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
(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 - September 30, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN GEOGRAPHICAL HOLDINGS
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United States 19.0%
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Japan 6.9
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Great Britain 6.7
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Spain 4.1
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Ireland 4.0
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Greece 4.0
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Austria 3.9
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Portugal 3.8
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Belgium 3.7
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France 3.6
Portfolio holdings and allocations are subject to change. Percentages are as of
September 30, 2004, and are based on total investments.
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REGIONAL ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Europe 47.2%
United States 19.0
Asia 11.9
Latin America 11.0
Emerging Europe 7.5
Middle East/Africa 3.2
Supranational 0.2
Portfolio holdings and allocations are subject to change. Percentages are as of
September 30, 2004, and are based on total investments.
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9 | OPPENHEIMER INTERNATIONAL BOND FUND
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED SEPTEMBER 30, 2004, FOLLOWED
BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE
BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. The Fund's performance during its
recent fiscal year was driven primarily by good results from its investments in
the emerging markets and favorable movements in foreign currency exchange rates.
The Fund's relatively heavy exposure to emerging-market bonds contributed
positively to performance, and debt securities from Brazil and Russia proved
particularly beneficial as these nations reformed their financial systems and
instilled greater confidence among investors and rating agencies. Brazil's
economy benefited during the reporting period from greater global demand for
basic materials, and Russia continued to emerge as a major force in the global
oil industry. The Fund also avoided some of the weaker emerging markets, such as
Turkey, sheltering the Fund from the brunt of weakness in those countries.
The Fund's investments in the foreign currencies of major industrialized
regions, including the Euro and Yen, fared well when the U.S. dollar weakened
during the first half of the reporting period. We believe that the U.S. current
account deficit and a ballooning U.S. federal budget deficit were factors in the
U.S. dollar's decline.
However, the Fund's performance was hindered by its duration posture,
which for much of the reporting period was set in a range that we considered
shorter than industry averages. While this stance helped preserve value during
declining markets, it limited the Fund's participation in market rallies.
Nonetheless, we have continued to maintain the Fund's average duration in
a relatively short position in anticipation of higher interest rates. We also
recently reduced the Fund's exposure to emerging markets debt by taking profits
in securities that had gained value. We have redeployed some of those assets to
bonds in developed markets, such as the United Kingdom and Australia, where
interest rates have already risen and restrictive monetary policies may be
nearing an end.
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the
performance of a hypothetical $10,000 investment in each class of shares of the
Fund held until September 30, 2004. In the case of Class A, Class B and Class C
shares, performance is measured from inception of the Class on June 15, 1995. In
the case of Class N shares, performance is measured from inception of the Class
on March 1, 2001. The Fund's performance reflects the deduction of the maximum
initial sales charge on Class A shares, the applicable contingent deferred sales
charge on Class B, Class C and Class N shares, and reinvestments of all
dividends and capital gains distributions.
10 | OPPENHEIMER INTERNATIONAL BOND FUND
The Fund's performance is compared to the Citigroup Non-US Dollar World
Government Bond Index, a subset of the Citigroup World Government Bond Index.
The Citigroup Non-US Dollar World Government Bond Index is a market
capitalization weighted benchmark that tracks the performance of 13 government
bond markets including Australia, Canada, Japan and 10 European countries. Thus,
the index does not reflect the performance of the fixed income markets in either
the United States or in any emerging market countries. In addition, it is
comprised of only government bonds and does not reflect the performance of
corporate bonds. Index performance reflects the reinvestment of dividends but
does not consider the effect of capital gains or transaction costs, and none of
the data in the graphs that follow shows the effect of taxes. The Fund's
performance reflects the effects of Fund business and operating expenses. While
index comparisons may be useful to provide a benchmark for the Fund's
performance, it must be noted that the Fund's investments are not limited to the
securities in the index.
11 | OPPENHEIMER INTERNATIONAL BOND FUND
FUND PERFORMANCE DISCUSSION
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CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer International Bond Fund (Class A)
Citigroup Non-US Dollar World Government Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer
International
Bond Fund Citigroup Non-US Dollar
Date (Class A) World Government Bond Index
06/15/1995 9,525 10,000
06/30/1995 9,570 10,050
09/30/1995 10,014 9,806
12/31/1995 10,473 10,009
03/31/1996 10,860 9,840
06/30/1996 11,362 9,879
09/30/1996 11,898 10,201
12/31/1996 12,492 10,418
03/31/1997 12,584 9,815
06/30/1997 12,934 10,092
09/30/1997 13,246 10,114
12/31/1997 12,799 9,974
03/31/1998 12,978 10,015
06/30/1998 12,850 10,182
09/30/1998 11,591 11,160
12/31/1998 12,242 11,748
03/31/1999 12,216 11,179
06/30/1999 12,635 10,678
09/30/1999 12,818 11,331
12/31/1999 13,589 11,152
03/31/2000 14,150 11,023
06/30/2000 13,986 10,935
09/30/2000 13,962 10,441
12/31/2000 14,519 10,858
03/31/2001 14,144 10,326
06/30/2001 14,206 10,122
09/30/2001 14,157 10,907
12/31/2001 14,830 10,474
03/31/2002 15,149 10,279
06/30/2002 16,368 11,715
09/30/2002 16,532 12,047
12/31/2002 17,917 12,777
03/31/2003 18,452 13,254
06/30/2003 19,889 13,812
09/30/2003 20,941 14,192
12/31/2003 22,554 15,144
03/31/2004 23,709 15,382
06/30/2004 22,464 14,861
09/30/2004 23,362 15,349
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND
AT 9/30/04
1-Year 6.26% 5-Year 11.66% Since Inception (6/15/95) 9.56%
12 | OPPENHEIMER INTERNATIONAL BOND FUND
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer International Bond Fund (Class B)
Citigroup Non-US Dollar World Government Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer
International
Bond Fund Citigroup Non-US Dollar
Date (Class B) World Government Bond Index
06/15/1995 10,000 10,000
06/30/1995 10,045 10,050
09/30/1995 10,492 9,806
12/31/1995 10,929 10,009
03/31/1996 11,312 9,840
06/30/1996 11,837 9,879
09/30/1996 12,350 10,201
12/31/1996 12,943 10,418
03/31/1997 13,014 9,815
06/30/1997 13,352 10,092
09/30/1997 13,649 10,114
12/31/1997 13,165 9,974
03/31/1998 13,324 10,015
06/30/1998 13,168 10,182
09/30/1998 11,852 11,160
12/31/1998 12,496 11,748
03/31/1999 12,447 11,179
06/30/1999 12,850 10,678
09/30/1999 13,013 11,331
12/31/1999 13,773 11,152
03/31/2000 14,318 11,023
06/30/2000 14,094 10,935
09/30/2000 14,046 10,441
12/31/2000 14,614 10,858
03/31/2001 14,208 10,326
06/30/2001 14,252 10,122
09/30/2001 14,203 10,907
12/31/2001 14,878 10,474
03/31/2002 15,198 10,279
06/30/2002 16,421 11,715
09/30/2002 16,585 12,047
12/31/2002 17,974 12,777
03/31/2003 18,512 13,254
06/30/2003 19,954 13,812
09/30/2003 21,009 14,192
12/31/2003 22,627 15,144
03/31/2004 23,785 15,382
06/30/2004 22,536 14,861
09/30/2004 23,440 15,349
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND
AT 9/30/04
1-Year 5.66% 5-Year 11.61% Since Inception (6/15/95) 9.60%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 4.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE,
SINCE-INCEPTION RETURNS FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE
PERIOD AFTER CONVERSION. SEE PAGE 16 FOR FURTHER INFORMATION.
13 | OPPENHEIMER INTERNATIONAL BOND FUND
FUND PERFORMANCE DISCUSSION
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CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer International Bond Fund (Class C)
Citigroup Non-US Dollar World Government Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer
International
Bond Fund Citigroup Non-US Dollar
Date (Class C) World Government Bond Index
06/15/1995 10,000 10,000
06/30/1995 10,045 10,050
09/30/1995 10,473 9,806
12/31/1995 10,929 10,009
03/31/1996 11,311 9,840
06/30/1996 11,814 9,879
09/30/1996 12,350 10,201
12/31/1996 12,943 10,418
03/31/1997 12,990 9,815
06/30/1997 13,352 10,092
09/30/1997 13,649 10,114
12/31/1997 13,165 9,974
03/31/1998 13,324 10,015
06/30/1998 13,169 10,182
09/30/1998 11,853 11,160
12/31/1998 12,497 11,748
03/31/1999 12,448 11,179
06/30/1999 12,852 10,678
09/30/1999 13,014 11,331
12/31/1999 13,774 11,152
03/31/2000 14,319 11,023
06/30/2000 14,097 10,935
09/30/2000 14,049 10,441
12/31/2000 14,617 10,858
03/31/2001 14,210 10,326
06/30/2001 14,246 10,122
09/30/2001 14,169 10,907
12/31/2001 14,779 10,474
03/31/2002 15,105 10,279
06/30/2002 16,292 11,715
09/30/2002 16,422 12,047
12/31/2002 17,724 12,777
03/31/2003 18,221 13,254
06/30/2003 19,607 13,812
09/30/2003 20,606 14,192
12/31/2003 22,154 15,144
03/31/2004 23,288 15,382
06/30/2004 21,982 14,861
09/30/2004 22,821 15,349
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND
AT 9/30/04
1-Year 9.75% 5-Year 11.89% Since Inception (6/15/95) 9.29%
14 | OPPENHEIMER INTERNATIONAL BOND FUND
CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer International Bond Fund (Class N)
Citigroup Non-US Dollar World Government Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Oppenheimer
International
Bond Fund Citigroup Non-US Dollar
Date (Class N) World Government Bond Index
03/01/2001 10,000 10,000
03/31/2001 9,706 9,598
06/30/2001 9,747 9,409
09/30/2001 9,712 10,139
12/31/2001 10,144 9,736
03/31/2002 10,380 9,554
06/30/2002 11,208 10,889
09/30/2002 11,287 11,198
12/31/2002 12,225 11,877
03/31/2003 12,583 12,320
06/30/2003 13,552 12,838
09/30/2003 14,257 13,192
12/31/2003 15,315 14,077
03/31/2004 16,115 14,298
06/30/2004 15,227 13,814
09/30/2004 15,824 14,268
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND
AT 9/30/04
1-Year 10.00% Since Inception (3/1/01) 13.68%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 4.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. SEE
PAGE 16 FOR FURTHER INFORMATION.
15 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES
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Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares.
Investors should consider the Fund's investment objectives, risks, and other
charges and expenses carefully before investing. The Fund's prospectus contains
this and other information about the Fund, and may be obtained by asking your
financial advisor, calling us at 1.800.525.7048 or visiting our website at
www.oppenheimerfunds.com. Read the prospectus carefully before investing.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
CLASS A shares of the Fund were first publicly offered on 6/15/95. Unless
otherwise noted, Class A returns include the current maximum initial sales
charge of 4.75%.
CLASS B shares of the Fund were first publicly offered on 6/15/95. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to
Class A shares 72 months after purchase, the "since inception" return for Class
B uses Class A performance for the period after conversion. Class B shares are
subject to an annual 0.75% asset-based sales charge.
CLASS C shares of the Fund were first publicly offered on 6/15/95. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for the 1-year period. Class C shares are subject to an annual 0.75%
asset-based sales charge.
CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
CLASS Y shares of the Fund were first publicly offered on 9/27/04. Class Y
shares are offered only to certain institutional investors under special
agreement with the Distributor. This Class has a limited operating history.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
16 | OPPENHEIMER INTERNATIONAL BOND FUND
FUND EXPENSES
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FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The Actual Expense examples for Classes A, B, C and N are based on an investment
of $1,000.00 invested at the beginning of the period and held for the entire
6-month period ended September 30, 2004. The Actual Expense examples for Class Y
are based on an investment of $1,000.00 invested at the beginning of the period,
September 27, 2004 (inception of offering) and held for the period ended
September 30, 2004.
The Hypothetical Examples for Comparison Purposes for all classes are based on
an investment of $1,000.00 invested on April 1, 2004 and held for the six months
ended September 30, 2004.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this
17 | OPPENHEIMER INTERNATIONAL BOND FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
5% hypothetical example for the class of shares you hold with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), or a $12.00 fee imposed annually
on accounts valued at less than $500.00 (subject to exceptions described in the
Statement of Additional Information). Therefore, the "hypothetical" lines of the
table are useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
18 | OPPENHEIMER INTERNATIONAL BOND FUND
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(4/1/04) (9/30/04) SEPTEMBER 30, 2004 1,2
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Class A Actual $1,000.00 $ 985.40 $5.62
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,019.35 5.72
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 979.50 9.80
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,015.15 9.97
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 979.90 9.30
- --------------------------------------------------------------------------------
Class C Hypothetical 1,000.00 1,015.65 9.47
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 981.90 7.31
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,017.65 7.44
- --------------------------------------------------------------------------------
Class Y Actual 1 1,000.00 1,009.20 0.10
- --------------------------------------------------------------------------------
Class Y Hypothetical 1,000.00 1,019.15 5.92
Hypothetical assumes 5% annual return before expenses.
1. Actual expenses paid for Classes A, B, C and N are equal to the Fund's
annualized expense ratio for that class, multiplied by the average account
value over the period, multiplied by 183/366 (to reflect the one-half year
period). Actual expenses paid for Class Y are equal to the Fund's annualized
expense ratio for that class, multiplied by the average account value over
the period, multiplied by 3/366 [to reflect the period from September 27,
2004 (inception of offering) to September 30, 2004].
2. Hypothetical expenses paid for all classes are equal to the Fund's
annualized expense ratio for that class, multiplied by the average account
value over the period, multiplied by 183/366 (to reflect the one-half year
period).
Those annualized expense ratios based on the 6-month period ended September 30,
2004 for Classes A, B, C and N and for the period from September 27, 2004
(inception of offering) to September 30, 2004 for Class Y are as follows:
CLASS EXPENSE RATIOS
- ---------------------------
Class A 1.13%
- ---------------------------
Class B 1.97
- ---------------------------
Class C 1.87
- ---------------------------
Class N 1.47
- ---------------------------
Class Y 1.17
19 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS September 30, 2004
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--10.9%
- ----------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. Nts., 3.75%, 7/15/09 [EUR] 16,635,000 $ 20,764,657
- ----------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Sr. Unsec. Nts., 2.125%, 10/9/07 [JPY] 510,000,000 4,886,061
- ----------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 2.25%, 4/30/06 1,2 151,000,000 150,610,722
----------------
Total U.S. Government Obligations (Cost $175,283,161) 176,261,440
- ----------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS--66.5%
- ----------------------------------------------------------------------------------------------------------------------
ARGENTINA--1.7%
Argentina (Republic of) Bonds:
1.389%, 5/3/05 3 396,000 389,285
1.98%, 8/3/12 3 15,620,000 11,381,294
Series PRE8, 2%, 1/3/10 4,5,6 [ARP] 15,670,000 6,833,613
Series PR12, 2%, 1/3/16 4,5,6 [ARP] 18,075,972 6,300,213
- ----------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Disc. Bonds, 3/31/23 4,6 660,000 339,900
- ----------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Letras del Banco Central de la Republica
Treasury Bills, 14.75%, 10/8/04 7 [ARP] 412,000 138,105
- ----------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Unsec. Bonds:
Series 4BR, 5%, 12/20/49 4,5 [JPY] 119,000,000 281,234
Series 4RG, 5%, 12/20/49 4,5 [JPY] 178,000,000 420,670
- ----------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Unsec. Unsub. Bonds, Series 6RG, 5.125%,
6/14/04 4,5 [JPY] 494,000,000 1,167,477
- ----------------------------------------------------------------------------------------------------------------------
Buenos Aires (Province of) Bonds, Bonos de Consolidacion de Deudas,
Series PBA1, 4/1/07 4,6 [ARP] 1,599,187 627,003
----------------
27,878,794
- ----------------------------------------------------------------------------------------------------------------------
AUSTRALIA--2.9%
Queensland Treasury Corp. Unsec. Nts., Series 09G, 6%, 7/14/09 [AUD] 62,395,000 46,371,134
- ----------------------------------------------------------------------------------------------------------------------
AUSTRIA--3.9%
Austria (Republic of) Nts.:
3.40%, 10/20/04 [EUR] 1,580,000 1,966,126
3.80%, 10/20/13 [EUR] 29,045,000 35,656,554
5.50%, 10/20/07 [EUR] 2,440,000 3,261,592
Series 98-1, 5%, 1/15/08 [EUR] 9,795,000 12,947,585
- ----------------------------------------------------------------------------------------------------------------------
Austria (Republic of) Sr. Unsec. Unsub. Nts., Series 1, 5%, 7/15/12 [EUR] 6,525,000 8,753,693
----------------
62,585,550
- ----------------------------------------------------------------------------------------------------------------------
BELGIUM--3.7%
Belgium (Kingdom of) Bonds:
5%, 9/28/11 [EUR] 3,545,000 4,755,265
5.50%, 3/28/28 [EUR] 5,400,000 7,535,024
Series 19, 6.50%, 3/31/05 [EUR] 7,460,000 9,471,529
Series 32, 3.75%, 3/28/09 [EUR] 19,125,000 24,258,116
Series 35, 5.75%, 9/28/10 [EUR] 9,415,000 13,084,764
----------------
59,104,698
20 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
BRAZIL--2.7%
Brazil (Federal Republic of) Bonds, Series 15 yr., 2.125%, 4/15/09 3 $ 17,648 $ 17,339
- ----------------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Debt Capitalization Bonds, Series 20 yr.,
8%, 4/15/14 27,753,602 27,458,720
- ----------------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Nts., 12%, 4/15/10 2,290,000 2,739,985
- ----------------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Unsec. Bonds, 4.75%, 4/10/07 6 [JPY] 500,000,000 4,613,007
- ----------------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Unsec. Unsub. Bonds:
10%, 8/7/11 1,530,000 1,696,005
11%, 2/4/10 [EUR] 840,000 1,186,740
11%, 8/17/40 5,345,200 5,998,651
Cl. B, 8.875%, 4/15/24 81,000 77,760
----------------
43,788,207
- ----------------------------------------------------------------------------------------------------------------------
BULGARIA--0.2%
Bulgaria (Republic of) Bonds:
8.25%, 1/15/15 1,505,000 1,862,438
8.25%, 1/15/15 8 1,505,000 1,862,438
----------------
3,724,876
- ----------------------------------------------------------------------------------------------------------------------
COLOMBIA--0.6%
Colombia (Republic of) Unsec. Unsub. Bonds, 5.50%, 4/27/05 [JPY] 960,000,000 8,885,770
- ----------------------------------------------------------------------------------------------------------------------
DENMARK--0.7%
Denmark (Kingdom of) Nts., 4%, 8/15/08 [DKK] 61,610,000 10,584,071
- ----------------------------------------------------------------------------------------------------------------------
EL SALVADOR--0.1%
El Salvador (Republic of) Bonds, 7.625%, 9/21/34 8 1,185,000 1,220,550
- ----------------------------------------------------------------------------------------------------------------------
FINLAND--3.1%
Finland (Republic of) Bonds, 5.375%, 7/4/13 [EUR] 20,985,000 28,885,122
- ----------------------------------------------------------------------------------------------------------------------
Finland (Republic of) Sr. Unsec. Unsub. Bonds:
2.75%, 7/4/06 [EUR] 3,470,000 4,333,084
5%, 7/4/07 [EUR] 12,415,000 16,326,084
----------------
49,544,290
- ----------------------------------------------------------------------------------------------------------------------
FRANCE--3.2%
France (Government of) Obligations Assimilables du Tresor Bonds:
4%, 10/25/13 [EUR] 13,960,000 17,415,169
5.50%, 10/25/07 [EUR] 12,375,000 16,544,426
5.50%, 10/25/10 [EUR] 3,080,000 4,232,637
5.75%, 10/25/32 [EUR] 5,300,000 7,722,022
- ----------------------------------------------------------------------------------------------------------------------
France (Government of) Treasury Nts., 5 yr., 5%, 7/12/05 [EUR] 5,050,000 6,412,539
----------------
52,326,793
21 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
GERMANY--2.5%
Germany (Republic of) Bonds:
2%, 6/17/05 [EUR] 7,865,000 $ 9,766,143
3%, 12/10/04 [EUR] 2,385,000 2,970,969
5.375%, 1/4/10 [EUR] 7,205,000 9,811,743
Series 01, 5%, 7/4/11 [EUR] 9,135,000 12,273,007
Series 02, 5%, 7/4/12 [EUR] 4,200,000 5,642,239
----------------
40,464,101
- ----------------------------------------------------------------------------------------------------------------------
GREECE--4.0%
Greece (Republic of) Bonds:
5.35%, 5/18/11 [EUR] 25,040,000 34,021,060
6.50%, 1/11/14 [EUR] 14,195,000 20,846,349
- ----------------------------------------------------------------------------------------------------------------------
Greece (Republic of) Sr. Unsub. Bonds, 4.65%, 4/19/07 [EUR] 6,980,000 9,072,390
----------------
63,939,799
- ----------------------------------------------------------------------------------------------------------------------
GUATEMALA--0.0%
Guatemala (Republic of) Nts.:
10.25%, 11/8/11 525,000 614,250
10.25%, 11/8/11 8 160,000 187,200
----------------
801,450
- ----------------------------------------------------------------------------------------------------------------------
HUNGARY--0.6%
Hungary (Government of) Bonds, Series 05/I, 8.50%, 10/12/05 [HUF] 1,918,660,000 9,474,926
- ----------------------------------------------------------------------------------------------------------------------
IRELAND--4.0%
Ireland (Republic of) Treasury Bonds, 3.25%, 4/18/09 [EUR] 52,335,000 65,027,825
- ----------------------------------------------------------------------------------------------------------------------
ITALY--3.2%
Italy (Republic of) Treasury Bonds:
Buoni del Tesoro Poliennali, 4%, 3/1/05 [EUR] 6,980,000 8,748,123
Buoni del Tesoro Poliennali, 4.25%, 2/1/19 [EUR] 13,785,000 16,828,266
Buoni del Tesoro Poliennali, 4.50%, 3/1/07 [EUR] 14,745,000 19,094,957
Buoni del Tesoro Poliennali, 5%, 10/15/07 [EUR] 5,125,000 6,765,687
----------------
51,437,033
- ----------------------------------------------------------------------------------------------------------------------
IVORY COAST--0.0%
Ivory Coast (Government of) Past Due Interest Bonds, 1.90%,
3/29/18 4,5,6 [FRF] 16,007,500 527,316
- ----------------------------------------------------------------------------------------------------------------------
JAPAN--4.5%
Japan (Government of) Bonds, 5 yr., Series 14, 0.40%, 6/20/06 [JPY] 7,893,800,000 72,114,956
- ----------------------------------------------------------------------------------------------------------------------
KOREA, REPUBLIC OF SOUTH--0.2%
Korea (Republic of) Nts.:
4.25%, 6/1/13 1,445,000 1,389,006
8.875%, 4/15/08 2,160,000 2,535,300
----------------
3,924,306
22 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
MEXICO--0.8%
Mexican Williams Sr. Nts., 2.31%, 11/15/08 3,6 $ 500,000 $ 516,875
- ----------------------------------------------------------------------------------------------------------------------
United Mexican States Bonds:
7.50%, 4/8/33 6,500,000 6,847,750
Series M20, 8%, 12/7/23 [MXN] 43,415,000 2,935,046
- ----------------------------------------------------------------------------------------------------------------------
United Mexican States Unsec. Unsub. Nts., Series 6 BR, 6.75%, 6/6/06 [JPY] 205,000,000 2,050,466
----------------
12,350,137
- ----------------------------------------------------------------------------------------------------------------------
NEW ZEALAND--0.3%
New Zealand (Government of) Bonds, 7%, 7/15/09 [NZD] 7,110,000 4,983,816
- ----------------------------------------------------------------------------------------------------------------------
NIGERIA--0.1%
Central Bank of Nigeria Gtd. Bonds, Series WW, 6.25%, 11/15/20 1,375,000 1,285,625
- ----------------------------------------------------------------------------------------------------------------------
Nigeria (Federal Republic of) Promissory Nts., Series RC, 5.092%, 1/5/10 654,554 592,311
----------------
1,877,936
- ----------------------------------------------------------------------------------------------------------------------
PERU--0.4%
Peru (Republic of) Sr. Nts., 4.53%, 2/28/16 7 5,860,848 3,350,647
- ----------------------------------------------------------------------------------------------------------------------
Peru (Republic of) Unsec. Unsub. Bonds, 8.75%, 11/21/33 3,400,000 3,391,500
----------------
6,742,147
- ----------------------------------------------------------------------------------------------------------------------
POLAND--2.7%
Poland (Republic of) Bonds:
Series 0K0805, 5.15%, 8/12/05 7 [PLZ] 102,160,000 27,411,901
Series WS0922, 5.75%, 9/23/22 [PLZ] 10,000,000 2,607,235
Series DS0509, 6%, 5/24/09 [PLZ] 50,015,000 13,702,057
----------------
43,721,193
- ----------------------------------------------------------------------------------------------------------------------
PORTUGAL--3.7%
Portugal (Republic of) Obrig Do Tes Medio Prazo Nts., 4.875%, 8/17/07 [EUR] 9,710,000 12,733,609
- ----------------------------------------------------------------------------------------------------------------------
Portugal (Republic of) Obrig Do Tes Medio Prazo Unsec. Unsub. Nts.,
5.85%, 5/20/10 [EUR] 34,195,000 47,601,510
----------------
60,335,119
- ----------------------------------------------------------------------------------------------------------------------
RUSSIA--1.4%
Aries Vermoegensverwaltungs GmbH Unsub. Nts., Series B, 7.75%, 10/25/09 6 [EUR] 2,500,000 3,294,272
- ----------------------------------------------------------------------------------------------------------------------
Ministry Finance of Russian Debs.:
Series V, 3%, 5/14/08 10,615,000 9,632,348
Series VI, 3%, 5/14/06 3,590,000 3,515,867
- ----------------------------------------------------------------------------------------------------------------------
Russian Federation Unsub. Nts., 5%, 3/31/30 3 5,730,000 5,525,869
----------------
21,968,356
- ----------------------------------------------------------------------------------------------------------------------
SPAIN--4.1%
Spain (Kingdom of) Bonds:
Bonos y Obligacion del Estado, 4.25%, 10/31/07 [EUR] 8,945,000 11,560,802
Bonos y Obligacion del Estado, 4.80%, 10/31/06 [EUR] 5,500,000 7,140,523
23 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
SPAIN Continued
Spain (Kingdom of) Bonds: Continued
Bonos y Obligacion del Estado, 5.35%, 10/31/11 [EUR] 21,360,000 $ 29,261,302
Bonos y Obligacion del Estado, 5.75%, 7/30/32 [EUR] 5,200,000 7,561,320
- ----------------------------------------------------------------------------------------------------------------------
Spain (Kingdom of) Treasury Bills, 2.03%, 10/22/04 7 [EUR] 8,420,000 10,461,016
----------------
65,984,963
- ----------------------------------------------------------------------------------------------------------------------
SWEDEN--0.6%
Sweden (Kingdom of) Bonds, Series 1043, 5%, 1/28/09 [SEK] 65,420,000 9,471,761
- ----------------------------------------------------------------------------------------------------------------------
THE NETHERLANDS--3.1%
Netherlands (Kingdom of the) Bonds:
3.75%, 7/15/09 [EUR] 8,000,000 10,145,196
4.25%, 7/15/13 [EUR] 9,660,000 12,283,158
5%, 7/15/11 [EUR] 15,405,000 20,670,022
5.50%, 1/15/28 [EUR] 5,300,000 7,421,852
----------------
50,520,228
- ----------------------------------------------------------------------------------------------------------------------
TURKEY--0.1%
Turkey (Republic of) Nts., 7.25%, 3/15/15 9 1,915,000 1,895,850
- ----------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM--6.2%
United Kingdom Treasury Nts., 4%, 3/7/09 [GBP] 56,685,000 99,616,042
- ----------------------------------------------------------------------------------------------------------------------
VENEZUELA--1.2%
Venezuela (Republic of) Collateralized Par Bonds, Series W-B, 6.75%, 3/31/20 159,000 155,224
- ----------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Debs., Series DL, 2.75%, 12/18/07 3 13,362 13,309
- ----------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Front-Loaded Interest Reduction Bonds,
Series A, 2.063%, 3/31/07 3 10,213,775 10,162,706
- ----------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Nts.:
8.50%, 10/8/14 9 2,610,000 2,556,821
10.75%, 9/13/13 4,350,000 4,904,625
- ----------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Sr. Unsec. Unsub. Bonds, 11%, 3/5/08 [EUR] 840,000 1,194,836
----------------
18,987,521
----------------
Total Foreign Government Obligations (Cost $1,033,520,851) 1,072,181,514
- ----------------------------------------------------------------------------------------------------------------------
LOAN PARTICIPATIONS--1.1%
- ----------------------------------------------------------------------------------------------------------------------
Algeria (Republic of) Loan Participation Nts.:
0.938%, 3/4/10 3,6 [JPY] 194,879,283 1,722,675
2%, 9/4/06 3,6 657,141 652,212
2.183%, 3/4/10 3,6 745,250 734,071
- ----------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG:
Indonesia (Republic of) Rupiah Loan Participation Nts., 2.636%, 3/21/05 3 5,390,000 5,364,667
Indonesia (Republic of) Rupiah Loan Participation Nts., 2.636%, 1/25/06 3 3,155,000 3,084,959
OAO Gazprom Loan Participation Nts., 6.50%, 8/4/05 6 3,005,000 3,079,524
- ----------------------------------------------------------------------------------------------------------------------
Morgan Stanley Bank AG, OAO Gazprom Unsec. Loan Participation Nts.,
9.625%, 3/1/13 3,020,000 3,355,975
----------------
Total Loan Participations (Cost $17,356,188) 17,994,083
24 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--6.9%
- ----------------------------------------------------------------------------------------------------------------------
Capital Gaming International, Inc., 11.50% Promissory Nts., 8/1/1995 4,5,6 $ 2,000 $ --
- ----------------------------------------------------------------------------------------------------------------------
European Investment Bank Nts., 2.125%, 9/20/07 [JPY] 136,000,000 1,305,373
- ----------------------------------------------------------------------------------------------------------------------
Gazprom International SA, 7.201% Sr. Unsec. Bonds, 2/1/20 7,850,000 7,969,556
- ----------------------------------------------------------------------------------------------------------------------
General Electric Capital Corp., 1.40% Sr. Unsec. Unsub. Nts., 11/2/06 [JPY] 4,101,000,000 38,174,098
- ----------------------------------------------------------------------------------------------------------------------
Inter-American Development Bank, 1.90% Unsec. Bonds, 7/8/09 [JPY] 113,000,000 1,092,510
- ----------------------------------------------------------------------------------------------------------------------
International Bank for Reconstruction and Development (The),
2% Nts., 2/18/08 [JPY] 121,000,000 1,162,371
- ----------------------------------------------------------------------------------------------------------------------
Japan (Government of) Unsec. Unsub. Nts., 2.875%, 7/28/05 [JPY] 3,320,000,000 30,882,956
- ----------------------------------------------------------------------------------------------------------------------
KfW International Finance, Inc., 2.05% Unsec. Unsub. Nts., 9/21/09 [JPY] 104,000,000 1,011,990
- ----------------------------------------------------------------------------------------------------------------------
Ongko International Finance Co. BV, 10.50% Sec. Nts., 3/29/10 4,5,6 550,000 3,438
- ----------------------------------------------------------------------------------------------------------------------
Petroleos Mexicanos, 7.375% Unsec. Nts., 8/13/07 [ITL] 14,895,000,000 10,506,882
- ----------------------------------------------------------------------------------------------------------------------
Pfizer, Inc., 0.80% Unsec. Nts., Series INTL, 3/18/08 [JPY] 1,980,000,000 18,199,118
----------------
Total Corporate Bonds and Notes (Cost $111,387,048) 110,308,292
SHARES
- ----------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--1.6%
- ----------------------------------------------------------------------------------------------------------------------
BASF AG 9,224 542,598
- ----------------------------------------------------------------------------------------------------------------------
Berkeley Group plc (The) 22,830 524,571
- ----------------------------------------------------------------------------------------------------------------------
Brambles Industries plc 114,390 532,203
- ----------------------------------------------------------------------------------------------------------------------
British Land Co. plc 38,554 519,782
- ----------------------------------------------------------------------------------------------------------------------
CNP Assurances SA 8,242 536,083
- ----------------------------------------------------------------------------------------------------------------------
Corus Group plc 5 630,456 582,645
- ----------------------------------------------------------------------------------------------------------------------
DaimlerChrysler AG 12,005 494,930
- ----------------------------------------------------------------------------------------------------------------------
E.ON AG 7,030 518,014
- ----------------------------------------------------------------------------------------------------------------------
Gecina SA 6,004 507,747
- ----------------------------------------------------------------------------------------------------------------------
Heidelberger Zement AG 11,342 531,071
- ----------------------------------------------------------------------------------------------------------------------
Hilton Group plc 106,590 534,544
- ----------------------------------------------------------------------------------------------------------------------
Hokkaido Electric Power Co. 27,424 491,820
- ----------------------------------------------------------------------------------------------------------------------
Japan Real Estate Investment Corp. 65 516,975
- ----------------------------------------------------------------------------------------------------------------------
Karstadt Quelle AG 31,462 494,574
- ----------------------------------------------------------------------------------------------------------------------
Kawasaki Kisen Kaisha Ltd. 77,943 534,191
- ----------------------------------------------------------------------------------------------------------------------
Kelda Group plc 52,585 510,270
- ----------------------------------------------------------------------------------------------------------------------
Klepierre 6,911 500,221
- ----------------------------------------------------------------------------------------------------------------------
Lafarge SA 5,825 510,358
- ----------------------------------------------------------------------------------------------------------------------
Land Securities Group plc 24,125 512,796
- ----------------------------------------------------------------------------------------------------------------------
Leopalace21 Corp. 26,000 480,934
- ----------------------------------------------------------------------------------------------------------------------
Liberty International plc 33,441 501,145
- ----------------------------------------------------------------------------------------------------------------------
Lloyds TSB Group plc 66,521 520,138
- ----------------------------------------------------------------------------------------------------------------------
MAN AG 14,732 503,840
25 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
COMMON STOCKS Continued
- ----------------------------------------------------------------------------------------------------------------------
Mitsui O.S.K. Lines Ltd. 84,301 $ 506,503
- ----------------------------------------------------------------------------------------------------------------------
Nippon Building Fund, Inc. 67 528,010
- ----------------------------------------------------------------------------------------------------------------------
Nippon Mining Holdings, Inc. 108,668 551,168
- ----------------------------------------------------------------------------------------------------------------------
Novar plc 226,450 476,003
- ----------------------------------------------------------------------------------------------------------------------
Omron Corp. 23,603 522,413
- ----------------------------------------------------------------------------------------------------------------------
PSA Peugeot Citroen 8,331 513,898
- ----------------------------------------------------------------------------------------------------------------------
Rakuten, Inc. 72 469,245
- ----------------------------------------------------------------------------------------------------------------------
RWE AG 10,213 487,734
- ----------------------------------------------------------------------------------------------------------------------
Sammy Corp. 10,061 493,836
- ----------------------------------------------------------------------------------------------------------------------
ScottishPower plc 68,960 527,962
- ----------------------------------------------------------------------------------------------------------------------
Severn Trent plc 32,030 509,601
- ----------------------------------------------------------------------------------------------------------------------
Showa Shell Sekiyu K.K. 56,398 501,361
- ----------------------------------------------------------------------------------------------------------------------
Societe Generale, Cl. A 5,845 517,926
- ----------------------------------------------------------------------------------------------------------------------
Suez SA 25,774 553,249
- ----------------------------------------------------------------------------------------------------------------------
Sumitomo Bakelite Co. Ltd. 80,931 488,462
- ----------------------------------------------------------------------------------------------------------------------
Tate & Lyle plc 77,590 542,715
- ----------------------------------------------------------------------------------------------------------------------
Technip SA 3,332 538,699
- ----------------------------------------------------------------------------------------------------------------------
ThyssenKrupp AG 26,817 520,942
- ----------------------------------------------------------------------------------------------------------------------
Tohoku Electric Power Co. 29,100 480,878
- ----------------------------------------------------------------------------------------------------------------------
TonenGeneral Sekiyu K.K. 59,852 517,377
- ----------------------------------------------------------------------------------------------------------------------
Trend Micro, Inc. 11,500 495,478
- ----------------------------------------------------------------------------------------------------------------------
TUI AG 27,742 517,175
- ----------------------------------------------------------------------------------------------------------------------
Unibail 4,418 532,686
- ----------------------------------------------------------------------------------------------------------------------
United Utilities plc 50,100 504,314
- ----------------------------------------------------------------------------------------------------------------------
Vinci 4,675 538,673
- ----------------------------------------------------------------------------------------------------------------------
Volkswagen AG, Preference 18,860 514,842
- ----------------------------------------------------------------------------------------------------------------------
William Hill plc 51,044 493,467
----------------
Total Common Stocks (Cost $24,057,563) 25,746,067
UNITS
- ----------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- ----------------------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/15/05 5,6 495 5
- ----------------------------------------------------------------------------------------------------------------------
Loral Space & Communications Ltd. Wts., Exp. 1/15/07 5,6 50 1
- ----------------------------------------------------------------------------------------------------------------------
Protection One, Inc. Wts., Exp. 6/30/05 5,6 640 --
- ----------------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Oil Linked Payment Obligation Wts., Exp. 4/15/20 5,6 500 --
----------------
Total Rights, Warrants and Certificates (Cost $481) 6
26 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------
STRUCTURED NOTES--8.3%
- ----------------------------------------------------------------------------------------------------------------------
Citigroup Global Markets Holdings, Inc.:
Brazilian Real Linked Unsec. Nts., 1.12%, 2/2/05 $ 9,500,000 $ 10,523,340
Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 3/15/07 10 [COP] 22,700,000,000 10,104,232
Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 3/15/07 [COP] 7,400,000,000 3,293,891
Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12 [COP] 31,110,000,000 13,389,519
Indonesia (Republic of) Recapitalization Unsec. Credit Linked Nts.,
13.15%, 3/17/10 9,523,810 9,681,734
OAO Gazprom Russian Local Market Unsec. Credit Linked Nts.,
15.462%, 11/8/05 10 4,406,270 5,206,901
Peruvian Sol Unsec. Linked Nts., 1.466%, 1/14/05 [PEN] 17,650,000 5,488,228
- ----------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston, Inc. (Nassau Branch):
Turkey (Republic of) Credit Linked Nts., Series EM 868, 25.01%, 8/25/05 4,070,000 3,337,441
Turkey (Republic of) Credit Linked Nts., Series EM 872, 23.57%, 10/20/05 3 19,769,000 20,865,240
- ----------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston, Inc. (USA), U.S. Dollar/South African Rand
Linked Nts., Series FBi 43, 1.44%, 5/23/22 2,100,000 2,043,300
- ----------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG:
Korea (Republic of) Credit Bonds, 1.56%, 6/20/09 7,225,000 7,296,528
OAO Gazprom I Credit Nts., 5.588%, 10/20/07 1,435,000 1,499,013
OAO Gazprom II Credit Nts., 5.338%, 4/20/07 1,435,000 1,494,249
Romania (The State of) 3 yr. Linked Nts., 12.89%, 9/27/07 [ROL] 56,400,000,000 1,707,480
Russian Federation Linked Nts., 15%, 3/11/05 [RUR] 141,112,000 5,044,144
Ukraine (Republic of) Credit Linked Nts., 6.541%, 8/5/11 7,740,000 7,964,460
- ----------------------------------------------------------------------------------------------------------------------
Lehman Brothers International:
Turkey (Republic of) Treasury Bills Total Return Linked Nts., 25.70%, 1/26/05 9,368,029 7,741,739
Turkey (Republic of) Treasury Bills Total Return Linked Nts., 28.25%, 5/26/05 11,674,353 10,027,102
- ----------------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital Services, Inc., Venezuela (Republic of) Credit
Bonds, 5%, 9/20/09 3,260,000 3,401,622
- ----------------------------------------------------------------------------------------------------------------------
UBS AG, OAO Gazprom III Credit Nts., 4.705%, 7/5/06 3,590,000 3,731,149
----------------
Total Structured Notes (Cost $130,985,113) 133,841,312
DATE STRIKE CONTRACTS
- ----------------------------------------------------------------------------------------------------------------------
OPTIONS PURCHASED--0.0%
- ----------------------------------------------------------------------------------------------------------------------
Japanese Yen Put 5,6 (Cost $978,607) 10/8/04 111.55JPY 14,995,000,000JPY 209,930
PRINCIPAL
AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--4.5%
- ----------------------------------------------------------------------------------------------------------------------
Undivided interest of 4.98% in joint repurchase agreement (Principal Amount/
Value $1,446,038,000, with a maturity value of $1,446,110,302) with UBS Warburg
LLC, 1.80%, dated 9/30/04, to be repurchased at $72,068,603 on 10/1/04,
collateralized by Federal National Mortgage Assn., 5%, with a 3/1/34,
value of $1,477,979,332 (Cost $72,065,000) $ 72,065,000 72,065,000
- ----------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $1,565,634,012) 99.8% 1,608,607,644
- ----------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.2 2,862,758
-----------------------------------
NET ASSETS 100.0% $ 1,611,470,402
===================================
27 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS
Principal amount, strike, contracts and exercise price are reported in U.S.
Dollars, except for those denoted in the following currencies:
ARP Argentine Peso
AUD Australian Dollar
COP Colombian Peso
DKK Danish Krone
EUR Euro
FRF French Franc
GBP British Pound Sterling
HUF Hungarian Forint
ITL Italian Lira
JPY Japanese Yen
MXN Mexican Nuevo Peso
NZD New Zealand Dollar
PEN Peruvian New Sol
PLZ Polish Zloty
ROL Romanian Leu
RUR Russian Ruble
SEK Swedish Krona
1. A sufficient amount of securities has been designated to cover outstanding
foreign currency contracts. See Note 5 of Notes to Financial Statements.
2. A sufficient amount of liquid assets has been designated to cover
outstanding written call options, as follows:
CONTRACTS EXPIRATION EXERCISE PREMIUM VALUE
SUBJECT TO CALL DATES PRICE RECEIVED SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
Japanese Yen (JPY) 14,995,000,000JPY 10/8/04 104.400JPY $ 1,075,791 $ --
New Zealand (Government of)
Bonds, 7%, 7/15/09 7,110NZD 12/9/04 6.205NZD 21,095 27,100
--------------------------
$ 1,096,886 $ 27,100
==========================
3. Represents the current interest rate for a variable or increasing rate
security.
4. Issue is in default. See Note 1 of Notes to Financial Statements.
5. Non-income producing security.
6. Illiquid or restricted security. See Note 11 of Notes to Financial
Statements.
7. Zero coupon bond reflects effective yield on the date of purchase.
8. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $3,270,188 or 0.20% of the Fund's net
assets as of September 30, 2004.
9. When-issued security or forward commitment to be delivered and settled after
September 30, 2004. See Note 1 of Notes to Financial Statements.
10. All or a portion of the security is held in collateralized accounts to cover
initial margin requirements on open futures sales contracts with an aggregate
market value of $14,790,443. See Note 6 of Notes to Financial Statements.
28 | OPPENHEIMER INTERNATIONAL BOND FUND
DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC HOLDINGS, AS A PERCENTAGE OF
TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS:
GEOGRAPHIC HOLDINGS VALUE PERCENT
- ---------------------------------------------------------------------------
United States $ 305,921,582 19.0%
Japan 110,576,563 6.9
Great Britain 107,408,198 6.7
Spain 65,984,963 4.1
Ireland 65,027,825 4.0
Greece 63,939,799 4.0
Austria 62,585,550 3.9
Portugal 60,335,119 3.8
Belgium 59,104,698 3.7
France 57,576,333 3.6
Brazil 54,311,547 3.4
Russia 53,348,867 3.3
Italy 51,437,033 3.2
The Netherlands 50,520,228 3.1
Finland 49,544,290 3.1
Australia 46,371,134 2.9
Germany 45,589,821 2.8
Turkey 43,867,372 2.7
Poland 43,721,193 2.7
Colombia 35,673,412 2.2
Argentina 27,878,794 1.7
Mexico 22,857,019 1.4
Venezuela 22,389,143 1.4
Indonesia 18,134,798 1.1
Peru 12,230,375 0.8
Korea, Republic of South 11,220,834 0.7
Denmark 10,584,071 0.7
Hungary 9,474,926 0.6
Sweden 9,471,761 0.6
Ukraine 7,964,460 0.5
New Zealand 4,983,816 0.3
Bulgaria 3,724,876 0.2
Supranational 3,560,254 0.2
Algeria 3,108,958 0.2
South Africa 2,043,300 0.1
Nigeria 1,877,936 0.1
Romania 1,707,480 0.1
El Salvador 1,220,550 0.1
Guatemala 801,450 0.1
Ivory Coast 527,316 --
--------------------------------
TOTAL $ 1,608,607,644 100.0%
================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES September 30, 2004
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
ASSETS
- ----------------------------------------------------------------------------------------------------------------------
Investments, at value (including securities loaned of approximately $151,985,000)
(cost $1,565,634,012)--see accompanying statement of investments $ 1,608,607,644
- ----------------------------------------------------------------------------------------------------------------------
Collateral for securities loaned 155,142,317
- ----------------------------------------------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 3,355,102
- ----------------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns 21,385,506
Shares of beneficial interest sold 13,734,037
Investments sold 535,563
Futures margins 131,127
Other 10,934
----------------
Total assets 1,802,902,230
- ----------------------------------------------------------------------------------------------------------------------
LIABILITIES
- ----------------------------------------------------------------------------------------------------------------------
Bank overdraft 89,592
- ----------------------------------------------------------------------------------------------------------------------
Bank overdraft-foreign currencies (cost $532,050) 543,718
- ----------------------------------------------------------------------------------------------------------------------
Options written, at value (premiums received $1,096,886)--see accompanying
statement of investments 27,100
- ----------------------------------------------------------------------------------------------------------------------
Swaptions written, at value (premiums received $791,373) 1,045,863
- ----------------------------------------------------------------------------------------------------------------------
Return of collateral for securities loaned 155,142,317
- ----------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on foreign currency contracts 7,967,087
- ----------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on swap contracts 2,451,716
- ----------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $4,368,635 purchased on a when-issued basis
or forward commitment) 9,502,430
Closed foreign currency contracts 9,759,128
Shares of beneficial interest redeemed 2,691,739
Distribution and service plan fees 908,429
Dividends 707,681
Transfer and shareholder servicing agent fees 244,871
Shareholder communications 103,808
Trustees' compensation 17,309
Other 229,040
----------------
Total liabilities 191,431,828
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 1,611,470,402
================
30 | OPPENHEIMER INTERNATIONAL BOND FUND
- ----------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 286,670
- ----------------------------------------------------------------------------------------------------------------------
Additional paid-in capital 1,512,692,070
- ----------------------------------------------------------------------------------------------------------------------
Accumulated net investment income 44,819,377
- ----------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 16,866,869
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets
and liabilities denominated in foreign currencies 36,805,416
----------------
NET ASSETS $ 1,611,470,402
================
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- ----------------------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $1,177,628,477
and 209,317,185 shares of beneficial interest outstanding) $ 5.63
Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $ 5.91
- ----------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $167,621,429 and
29,885,779 shares of beneficial interest outstanding) $ 5.61
- ----------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $233,311,139 and 41,609,376 shares
of beneficial interest outstanding) $ 5.61
- ----------------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $18,641,018 and 3,320,854 shares
of beneficial interest outstanding) $ 5.61
- ----------------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $14,268,339 and 2,536,575 shares of beneficial interest outstanding) $ 5.63
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF OPERATIONS For the Year Ended September 30, 2004
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- ----------------------------------------------------------------------------------------------------------------------
Interest $ 37,536,465
- ----------------------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $75,375) 638,192
- ----------------------------------------------------------------------------------------------------------------------
Portfolio lending fees 43,240
-----------------
Total investment income 38,217,897
- ----------------------------------------------------------------------------------------------------------------------
EXPENSES
- ----------------------------------------------------------------------------------------------------------------------
Management fees 7,484,558
- ----------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 1,987,821
Class B 1,529,196
Class C 1,703,454
Class N 53,586
- ----------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 1,450,702
Class B 387,581
Class C 303,793
Class N 30,206
Class Y 3
- ----------------------------------------------------------------------------------------------------------------------
Shareholder communications:
Class A 127,694
Class B 45,892
Class C 26,433
Class N 2,175
- ----------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 344,485
- ----------------------------------------------------------------------------------------------------------------------
Trustees' compensation 31,233
- ----------------------------------------------------------------------------------------------------------------------
Other 143,861
-----------------
Total expenses 15,652,673
Less reduction to custodian expenses (28,349)
Less payments and waivers of expenses (17,908)
-----------------
Net expenses 15,606,416
- ----------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 22,611,481
32 | OPPENHEIMER INTERNATIONAL BOND FUND
- ----------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments (including premiums on options exercised) $ 12,632,724
Closing of futures contracts (1,812,061)
Closing and expiration of option contracts written 2,688,999
Closing and expiration of swaption contracts (226,999)
Foreign currency transactions 52,057,715
Swap contracts 12,508,030
-----------------
Net realized gain 77,848,408
- ----------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments 9,901,970
Translation of assets and liabilities denominated in foreign currencies (8,651,844)
Futures contracts (880,170)
Option contracts 451,883
Swaption contracts (563,469)
Swap contracts (2,492,218)
-----------------
Net change in unrealized appreciation (2,233,848)
- ----------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 98,226,041
=================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
33 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2004 2003
- ----------------------------------------------------------------------------------------------------------------------
OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------
Net investment income $ 22,611,481 $ 17,157,924
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain 77,848,408 51,584,451
- ----------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (2,233,848) 37,514,665
------------------------------------
Net increase in net assets resulting from operations 98,226,041 106,257,040
- ----------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (35,086,382) (11,257,243)
Class B (6,602,563) (3,817,825)
Class C (6,093,022) (1,988,035)
Class N (397,275) (94,512)
Class Y (2,820) --
- ----------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A 713,652,173 193,984,034
Class B 25,122,862 11,875,148
Class C 136,111,001 39,379,694
Class N 13,528,377 2,842,914
Class Y 14,179,799 --
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------
Total increase 952,638,191 337,181,215
- ----------------------------------------------------------------------------------------------------------------------
Beginning of period 658,832,211 321,650,996
------------------------------------
End of period (including accumulated net investment income
of $44,819,377 and $16,341,168, respectively) $ 1,611,470,402 $ 658,832,211
====================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34 | OPPENHEIMER INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED SEPTEMBER 30, 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 5.33 $ 4.38 $ 3.95 $ 4.19 $ 4.23
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .13 .20 .24 .30 .45
Net realized and unrealized gain (loss) .47 .95 .41 (.24) (.08)
-------------------------------------------------------------------------------
Total from investment operations .60 1.15 .65 .06 .37
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.30) (.20) (.19) -- (.21)
Tax return of capital distribution -- -- (.03) (.30) (.20)
-------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.30) (.20) (.22) (.30) (.41)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.63 $ 5.33 $ 4.38 $ 3.95 $ 4.19
===============================================================================
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 11.56% 26.67% 16.78% 1.40% 8.93%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 1,177,628 $ 429,283 $ 181,456 $ 118,733 $ 100,928
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 811,608 $ 285,391 $ 134,912 $ 117,000 $ 110,968
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 2.19% 3.94% 5.16% 7.10% 10.23%
Total expenses 1.13% 1.22% 1.37% 1.38% 1.31%
Expenses after payments and waivers
and reduction to custodian expenses N/A 3,4 N/A 3 N/A 3 N/A 3 1.29%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 133% 341% 372% 377% 288%
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%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35 | OPPENHEIMER INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS B YEAR ENDED SEPTEMBER 30, 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 5.31 $ 4.37 $ 3.94 $ 4.17 $ 4.22
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .08 .16 .21 .26 .42
Net realized and unrealized gain (loss) .47 .94 .40 (.22) (.09)
--------------------------------------------------------------------------------
Total from investment operations .55 1.10 .61 .04 .33
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.25) (.16) (.15) -- (.20)
Tax return of capital distribution -- -- (.03) (.27) (.18)
--------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.25) (.16) (.18) (.27) (.38)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.61 $ 5.31 $ 4.37 $ 3.94 $ 4.17
================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 10.66% 25.48% 15.90% 0.85% 7.94%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 167,621 $ 134,661 $ 100,049 $ 84,427 $ 98,272
- ---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 153,117 $ 119,232 $ 85,244 $ 93,455 $ 115,116
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 1.40% 3.20% 4.41% 6.40% 9.63%
Total expenses 1.98% 2.03% 2.14% 2.14% 2.05%
Expenses after payments and waivers
and reduction to custodian expenses N/A 3,4 N/A 3 N/A 3 N/A 3 2.03%
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 133% 341% 372% 377% 288%
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%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36 | OPPENHEIMER INTERNATIONAL BOND FUND
CLASS C YEAR ENDED SEPTEMBER 30, 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 5.31 $ 4.37 $ 3.94 $ 4.17 $ 4.22
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .09 .16 .21 .26 .41
Net realized and unrealized gain (loss) .46 .94 .40 (.22) (.08)
--------------------------------------------------------------------------------
Total from investment operations .55 1.10 .61 .04 .33
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.25) (.16) (.15) -- (.19)
Tax return of capital distribution -- -- (.03) (.27) (.19)
--------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.25) (.16) (.18) (.27) (.38)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.61 $ 5.31 $ 4.37 $ 3.94 $ 4.17
================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 10.75% 25.48% 15.90% 0.85% 7.95%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 233,311 $ 90,248 $ 38,865 $ 25,221 $ 27,663
- ---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 170,796 $ 63,198 $ 28,635 $ 27,125 $ 30,710
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 1.46% 3.15% 4.37% 6.39% 9.55%
Total expenses 1.88% 2.02% 2.14% 2.14% 2.05%
Expenses after payments and waivers
and reduction to custodian expenses N/A 3,4 N/A 3 N/A 3 N/A 3 2.03%
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 133% 341% 372% 377% 288%
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%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
37 | OPPENHEIMER INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS N YEAR ENDED SEPTEMBER 30, 2004 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 .12 .18 .21 .16
Net realized and unrealized gain (loss) .45 .95 .42 (.28)
-----------------------------------------------------------------
Total from investment operations .57 1.13 .63 (.12)
- ------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.28) (.18) (.18) --
Tax return of capital distribution -- -- (.03) (.16)
-----------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.28) (.18) (.21) (.16)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.61 $ 5.32 $ 4.37 $ 3.95
=================================================================
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 11.00% 26.31% 16.23% (2.88)%
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 18,641 $ 4,640 $ 1,280 $ 109
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 10,769 $ 2,653 $ 297 $ 34
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.83% 3.56% 4.87% 6.56%
Total expenses 1.49% 4,5 1.57% 4 1.57% 4 1.39% 4
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 133% 341% 372% 377%
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%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38 | OPPENHEIMER INTERNATIONAL BOND FUND
CLASS Y PERIOD ENDED SEPTEMBER 30, 2004 1
- ---------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------
Net asset value, beginning of period $ 5.58
- ---------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income -- 2
Net realized and unrealized gain .05
--------------
Total from investment operations .05
- ---------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- 2
Tax return of capital distribution --
--------------
Total dividends and/or distributions to shareholders --
- ---------------------------------------------------------------------------
Net asset value, end of period $ 5.63
==============
- ---------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 0.92%
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 14,268
- ---------------------------------------------------------------------------
Average net assets (in thousands) $ 7,086
- ---------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 4.84%
Total expenses 1.17% 5
- ---------------------------------------------------------------------------
Portfolio turnover rate 133%
1. For the period from September 27, 2004 (inception of offering) to September
30, 2004.
2. Less than $0.005 per share.
3. 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.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
39 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer International Bond Fund (the Fund) is a registered investment
company organized as a Massachusetts Business Trust. The Fund is registered as a
non-diversified, open-end management investment company under the Investment
Company Act of 1940, as amended. The Fund's investment objective is to seek
total return. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager).
The Fund offers Class A, Class B, Class C, Class N and Class Y 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. Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC, however, the institutional investor
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. Class A, B, C and N have
separate distribution and/or service plans. No such plan has been adopted for
Class Y shares. 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. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. 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.
Corporate, government and municipal debt instruments having a remaining maturity
in excess of 60 days and all mortgage-backed securities will be valued at the
mean between the "bid" and "asked" prices. 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 and domestic 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 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
40 | OPPENHEIMER INTERNATIONAL BOND FUND
remaining maturities of sixty days or less are valued at amortized cost (which
approximates market value).
- --------------------------------------------------------------------------------
STRUCTURED NOTES. The Fund invests in structured notes whose market values,
interest rates and/or redemption prices are linked to the performance of
underlying foreign currencies, interest rate spreads, stock market indices,
prices of individual securities, commodities or other financial instruments or
the occurrence of other specific events. The structured notes are often
leveraged, increasing the volatility of each note's market value relative to the
change in the underlying linked financial element or event. Fluctuations in
value of these securities are recorded as unrealized gains and losses in the
accompanying financial statements. The Fund records a realized gain or loss when
a structured note is sold or matures. As of September 30, 2004, the market value
of these securities comprised 8.3% of the Fund's net assets and resulted in
unrealized gains of $2,856,199.
- --------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis or
forward commitment can take place up to ten days or more after the trade date.
Normally the settlement date occurs within six months after the trade date;
however, the Fund may, from time to time, purchase securities whose settlement
date extends six months or more beyond trade date. During this period, such
securities do not earn interest, are subject to market fluctuation and may
increase or decrease in value prior to their delivery. The Fund maintains
internally designated assets with a market value equal to or greater than the
amount of its purchase commitments. The purchase of securities on a when-issued
basis or forward commitment may increase the volatility of the Fund's net asset
value to the extent the Fund executes such transactions while remaining
substantially fully invested. The Fund may also sell securities that it
purchased on a when-issued basis or forward commitment prior to settlement of
the original purchase. As of September 30, 2004, the Fund had purchased
$4,368,635 of securities on a when-issued basis or forward commitment.
- --------------------------------------------------------------------------------
SECURITY CREDIT RISK. The Fund invests in high-yield securities, which may be
subject to a greater degree of credit risk, market fluctuations and loss of
income and principal, and may be more sensitive to economic conditions than
lower-yielding, higher-rated fixed-income securities. The Fund may acquire
securities in default, and is not obligated to dispose of securities whose
issuers subsequently default. As of September 30, 2004, securities with an
aggregate market value of $16,500,864, representing 1.02% 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 as of the close of The New York Stock Exchange (the
Exchange), normally 4:00 P.M. Eastern time, on each day the Exchange is open.
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. Foreign exchange rates may be
41 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
valued primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
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. 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 its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
42 | OPPENHEIMER INTERNATIONAL BOND FUND
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3,4 TAX PURPOSES
---------------------------------------------------------------------------
$ 63,726,906 $-- $985,396 $33,373,297
1. As of September 30, 2004, the Fund had $629,834 of post-October losses
available to offset future realized capital gains, if any. Such losses, if
unutilized, will expire in 2013.
2. The Fund had $355,562 of straddle losses which were deferred.
3. During the fiscal year ended September 30, 2004, the Fund utilized $3,556,158
of capital loss carryforward to offset capital gains realized in that fiscal
year.
4. During the fiscal year ended September 30, 2003, the Fund utilized
$34,133,620 of capital loss carryforward to offset capital gains realized in
that fiscal year.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for September 30, 2004. Net assets of
the Fund were unaffected by the reclassifications.
REDUCTION TO
REDUCTION TO ACCUMULATED NET
INCREASE TO ACCUMULATED NET REALIZED GAIN
PAID-IN CAPITAL INVESTMENT LOSS ON INVESTMENTS 5
-------------------------------------------------------------
$ 4,405,760 $54,048,790 $58,454,550
5. $2,931,783 was distributed in connection with Fund share redemptions.
The tax character of distributions paid during the years ended September 30,
2004 and September 30, 2003 was as follows:
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2003
-------------------------------------------------------------------
Distributions paid from:
Ordinary income $48,182,062 $17,157,615
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of September 30, 2004 are noted below. The
primary difference between book and tax appreciation or depreciation of
securities and other investments, if applicable, is attributable to the tax
deferral of losses or tax realization of financial statement unrealized gain or
loss.
43 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
Federal tax cost of securities $ 1,566,262,346
Federal tax cost of other investments 238,544,957
----------------
Total federal tax cost $ 1,804,807,303
================
Gross unrealized appreciation $ 56,675,862
Gross unrealized depreciation (23,302,565)
----------------
Net unrealized appreciation $ 33,373,297
================
- --------------------------------------------------------------------------------
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. For purposes of determining the amount owed to the
Trustee under the plan, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the Fund or in other Oppenheimer funds
selected by the Trustee. The Fund purchases shares of the funds selected for
deferral by the Trustee in amounts equal to his or her deemed investment,
resulting in a Fund asset equal to the deferred compensation liability. Such
assets are included as a component of "Other" within the asset section of the
Statement of Assets and Liabilities. Deferral of trustees' fees under the plan
will not affect the net assets of the Fund, and will not materially affect the
Fund's assets, liabilities or net investment income per share. Amounts will be
deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income distributions, if any, are declared
daily and paid monthly. Capital gain distributions, if any, are declared and
paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
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 U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of
44 | OPPENHEIMER INTERNATIONAL BOND FUND
income and expenses during the reporting period. Actual results could differ
from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:
YEAR ENDED SEPTEMBER 30, 2004 1 YEAR ENDED SEPTEMBER 30, 2003
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------
CLASS A
Sold 172,839,291 $ 957,396,128 66,619,226 $ 327,783,210
Dividends and/or
distributions reinvested 5,072,488 27,463,043 1,800,877 8,831,110
Redeemed (49,156,351) (271,206,998) (29,286,342) (142,630,286)
--------------------------------------------------------------------
Net increase 128,755,428 $ 713,652,173 39,133,761 $ 193,984,034
====================================================================
- ------------------------------------------------------------------------------------------------
CLASS B
Sold 14,676,405 $ 80,808,899 14,881,963 $ 71,989,537
Dividends and/or
distributions reinvested 944,780 5,057,584 560,961 2,725,698
Redeemed (11,077,428) (60,743,621) (13,006,585) (62,840,087)
--------------------------------------------------------------------
Net increase 4,543,757 $ 25,122,862 2,436,339 $ 11,875,148
====================================================================
- ------------------------------------------------------------------------------------------------
CLASS C
Sold 30,576,433 $ 168,801,488 12,729,289 $ 62,063,352
Dividends and/or
distributions reinvested 830,062 4,457,967 292,444 1,431,897
Redeemed (6,789,922) (37,148,454) (4,932,108) (24,115,555)
--------------------------------------------------------------------
Net increase 24,616,573 $ 136,111,001 8,089,625 $ 39,379,694
====================================================================
- ------------------------------------------------------------------------------------------------
CLASS N
Sold 2,975,732 $ 16,429,938 682,672 $ 3,342,355
Dividends and/or
distributions reinvested 66,020 357,127 15,660 77,211
Redeemed (593,448) (3,258,688) (118,748) (576,652)
--------------------------------------------------------------------
Net increase 2,448,304 $ 13,528,377 579,584 $ 2,842,914
====================================================================
- ------------------------------------------------------------------------------------------------
CLASS Y
Sold 2,536,075 $ 14,176,984 -- $ --
Dividends and/or
distributions reinvested 500 2,815 -- --
Redeemed -- -- -- --
--------------------------------------------------------------------
Net increase 2,536,575 $ 14,179,799 -- $ --
====================================================================
1. For the year ended September 30, 2004, for Class A, B, C and N shares and for
the period from September 27, 2004 (inception of offering) to September 30, 2004
for Class Y shares.
45 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than U.S. government obligations and short-term obligations, for the year ended
September 30, 2004, were $1,506,398,131 and $1,057,381,523, respectively. There
were purchases of $566,162,511 and sales of $236,279,983 of U.S. government and
government agency obligations for the year ended September 30, 2004.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICES. The Fund pays the Manager a fee of $1,500 per year for
preparing and filing the Fund's tax returns.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended September 30, 2004, the Fund paid
$2,019,276 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $10,000 for
assets of $10 million or more. The Class Y shares are subject to the minimum
fees in the event that the per account fee does not equal or exceed the
applicable minimum fees. OFS may voluntarily waive the minimum fees.
- --------------------------------------------------------------------------------
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 all of those fees to
pay dealers, brokers, banks and other financial institutions quarterly for
providing personal services and maintenance of accounts of their customers that
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.
- --------------------------------------------------------------------------------
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 those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-
46 | OPPENHEIMER INTERNATIONAL BOND FUND
based sales charge of 0.75% per year on Class B and 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 September 30, 2004 for Class B, Class C and Class N
shares were $6,272,974, $3,468,952 and $130,925, 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
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- -----------------------------------------------------------------------------------------------------------
September 30, 2004 $822,275 $27,674 $353,364 $116,729 $1,248
- --------------------------------------------------------------------------------
PAYMENTS AND WAIVERS OF EXPENSES. OFS has voluntarily agreed to limit transfer
and shareholder servicing agent fees for all classes to 0.35% of average annual
net assets per class. During the year ended September 30, 2004, OFS waived
$7,603, $7,798, $2,257 and $250 for Class A, Class B, Class C and Class N
shares, respectively. This undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
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.
47 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS Continued
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 September 30, 2004, the Fund had outstanding foreign currency contracts as
follows:
CONTRACT VALUATION
EXPIRATION AMOUNT AS OF UNREALIZED UNREALIZED
CONTRACT DESCRIPTION DATES (000s) SEPT. 30, 2004 APPRECIATION DEPRECIATION
- -----------------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Argentine Peso (ARP) 1/18/05-2/2/05 32,660ARP $ 10,675,380 $ 1,118 $ 13,900
Australian Dollar (AUD) 10/18/04 17,195AUD 12,490,856 450,745 --
Brazilian Real (BRR) 12/14/04-10/13/05 69,174BRR 23,396,425 731,427 --
British Pound
Sterling (GBP) 10/18/04 7,160GBP 12,954,841 105,505 --
Columbian Peso (COP) 3/16/05 16,492,230COP 6,143,108 342,113 --
Euro (EUR) 11/16/04 44,415EUR 55,221,056 834,888 --
Japanese Yen (JPY) 3/15/05-4/1/05 32,006,300JPY 294,007,602 487,523 5,593,956
New Zealand
Dollar (NZD) 10/18/04 19,895NZD 13,448,884 333,006 --
Polish Zloty (PLZ) 12/27/04 10,297PLZ 2,895,764 12,823 --
South African Rand (ZAR) 10/25/04 80,940ZAR 12,484,038 -- 13,646
----------------------------
3,299,148 5,621,502
----------------------------
CONTRACTS TO SELL
British Pound
Sterling (GBP) 10/4/04-11/18/04 31,690GBP 57,377,355 -- 670,206
Euro (EUR) 11/17/04-12/27/04 35,617EUR 44,282,233 -- 1,194,961
Japanese Yen (JPY) 10/12/04-11/18/04 4,242,000JPY 38,600,909 55,954 315,166
Mexican Nuevo
Peso (MXN) 10/26/04 31,210MXN 2,729,619 -- 20,888
Swiss Franc (CHF) 10/18/04 16,910CHF 13,589,755 -- 144,364
----------------------------
55,954 2,345,585
----------------------------
Total unrealized appreciation and depreciation $ 3,355,102 $ 7,967,087
============================
- --------------------------------------------------------------------------------
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 stocks and bonds or
interest rates. The Fund may also buy or write put or call options on these
futures contracts.
The Fund generally sells futures contracts as a hedge against increases in
interest rates and decreases in market value of portfolio securities. The Fund
may also purchase futures
48 | OPPENHEIMER INTERNATIONAL BOND FUND
contracts to gain exposure to market changes as it may be more efficient or cost
effective than actually buying 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 in the Statement of Operations as the closing and expiration of futures
contracts. The net change in unrealized appreciation and depreciation is
reported on the Statement of Operations.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
As of September 30, 2004, the Fund had outstanding futures contracts as follows:
VALUATION UNREALIZED
EXPIRATION NUMBER OF AS OF APPRECIATION
CONTRACT DESCRIPTION DATES CONTRACTS SEPT. 30, 2004 (DEPRECIATION)
- -------------------------------------------------------------------------------------------------
CONTRACTS TO SELL
CAC-40 10 Index 12/17/04 68 $ 3,086,738 $ 2,114
DAX Index 12/17/04 42 5,105,803 79,656
FTSE 100 Index 12/17/04 65 5,422,850 (21,790)
Japan (Government of) Bonds, 10 yr. 12/9/04 25 31,352,543 (445,395)
Japan (Government of) Bonds, 10 yr. 12/8/04 23 2,885,897 (45,367)
Nikkei 225 Index 12/9/04 60 5,939,190 226,345
---------------
$ (204,437)
===============
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction.
49 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY Continued
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 year ended September 30, 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 15,096,642,110 3,363,750 3,870,000,000 666,309
Options closed or expired (136,183,797) (2,789,693) (6,033,660,000) (1,080,470)
Options exercised (9,852,755,000) (1,043,363) -- --
--------------------------------------------------------------------
Options outstanding as of
September 30, 2004 14,995,007,110 $ 1,096,886 -- $ --
====================================================================
- --------------------------------------------------------------------------------
8. INTEREST RATE SWAP CONTRACTS
The Fund may enter into an interest rate swap transaction to maintain a total
return or yield spread on a particular investment, or portion of its portfolio,
or for other non-speculative purposes. Interest rate swaps involve the exchange
of commitments to pay or receive interest, e.g., an exchange of floating rate
payments for fixed rate payments. The coupon payments are based on an agreed
upon principal amount and a specified index. Because the principal amount is not
exchanged, it represents neither an asset nor a liability to either
counterparty, and is referred to as notional. The Fund records an increase or
decrease to unrealized gain (loss), 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.
50 | OPPENHEIMER INTERNATIONAL BOND FUND
As of September 30, 2004, the Fund had entered into the following interest rate
swap agreements:
FIXED RATE FLOATING RATE
PAID BY RECEIVED BY
THE FUND AT THE FUND AT UNREALIZED
SWAP NOTIONAL SEPT. 30, SEPT. 30, FLOATING TERMINATION APPRECIATION
COUNTERPARTY PRINCIPAL 2004 2004 RATE INDEX DATES (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------------------------
Citigroup
Global Markets 90 Day
Holdings, Inc. 333,000,000TWD 2.02% 1.057% CPTW Rate 3/4/09 $ 95,928
Citigroup
Global Markets 90 Day
Holdings, Inc. 333,000,000TWD 2.02 1.112 CPTW Rate 3/23/09 109,241
Citigroup
Global Markets Three-Month
Holdings, Inc., LIBOR BBA
10 yr. 30,000,000 4.96 1.18 Rate 5/6/14 1,592,903
Deutsche Six-Month
Bank AG 500,000,000INR 4.87 4.547 MIFOR Rate 3/22/09 539,025
Deutsche
Bank AG, 5 yr. 454,000,000INR 4.83 4.50 IRS Rate 1/14/09 443,413
Deutsche 90 Day
Bank AG, 5yr. 187,000,000TWD 1.024 1.02 CPTW Rate 8/19/09 (1,434)
Three-Month
Deutsche LIBOR BBA
Bank AG, 10 yr. 36,000,000 5.32 1.68 Rate 5/12/14 3,072,327
JPMorgan Three-Month
Chase Bank 13,500,000 3.342 1.289999 LIBOR flat 3/31/08 (91,996)
JPMorgan Six-Month
Chase Bank 8,000,000 1.289988 2.92 LIBOR flat 5/13/08 (75,512)
JPMorgan Six-Month
Chase Bank 3,880,000EUR 3.135 2.08 LIBOR flat 7/14/08 (400)
JPMorgan Six-Month
Chase Bank 1,080,000,000HUF 7.00 7.00 LIBOR flat 7/14/08 (517,245)
JPMorgan Six-Month
Chase Bank 231,500,000 1.17 3.535 LIBOR flat 12/23/08 1,408,585
JPMorgan Three-Month
Chase Bank 66,000,000ZAR 9.78 9.78 LIBOR flat 2/20/11 344,867
JPMorgan Three-Month
Chase Bank 66,000,000ZAR 9.68 9.68 LIBOR flat 2/18/11 295,586
Morgan Stanley
Capital Services, Six-Month
Inc. 147,000,000EUR 3.064 2.243 EURIBOR 12/3/05 (4,582,506)
---------------
$ 2,632,782
===============
51 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. INTEREST RATE SWAP CONTRACTS Continued
Notional amount is reported in U.S. Dollars, except for those denoted in the
following currencies. Index abbreviations and currencies are as follows:
EUR Euro
HUF Hungary Forints
INR Indian Rupee
TWD New Taiwan Dollar
ZAR South African Rand
CPTW Bloomberg Taiwan Secondary Commercial Papers
EURIBOR Euro Interbank Offered Rate
IRS India Swap Composites
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 unrealized gain (loss), 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 year ended September 30, 2004, the Fund entered into transactions to
hedge credit risk. Information regarding the credit swaps is as follows:
VALUATION UNREALIZED
EXPIRATION NOTIONAL AS OF APPRECIATION
CONTRACT DESCRIPTION DATES AMOUNT SEPT. 30, 2004 (DEPRECIATION)
- -----------------------------------------------------------------------------------------------
Deutsche Bank AG:
Export-Import Bank of Korea
Credit Bonds 6/20/09 $ 1,440,000 $ (11,952) $ (11,952)
Korea Deposit Insurance Corp.
Credit Bonds 6/20/09 1,440,000 (12,096) (12,096)
Korea Development Bank
Credit Bonds 6/20/09 1,440,000 (11,376) (11,376)
Korea Electric Power Corp.
Credit Bonds 6/20/09 1,440,000 (12,528) (12,528)
Panama (Republic of) Credit Nts. 5/13/08 1,835,000 (91,281) (91,281)
Philippines (Republic of)
10 yr. Credit Bonds 7/25/13 2,335,000 23,530 23,530
Samsung Electronic Co. Ltd.
Credit Bonds 6/20/09 1,440,000 (10,800) (10,800)
Turkey (Republic of)
2 yr. Credit Nts. 5/7/06 3,070,000 (146,682) (146,682)
52 | OPPENHEIMER INTERNATIONAL BOND FUND
VALUATION UNREALIZED
EXPIRATION NOTIONAL AS OF APPRECIATION
CONTRACT DESCRIPTION DATES AMOUNT SEPT. 30, 2004 (DEPRECIATION)
- -----------------------------------------------------------------------------------------------
Deutsche Bank AG: Continued
Turkey (Republic of)
5 yr. Credit Nts. 5/7/09 $ 1,445,000 $ 325,859 $ 325,859
United Mexican States
Credit Bonds 9/20/13 2,790,000 (119,387) (119,387)
Venezuela (Republic of)
Credit Bonds 8/20/14 2,950,000 (308,796) (308,796)
Venezuela (Republic of)
Credit Bonds 9/28/09 6,960,000 (47,890) (47,890)
Venezuela (Republic of)
Credit Bonds 10/20/09 11,475,000 (3,482) (3,482)
- -----------------------------------------------------------------------------------------------
JP Morgan Chase Bank:
Chile (Republic of) Credit Bonds 12/20/13 8,500,000 (329,067) (329,067)
Export-Import Bank of Korea
Credit Bonds 6/20/09 720,000 (12,250) (12,250)
Inter-American Development Bank
Credit Bonds 12/20/13 15,910,000 (11,794) (11,794)
Jordan (Kingdom of)
Credit Nts. 6/6/06 390,000 (2,840) (2,840)
Korea Deposit Insurance Corp.
Credit Bonds 6/20/09 720,000 (12,257) (12,257)
Korea Development Bank
Credit Bonds 6/20/09 720,000 (11,930) (11,930)
Korea Electric Power Co.
Credit Bonds 6/20/09 720,000 (13,391) (13,391)
Russian Federation Credit Bonds 10/9/13 550,000 7,789 7,789
Samsung Electronics Co. Ltd.
Credit Bonds 6/20/09 720,000 (12,285) (12,285)
- -----------------------------------------------------------------------------------------------
Lehman Brothers Special
Financing, Inc.:
Brazil (Federal Republic of)
Credit Bonds 8/20/09 5,120,000 (456,613) (456,613)
Brazil (Federal Republic of)
Credit Bonds 10/20/09 840,000 1,688 1,688
Venezuela (Republic of)
Credit Bonds 3/5/08 840,000 (12,953) (12,953)
- -----------------------------------------------------------------------------------------------
Morgan Stanley Capital
Services, Inc.:
Brazil (Federal Republic of)
Credit Bonds 8/20/09 5,770,000 (471,117) (471,117)
Brazil (Federal Republic of)
Credit Bonds 8/20/09 5,770,000 (483,389) (483,389)
Philippines (Republic of)
Credit Bonds 6/20/09 5,000,000 (125,353) (125,353)
Philippines (Republic of)
Credit Bonds 6/20/09 2,500,000 (67,701) (67,701)
Philippines (Republic of)
Credit Bonds 6/20/09 5,000,000 (155,499) (155,499)
53 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
9. CREDIT SWAP CONTRACTS Continued
VALUATION UNREALIZED
EXPIRATION NOTIONAL AS OF APPRECIATION
CONTRACT DESCRIPTION DATES AMOUNT SEPT. 30, 2004 (DEPRECIATION)
- -----------------------------------------------------------------------------------------------
Morgan Stanley Capital
Services, Inc.: Continued
Turkey (Republic of)
2 yr. Credit Nts. 5/8/06 $ 3,070,000 $ (160,563) $ (160,563)
Turkey (Republic of)
5 yr. Credit Nts. 5/8/09 1,445,000 165,652 165,652
Venezuela (Republic of)
Credit Bonds 2/20/14 2,135,000 (447,650) (447,650)
Venezuela (Republic of)
Credit Bonds 8/20/06 4,890,000 182,963 182,963
Venezuela (Republic of)
Credit Bonds 8/20/09 2,445,000 (171,844) (171,844)
Venezuela (Republic of)
Credit Bonds 7/20/14 5,000,000 (862,701) (862,701)
- -----------------------------------------------------------------------------------------------
UBS AG:
Venezuela (Republic of)
Credit Bonds 6/20/14 6,040,000 (1,184,681) (1,184,681)
Venezuela (Republic of)
Credit Bonds 8/20/06 3,260,000 (117,954) (117,954)
Venezuela (Republic of)
Credit Bonds 8/20/09 1,630,000 108,123 108,123
---------------
$ (5,084,498)
===============
- --------------------------------------------------------------------------------
10. SWAPTION ACTIVITY
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.
Written swaption activity for the year ended September 30, 2004 was as follows:
NOTIONAL AMOUNT OF
AMOUNT PREMIUMS
------------------------------------------------------------------
Swaptions outstanding as of
September 30, 2003 $ 79,335,000 $ 694,082
Swaptions written 168,910,000 1,451,074
Swaptions closed or expired (135,300,000) (1,353,783)
---------------------------------
Swaptions outstanding as of
September 30, 2004 $ 112,945,000 $ 791,373
=================================
54 | OPPENHEIMER INTERNATIONAL BOND FUND
As of September 30, 2004, the Fund had entered into the following swaption
contracts:
NOTIONAL EXPIRATION EXERCISE PREMIUM VALUE
SWAPTIONS AMOUNT DATES PRICE RECEIVED SEE NOTE 1
- ---------------------------------------------------------------------------------------------------
Deutsche Bank AG 62,395,000GBP 11/4/04 5.997% $ 291,178 $ 542,058
Lehman Brothers International 50,550,000AUD 12/30/04 5.150 500,195 503,805
-------------------------
$ 791,373 $ 1,045,863
=========================
Notional amount is denoted in the following currencies:
AUD Australian Dollar
GBP British Pound Sterling
- --------------------------------------------------------------------------------
11. ILLIQUID OR RESTRICTED SECURITIES AND CURRENCY
As of September 30, 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 will not invest more than 10% of
its net assets (determined at the time of purchase and reviewed periodically) in
illiquid or restricted securities. Certain restricted securities, eligible for
resale to qualified institutional investors, are not subject to that limitation.
The aggregate value of illiquid or restricted securities subject to this
limitation as of September 30, 2004 was $29,998,722, which represents 1.86% of
the Fund's net assets, of which $544,667 is considered restricted. Information
concerning restricted securities and currency is as follows:
ACQUISITION VALUATION AS OF UNREALIZED
SECURITY DATE COST SEPTEMBER 30, 2004 DEPRECIATION
- ---------------------------------------------------------------------------------------------------
CURRENCY
Argentine Peso 9/13/04 $548,747 $544,667 $4,080
- --------------------------------------------------------------------------------
12. SECURITIES LENDING
The Fund lends portfolio securities from time to time in order to earn
additional income. In return, the Fund receives collateral in the form of US
Treasury obligations or cash, against the loaned securities and maintains
collateral in an amount not less than 100% of the market value of the loaned
securities during the period of the loan. The market value of the loaned
securities is determined at the close of business of the funds and any
additional required collateral is delivered to the Fund on the next business
day. If the borrower defaults on its obligation to return the securities loaned
because of insolvency or other reasons, the Fund could experience delays and
cost in recovering the securities loaned or in gaining access to the collateral.
Cash collateral is invested in cash equivalents. The Fund retains a portion of
the interest earned from the collateral. The Fund also continues to receive
interest or dividends paid on the securities loaned. As of September 30, 2004,
the Fund had on loan securities valued at approximately $151,985,000. Cash of
$155,142,317 was received as collateral for the loans, and has been invested in
approved instruments.
55 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
13. LITIGATION
Six complaints have been filed as putative derivative and class actions against
the Manager, OFS and the Distributor (collectively, "OppenheimerFunds"), as well
as 51 of the Oppenheimer funds (collectively, the "Funds") including this Fund,
and nine Directors/ Trustees of certain of the Funds other than this Fund
(collectively, the "Directors/Trustees"). The complaints allege that the Manager
charged excessive fees for distribution and other costs, improperly used assets
of the Funds in the form of directed brokerage commissions and 12b-1 fees to pay
brokers to promote sales of the Funds, and failed to properly disclose the use
of Fund assets to make those payments in violation of the Investment Company Act
of 1940 and the Investment Advisers Act of 1940. The complaints further allege
that by permitting and/or participating in those actions, the Directors/Trustees
breached their fiduciary duties to Fund shareholders under the Investment
Company Act of 1940 and at common law. By order dated October 27, 2004, these
six actions, and future related actions, were consolidated by the U.S. District
Court for the Southern District of New York into a single consolidated
proceeding in contemplation of the filing of a superceding consolidated and
amended complaint.
OppenheimerFunds believes that it is premature to render any opinion as to
the likelihood of an outcome unfavorable to them, the Funds or the
Directors/Trustees and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss. However,
OppenheimerFunds, the Funds and the Directors/Trustees believe that the
allegations contained in the complaints are without merit and intend to defend
these lawsuits vigorously.
56 | OPPENHEIMER INTERNATIONAL BOND FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER INTERNATIONAL BOND
FUND:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer International Bond Fund, including the statement of investments, as
of September 30, 2004, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of September 30, 2004, by correspondence
with the custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer International Bond Fund as of September 30, 2004, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for the
periods presented, in conformity with accounting principles generally accepted
in the United States of America.
DELOITTE & TOUCHE LLP
Denver, Colorado
November 16, 2004
57 | OPPENHEIMER INTERNATIONAL BOND FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2005, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2004. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
A portion, if any, of the dividends paid by the Fund during the fiscal
year ended September 30, 2004 which are not designated as capital gain
distributions are eligible for lower individual income tax rates to the extent
that the Fund has received qualified dividend income as stipulated by recent tax
legislation. $468,750 of the Fund's fiscal year taxable income may be eligible
for the lower individual income tax rates. In early 2005, shareholders of record
will receive information regarding the percentage of distributions that are
eligible for lower individual income tax rates.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
58 | OPPENHEIMER INTERNATIONAL BOND FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (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 is 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 Fund's Form N-PX
filing is available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.525.7048, and (ii) on the SEC's website at www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at www.sec.gov. Those
forms may be reviewed and copied at the SEC's Public Reference Room in
Washington D.C. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
59 | OPPENHEIMER INTERNATIONAL BOND FUND
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS HELD
WITH FUND, LENGTH OF BY TRUSTEE; NUMBER OF PORTFOLIOS IN FUND COMPLEX CURRENTLY OVERSEEN BY TRUSTEE
SERVICE, AGE
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY, CENTENNIAL,
TRUSTEES CO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, UNTIL HIS OR HER
RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
WILLIAM L. ARMSTRONG, Chairman of the following private mortgage banking companies: Cherry Creek
Chairman of the Board Mortgage Company (since 1991), Centennial State Mortgage Company (since
of Trustees (since 2003) 1994), The El Paso Mortgage Company (since 1993), Transland Financial Services,
and Trustee (since 2000) Inc. (since 1997); Chairman of the following private companies: Great Frontier
Age: 67 Insurance (insurance agency) (since 1995), Ambassador Media Corporation and
Broadway Ventures (since 1984); a director of the following public companies:
Helmerich & Payne, Inc. (oil and gas drilling/production company) (since 1992)
and UNUMProvident (insurance company) (since 1991). Mr. Armstrong is also a
Director/Trustee of Campus Crusade for Christ and the Bradley Foundation.
Formerly a director of the following: Storage Technology Corporation (a
publicly-held computer equipment company) (1991-February 2003), and
International Family Entertainment (television channel) (1992-1997),
Frontier Real Estate, Inc. (residential real estate brokerage) (1994-1999),
and Frontier Title (title insurance agency) (1995-June 1999); a U.S.
Senator (January 1979-January 1991). Oversees 39 portfolios in the
OppenheimerFunds complex.
ROBERT G. AVIS, Formerly, Director and President of A.G. Edwards Capital, Inc. (General Partner
Trustee (since 1995) of private equity funds) (until February 2001); Chairman, President and Chief
Age: 73 Executive Officer of A.G. Edwards Capital, Inc. (until March 2000); Vice Chairman
and Director of A.G. Edwards, Inc. and Vice Chairman of A.G. Edwards & Sons,
Inc. (its brokerage company subsidiary) (until March 1999); Chairman of A.G.
Edwards Trust Company and A.G.E. Asset Management (investment advisor)
(until March 1999); and a Director (until March 2000) of A.G. Edwards &
Sons and A.G. Edwards Trust Company. Oversees 39 portfolios in the
OppenheimerFunds complex.
GEORGE C. BOWEN, Formerly Assistant Secretary and a director (December 1991-April 1999) of
Trustee (since 1998) Centennial Asset Management Corporation; President, Treasurer and a director
Age: 68 (June 1989-April 1999) of Centennial Capital Corporation; Chief Executive
Officer and a director of MultiSource Services, Inc. (March 1996-April 1999).
Until April 1999 Mr. Bowen held several positions in subsidiary or affiliated
companies of the Manager. Oversees 39 portfolios in the OppenheimerFunds
complex.
EDWARD L. CAMERON, A member of The Life Guard of Mount Vernon, George Washington's home
Trustee (since 1999) (since June 2000). Formerly Director (March 2001-May 2002) of Genetic ID, Inc.
Age: 66 and its subsidiaries (a privately held biotech company); a partner (July 1974-June
1999) with PricewaterhouseCoopers LLP (an accounting firm); and Chairman
(July 1994-June 1998) of Price Waterhouse LLP Global Investment Management
Industry Services Group. Oversees 39 portfolios in the OppenheimerFunds complex.
JON S. FOSSEL, Director (since February 1998) of Rocky Mountain Elk Foundation (a not-for-
Trustee (since 1990) profit foundation); a director (since 1997) of Putnam Lovell Finance (finance
Age: 62 company); a director (since June 2002) of UNUMProvident (an insurance company).
Formerly a director (October 1999-October 2003) of P.R. Pharmaceuticals
(a privately held company); Chairman and a director (until October 1996) and
President and Chief Executive Officer (until October 1995) of the Manager;
President, Chief Executive Officer and a director (until October 1995) of
60 | OPPENHEIMER INTERNATIONAL BOND FUND
JON S. FOSSEL, Oppenheimer Acquisition Corp., Shareholders Services Inc. and Shareholder
Continued Financial Services, Inc. Oversees 39 portfolios in the OppenheimerFunds complex.
SAM FREEDMAN, Director of Colorado Uplift (a non-profit charity) (since September 1984).
Trustee (since 1996) Formerly (until October 1994) Mr. Freedman held several positions in subsidiary
Age: 63 or affiliated companies of the Manager. Oversees 39 portfolios in the
OppenheimerFunds complex.
BEVERLY L. HAMILTON, Trustee of Monterey International Studies (an educational organization)
Trustee (since 2002) (since February 2000); a director of The California Endowment
Age: 57 (a philanthropic organization) (since April 2002) and of Community Hospital
of Monterey Peninsula (educational organization) (since February 2002); a
director of America Funds Emerging Markets Growth Fund (since October 1991)
(an investment company); an advisor to Credit Suisse First Boston's Sprout
venture capital unit. Mrs. Hamilton also is a member of the investment
committees of the Rockefeller Foundation and of the University of Michigan.
Formerly, Trustee of MassMutual Institutional Funds (open-end investment company)
(1996-May 2004); a director of MML Series Investment Fund (April 1989-May 2004)
and MML Services (April 1987-May 2004) (investment companies); member of the
investment committee (2000-2003) of Hartford Hospital; an advisor (2000-2003)
to Unilever (Holland)'s pension fund; and President (February 1991-April 2000)
of ARCO Investment Management Company. Oversees 38 portfolios in the
OppenheimerFunds complex.
ROBERT J. MALONE, Chairman, Chief Executive Officer and Director of Steele Street State Bank
Trustee (since 2002) (a commercial banking entity) (since August 2003); director of Colorado UpLIFT
Age: 60 (a non-profit organization) (since 1986); trustee (since 2000) of the Gallagher
Family Foundation (non-profit organization). Formerly, Chairman of U.S. Bank-
Colorado (a subsidiary of U.S. Bancorp and formerly Colorado National Bank,)
(July 1996-April 1, 1999), a director of: Commercial Assets, Inc. (a REIT) (1993-
2000), Jones Knowledge, Inc. (a privately held company) (2001-July 2004) and
U.S. Exploration, Inc. (oil and gas exploration) (1997-February 2004). Oversees
38 portfolios in the OppenheimerFunds complex.
F. WILLIAM MARSHALL, JR., Trustee of MassMutual Institutional Funds (since 1996) and MML Series Investment
Trustee (since 2000) Fund (since 1987) (both open-end investment companies) and the Springfield Library
Age: 62 and Museum Association (since 1995) (museums) and the Community Music School of
Springfield (music school) (since 1996); Trustee (since 1987), Chairman of the
Board (since 2003) and Chairman of the investment committee (since 1994) for the
Worcester Polytech Institute (private university); and President and Treasurer
(since January 1999) of the SIS Fund (a private not for profit charitable fund).
Formerly, member of the investment committee of the Community Foundation of
Western Massachusetts (1998 - 2003); Chairman (January 1999-July 1999) of SIS &
Family Bank, F.S.B. (formerly SIS Bank) (commercial bank); and Executive
Vice President (January 1999-July 1999) of Peoples Heritage Financial Group, Inc.
(commercial bank). Oversees 39 portfolios in the OppenheimerFunds complex.
61 | OPPENHEIMER INTERNATIONAL BOND FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IN THE CHART BELOW IS TWO WORLD FINANCIAL CENTER,
AND OFFICER 225 LIBERTY STREET, 11TH FLOOR, NEW YORK, NY 10281-1008. MR. MURPHY SERVES FOR
AN INDEFINITE TERM, UNTIL HIS RESIGNATION, DEATH OR REMOVAL.
JOHN V. MURPHY, Chairman, Chief Executive Officer and director (since June 2001) and President
President and Trustee (since September 2000) of the Manager; President and a director or trustee
(since 2001) of other Oppenheimer funds; President and a director (since July 2001) of
Age: 55 Oppenheimer Acquisition Corp. (the Manager's parent holding company) and
of Oppenheimer Partnership Holdings, Inc. (a holding company subsidiary of
the Manager); a director (since November 2001) of OppenheimerFunds
Distributor, Inc. (a subsidiary of the Manager); Chairman and a director
(since July 2001) of Shareholder Services, Inc. and of Shareholder
Financial Services, Inc. (transfer agent subsidiaries of the Manager);
President and a director (since July 2001) of OppenheimerFunds Legacy Program
(a charitable trust program established by the Manager); a director of the
following investment advisory subsidiaries of the Manager: OFI Institutional
Asset Management, Inc., Centennial Asset Management Corporation, Trinity
Investment Management Corporation and Tremont Capital Management, Inc.
(since November 2001), HarbourView Asset Management Corporation and OFI
Private Investments, Inc. (since July 2001); President (since November 1, 2001)
and a director (since July 2001) of Oppenheimer Real Asset Management, Inc.;
Executive Vice President (since February 1997) of Massachusetts Mutual Life
Insurance Company (the Manager's parent company); a director (since June 1995)
of DLB Acquisition Corporation (a holding company that owns the shares of Babson
Capital Management LLC); a member of the Investment Company Institute's
Board of Governors (elected to serve from October 3, 2003 through
September 30, 2006). Formerly, Chief Operating Officer (September 2000-June 2001)
of the Manager; President and trustee (November 1999-November 2001) of MML Series
Investment Fund and MassMutual Institutional Funds (open-end investment
companies); a director (September 1999-August 2000) of C.M. Life Insurance
Company; President, Chief Executive Officer and director (September 1999-August
2000) of MML Bay State Life Insurance Company; a director (June 1989-June 1998)
of Emerald Isle Bancorp and Hibernia Savings Bank (a wholly-owned subsidiary of
Emerald Isle Bancorp). Oversees 74 portfolios as Trustee/Director and 10
portfolios as Officer in the OppenheimerFunds complex.
- --------------------------------------------------------------------------------------------------------------------
OFFICERS THE ADDRESS OF THE OFFICERS IN THE CHART BELOW IS AS FOLLOWS: FOR MESSRS. STEINMETZ
AND ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH FLOOR, NEW YORK, NY
10281-1008, FOR MESSRS. VANDEHEY AND WIXTED 6803 S. TUCSON WAY, CENTENNIAL, CO
80112-3924. EACH OFFICER SERVES FOR AN ANNUAL TERM OR UNTIL HIS OR HER EARLIER
RESIGNATION, DEATH OR REMOVAL.
ARTHUR P. STEINMETZ, Senior Vice President of the Manager (since March 1993) and of HarbourView
Vice President and Portfolio Asset Management Corporation (since March 2000); an officer of 4 portfolios
Manager (since 2002) in the OppenheimerFunds complex.
Age: 46
BRIAN W. WIXTED, Senior Vice President and Treasurer (since March 1999) of the Manager;
Treasurer (since 1999) Treasurer of HarbourView Asset Management Corporation, Shareholder Financial
Age: 45 Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management
Corporation, and Oppenheimer Partnership Holdings, Inc. (since March 1999),
of OFI Private Investments, Inc. (since March 2000), of OppenheimerFunds International
Ltd. and OppenheimerFunds plc (since May 2000), of OFI Institutional
Asset Management, Inc. (since November 2000), and of OppenheimerFunds
Legacy Program (a Colorado non-profit corporation) (since June 2003); Treasurer
62 | OPPENHEIMER INTERNATIONAL BOND FUND
BRIAN W. WIXTED, and Chief Financial Officer (since May 2000) of OFI Trust Company (a trust company
Continued subsidiary of the Manager); Assistant Treasurer (since March 1999) of Oppenheimer
Acquisition Corp. Formerly Assistant Treasurer of Centennial Asset Management
Corporation (March 1999-October 2003) and OppenheimerFunds Legacy Program
(April 2000-June 2003); Principal and Chief Operating Officer
(March 1995-March 1999) at Bankers Trust Company-Mutual Fund Services Division.
An officer of 84 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since
Vice President and February 2002) of the Manager; General Counsel and a director
Secretary (since 2001) (since November 2001) of the Distributor; General Counsel (since November 2001)
Age: 56 of Centennial Asset Management Corporation; Senior Vice President and General
Counsel (since November 2001) of HarbourView Asset Management Corporation;
Secretary and General Counsel (since November 2001) of Oppenheimer Acquisition
Corp.; Assistant Secretary and a director (since October 1997) of OppenheimerFunds
International Ltd. and OppenheimerFunds plc; Vice President and a director (since
November 2001) of Oppenheimer Partnership Holdings, Inc.; a director (since
November 2001) of Oppenheimer Real Asset Management, Inc.; Senior Vice President,
General Counsel and a director (since November 2001) of Shareholder Financial
Services, Inc., Shareholder Services, Inc., OFI Private Investments, Inc. and OFI
Trust Company; Vice President (since November 2001) of OppenheimerFunds Legacy
Program; Senior Vice President and General Counsel (since November 2001) of OFI
Institutional Asset Management, Inc.; a director (since June 2003) of
OppenheimerFunds (Asia) Limited. Formerly Senior Vice President (May 1985-December
2003), Acting General Counsel (November 2001-February 2002) and Associate General
Counsel (May 1981-October 2001) of the Manager; Assistant Secretary of Shareholder
Services, Inc. (May 1985-November 2001), Shareholder Financial Services, Inc.
(November 1989-November 2001); and OppenheimerFunds International Ltd. (October
1997-November 2001). An officer of 84 portfolios in the OppenheimerFunds complex.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer (since March 2004) of the
Vice President and Manager; Vice President (since June 1983) of OppenheimerFunds Distributor,
Chief Compliance Officer Inc., Centennial Asset Management Corporation and Shareholder Services, Inc.
(since 2004) Formerly (until February 2004) Vice President and Director of Internal Audit of
Age: 54 OppenheimerFunds, Inc. An officer of 84 portfolios in the Oppenheimer funds
complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND IS AVAILABLE WITHOUT CHARGE, UPON REQUEST, BY
CALLING 1.800.525.7048.
63 | 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
(a) Audit Fees
The principal accountant for the audit of the registrant's annual
financial statements billed $28,000 in fiscal 2004 and $17,000 in
fiscal 2003.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees in fiscal 2004 and
$35,859 in fiscal 2003 to the registrant's investment adviser or
any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant.
Such fees would include, among others: due diligence related to
mergers and acquisitions, accounting consultations and audits in
connection with acquisitions, internal control reviews and
consultation concerning financial accounting and reporting
standards.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees in fiscal 2004 and $6,748
in fiscal 2003 to the registrant's investment adviser or any
entity controlling, controlled by, or under common control with
the adviser that provides ongoing services to the registrant.
Such fees would include, among others: tax compliance, tax
planning and tax advice. Tax compliance generally involves
preparation of original and amended tax returns, claims for a
refund and tax payment-planning services. Tax planning and tax
advice includes assistance with tax audits and appeals, tax advice
related to mergers and acquisitions and requests for rulings or
technical advice from taxing authorities.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees in fiscal 2004 and $3,500
in fiscal 2003 to the registrant's investment adviser or any
entity controlling, controlled by, or under common control with
the adviser that provides ongoing services to the registrant.
Such fees would include services provided to the registrant's
Board of Trustees with respect to the annual renewal of the
registrant's investment advisory agreement.
(e) (1) During its regularly scheduled periodic meetings, the
registrant's audit committee will pre-approve all audit,
audit-related, tax and other services to be provided by the
principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its
Chairman for any subsequent new engagements that arise between
regularly scheduled meeting dates provided that any fees such
pre-approved are presented to the audit committee at its next
regularly scheduled meeting.
Pre-approval of non-audit services is waived provided that: 1) the
aggregate amount of all such services provided constitutes no more
than five percent of the total amount of fees paid by the
registrant to it principal accountant during the fiscal year in
which services are provided 2) such services were not recognized
by the registrant at the time of engagement as non-audit services
and 3) such services are promptly brought to the attention of the
audit committee of the registrant and approved prior to the
completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed no such fees in fiscal 2004 and
$46,107 in fiscal 2003 to the registrant and the registrant's
investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing
services to the registrant related to non-audit fees. Those
billings did not include any prohibited non-audit services as
defined by the Securities Exchange Act of 1934.
(h) The registrant's audit committee of the board of trustees has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser, and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal account's independence. No such services
were rendered.
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 registrant's Board of Trustees has established a Governance
Committee, one function of which is to create and oversee the process by which
shareholders can submit nominees for positions on the Board. The Governance
Committee has not yet adopted a charter, but anticipates that it will do so by
the end of this calendar year. The Committee has temporarily adopted the process
previously adopted by the Audit Committee regarding shareholder submission of
nominees for board positions. Shareholders may submit names of individuals,
accompanied by complete and properly supported resumes, for the Governance
Committee's consideration by mailing such information to the Committee in care
of the Fund. The Committee may consider such persons at such time as it meets to
consider possible nominees. The Committee, however, reserves solo discretion to
determine the candidates for trustees and independent trustees to recommend to
the Board and/or shareholders and may identify candidates other than those
submitted by Shareholders. The Committee may, but need not, consider the advice
and recommendation of the Manager and its affiliates in selecting nominees. The
full Board elects new trustees except for those instances when a shareholder
vote is required.
Shareholders who desire to communicate with the Board should address
correspondence to the Board of Trustees of the registrant, or to an individual
Trustee c/o the Secretary of the Fund at 6803 South Tucson Way, Centennial,
Colorado 80112 and may submit their correspondence electronically at
www.oppenheimerfunds.com under the caption "contact us." If your correspondence
is intended for a particular Trustee, please indicate the name of the Trustee
for whom it is intended. The sender should indicate in the address whether it is
intended for the entire board, the Independent Trustees as group, or to an
individual Trustee. The Governance Committee will consider if a different
process should be recommended to the Board.
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 September 30, 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)(NOT
APPLICABLE TO SEMIANNUAL REPORTS)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)