 2,412 --
---------------------------
16,788 4,315,912
---------------------------
Total unrealized appreciation and depreciation $10,125,070 $4,455,025
===========================
- --------------------------------------------------------------------------------
6. Futures Contracts
A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a negotiated price on a stipulated future
date. Futures contracts are traded on a commodity exchange. The Fund may buy
and sell futures contracts that relate to broadly based securities indices
"financial futures" or debt securities "interest rate futures" in order to gain
exposure to or protection from changes in market value of stock and bonds or
interest rates. The Fund may also buy or write put or call options on these
futures contracts.
The Fund generally sells futures contracts as a hedge against increases in
interest rates and decreases in market value of portfolio securities. The Fund
may also purchase futures contracts to gain exposure to market changes 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 has expired.
Cash held by the broker to cover initial margin requirements on open futures
contracts is noted in the Statement of Assets and Liabilities. 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. Realized gains and
33 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
6. Futures Contracts Continued
losses are reported on the Statement of Operations as closing and expiration of
futures contracts. The net change in unrealized appreciation and depreciation
is reported on the Statement of Operations.
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 September 30, 2003, the Fund had outstanding futures contracts as
follows:
Unrealized
Expiration Number of Valuation as of Appreciation
Contract Description Dates Contracts Sept. 30, 2003 (Depreciation)
- ---------------------------------------------------------------------------------------------
Contracts to Purchase
U.S. Long Bonds 12/19/03 43 $ 4,822,719 $218,887
----------
Contracts to Sell
Japan (Government of) Bonds, 10 yr. 12/11/03 22 26,975,429 299,333
Standard & Poor's 500 E-Mini 12/19/03 39 1,938,300 38,020
Standard & Poor's 500 Index 12/18/03 37 9,195,425 214,133
U.S. Treasury Nts., 5 yr. 12/19/03 153 17,360,719 (94,640)
----------
456,846
----------
$675,733
==========
- --------------------------------------------------------------------------------
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 note
to the Statement of Investments. Options written are reported as a liability in
the Statement of Assets and Liabilities. Realized 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
34 | OPPENHEIMER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
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 September 30, 2003 was as follows:
Call Options Put Options
------------------------------- -------------------------------
Principal (000s)/ Principal (000s)/
Number of Amount of Number of Amount of
Contracts Premiums Contracts Premiums
- -----------------------------------------------------------------------------------------------
Options outstanding as of
September 30, 2002 -- $ -- 1,970 $ 175,330
Options written 9,925,025,897 1,969,367 2,175,847,745 761,424
Options closed or expired (4,000,000) (44,400) (12,189,715) (522,593)
Options exercised (33,722,100) (358,775) -- --
------------------------------------------------------------
Options outstanding as of
September 30, 2003 9,887,303,797 $1,566,192 2,163,660,000 $414,161
============================================================
- --------------------------------------------------------------------------------
8. Interest Rate Swap Contracts
The Fund may enter into an interest rate swap transaction to maintain a total
return or yield spread on a particular investment, or portion of its portfolio,
or for other non-speculative purposes. Interest rate swaps involve the exchange
of commitments to pay or receive interest, e.g., an exchange of floating rate
payments for fixed rate payments. The coupon payments are based on an agreed
upon principal amount and a specified index. Because the principal amount is
not exchanged, it represents neither an asset nor a liability to either
counterparty, and is referred to as notional. The Fund records an increase or
decrease to interest income, in the amount due to or owed by the Fund at
termination or settlement.
Interest rate swaps are subject to credit risk (if the counterparty fails to
meet its obligations) and interest rate risk. The Fund could be obligated to
pay more under its swap agreements than it receives under them, as a result of
interest rate changes.
As of September 30, 2003, the Fund had entered into the following interest rate
swap agreements:
Floating Rate
Rate Paid by Received by
the Fund at the Fund at Unrealized
Swap Notional September 30, September 30, Floating Termination Appreciation
Counterparty Principal 2003 2003 Rate Index Dates (Depreciation)
- ------------------------------------------------------------------------------------------------------
JPMorgan Three-Month
Chase Bank $ 13,500,000 3.342% 1.289999% Libor Flat 3/31/08 $(86,011)
JPMorgan Six-Month
Chase Bank 8,000,000 1.289999 2.92 LIBOR flat 5/13/08 19,144
JPMorgan Six-Month
Chase Bank 3,880,000 3.135 2.081 LIBOR flat 7/14/08 40,449
JPMorgan Six-Month
Chase Bank 1,080,000,000 9.13 7.00 LIBOR flat 7/14/08 (42,644)
-----------
$(69,062)
===========
35 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
9. Credit Swap Contracts
The Fund may enter into a credit swap transaction to maintain a total return on
a particular investment or portion of its portfolio, or for other
non-speculative purposes. Because the principal amount is not exchanged, it
represents neither an asset nor a liability to either counterparty, and is
referred to as a notional principal amount. The Fund records an increase or
decrease to interest income, in the amount due to or owed by the Fund at
termination or settlement. Credit swaps are subject to credit risks (if the
counterparty fails to meet its obligations).
During the year ended September 30, 2003, the Fund entered into a transaction
to hedge credit risk. The Fund pays an annual 2% interest fee on the notional
amount in exchange for the counterparty paying in a potential credit event.
Information regarding the credit swap is as follows:
Unrealized
Expiration Notional Valuation as of Appreciation
Contract Description Dates Amount Sept. 30, 2003 (Depreciation)
- --------------------------------------------------------------------------------------------------
Deutsche Bank AG, Colombia
(Republic of) Credit Nts. 9/20/13 $5,725,000 $123,931 $123,931
Deutsche Bank AG, Colombia
(Republic of) Credit Nts. 9/20/13 5,725,000 197,839 197,839
Deutsche Bank AG, Costa Rica
(Republic of) Certificate of Deposit 5/10/08 1,835,000 (12,858) (12,858)
Deutsche Bank AG, Costa Rica
(Republic of) Credit Bonds 4/25/08 990,000 (32,135) (32,135)
Deutsche Bank AG, United Mexican
States Credit Bonds 9/20/13 2,790,000 (28,453) (28,453)
Deutsche Bank AG, Panama
(Republic of) Certificate of Deposit 5/13/08 1,835,000 (27,691) (27,691)
Deutsche Bank AG, Philippines
(Republic of) 5 yr. Credit Notes 7/25/08 2,335,000 (1,685) (1,685)
Deutsche Bank AG, Philippines
(Republic of) 10 yr. Credit Bonds 7/25/13 2,335,000 2,265 2,265
Deutsche Bank AG, Philippines
(Republic of) Credit Nts. 12/20/08 670,000 (714) (714)
Deutsche Bank AG, Russia Federation
Credit Bonds 9/10/13 2,570,000 17,729 17,729
Deutsche Bank AG, Russia Federation
Credit Bonds 9/20/13 3,490,000 11,405 11,405
Deutsche Bank AG, Turkey
(Republic of) Credit Nts. 9/20/10 1,595,000 (9,182) (9,182)
JPMorgan Chase Bank, Jordan
(Kingdom of) Credit Nts. 6/6/06 390,000 2,333 2,333
JPMorgan Chase Bank, Peru
(Republic of) Credit Default Bonds 9/20/08 1,800,000 (87,576) (87,576)
JPMorgan Chase Bank, Peru
(Republic of) Credit Default Bonds 9/20/08 900,000 (45,644) (45,644)
----------
$109,564
==========
36 | OPPENHEIMER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
10. Swaption Transactions
The Fund may enter into a swaption transaction, whereby a contract that grants
the holder, in return for payment of the purchase price (the "premium") of the
option, the right, but not the obligation, to enter into an interest rate swap
at a preset rate within a specified period of time, with the writer of the
contract. The writer receives premiums and bears the risk of unfavorable
changes in the preset rate on the underlying interest rate swap. Swaption
contracts written by the Fund do not give rise to counterparty credit risk as
they obligate the Fund, not its counterparty, to perform. Swaptions written are
reported as a liability in the Statement of Assets and Liabilities.
As of September 30, 2003, the Fund had entered into the following swaption
contracts:
Contracts Expiration Exercise Premium Market Value
Swaptions Subject to Call Dates Price Received See Note 1
- ------------------------------------------------------------------------------------------
Deutsche Swaption 49,335,000 5/17/04 2.825% $439,082 $233,668
JPMorgan Chase Bank
Swaption 30,000,000 5/10/04 2.920 255,000 151,435
------------------------
$694,082 $385,103
========================
- --------------------------------------------------------------------------------
11. Illiquid or Restricted Securities
As of September 30, 2003, 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 also
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 limitation. The aggregate value of illiquid
or restricted securities subject to this limitation as of September 30, 2003
was $21,714,353, which represents 3.30% of the Fund's net assets, of which
$56,910 is considered restricted. Information concerning restricted securities
is as follows:
Acquisition Valuation as of Unrealized
Security Date Cost Sept. 30, 2003 Appreciation
- -------------------------------------------------------------------------------
Currency
Argentine Peso 8/6/03 $56,551 $56,910 $359
37 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
12. Borrowing and Lending Arrangements
The Fund entered into an "interfund borrowing and lending arrangement" with
other funds in the Oppenheimer funds complex, to allow funds to borrow for
liquidity purposes. The arrangement was initiated pursuant to exemptive relief
granted by the Securities and Exchange Commission to allow these affiliated
funds to lend money to, and borrow money from, each other, in an attempt to
reduce borrowing costs below those of bank loan facilities. Under the
arrangement the Fund may lend money to other Oppenheimer funds and may borrow
from other Oppenheimer funds at a rate set by the Fund's Board of Trustees,
based upon a recommendation by the Manager. The Fund's borrowings, if any, are
subject to asset coverage requirements under the Investment Company Act and the
provisions of the SEC order and other applicable regulations. If the Fund
borrows money, there is a risk that the loan could be called on one day's
notice, in which case the Fund might have to borrow from a bank at higher rates
if a loan were not available from another Oppenheimer fund. If the Fund lends
money to another fund, it will be subject to the risk that the other fund might
not repay the loan in a timely manner, or at all.
The Fund had no interfund borrowings or loans outstanding during the year
ended or at September 30, 2003.
38 | OPPENHEIMER INTERNATIONAL BOND FUND
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of
Oppenheimer International Bond Fund:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer International Bond Fund, including the statement of investments, as
of September 30, 2003, and the related statement of operations for the year
then ended, the statements of changes in net assets for each of the two years
in the period then ended, and the financial highlights for the periods
indicated. 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 auditing standards generally
accepted in the United States of America. 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 September 30, 2003, by
correspondence with the custodian and brokers; where replies 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 International Bond Fund as of September 30, 2003, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for the
periods indicated, in conformity with accounting principles generally accepted
in the United States of America.
Deloitte & Touche LLP
Denver, Colorado
November 14, 2003
39 | OPPENHEIMER INTERNATIONAL BOND FUND
FEDERAL income tax information Unaudited
- --------------------------------------------------------------------------------
In early 2004, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2003. Regulations of the U.S. Treasury Department require the
Fund to report this information to the Internal Revenue Service.
A portion, if any, of the dividends paid by the Fund during the fiscal year
ended September 30, 2003 which are not designated as capital gain distributions
are eligible for lower individual income tax rates to the extent that the Fund
has received qualified dividend income as stipulated by recent tax legislation.
$235,639 of the Fund's fiscal year taxable income may be eligible for the lower
individual income tax rates. In early 2004, shareholders of record will receive
information regarding the percentage of distributions that are eligible for
lower individual income tax rates.
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.
- --------------------------------------------------------------------------------
PORTFOLIO PROXY VOTING
POLICIES AND PROCEDURES Unaudited
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and
Procedures is available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.225.5677, (ii) on the Fund's website at
www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In
addition, the Fund will be required to file new Form N-PX, with its complete
proxy voting record for the 12 months ended June 30th, no later than August
31st of each year. The first such filing is due no later than August 31, 2004,
for the twelve months ended June 30, 2004. Once filed, the Fund's Form N-PX
filing will be available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.225.5677, and (ii) on the SEC's website at www.sec.gov.
40 | OPPENHEIMER INTERNATIONAL BOND FUND
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------------------------------------------------------
Name, Position(s) Held with Principal Occupation(s) During Past 5 Years; Other Trusteeships/Directorships Held
Fund, Length of Service, Age by Trustee; Number of Portfolios in Fund Complex Currently Overseen by Trustee
INDEPENDENT The address of each Trustee in the chart below is 6803 S. Tucson Way,
TRUSTEES Centennial, CO 80112-3924. Each Trustee serves for an indefinite term, until his
or her resignation, retirement, death or removal.
James C. Swain, Formerly, Chief Executive Officer (until August 27, 2002) of the Board II Funds,
Chairman and Trustee Vice Chairman (until January 2, 2002) of OppenheimerFunds, Inc. and President
(since 1995) and a director (until 1997) of Centennial Asset Management Corporation (a
Age: 69 wholly-owned investment advisory subsidiary of the Manager). Oversees 41
portfolios in the OppenheimerFunds complex.
William L. Armstrong, Chairman of the following private mortgage banking companies: Cherry Creek
Vice Chairman and Trustee Mortgage Company (since 1991), Centennial State Mortgage Company (since 1994),
(since 1999) The El Paso Mortgage Company (since 1993), Transland Financial Services, Inc.
Age: 66 (since 1997); Chairman of the following private companies: Great Frontier
Insurance (insurance agency) (since 1995), Ambassador Media Corporation and
Broadway Ventures (since 1984); a director of the following public companies:
Helmerich & Payne, Inc. (oil and gas drilling/production company) (since 1992)
and UNUMProvident (insurance company) (since 1991). Mr. Armstrong is also a
Director/Trustee of Campus Crusade for Christ and the Bradley Foundation.
Formerly a director of the following: Storage Technology Corporation (a
publicly-held computer equipment company) (1991-February 2003), and
International Family Entertainment (television channel) (1992-1997), Frontier
Real Estate, Inc. (residential real estate brokerage) (1994-1999), and Frontier
Title (title insurance agency) (1995-June 1999); a U.S. Senator (January
1979-January 1991). Oversees 41 portfolios in the OppenheimerFunds complex.
Robert G. Avis, Formerly, Director and President of A.G. Edwards Capital, Inc. (General Partner
Trustee (since 1995) of private equity funds) (until February 2001); Chairman, President and Chief
Age: 72 Executive Officer of A.G. Edwards Capital, Inc. (until March 2000); Vice
Chairman and Director of A.G. Edwards, Inc. and Vice Chairman of A.G. Edwards &
Sons, Inc. (its brokerage company subsidiary) (until March 1999); Chairman of
A.G. Edwards Trust Company and A.G.E. Asset Management (investment advisor)
(until March 1999); and a Director (until March 2000) of A.G. Edwards & Sons and
A.G. Edwards Trust Company. Oversees 41 portfolios in the OppenheimerFunds
complex.
George C. Bowen, Formerly (until April 1999): Senior Vice President (from September 1987) and
Trustee (since 1997) Treasurer (from March 1985) of the Manager; Vice President (from June 1983) and
Age: 67 Treasurer (since March 1985) of OppenheimerFunds Distributor, Inc. (a subsidiary
of the Manager); Senior Vice President (since February 1992), Treasurer (since
July 1991) Assistant Secretary and a director (since December 1991) of
Centennial Asset Management Corporation; Vice President (since October 1989) and
Treasurer (since April 1986) of HarbourView Asset Management Corporation (an
investment advisory subsidiary of the Manager); President, Treasurer and a
director (June 1989-January 1990) of Centennial Capital Corporation (an
investment advisory subsidiary of the Manager); Vice President and Treasurer
(since August 1978) and Secretary (since April 1981) of Shareholder Services,
Inc. (a transfer agent subsidiary of the Manager); Vice President, Treasurer and
Secretary (since November 1989) of Shareholder Financial Services, Inc. (a
transfer agent subsidiary of the Manager); Assistant Treasurer (since March
1998) of Oppenheimer Acquisition Corp. (the Manager's parent corporation);
Treasurer (since November 1989) of Oppenheimer Partnership Holdings, Inc. (a
holding company subsidiary of the Manager); Vice President and Treasurer (since
July
41 | OPPENHEIMER INTERNATIONAL BOND FUND
TRUSTEES AND OFFICERS Unaudited / Continued
George C. Bowen, 1996) of Oppenheimer Real Asset Management, Inc. (an investment advisory
Continued subsidiary of the Manager); Chief Executive Officer and director (since March
1996) of MultiSource Services, Inc. (a broker-dealer subsidiary of the Manager);
Treasurer (since October 1997) of OppenheimerFunds International Ltd. and
OppenheimerFunds plc (offshore fund management subsidiaries of the Manager).
Oversees 41 portfolios in the OppenheimerFunds complex.
Edward L. Cameron, A member of The Life Guard of Mount Vernon, George Washington's home (since June
Trustee (since 1999) 2000). Formerly (March 2001 - May 2002) Director of Genetic ID, Inc. and its
Age: 65 subsidiaries (a privately held biotech company); a partner with
PricewaterhouseCoopers LLP (from 1974-1999) (an accounting firm) and Chairman
(from 1994-1998), Price Waterhouse LLP Global Investment Management Industry
Services Group. Oversees 41 portfolios in the OppenheimerFunds complex.
Jon S. Fossel, Chairman and Director (since 1998) of Rocky Mountain Elk Foundation (a
Trustee (since 1995) not-for-profit foundation); and a director (since October 1999) of P.R.
Age: 61 Pharmaceuticals (a privately held company) and UNUMProvident (an insurance
company) (since June 1, 2002). Formerly Chairman and a director (until October
1996) and President and Chief Executive Officer (until October 1995) of the
Manager; President, Chief Executive Officer and a director of Oppenheimer
Acquisition Corp., Shareholders Services Inc. and Shareholder Financials
Services, Inc. (until October 1995). Oversees 41 portfolios in the
OppenheimerFunds complex.
Sam Freedman, Director of Colorado Uplift (a non-profit charity) (since September 1984).
Trustee (since 1996) Formerly (until October 1994) Mr. Freedman held several positions in subsidiary
Age: 62 or affiliated companies of the Manager. Oversees 41 portfolios in the
OppenheimerFunds complex.
Beverly L. Hamilton, Trustee (since 1996) of MassMutual Institutional Funds and of MML Series
Trustee (since 2002) Investment Fund (open-end investment companies); Director of MML Services (since
Age: 56 April 1987) and America Funds Emerging Markets Growth Fund (since October 1991)
(both are investment companies), The California Endowment (a philanthropy
organization) (since April 2002), and Community Hospital of Monterey Peninsula,
(since February 2002); a trustee (since February 2000) of Monterey International
Studies (an educational organization), and an advisor to Unilever (Holland)'s
pension fund and to Credit Suisse First Boston's Sprout venture capital unit.
Mrs. Hamilton also is a member of the investment committees of the Rockefeller
Foundation, the University of Michigan and Hartford Hospital. Formerly,
President (February 1991-April 2000) ARCO Investment Management Company.
Oversees 42 portfolios in the OppenheimerFunds complex.
Robert J. Malone, Chairman and CEO (since August 2003) of Steele Street Bank (a commercial banking
Trustee (since 2002) entity), Director (since 2001) of Jones Knowledge, Inc. (a privately held
Age: 59 company), U.S. Exploration, Inc., (since 1997), Colorado UpLIFT (a non-profit
organization) (since 1986) and a trustee of the Gallagher Family Foundation
(non-profit organization) (since 2000). Formerly, Chairman of U.S. Bank (a
subsidiary of U.S. Bancorp and formerly Colorado National Bank) (July 1996-April
1, 1999) and a director of Commercial Assets, Inc. (a REIT) (1993-2000).
Oversees 40 portfolios in the OppenheimerFunds complex.
F. William Marshall, Jr., Trustee (since 1996) of MassMutual Institutional Funds and of MML Series
Trustee (since 2000) Investment Fund (open-end investment companies); Trustee (since 1987), Chairman
Age: 61 of the Board (since 2003) and Chairman of the investment committee (since 1994)
for the Worcester Polytech Institute; President and Treasurer (since
42 | OPPENHEIMER INTERNATIONAL BOND FUND
F. William Marshall, Jr., January 1999) of the SIS Fund (a private not for profit charitable fund);
Continued Trustee (since 1995) of the Springfield Library and Museum Association; Trustee
(since 1996) of the Community Music School of Springfield. Formerly, member of
the investment committee of the Community Foundation of Western Massachusetts
(1998 - 2003); Chairman (January 1999-July 1999) of SIS & Family Bank, F.S.B.
(formerly SIS Bank); President, Chief Executive Officer and Director (May
1993-December 1998) of SIS Bankcorp, Inc. and SIS Bank (formerly Springfield
Institution for Savings) and Executive Vice President (January 1999-July 1999)
of Peoples Heritage Financial Group, Inc. Oversees 43 portfolios in the
OppenheimerFunds complex.
- --------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE The address of Mr. Murphy in the chart below is Two World Financial Center, New
AND OFFICER York, NY 10080. Mr. Murphy serves for an indefinite term, until his resignation,
death or removal.
John V. Murphy, Chairman, Chief Executive Officer and director (since June 2001) and President
President and Trustee (since September 2000) of the Manager; President and a director or trustee of
(since 2001) other Oppenheimer funds; President and a director (since July 2001) of
Age: 54 Oppenheimer Acquisition Corp. and of Oppenheimer Partnership Holdings, Inc.; a
director (since November 2001) of OppenheimerFunds Distributor, Inc.; Chairman
and a director (since July 2001) of Shareholder Services, Inc. and of
Shareholder Financial Services, Inc.; President and a director (since July 2001)
of OppenheimerFunds Legacy Program (a charitable trust program established by
the Manager); a director of the following investment advisory subsidiaries of
OppenheimerFunds, Inc.: OFI Institutional Asset Management, Inc. and Centennial
Asset Management Corporation (since November 2001), HarbourView Asset Management
Corporation and OFI Private Investments, Inc. (since July 2001); President
(since November 1, 2001) and a director (since July 2001) of Oppenheimer Real
Asset Management, Inc.; a director (since November 2001) of Trinity Investment
Management Corp. and Tremont Advisers, Inc. (investment advisory affiliates of
the Manager); Executive Vice President (since February 1997) of Massachusetts
Mutual Life Insurance Company (the Manager's parent company); a director (since
June 1995) of DLB Acquisition Corporation (a holding company that owns the
shares of David L. Babson & Company, Inc.); formerly, Chief Operating Officer
(September 2000-June 2001) of the Manager; President and trustee (November
1999-November 2001) of MML Series Investment Fund and MassMutual Institutional
Funds (open-end investment companies); a director (September 1999-August 2000)
of C.M. Life Insurance Company; President, Chief Executive Officer and director
(September 1999-August 2000) of MML Bay State Life Insurance Company; a director
(June 1989-June 1998) of Emerald Isle Bancorp and Hibernia Savings Bank (a
wholly-owned subsidiary of Emerald Isle Bancorp). Oversees 75 portfolios in the
OppenheimerFunds complex.
43 | OPPENHEIMER INTERNATIONAL BOND FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------------------------------------------------------
OFFICERS The address of the Officers in the chart below is as follows: for Messrs.
de'Rossi and Zack, Two World Financial Center, New York, NY 10080, for Mr.
Wixted, 6803 S. Tucson Way, Centennial, CO 80112-3924. Each Officer serves for
an annual term or until his or her earlier resignation, death or removal.
Ruggero de'Rossi, Vice President of the Manager (since March 2000); an officer of 1 portfolio in
Vice President (since 2000) the OppenheimerFunds complex. Prior to joining the Manager he was a Senior Vice
Age: 40 President and Chief Emerging Markets Debt and Currency Strategist of ING
Barings, a global investment bank (July 1998 - March 2000); before that he was a
Vice President, head of emerging markets trading strategies at Citicorp
Securities, after having run the bank's proprietary trading activity on
international fixed income and foreign exchange derivatives (May 1995 - July
1998).
Brian W. Wixted, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer
Treasurer (since 1999) (since March 1999) of HarbourView Asset Management Corporation, Shareholder
Age: 43 Services, Inc., Oppenheimer Real Asset Management Corporation, Shareholder
Financial Services, Inc., Oppenheimer Partnership Holdings, Inc., OFI Private
Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. and
OppenheimerFunds plc (offshore fund management subsidiaries of the Manager)
(since May 2000) and OFI Institutional Asset Management, Inc. (since November
2000); Treasurer and Chief Financial Officer (since May 2000) of Oppenheimer
Trust Company (a trust company subsidiary of the Manager); Assistant Treasurer
(since March 1999) of Oppenheimer Acquisition Corp. and OppenheimerFunds Legacy
Program (since April 2000); formerly Principal and Chief Operating Officer
(March 1995-March 1999), Bankers Trust Company-Mutual Fund Services Division. An
officer of 91 portfolios in the OppenheimerFunds complex.
Robert G. Zack, Senior Vice President (since May 1985) and General Counsel (since February 2002)
Vice President and Secretary of the Manager; General Counsel and a director (since November 2001) of
(since 2001) OppenheimerFunds Distributor, Inc.; Senior Vice President and General Counsel
Age: 55 (since November 2001) of HarbourView Asset Management Corporation; Vice
President and a director (since November 2000) of Oppenheimer Partnership
Holdings, Inc.; Senior Vice President, General Counsel and a director (since
November 2001) of Shareholder Services, Inc., Shareholder Financial Services,
Inc., OFI Private Investments, Inc., Oppenheimer Trust Company and OFI
Institutional Asset Management, Inc.; General Counsel (since November 2001) of
Centennial Asset Management Corporation; a director (since November 2001) of
Oppenheimer Real Asset Management, Inc.; Assistant Secretary and a director
(since November 2001) of OppenheimerFunds International Ltd.; Vice President
(since November 2001) of OppenheimerFunds Legacy Program; Secretary (since
November 2001) of Oppenheimer Acquisition Corp.; formerly Acting General Counsel
(November 2001-February 2002) and Associate General Counsel (May 1981-October
2001) of the Manager; Assistant Secretary of Shareholder Services, Inc. (May
1985-November 2001), Shareholder Financial Services, Inc. (November
1989-November 2001); OppenheimerFunds International Ltd. And OppenheimerFunds
plc (October 1997-November 2001). An officer of 91 portfolios in the
OppenheimerFunds complex.
The Fund's Statement of Additional Information contains additional information
about the Fund's Trustees and is available without charge upon request.
44 | OPPENHEIMER INTERNATIONAL BOND FUND
ITEM 2. CODE OF ETHICS
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the Fund has determined that Edward
L. Cameron, the Chairman of the Board's Audit Committee, and George C. Bowen, a
member of the Board's Audit Committee, possess the technical attributes
identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as "audit
committee financial experts," and has designated Messrs. Cameron and Bowen as
the Audit Committee's financial experts. Messrs. Cameron and Bowen are
"independent" Trustees pursuant to paragraph (a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES - NOT REQUIRED
ITEM 5. NOT APPLICABLE
ITEM 6. RESERVED
ITEM 7. NOT APPLICABLE
ITEM 8. RESERVED
ITEM 9. CONTROLS AND PROCEDURES
(a) Based on their evaluation of registrant's disclosure controls and
procedures (as defined in rule 30a-2(c) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(c)) as of September 30, 2003,
registrant's principal executive officer and principal financial
officer found registrant's disclosure controls and procedures to be
appropriately designed to ensure that information required to be
disclosed by registrant in the reports that it files under the
Securities Exchange Act of 1934 (a) is accumulated and communicated to
registrant's management, including its principal executive officer and
principal financial officer, to allow timely decisions regarding
required disclosure, and (b) is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms
adopted by the U.S. Securities and Exchange Commission.
(b) There have been no significant changes in registrant's internal
controls or in other factors that could significantly affect
registrant's internal controls subsequent to the date of the most
recent evaluation as indicated, including no significant deficiencies
or material weaknesses that required corrective action.
ITEM 10. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)