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.
Two World Financial Center, New York, New York 10281-1008
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(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, 2003 - March 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
STATEMENT OF INVESTMENTS MARCH 31, 2004 / UNAUDITED
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PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
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U.S. GOVERNMENT OBLIGATIONS--0.4%
- --------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Sr. Unsec. Nts., 2.125%,
10/9/07 [JPY] (Cost $4,973,237) 510,000,000 $5,196,328
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FOREIGN GOVERNMENT OBLIGATIONS--61.1%
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ARGENTINA--2.1%
Argentina (Republic of) Bonds:
1.234%, 8/3/12 1 18,905,000 12,582,658
1.278%, 5/3/05 1,2 693,000 670,478
Series PRE8, 2%, 1/3/10 2,3,4 [ARP] 15,670,000 6,348,993
Series PR12, 2%, 1/3/16 2,3,4 [ARP] 18,075,972 5,993,653
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Argentina (Republic of) Disc. Bonds, 2.345%, 3/31/23 1,2 660,000 339,900
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Argentina (Republic of) Letras del Banco Central de la
Republica Treasury Bills, 14.75%, 10/8/04 5 [ARP] 412,000 141,195
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Buenos Aires (Province of) Bonds, Bonos de Consolidacion de
Deudas, Series PBA1, 3.257%, 4/1/07 1,2,4 [ARP] 1,918,540 773,198
----------------
26,850,075
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AUSTRIA--3.2%
Austria (Republic of) Nts.:
3.40%, 10/20/04 [EUR] 1,580,000 1,957,370
3.80%, 10/20/13 [EUR] 17,355,000 21,054,243
5.50%, 10/20/07 [EUR] 2,440,000 3,277,602
Series 98-1, 5%, 1/15/08 [EUR] 5,200,000 6,893,993
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Austria (Republic of) Sr. Unsec. Unsub. Nts., Series 1,
5%, 7/15/12 [EUR] 6,525,000 8,700,110
----------------
41,883,318
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BELGIUM--2.5%
Belgium (Kingdom of) Bonds:
5%, 9/28/11 [EUR] 3,545,000 4,726,312
5.50%, 3/28/28 [EUR] 5,400,000 7,316,255
Series 19, 6.50%, 3/31/05 [EUR] 7,460,000 9,578,301
Series 32, 3.75%, 3/28/09 [EUR] 3,300,000 4,164,864
Series 35, 5.75%, 9/28/10 [EUR] 5,000,000 6,940,212
----------------
32,725,944
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BRAZIL--3.3%
Brazil (Federal Republic of) Bonds, Series 15 yr.,
2.063%, 4/15/09 1 19,412 18,296
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Brazil (Federal Republic of) Debt Capitalization Bonds,
Series 20 yr., 8%, 4/15/14 38,506,191 37,736,067
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Brazil (Federal Republic of) Unsec. Bonds, 4.75%
4/10/07 [JPY] 500,000,000 4,740,232
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Brazil (Federal Republic of) Unsec. Unsub. Bonds:
11%, 8/17/40 200 215
Cl. B, 8.875%, 4/15/24 81,000 74,601
----------------
42,569,411
9 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS UNAUDITED / CONTINUED
- --------------------------------------------------------------------------------
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
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COLOMBIA--0.7%
Colombia (Republic of) Unsec. Unsub. Bonds, 5.50%,
4/27/05 [JPY] 960,000,000 $ 9,485,116
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DENMARK--0.7%
Denmark (Kingdom of) Nts., 4%, 8/15/08 [DKK] 53,605,000 9,171,226
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FINLAND--3.8%
Finland (Republic of) Bonds, 5.375%, 7/4/13 [EUR] 20,985,000 28,713,209
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Finland (Republic of) Sr. Unsec. Unsub. Bonds:
2.75%, 7/4/06 [EUR] 3,470,000 4,309,398
5%, 7/4/07 [EUR] 12,415,000 16,380,759
----------------
49,403,366
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FRANCE--3.5%
France (Government of) Obligations Assimilables du Tresor Bonds:
4%, 10/25/13 [EUR] 13,960,000 17,177,743
5.50%, 10/25/07 [EUR] 7,835,000 10,515,208
5.50%, 10/25/10 [EUR] 3,080,000 4,222,559
5.75%, 10/25/32 [EUR] 5,300,000 7,502,324
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France (Government of) Treasury Nts., 3.50%, 7/12/04 [EUR] 5,180,000 6,393,392
----------------
45,811,226
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GERMANY--3.1%
Germany (Republic of) Bonds:
2%, 6/17/05 [EUR] 7,865,000 9,673,512
3%, 12/10/04 [EUR] 2,385,000 2,953,348
5.375%, 1/4/10 [EUR] 7,205,000 9,812,250
Series 01, 5%, 7/4/11 [EUR] 9,135,000 12,215,010
Series 02, 5%, 7/4/12 [EUR] 4,200,000 5,602,677
----------------
40,256,797
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GREAT BRITAIN--1.3%
United Kingdom Treasury Nts., 7.50%, 12/7/06 6 [GBP] 8,655,000 17,091,634
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GREECE--3.3%
Greece (Republic of) Bonds:
5.35%, 5/18/11 [EUR] 9,060,000 12,271,431
6.50%, 1/11/14 [EUR] 14,195,000 20,788,117
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Greece (Republic of) Sr. Unsub. Bonds, 4.65%, 4/19/07 [EUR] 6,980,000 9,091,912
----------------
42,151,460
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GUATEMALA--0.2%
Guatemala (Republic of) Nts.:
10.25%, 11/8/11 1,940,000 2,347,400
10.25%, 11/8/11 7 160,000 193,600
----------------
2,541,000
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IRELAND--3.3%
Ireland (Republic of) Treasury Bonds, 3.25%, 4/18/09 [EUR] 34,010,000 41,953,702
10 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------
ITALY--3.3%
Italy (Republic of) Treasury Bonds, Buoni del Tesoro
Poliennali:
4%, 3/1/05 [EUR] 1,135,000 $ 1,421,163
4.25%, 2/1/19 [EUR] 13,785,000 16,499,934
4.50%, 7/1/04 [EUR] 5,870,000 7,258,366
4.50%, 3/1/07 [EUR] 8,015,000 10,392,347
5%, 10/15/07 [EUR] 5,125,000 6,779,287
----------------
42,351,097
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IVORY COAST--0.0%
Ivory Coast (Government of) Past Due Interest
Bonds, 1.90%, 3/29/18 2,3,4 [FRF] 16,007,500 569,794
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JAPAN--4.2%
Japan (Government of) Bonds, 5 yr., Series 14, 0.40%,
6/20/06 [JPY] 5,618,800,000 54,294,453
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MEXICO--0.2%
Mexican Williams Sr. Nts., 1.278%, 11/15/08 1,4 500,000 522,500
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United Mexican States Bonds, 6.75%, 6/6/06 [JPY] 120,000,000 1,297,410
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United Mexican States Unsec. Unsub. Nts., Series 6 BR,
6.75%, 6/6/06 [JPY] 85,000,000 918,998
----------------
2,738,908
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NIGERIA--0.2%
Central Bank of Nigeria Gtd. Bonds, Series WW, 6.25%,
11/15/20 1,375,000 1,289,063
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Nigeria (Federal Republic of) Promissory Nts., Series RC,
5.092%, 1/5/10 705,515 649,672
----------------
1,938,735
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PERU--0.3%
Peru (Republic of) Sr. Nts., 4.53%, 2/28/16 5 6,444,281 3,702,240
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POLAND--1.9%
Poland (Republic of) Bonds, Series 0K0805, 5.15%,
8/12/05 5 [PLZ] 102,160,000 24,399,299
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PORTUGAL--3.1%
Portugal (Republic of) Obrig Do Tes Medio Prazo Nts.,
4.875%, 8/17/07 [EUR] 945,000 1,242,503
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Portugal (Republic of) Obrig Do Tes Medio Prazo Unsec.
Unsub. Bonds, 5.85%, 5/20/10 [EUR] 28,140,000 39,186,251
----------------
40,428,754
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RUSSIA--0.9%
Ministry Finance of Russia Debs.:
Series V, 3%, 5/14/08 3,420,000 3,178,463
Series VI, 3%, 5/14/06 3,590,000 3,546,238
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Russian Federation Unsec. Unsub. Nts., 10%, 6/26/07 3,605,000 4,280,938
----------------
11,005,639
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SPAIN--2.8%
Spain (Kingdom of) Bonds, Bonos y Obligacion del Estado:
4.25%, 10/31/07 [EUR] 8,945,000 11,557,469
4.80%, 10/31/06 [EUR] 5,500,000 7,164,215
5.75%, 7/30/32 [EUR] 5,200,000 7,342,846
11 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS UNAUDITED / CONTINUED
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PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
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SPAIN Continued
Spain (Kingdom of) Treasury Bills, 1.96%, 4/23/04 5 [EUR] 8,300,000 $ 10,189,158
----------------
36,253,688
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SWEDEN--8.0%
Sweden (Kingdom of) Bonds, Series 1043, 5%, 1/28/09 [SEK] 557,725,000 79,133,008
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Sweden (Kingdom of) Debs., Series 1040, 6.50%, 5/5/08 [SEK] 160,975,000 23,988,398
----------------
103,121,406
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THE NETHERLANDS--3.9%
Netherlands (Kingdom of the) Bonds:
3.75%, 7/15/09 [EUR] 8,000,000 10,100,573
4.25%, 7/15/13 [EUR] 9,660,000 12,175,371
5%, 7/15/11 8 [EUR] 15,405,000 20,553,605
5.50%, 1/15/28 [EUR] 5,300,000 7,219,848
----------------
50,049,397
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TURKEY--0.2%
Turkey (Republic of) Nts., 7.20%, 2/16/06 [JPY] 250,000,000 2,607,296
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VENEZUELA--1.1%
Venezuela (Republic of) Collateralized Par Bonds,
Series W-B, 6.75%, 3/31/20 159,000 148,665
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Venezuela (Republic of) Debs., Series DL, 2.125%,
12/18/07 1 11,824,378 11,188,817
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Venezuela (Republic of) Disc. Bonds, Series W-A,
2.188%, 3/31/20 1 3,075,000 2,598,375
----------------
13,935,857
----------------
Total Foreign Government Obligations (Cost $764,133,029) 789,290,838
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LOAN PARTICIPATIONS--1.2%
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Algeria (Republic of) Loan Participation Nts.:
0.938%, 3/4/10 1,4 [JPY] 230,311,880 2,097,568
2%, 9/4/06 1,4 985,714 975,857
2%, 3/4/10 1,4 880,750 866,438
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Deutsche Bank AG, OAO Gazprom Loan Participation Nts.,
6.50%, 8/4/05 4 3,005,000 3,013,715
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Deutsche Bank AG, Indonesia (Republic of) Rupiah Loan
Participation Nts.:
2.636%, 5/21/04 1,4 5,390,000 5,201,350
2.636%, 3/25/05 1,4 3,155,000 2,957,813
----------------
Total Loan Participations (Cost $14,411,260) 15,112,741
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CORPORATE BONDS AND NOTES--8.4%
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Capital Gaming International, Inc., 11.50% Promissory
Nts., 8/1/1995 2,3,4 2,000 --
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European Investment Bank Nts., 2.125%, 9/20/07 [JPY] 136,000,000 1,390,917
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General Electric Capital Corp., 1.40% Sr. Unsec. Unsub.
Nts., 11/2/06 [JPY] 4,101,000,000 40,513,315
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Inter-American Development Bank, 1.90% Unsec. Bonds,
7/8/09 [JPY] 113,000,000 1,156,068
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International Bank for Reconstruction and Development
(The), 2% Nts., 2/18/08 [JPY] 121,000,000 1,236,140
12 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
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CORPORATE BONDS AND NOTES Continued
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Japan (Government of) Unsec. Unsub. Nts., 2.875%,
7/28/05 [JPY] 3,320,000,000 $ 33,118,145
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KfW International Finance, Inc., 2.05% Unsec. Unsub.
Nts., 9/21/09 [JPY] 104,000,000 1,071,789
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Ongko International Finance Co. BV, 10.50% Sec. Nts.,
3/29/04 2,3,4 550,000 2,750
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Petroleos Mexicanos, 7.375% Unsec. Nts., 8/13/07 [ITL] 14,895,000,000 10,429,536
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Pfizer, Inc., 0.80% Unsec. Nts., Series INTL,
3/18/08 [JPY] 1,980,000,000 19,207,151
----------------
Total Corporate Bonds and Notes (Cost $104,283,493) 108,125,811
SHARES
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COMMON STOCKS--3.5%
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Banco Bradesco SA, Sponsored ADR 105,000 5,055,750
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Bank Pekao SA, GDR 3 84,110 2,826,096
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Brasil Telecom Participacoes SA, ADR 17,720 605,138
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Cesky Telecom AS, GDR 150,393 1,915,300
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Companhia de Bebidas das Americas, ADR 89,140 1,782,800
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Gedeon Richter Rt, Sponsored GDR 3 8,951 1,021,667
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iShares MSCI Brazil Index Fund 318,500 5,350,800
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iShares MSCI Hong Kong Index Fund 225 2,385
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KGHM Polska Miedz SA, GDR 3 57,244 947,388
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Komercni Banka AS, GDR 3 87,544 3,498,258
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Magyar Tavkozlesi Rt, Sponsored ADR 3 66,191 1,513,788
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MOL Magyar Olaj-es Gazipari Rt, Sponsored GDR 3 38,096 1,333,360
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OTP Bank Rt, GDR 3 76,029 2,850,327
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Petroleo Brasileiro SA, ADR 167,000 5,594,500
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Polski Koncern Naftowy Orlen SA, GDR 3 181,144 2,644,702
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Telekomunikacja Polska SA, GDR 3 632,358 2,548,403
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Telesp Celular Participacoes SA, ADR 3 678,000 6,190,140
----------------
Total Common Stocks (Cost $41,305,541) 45,680,802
UNITS
- --------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--4.9%
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Chesapeake Energy Corp. Wts., Exp. 9/1/04 3 66 5
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ICG Communications, Inc. Wts., Exp. 9/15/05 3,4 495 5
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Loral Space & Communications Ltd. Wts., Exp. 1/15/07 3,4 50 1
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Morgan Stanley Capital I, Inc. All Country Asia Free
(except for Japan)
Wts., Exp. 3/4/05 3 427,760 6,755,058
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Morgan Stanley Capital I, Inc. Basket of Countries Wts.:
Exp. 11/3/05 3 2,035 21,466,198
Exp. 3/4/05 3 338,332 4,972,770
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Morgan Stanley Capital III, Inc. All Country Asia Free
(except for Japan)
Wts., Exp. 3/4/05 3 827,508 10,696,948
13 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS UNAUDITED / CONTINUED
- --------------------------------------------------------------------------------
MARKET VALUE
UNITS SEE NOTE 1
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RIGHTS, WARRANTS AND CERTIFICATES Continued
- --------------------------------------------------------------------------------------------------
Morgan Stanley Capital IV, Inc. Basket of Countries Wts.,
Exp. 11/17/05 3 1,823 $ 18,914,469
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Protection One, Inc. Wts., Exp. 6/30/05 3,4 640 --
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Venezuela (Republic of) Oil Linked Payment
Obligation Wts., Exp. 4/15/20 3,4 500 --
----------------
Total Rights, Warrants and Certificates (Cost $53,838,613) 62,805,454
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------------------------
STRUCTURED NOTES--11.2%
- --------------------------------------------------------------------------------------------------
Citigroup Global Markets Holdings, Inc.:
Argentine Peso Unsec. Linked Nts., 7/6/04 $ 1,165,000 1,254,589
Brazilian Real Linked Unsec. Nts., 1.12%, 2/2/05 9,500,000 9,690,950
Indonesia (Republic of) Recapitalization Credit Linked
Unsec. Nts., 13.15%, 3/17/10 9,523,810 10,040,439
OAO Gazprom Russia Local Market Unsec. Credit Linked Nts.,
15.208%, 11/8/05 1 4,406,270 5,355,059
Peruvian Sol Unsec. Linked Nts., 0.77%, 7/14/04 [PEN] 17,413,500 4,987,508
- --------------------------------------------------------------------------------------------------
Citigroup Global Markets Holdings, Inc., Colombia
(Republic of) Unsec. Credit Linked Nts.:
15%, 3/15/07 [COP] 22,700,000,000 9,396,431
15%, 3/15/07 [COP] 22,385,000,000 9,266,040
15%, 4/27/12 [COP] 21,392,500,000 9,124,850
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Credit Suisse First Boston Corp. (Nassau Branch), U.S.
Dollar/Philippine Peso Linked Nts., 12.50%, 3/5/12 1
[PHP] 119,085,000 2,083,431
- --------------------------------------------------------------------------------------------------
Credit Suisse First Boston International, U.S. Dollar/
South African Rand Linked Nts., Series FBi 43, 1.10%,
5/23/22 1 2,100,000 2,030,070
- --------------------------------------------------------------------------------------------------
Deutsche Bank AG:
Basket of Emerging Market Currencies Linked Nts.,
0.75%, 4/26/04 12,990,000 13,274,481
Russian Federation Linked Nts., 15%, 3/11/05 [RUR] 141,112,000 5,414,349
Turkey (Republic of) Treasury Bills Linked Nts.,
23.72%, 4/27/05 21,176,655 17,143,956
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Deutsche Bank AG, Indonesia (Republic of) Recapitalization
Linked Nts.:
13.15%, 3/22/10 6,255,030 6,629,946
13.15%, 9/15/10 4,140,000 4,361,209
14.275%, 12/22/13 4,715,030 5,364,398
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Deutsche Bank AG, Venezuela (Republic of) Credit Linked
Nts.:
7.32%, 12/20/06 1 4,715,000 4,780,539
8.15%, 9/20/06 1 2,180,000 2,263,494
11.63%, 6/15/04 1 2,800,000 2,845,080
- --------------------------------------------------------------------------------------------------
JPMorgan Chase Bank:
EMBI Plus Turkey (Republic of) Linked Certificate of
Deposit, 1.50%, 4/22/04 2,428,000 1,972,702
Polish Zloty/Euro Linked Certificate of Deposit, 0.91%,
4/7/04 2,610,000 2,549,075
Venezuela (Republic of) Credit Linked Default Nts.,
7.86%, 9/20/05 1 2,410,000 2,482,059
- --------------------------------------------------------------------------------------------------
JPMorgan Chase Bank, Venezuela (Republic of) Credit
Linked Certificate of Deposit:
7.81%, 9/20/05 1 2,410,000 2,475,552
7.96%, 9/20/05 1 2,410,000 2,477,721
14 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL MARKET VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------
STRUCTURED NOTES Continued
- --------------------------------------------------------------------------------------------------
Lehman Brothers International, Turkey (Republic of)
Treasury Bills Linked Nts., 24.43%, 1/26/05 $ 9,368,029 $ 8,055,564
----------------
Total Structured Notes (Cost $141,655,854) 145,319,492
DATE STRIKE CONTRACTS
- --------------------------------------------------------------------------------------------------
OPTIONS PURCHASED--0.3%
- --------------------------------------------------------------------------------------------------
Euro Call 3,4 6/28/04 1.24EUR 112,000,000 2,467,136
- --------------------------------------------------------------------------------------------------
Japanese Yen Call 3,4 4/22/04 102.92JPY 15,040,000,000 481,280
Japanese Yen Call 3,4 5/11/04 102JPY 16,700,000,000 1,169,000
----------------
Total Options Purchased (Cost $4,851,289) 4,117,416
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--5.4%
- --------------------------------------------------------------------------------------------------
Undivided interest of 4.56% in joint repurchase agreement
(Principal Amount/Market Value $1,535,928,000, with a
maturity value of $1,535,971,945) with PaineWebber,
Inc., 1.03%, dated 3/31/04, to be repurchased at
$70,049,004 on 4/1/04, collateralized by Federal
National Mortgage Assn., 4.50%, 10/1/33--3/1/34,
with a value of $1,568,601,295
(Cost $70,047,000) $70,047,000 70,047,000
- --------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $1,199,499,316) 96.4% 1,245,695,882
- --------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 3.6 46,891,368
-----------------------------------
NET ASSETS 100.0% $1,292,587,250
===================================
15 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS UNAUDITED / CONTINUED
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS
Principal amount, strike, contracts and notional amount are reported in U.S.
Dollars, except for those denoted in the following currencies:
ARP Argentine Peso
AUD Australian Dollar
BRR Brazilian Real
CAD Canadian Dollar
CHF Swiss Franc
COP Colombian Peso
DKK Danish Krone
EUR Euro
FRF French Franc
GBP British Pound Sterling
HUF Hungary Forints
IDR Indonesia Rupiah
INR Indian Rupee
ITL Italian Lira
JPY Japanese Yen
KRW South Korean Won
NZD New Zealand Dollar
PEN Peruvian New Sol
PHP Philippines Peso
PLZ Polish Zloty
RUR Russian Ruble
SEK Swedish Krona
TWD New Taiwan Dollar
ZAR South African Rand
1. Represents the current interest rate for a variable or increasing rate
security.
2. Issue 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. 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
- ---------------------------------------------------------------------------------------------------
Euro [EUR] 41,850,000EUR 5/10/04 1.29EUR $ 741,235 $ 116,008
Japanese Yen [JPY] 25,510,000JPY 4/28/04 141.00JPY/EUR 9 355,503 2,194
-------------------------
1,096,738 118,202
-------------------------
CONTRACTS
SUBJECT TO PUT
- ---------------------------------------------------------------------------------------------------
Hungary Forints [HUF] 10,000,000EUR 5/12/04 263.62HUF/EUR 9 127,300 630,790
Japanese Yen [JPY] 2,161,000,000JPY 6/1/04 120.00JPY 403,387 4,322
Japanese Yen [JPY] 3,860,000,000JPY 6/10/04 111.00JPY 539,010 69,480
-------------------------
1,069,697 704,592
-------------------------
$2,166,435 $ 822,794
=========================
7. 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 $193,600 or 0.01% of the Fund's net assets
as of March 31, 2004.
8. A sufficient amount of securities has been designated to cover outstanding
foreign currency contracts. See Note 5 of Notes to Financial Statements.
9. Represents cross currency strike price.
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
- ------------------------------------------------------------------------------
United States $208,309,253 16.7%
Sweden 103,121,406 8.3
Japan 87,412,598 7.0
Brazil 71,488,689 5.7
The Netherlands 50,049,397 4.0
Finland 49,403,366 4.0
France 45,811,226 3.7
Italy 42,351,097 3.4
Greece 42,151,460 3.4
Ireland 41,953,702 3.4
Austria 41,883,318 3.4
Portugal 40,428,754 3.2
Germany 40,256,797 3.2
Colombia 37,272,437 3.0
Spain 36,253,688 2.9
Poland 35,914,963 2.9
Indonesia 34,557,905 2.8
Belgium 32,725,944 2.6
Venezuela 31,260,302 2.5
Turkey 29,779,518 2.4
Argentina 28,104,664 2.2
Russia 24,788,762 2.0
Great Britain 17,091,634 1.4
India 13,274,481 1.1
Mexico 13,168,444 1.1
Denmark 9,171,226 0.7
Peru 8,689,748 0.7
Hungary 6,719,142 0.5
Czech Republic 5,413,558 0.4
Algeria 3,939,863 0.3
Supranational 3,783,125 0.3
Guatemala 2,541,000 0.2
Philippines 2,083,431 0.2
South Africa 2,030,070 0.2
Nigeria 1,938,735 0.2
Ivory Coast 569,794 --
Hong Kong 2,385 --
---------------------------------
Total $1,245,695,882 100.0%
=================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
March 31, 2004
- -----------------------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------------------
Investments, at value (cost $1,199,499,316)--see accompanying
statement of investments $1,245,695,882
- -----------------------------------------------------------------------------------
Cash 2,602,309
- -----------------------------------------------------------------------------------
Cash--foreign currencies (cost $448,572) 454,860
- -----------------------------------------------------------------------------------
Cash used for collateral on futures 2,603,000
- -----------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 22,703,410
- -----------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns 19,267,547
Investments sold 18,004,778
Shares of beneficial interest sold 13,922,931
Futures margins 204,563
Other 10,403
---------------
Total assets 1,325,469,683
- -----------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------
Unrealized depreciation on foreign currency contracts 2,908,253
- -----------------------------------------------------------------------------------
Options written, at value (premiums received $2,166,435)
--see accompanying statement of investments 822,794
- -----------------------------------------------------------------------------------
Swaptions written, at value (premiums received $694,082) 116,259
- -----------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 13,146,039
Swap contracts 10,503,949
Closed foreign currency contracts 2,359,060
Shares of beneficial interest redeemed 1,612,647
Distribution and service plan fees 653,850
Dividends 438,344
Transfer and shareholder servicing agent fees 185,011
Shareholder communications 66,371
Trustees' compensation 10,262
Other 59,594
---------------
Total liabilities 32,882,433
- -----------------------------------------------------------------------------------
NET ASSETS $1,292,587,250
===============
- -----------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- -----------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 223,274
- -----------------------------------------------------------------------------------
Additional paid-in capital 1,158,149,339
- -----------------------------------------------------------------------------------
Accumulated net investment loss (5,975,031)
- -----------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency
transactions 81,762,721
- -----------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 58,426,947
---------------
NET ASSETS $1,292,587,250
===============
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
$920,140,198 and 158,793,454 shares of beneficial interest outstanding) $5.79
Maximum offering price per share (net asset value plus sales charge of
4.75% of offering price) $6.08
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $167,509,673 and 28,996,596 shares of beneficial interest
outstanding) $5.78
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $194,727,349 and 33,717,840 shares of beneficial interest
outstanding) $5.78
- --------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $10,210,030 and 1,765,887 shares of beneficial interest
outstanding) $5.78
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF OPERATIONS UNAUDITED
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED MARCH 31, 2004
- -----------------------------------------------------------------------------------
INVESTMENT INCOME
- -----------------------------------------------------------------------------------
Interest $15,013,910
- -----------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $45,432) 303,590
------------
Total investment income 15,317,500
- -----------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------
Management fees 3,119,278
- -----------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 760,249
Class B 735,671
Class C 662,985
Class N 17,619
- -----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 563,372
Class B 183,835
Class C 124,921
Class N 10,375
- -----------------------------------------------------------------------------------
Shareholder communications:
Class A 27,427
Class B 13,160
Class C 7,135
Class N 575
- -----------------------------------------------------------------------------------
Custodian fees and expenses 96,318
- -----------------------------------------------------------------------------------
Trustees' compensation 11,315
- -----------------------------------------------------------------------------------
Other 27,740
------------
Total expenses 6,361,975
Less reduction to custodian expenses (6,730)
Less voluntary waiver of transfer and shareholder servicing
agent fees:
Class A (2,778)
Class B (2,013)
Class C (504)
Class N (120)
------------
Net expenses 6,349,830
- -----------------------------------------------------------------------------------
NET INVESTMENT INCOME 8,967,670
20 | OPPENHEIMER INTERNATIONAL BOND FUND
- -----------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- -----------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments (including premiums on options exercised) $ 20,968,532
Closing of futures contracts (5,582,592)
Closing and expiration of option contracts written 1,102,201
Foreign currency transactions 67,801,569
-------------
Net realized gain 84,289,710
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments 9,197,810
Translation of assets and liabilities denominated in foreign
currencies 9,883,426
Futures contracts 306,447
-------------
Net change in unrealized appreciation 19,387,683
- -----------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $112,645,063
=============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
MARCH 31, 2004 SEPTEMBER 30,
(UNAUDITED) 2003
- ------------------------------------------------------------------------------------
OPERATIONS
- ------------------------------------------------------------------------------------
Net investment income $ 8,967,670 $ 17,157,924
- ------------------------------------------------------------------------------------
Net realized gain 84,289,710 51,584,451
- ------------------------------------------------------------------------------------
Net change in unrealized appreciation 19,387,683 37,514,665
------------------------------
Net increase in net assets resulting from
operations 112,645,063 106,257,040
- ------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- ------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (21,800,869) (11,257,243)
Class B (5,158,176) (3,817,825)
Class C (4,095,922) (1,988,035)
Class N (228,902) (94,512)
- -----------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- -----------------------------------------------------------------------------------
Net increase in net assets resulting from
beneficial interest transactions:
Class A 434,859,150 193,984,034
Class B 20,181,152 11,875,148
Class C 92,423,645 39,379,694
Class N 4,929,898 2,842,914
- -----------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------
Total increase 633,755,039 337,181,215
- -----------------------------------------------------------------------------------
Beginning of period 658,832,211 321,650,996
-----------------------------
End of period (including accumulated net investment
income (loss) of $(5,975,031) and $16,341,168,
respectively) $1,292,587,250 $658,832,211
=============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 | OPPENHEIMER INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
MARCH 31, 2004 SEPT. 30,
CLASS A (UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $5.33 $4.38 $3.95 $4.19 $4.23 $4.32
- --------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .06 .20 .24 .30 .45 .58
Net realized and unrealized gain (loss) .62 .95 .41 (.24) (.08) (.14)
-----------------------------------------------------------
Total from investment operations .68 1.15 .65 .06 .37 .44
- --------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment income (.22) (.20) (.19) -- (.21) (.53)
Tax return of capital distribution -- -- (.03) (.30) (.20) --
-----------------------------------------------------------
Total dividends and/or distributions
to shareholders (.22) (.20) (.22) (.30) (.41) (.53)
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.79 $5.33 $4.38 $3.95 $4.19 $4.23
===========================================================
- --------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 13.22% 26.67% 16.78% 1.40% 8.93% 10.58%
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $920,140 $429,283 $181,456 $118,733 $100,928 $102,236
- --------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $625,488 $285,391 $134,912 $117,000 $110,968 $101,948
- --------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 2.21% 3.94% 5.16% 7.10% 10.23% 13.47%
Total expenses 1.14% 1.22% 1.37% 1.38% 1.31% 1.26%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses N/A 3,4 N/A 3 N/A 3 N/A 3 1.29% 1.25%
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate 107% 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%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | OPPENHEIMER INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS CONTINUED
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
MARCH 31, 2004 SEPT. 30,
CLASS B (UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $5.31 $4.37 $3.94 $4.17 $4.22 $4.31
- --------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .04 .16 .21 .26 .42 .55
Net realized and unrealized gain (loss) .63 .94 .40 (.22) (.09) (.14)
-----------------------------------------------------------
Total from investment operations .67 1.10 .61 .04 .33 .41
- --------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment income (.20) (.16) (.15) -- (.20) (.50)
Tax return of capital distribution -- -- (.03) (.27) (.18) --
-----------------------------------------------------------
Total dividends and/or distributions
to shareholders (.20) (.16) (.18) (.27) (.38) (.50)
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.78 $5.31 $4.37 $3.94 $4.17 $4.22
===========================================================
- --------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 12.98% 25.48% 15.90% 0.85% 7.94% 9.79%
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $167,510 $134,661 $100,049 $84,427 $ 98,272 $118,632
- --------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $147,238 $119,232 $ 85,244 $93,455 $115,116 $122,878
- --------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 1.39% 3.20% 4.41% 6.40% 9.63% 12.70%
Total expenses 1.98% 2.03% 2.14% 2.14% 2.05% 2.02%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses N/A 3,4 N/A 3 N/A 3 N/A 3 2.03% 2.01%
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate 107% 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%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | OPPENHEIMER INTERNATIONAL BOND FUND
SIX MONTHS YEAR
ENDED ENDED
MARCH 31, 2004 SEPT. 30,
CLASS C (UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $5.31 $4.37 $3.94 $4.17 $4.22 $4.31
- --------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .04 .16 .21 .26 .41 .55
Net realized and unrealized gain (loss) .63 .94 .40 (.22) (.08) (.14)
----------------------------------------------------------
Total from investment operations .67 1.10 .61 .04 .33 .41
- --------------------------------------------------------------------------------------------------------
Dividends and/or distributions to
shareholders:
Dividends from net investment income (.20) (.16) (.15) -- (.19) (.50)
Tax return of capital distribution -- -- (.03) (.27) (.19) --
----------------------------------------------------------
Total dividends and/or distributions
to shareholders (.20) (.16) (.18) (.27) (.38) (.50)
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.78 $5.31 $4.37 $3.94 $4.17 $4.22
==========================================================
- --------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 13.02% 25.48% 15.90% 0.85% 7.95% 9.80%
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $194,727 $90,248 $38,865 $25,221 $27,663 $29,456
- --------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $133,079 $63,198 $28,635 $27,125 $30,710 $28,918
- --------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 1.43% 3.15% 4.37% 6.39% 9.55% 12.76%
Total expenses 1.91% 2.02% 2.14% 2.14% 2.05% 2.02%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses N/A 3,4 N/A 3 N/A 3 N/A 3 2.03% 2.01%
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate 107% 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%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
MARCH 31, 2004 SEPT. 30,
CLASS N (UNAUDITED) 2003 2002 2001 1
- -------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------
Net asset value, beginning of period $5.32 $4.37 $3.95 $4.23
- -------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .05 .18 .21 .16
Net realized and unrealized gain (loss) .62 .95 .42 (.28)
---------------------------------------
Total from investment operations .67 1.13 .63 (.12)
- -------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.21) (.18) (.18) --
Tax return of capital distribution -- -- (.03) (.16)
---------------------------------------
Total dividends and/or distributions
to shareholders (.21) (.18) (.21) (.16)
- -------------------------------------------------------------------------------------------
Net asset value, end of period $5.78 $5.32 $4.37 $3.95
=======================================
- -------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 13.04% 26.31% 16.23% (2.88)%
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $10,210 $4,640 $1,280 $109
- -------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 7,078 $2,653 $ 297 $ 34
- -------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.86% 3.56% 4.87% 6.56%
Total expenses 1.52% 4,5 1.57% 4 1.57% 4 1.39% 4
- -------------------------------------------------------------------------------------------
Portfolio turnover rate 107% 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, 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%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS UNAUDITED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 with respect to the Fund in
general and exclusive voting rights on matters that affect that class alone.
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 may be valued
primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. Securities (including restricted
securities) for which market quotations are not readily available are valued at
their fair value. Foreign securities whose values have been materially affected
by what the Manager identifies as a significant event occurring before the
Fund's assets are valued but after the close of their respective foreign
exchanges will be fair valued. 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
27 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS UNAUDITED / CONTINUED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 March 31, 2004, the market value of
these securities comprised 11.2% of the Fund's net assets and resulted in
unrealized gains of $3,663,638. The Fund also hedges a portion of the foreign
currency exposure generated by these securities, as discussed in Note 5.
- --------------------------------------------------------------------------------
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 March 31, 2004, securities with an
aggregate market value of $14,698,766, representing 1.14% 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.
- --------------------------------------------------------------------------------
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
28 | OPPENHEIMER INTERNATIONAL BOND FUND
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.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes primarily due to the recognition of
paydown gains and losses as capital gain or loss for tax purposes and the
recognition of certain foreign currency gains (losses) as ordinary income
(loss) for 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.
As of March 31, 2004, the Fund had available for federal income tax purposes
an estimated unused capital loss carryforward of zero. This estimated capital
loss carryforward represents carryforward as of the end of the last fiscal
year, increased for losses deferred under tax accounting rules to the current
fiscal year and is increased or decreased by capital losses or gains realized
in the first six months of the current fiscal year. During the six months ended
March 31, 2004 and the year ended September 30, 2003, the Fund used $2,082,181
and $34,133,620, respectively, of carryforward to offset capital gains
realized.
As of September 30, 2003, the Fund had available for federal income tax
purposes unused capital loss carryforwards as follows:
EXPIRING
----------------------
2008 $ 783,099
2009 1,299,082
----------
Total $2,082,181
==========
- --------------------------------------------------------------------------------
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 Oppenheimer funds selected by the Trustee. 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
29 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
the fair market value of the securities received. Interest income, which
includes accretion of discount and amortization of premium, is accrued as
earned.
- --------------------------------------------------------------------------------
EXPENSE OFFSET ARRANGEMENT. The reduction of custodian fees, if applicable,
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:
SIX MONTHS ENDED MARCH 31, 2004 YEAR ENDED SEPTEMBER 30, 2003
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------
CLASS A
Sold 94,227,236 $523,940,278 66,619,226 $327,783,210
Dividends and/or
distributions reinvested 3,215,653 17,243,527 1,800,877 8,831,110
Redeemed (19,211,192) (106,324,655) (29,286,342) (142,630,286)
-----------------------------------------------------------
Net increase 78,231,697 $434,859,150 39,133,761 $193,984,034
===========================================================
- ---------------------------------------------------------------------------------------
CLASS B
Sold 8,236,780 $ 45,472,441 14,881,963 $ 71,989,537
Dividends and/or
distributions reinvested 739,017 3,929,253 560,961 2,725,698
Redeemed (5,321,223) (29,220,542) (13,006,585) (62,840,087)
-----------------------------------------------------------
Net increase 3,654,574 $ 20,181,152 2,436,339 $ 11,875,148
===========================================================
- ---------------------------------------------------------------------------------------
CLASS C
Sold 19,063,106 $105,375,350 12,729,289 $ 62,063,352
Dividends and/or
distributions reinvested 571,167 3,039,001 292,444 1,431,897
Redeemed (2,909,236) (15,990,706) (4,932,108) (24,115,555)
-----------------------------------------------------------
Net increase 16,725,037 $ 92,423,645 8,089,625 $ 39,379,694
===========================================================
30 | OPPENHEIMER INTERNATIONAL BOND FUND
SIX MONTHS ENDED MARCH 31, 2004 YEAR ENDED SEPTEMBER 30, 2003
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------
CLASS N
Sold 1,044,968 $ 5,779,245 682,672 $ 3,342,355
Dividends and/or
distributions reinvested 37,956 202,993 15,660 77,211
Redeemed (189,587) (1,052,340) (118,748) (576,652)
-----------------------------------------------------------
Net increase 893,337 $ 4,929,898 579,584 $ 2,842,914
===========================================================
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the six months ended March 31, 2004, were
$1,242,400,475 and $819,583,135, 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 a 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 six months ended March 31, 2004, the
Fund paid $801,845 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 Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
- --------------------------------------------------------------------------------
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. The Distributor currently uses the fees it receives
from the Fund to pay brokers, dealers and other financial institutions for
personal services and account maintenance services they provide for their
customers who hold Class A shares. Any unreimbursed expenses the Distributor
incurs with respect to Class A shares in any fiscal year cannot be recovered in
subsequent years. Fees incurred by the Fund under the plan are detailed in the
Statement of Operations.
31 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS UNAUDITED / CONTINUED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
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 to compensate the Distributor for its services in connection with the
distribution of these shares and servicing accounts. 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 0.25% per year on Class N shares. The
Distributor also receives a service fee of up to 0.25% per year under each
plan. If either the Class B, Class C or Class N plan is terminated by the Fund
or by the shareholders of a class, the Board of Trustees and its independent
trustees must determine whether the Distributor shall be entitled to payment
from the Fund of all or a portion of the service fee and/or asset-based sales
charge in respect to shares sold prior to the effective date of such
termination. The Distributor's aggregate uncompensated expenses under the plan
at March 31, 2004 for Class B, Class C and Class N shares were $6,221,436,
$3,245,209 and $103,769, respectively. Fees incurred by the Fund under the
plans are detailed in the Statement of Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption
proceeds prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ----------------------------------------------------------------------------------------------
March 31, 2004 $414,429 $-- $173,904 $47,397 $5,426
- --------------------------------------------------------------------------------
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.
32 | OPPENHEIMER INTERNATIONAL BOND FUND
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 gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of March 31, 2004, the Fund had outstanding foreign currency contracts as
follows:
VALUATION
CONTRACT AS OF
EXPIRATION AMOUNT MARCH 31, UNREALIZED UNREALIZED
CONTRACT DESCRIPTION DATES (000S) 2004 APPRECIATION DEPRECIATION
- ------------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Argentine Peso [ARP] 5/27/04-7/16/04 50,640ARP $ 17,616,013 $ 1,114,720 $ --
Australian Dollar [AUD] 4/14/04 12,800AUD 9,755,316 212,532 --
Brazilian Real [BRR] 9/15/04-1/31/05 142,154BRR 44,588,773 15,644 615,122
British Pound
Sterling [GBP] 4/14/04-7/16/04 16,230GBP 29,623,940 123,311 529,882
Columbian Peso [COP] 3/16/05 16,492,230COP 5,764,892 -- 36,103
Euro [EUR] 5/12/04-6/23/04 210,565EUR 258,231,286 103,083 1,336,485
Hungary Forints [HUF] 5/12/04 2,704,700HUF 13,186,156 486,156 --
Indonesia Rupiah [IDR] 9/24/04 10,250,000IDR 1,196,944 31,906 --
Japanese Yen [JPY] 3/15/05-4/1/05 45,256,300JPY 461,325,996 19,130,431 --
New Taiwan
Dollar [TWD] 9/24/04 139,495TWD 4,279,121 33,990 --
New Zealand
Dollar [NZD] 4/14/04 14,280NZD 9,490,785 200,931 --
Peruvian New
Sol [PEN] 4/29/04-6/15/04 88,571PEN 25,551,790 177,694 --
South Korean
Won [KRW] 5/13/04-9/24/04 34,159,000KRW 29,610,967 495,506 --
---------------------------
22,125,904 2,517,592
---------------------------
CONTRACTS TO SELL
Canadian Dollar [CAD] 6/22/04 21,900CAD 16,623,844 143,118 --
Columbian Peso [COP] 4/26/04 26,666,000COP 9,921,805 9,666 --
Euro [EUR] 5/12/04-6/15/04 24,045EUR 29,502,683 424,722 86,531
Japanese Yen [JPY] 4/14/04 1,059,000JPY 10,184,167 -- 177,647
Swiss Franc [CHF] 4/14/04 12,400CHF 9,791,557 -- 126,483
---------------------------
577,506 390,661
---------------------------
Total unrealized appreciation and depreciation $22,703,410 $2,908,253
===========================
- --------------------------------------------------------------------------------
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.
33 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS UNAUDITED / CONTINUED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS Continued
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 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 March 31, 2004, the Fund had outstanding futures contracts as follows:
UNREALIZED
EXPIRATION NUMBER OF VALUATION AS OF APPRECIATION
CONTRACT DESCRIPTION DATES CONTRACTS MARCH 31, 2004 (DEPRECIATION)
- -------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Nikkei 225 Index 6/10/04 403 $22,787,019 $997,478
---------
CONTRACTS TO SELL
DAX Index 6/18/04 56 6,671,083 22,968
Hang Seng Index 4/29/04 174 14,064,317 94,832
Japan (Government of) Bonds, 10 yr. 6/9/04 23 3,036,747 4,183
Japan (Government of) Bonds, 10 yr. 6/10/04 23 30,409,478 179,074
MIB 30 Index 6/18/04 60 9,878,142 (58,628)
Standard & Poor's 500 E-Mini 6/18/04 176 9,900,000 (183,260)
Standard & Poor's 500 Index 6/17/04 37 10,405,325 (74,467)
---------
(15,298)
---------
$982,180
=========
- --------------------------------------------------------------------------------
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.
34 | OPPENHEIMER INTERNATIONAL BOND FUND
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. Contracts 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 and the option is exercised. The
risk in buying an option is that the Fund pays a premium whether or not the
option is exercised. The Fund also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not exist.
Written option activity for the six months ended March 31, 2004 was as follows:
CALL OPTIONS PUT OPTIONS
----------------------------------------------------------
PRINCIPAL/ PRINCIPAL/
NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF
CONTRACTS PREMIUMS CONTRACTS PREMIUMS
- ---------------------------------------------------------------------------------------
Options outstanding as of
September 30, 2003 9,887,303,797 $1,566,192 2,163,660,000 $ 414,161
Options written 101,635,000 2,266,863 3,870,000,000 666,309
Options closed or expired (68,823,797) (1,692,953) (2,660,000) (10,773)
Options exercised (9,852,755,000) (1,043,364) -- --
----------------------------------------------------------
Options outstanding as of
March 31, 2004 67,360,000 $1,096,738 6,031,000,000 $1,069,697
==========================================================
- --------------------------------------------------------------------------------
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
35 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS UNAUDITED / CONTINUED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. INTEREST RATE SWAP CONTRACTS Continued
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 March 31, 2004, the Fund had entered into the following interest rate
swap agreements:
RATE PAID FLOATING RATE
BY THE RECEIVED BY
FUND AT THE FUND AT UNREALIZED
SWAP NOTIONAL MARCH 31, MARCH 31, FLOATING TERMINATION APPRECIATION
COUNTERPARTY AMOUNT 2004 2004 RATE INDEX DATE (DEPRECIATION)
- ------------------------------------------------------------------------------------------------------------
Citigroup
Global Markets 90 Day
Holdings, Inc. 333,000,000TWD 2.02% 1.018% CPTW 3/4/09 $ (16,195)
Citigroup
Global Markets Three-Month
Holdings, Inc. 160,000,000 3.453 1.12 LIBOR BBA 3/5/09 (2,250,464)
Citigroup
Global Markets Three-Month
Holdings, Inc. 90,000,000 4.46 1.12 LIBOR BBA 3/15/14 (1,815,945)
Citigroup
Global Markets 90 Day
Holdings, Inc. 333,000,000TWD 2.02 0.99725 CPTW 3/23/09 2,791
Deutsche Six-Month
Bank AG 500,000,000INR 1.61 4.87 MIFOR 3/22/09 (41,399)
JPMorgan Six-Month
Chase Bank 248,765,000 3.484 1.12 USD Flat 3/5/09 (3,929,766)
JPMorgan Three-Month
Chase Bank 66,000,000ZAR 7.956 9.68 LIBOR Flat 2/18/11 (141,889)
JPMorgan Three-Month
Chase Bank 66,000,000ZAR 7.966 9.78 LIBOR Flat 2/20/11 (90,012)
JPMorgan Three-Month
Chase Bank 13,500,000 3.342 1.29 LIBOR Flat 3/31/08 (231,614)
JPMorgan Three-Month
Chase Bank 110,000,000 3.82 1.17 LIBOR Flat 11/10/08 (3,666,666)
JPMorgan Six-Month
Chase Bank 8,000,000 1.290 2.92 LIBOR Flat 5/13/08 (6,439)
JPMorgan Six-Month
Chase Bank 3,880,000EUR 3.135 2.081 LIBOR Flat 7/14/08 (13,717)
JPMorgan Six-Month
Chase Bank 1,080,000,000HUF 9.13 7.00 LIBOR Flat 7/14/08 (350,784)
JPMorgan Six-Month
Chase Bank 279,000,000 1.17 3.535 LIBOR Flat 12/23/08 5,512,214
JPMorgan Six-Month
Chase Bank 147,000,000EUR 3.064 2.243 EURIBOR 12/3/05 (2,703,580)
------------
$(9,743,465)
============
36 | OPPENHEIMER INTERNATIONAL BOND FUND
Index abbreviations:
CPTW Taiwan Secondary Commercial Papers
EURIBOR Euro Interbank Offered Rate
LIBOR London-Interbank Offered Rate
LIBOR BBA London-Interbank Offered Rate British Bankers Association
MIFOR Mumbai Interbank Forward Offer Rates
- --------------------------------------------------------------------------------
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). The Fund pays an annual interest
fee on the notional amount in exchange for the counterparty paying in a
potential credit event.
During the six months ended March 31, 2004, the Fund entered into transactions
to hedge credit risk. Information regarding the credit swaps is as follows:
UNREALIZED
EXPIRATION NOTIONAL VALUATION AS OF APPRECIATION
CONTRACT DESCRIPTION DATES AMOUNT MARCH 31, 2004 (DEPRECIATION)
- ----------------------------------------------------------------------------------------------
Deutsche Bank AG, Costa Rica
(Republic of) Credit Nts. 5/10/08 $ 1,835,000 $ (78,081) $ (78,081)
Deutsche Bank AG, Costa Rica
(Republic of) Credit Bonds 4/25/08 990,000 (29,843) (29,843)
Deutsche Bank AG, Indonesia
(Republic of) Credit Bonds 1/14/09 454,000,000INR (55,485) (55,485)
Deutsche Bank AG, Panama
(Republic of) Credit Nts. 5/13/08 1,835,000 (58,189) (58,189)
Deutsche Bank AG, Peru
(Republic of) Credit Bonds 10/20/08 1,205,000 4,372 4,372
Deutsche Bank AG, Philippines
(Republic of) 5 yr. Credit Nts. 7/25/08 2,335,000 (46,943) (46,943)
Deutsche Bank AG, Philippines
(Republic of) 10 yr. Credit Bonds 7/25/13 2,335,000 76,766 76,766
Deutsche Bank AG,
Russia Federation Credit Bonds 9/20/13 3,490,000 (126,629) (126,629)
Deutsche Bank AG,
Russia Federation Credit Bonds 9/10/13 2,570,000 (83,928) (83,928)
Deutsche Bank AG,
Russia Federation Credit Bonds 10/30/13 5,190,000 (171,563) (171,563)
Deutsche Bank AG, Turkey
(Republic of ) Credit Bonds 9/20/10 1,595,000 (214,252) (214,252)
Deutsche Bank AG, Turkey
(Republic of ) Credit Bonds 10/10/13 1,180,000 (116,749) (116,749)
Deutsche Bank AG, United
Mexican States Credit Bonds 9/20/13 2,790,000 (93,283) (93,283)
37 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS UNAUDITED / CONTINUED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
9. CREDIT SWAP CONTRACTS Continued
UNREALIZED
EXPIRATION NOTIONAL VALUATION AS OF APPRECIATION
CONTRACT DESCRIPTION DATES AMOUNT MARCH 31, 2004 (DEPRECIATION)
- --------------------------------------------------------------------------------------------
JPMorgan Chase Bank, Chile
(Republic of) Credit Bonds 12/20/13 $ 8,500,000 $(177,034) $ (177,034)
JPMorgan Chase Bank, Inter-American
Development Bank Credit Bonds 12/20/13 15,910,000 (23,393) (23,393)
JPMorgan Chase Bank, Jordan
(Kingdom of) Credit Nts. 6/6/06 390,000 637 637
JPMorgan Chase Bank, Peru
(Republic of) Credit Bonds 9/20/08 900,000 (46,847) (46,847)
JPMorgan Chase Bank, Peru
(Republic of) Credit Bonds 9/20/08 1,800,000 (90,098) (90,098)
JPMorgan Chase Bank, Peru
(Republic of) Credit Bonds 12/20/13 2,540,000 78,105 78,105
JPMorgan Chase Bank,
Russian Federation Credit Bonds 10/9/13 550,000 3,499 3,499
JPMorgan Chase Bank, TRAC-X
Emerging Markets Credit Nts. 1 12/20/08 1,805,000 (78,549) (78,549)
JPMorgan Chase Bank, Turkey
(Republic of) Credit Bonds 2/16/06 2,600,000 (46,800) (46,800)
JPMorgan Chase Bank, Turkey
(Republic of) Credit Bonds 12/19/13 8,500,000 43,300 43,300
JPMorgan Chase Bank, Turkey
(Republic of) Credit Bonds 11/27/13 8,500,000 565,000 565,000
JPMorgan Chase Bank, Venezuela
(Republic of) Credit Bonds 2/20/14 2,135,000 (147,497) (147,497)
JPMorgan Chase Bank, Venezuela
(Republic of) Credit Nts. 3/20/06 4,000,000 153,000 153,000
----------
$(760,484)
==========
1. Comprised of emerging markets credit default swaps of which the underlying
is comprised of a pool of emerging market entities and associated benchmark
obligations. The Fund received a premium and is obligated to pay a rate that
resets every six months primarily based upon default by an emerging market
entity within the pool.
- --------------------------------------------------------------------------------
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.
38 | OPPENHEIMER INTERNATIONAL BOND FUND
As of March 31, 2004, 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 Bank AG 49,335,000 5/17/04 2.825% $439,082 $ 67,894
JPMorgan Chase Bank 30,000,000 5/10/04 2.920 255,000 48,365
-------------------------
$694,082 $116,259
=========================
- --------------------------------------------------------------------------------
11. ILLIQUID OR RESTRICTED SECURITIES AND CURRENCY
As of March 31, 2004, investments in securities included issues that are
illiquid or restricted. Restricted securities are 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 March 31, 2004 was
$33,895,911, which represents 2.62% of the Fund's net assets, of which $454,860
is considered restricted. Information concerning restricted currency is as
follows:
ACQUISITION VALUATION AS OF UNREALIZED
SECURITY DATE COST MARCH 31, 2004 APPRECIATION
- -------------------------------------------------------------------------------
CURRENCY
Argentine Peso 3/17/04 $448,572 $454,860 $6,288
- --------------------------------------------------------------------------------
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 (the SEC) 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. The
SEC's order requires the Fund's Board of Trustees to adopt operating policies
and procedures to administer interfund borrowing and lending. 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.
39 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS UNAUDITED / CONTINUED
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The Fund had no interfund borrowings or loans outstanding during the six
months ended or at March 31, 2004.
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PORTFOLIO PROXY VOTING
POLICIES AND PROCEDURES Unaudited
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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
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer, principal
accounting officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the registrant 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 applicable to semiannual reports.
ITEM 5. NOT APPLICABLE
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable
ITEM 7. NOT APPLICABLE
ITEM 8. NOT APPLICABLE
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Board is responsible for approving nominees for election as trustees. To
assist in this task, the Board has designated the Audit Committee as the
nominating committee for the Board. It reviews and recommends nominees to the
Board. The Committee is comprised entirely of disinterested trustees as defined
in Section 2(a)(19) of the Investment Company Act of 1940.
The Audit Committee charter describes the responsibilities of the Committee in
nominating candidates for election as independent Trustees of the Registrant.
The Registrant's Board has adopted a written charter for the Committee. A
current copy of the Audit Committee charter is available to shareholders on the
OppenheimerFunds website at www.oppenheimerfunds.com.
Under the current policy, if the Board determines that a vacancy exists or is
likely to exist on the Board, the Audit Committee of the Board will consider
candidates for Board membership including recommended by Registrant
shareholders. The Audit Committee will consider nominees recommended by
independent Board members or recommended by any other Board members including
Board members affiliated with the Registrant's investment advisors. The
Committee may, upon Board approval, retain an executive search firm to assist in
screening potential candidates. Upon Board approval, the Audit Committee may
also use the services of legal, financial, or other external counsel that it
deems necessary or desirable in the screening process. Shareholders wishing to
submit a nominee for election to the Board may do so by
mailing their submission to the offices of OppenheimerFunds, Inc., 6803 South
Tucson Way, Centennial, CO 80112, to the attention of the Board of Trustees of
the named Registrant, c/o the Secretary of the Registrant.
The Committee's process for identifying and evaluating nominees for trustees
includes a number of factors. In screening candidates for board membership,
whether the candidate is suggested by Board members, shareholders or others, the
Committee considers the candidate's professional experience, soundness of
judgment, integrity, ability to make independent, analytical inquiries,
collegiality, willingness and ability to devote the time required to perform
Board activities adequately, ability to represent the interests of all
shareholders of the Registrant, and diversity relative to the board's
composition. Candidates are expected to provide a mix of attributes, experience,
perspective and skills necessary to effectively advance the interests of
shareholders.
ITEM 10. 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 March 31, 2004,
registrant's principal executive officer and principal financial
officer found registrant's disclosure controls and procedures to
provide reasonable assurances 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 over financial reporting that occurred during the
registrant's last fiscal half-year that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 11. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)