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
Date of reporting period: 09/30/2006
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN GEOGRAPHICAL HOLDINGS
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United States 34.1%
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Italy 6.9
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Brazil 6.3
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France 5.1
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Germany 5.0
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United Kingdom 3.8
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Russia 3.2
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Japan 2.9
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Colombia 2.8
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Peru 2.8
Portfolio holdings and allocations are subject to change. Percentages are as of
September 30, 2006, and are based on the total market value of investments.
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REGIONAL ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
United States/Canada 36.2%
Europe 24.0
Latin America 18.3
Asia 9.0
Emerging Europe 7.2
Middle East/Africa 4.9
Supranational 0.4
Portfolio holdings and allocations are subject to change. Percentages are as of
September 30, 2006, and are based on the total market value of 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, 2006, FOLLOWED
BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE
BROAD-BASED MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. Over the 12-month period ended
September 30, 2006, Oppenheimer International Bond Fund's Class A shares
(without sales charge) produced higher returns than its benchmark, the Citigroup
Non-U.S. Dollar World Government Bond Index, and finished in the first quartile
of all funds reported in the Lipper International Income Funds category.
The Fund benefited early in the reporting period from its emphasis on
bonds and currencies from the emerging markets, which continued to gain value in
a robust global economy. The Fund's investments in Brazil, Mexico, Turkey and
Russia produced particularly attractive returns as these nations made progress
toward reforming their financial systems and taming inflation. Conversely, the
Fund maintained relatively light holdings of bonds and currencies from the
developed markets of Europe and Japan, which produced relatively lackluster
returns at the time.
In the spring of 2006, surging commodity prices and weakening housing
markets in the United States sparked concerns among global investors that a U.S.
economic slowdown might precede a downturn in international economic conditions.
As investors grew more risk-averse, global market volatility intensified, and
the Fund's overweighted position in emerging market bonds detracted modestly
from its relative performance. The Fund's returns also were undermined to a mild
degree by unfortunate timing in the trading of yen and euros in the currency
markets. However, these setbacks were not sufficient to completely erase the
reporting period's previous gains.
In addition, the effects of market weakness in 2006 were offset by strong
results from our security selection and duration management strategies. We
recently have focused more intently on mortgage- and asset-backed securities
from international issuers, enabling the Fund to capture incrementally higher
yields. In the spring of 2006, we began to increase the Fund's average
duration--a measure of sensitivity to changing interest rates--toward a range
that is closer to industry averages. This change helped the Fund participate
more fully in periodic rallies during the second half of the reporting period.
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, 2006. In the case of Class A, Class B and Class C
shares, performance is measured over a ten-fiscal-year period. In the case of
Class N shares, performance is measured from inception of the Class on March 1,
2001. In the case of Class Y shares, performance is measured from inception of
the Class on September 27, 2004. The Fund's performance
10 | OPPENHEIMER INTERNATIONAL BOND FUND
reflects the deduction of the maximum initial sales charge on Class A shares,
the applicable contingent deferred sales charge on Class B, Class C and Class N
shares, and reinvestments of all dividends and capital gains distributions.
The Fund's performance is compared to the Citigroup Non-U.S. Dollar World
Government Bond Index, a subset of the Citigroup World Government Bond Index.
The Citigroup Non-U.S. Dollar World Government Bond Index is a market
capitalization weighted benchmark that tracks the performance of government bond
markets including Australia, Canada, Japan and various 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 indices.
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-U.S. Dollar World Government Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Citigroup Non-U.S.
International Dollar World
Bond Fund (Class A) Government Bond Index
09/30/1996 $ 9,525 $10,000
12/31/1996 $10,000 $10,212
03/31/1997 $10,074 $ 9,622
06/30/1997 $10,354 $ 9,894
09/30/1997 $10,604 $ 9,914
12/31/1997 $10,246 $ 9,777
03/31/1998 $10,389 $ 9,817
06/30/1998 $10,287 $ 9,981
09/30/1998 $ 9,279 $10,940
12/31/1998 $ 9,800 $11,516
03/31/1999 $ 9,780 $10,959
06/30/1999 $10,114 $10,467
09/30/1999 $10,261 $11,107
12/31/1999 $10,878 $10,932
03/31/2000 $11,327 $10,805
06/30/2000 $11,196 $10,720
09/30/2000 $11,177 $10,235
12/31/2000 $11,623 $10,645
03/31/2001 $11,322 $10,122
06/30/2001 $11,372 $ 9,923
09/30/2001 $11,333 $10,692
12/31/2001 $11,872 $10,268
03/31/2002 $12,127 $10,076
06/30/2002 $13,103 $11,484
09/30/2002 $13,234 $11,810
12/31/2002 $14,343 $12,526
03/31/2003 $14,772 $12,993
06/30/2003 $15,922 $13,540
09/30/2003 $16,764 $13,912
12/31/2003 $18,055 $14,845
03/31/2004 $18,979 $15,079
06/30/2004 $17,983 $14,569
09/30/2004 $18,702 $15,047
12/31/2004 $20,864 $16,647
03/31/2005 $20,276 $16,131
06/30/2005 $21,160 $15,697
09/30/2005 $21,606 $15,520
12/31/2005 $21,551 $15,115
03/31/2006 $22,088 $15,086
06/30/2006 $21,492 $15,695
09/30/2006 $22,304 $15,833
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
9/30/06
1-Year -1.68% 5-Year 13.39% 10-Year 8.35%
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-U.S. Dollar World Government Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Citigroup Non-U.S.
International Dollar World
Bond Fund (Class B) Government Bond Index
09/30/1996 $10,000 $10,000
12/31/1996 $10,480 $10,212
03/31/1997 $10,538 $ 9,622
06/30/1997 $10,811 $ 9,894
09/30/1997 $11,052 $ 9,914
12/31/1997 $10,660 $ 9,777
03/31/1998 $10,789 $ 9,817
06/30/1998 $10,663 $ 9,981
09/30/1998 $ 9,597 $10,940
12/31/1998 $10,118 $11,516
03/31/1999 $10,079 $10,959
06/30/1999 $10,405 $10,467
09/30/1999 $10,537 $11,107
12/31/1999 $11,152 $10,932
03/31/2000 $11,593 $10,805
06/30/2000 $11,412 $10,720
09/30/2000 $11,374 $10,235
12/31/2000 $11,833 $10,645
03/31/2001 $11,504 $10,122
06/30/2001 $11,533 $ 9,923
09/30/2001 $11,470 $10,692
12/31/2001 $11,964 $10,268
03/31/2002 $12,228 $10,076
06/30/2002 $13,189 $11,484
09/30/2002 $13,274 $11,810
12/31/2002 $14,385 $12,526
03/31/2003 $14,815 $12,993
06/30/2003 $15,969 $13,540
09/30/2003 $16,814 $13,912
12/31/2003 $18,109 $14,845
03/31/2004 $19,036 $15,079
06/30/2004 $18,036 $14,569
09/30/2004 $18,758 $15,047
12/31/2004 $20,926 $16,647
03/31/2005 $20,336 $16,131
06/30/2005 $21,223 $15,697
09/30/2005 $21,671 $15,520
12/31/2005 $21,615 $15,115
03/31/2006 $22,154 $15,086
06/30/2006 $21,555 $15,695
09/30/2006 $22,370 $15,833
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
9/30/06
1-Year -2.48% 5-Year 13.30% 10-Year 8.39%
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, THE
10-YEAR RETURN FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD AFTER
CONVERSION. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 17 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-U.S. Dollar World Government Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Citigroup Non-U.S.
International Dollar World
Bond Fund (Class C) Government Bond Index
09/30/1996 $10,000 $10,000
12/31/1996 $10,480 $10,212
03/31/1997 $10,519 $ 9,622
06/30/1997 $10,812 $ 9,894
09/30/1997 $11,052 $ 9,914
12/31/1997 $10,660 $ 9,777
03/31/1998 $10,789 $ 9,817
06/30/1998 $10,663 $ 9,981
09/30/1998 $ 9,598 $10,940
12/31/1998 $10,119 $11,516
03/31/1999 $10,080 $10,959
06/30/1999 $10,407 $10,467
09/30/1999 $10,538 $11,107
12/31/1999 $11,153 $10,932
03/31/2000 $11,594 $10,805
06/30/2000 $11,414 $10,720
09/30/2000 $11,376 $10,235
12/31/2000 $11,836 $10,645
03/31/2001 $11,507 $10,122
06/30/2001 $11,535 $ 9,923
09/30/2001 $11,473 $10,692
12/31/2001 $11,967 $10,268
03/31/2002 $12,231 $10,076
06/30/2002 $13,192 $11,484
09/30/2002 $13,297 $11,810
12/31/2002 $14,352 $12,526
03/31/2003 $14,754 $12,993
06/30/2003 $15,876 $13,540
09/30/2003 $16,685 $13,912
12/31/2003 $17,939 $14,845
03/31/2004 $18,857 $15,079
06/30/2004 $17,799 $14,569
09/30/2004 $18,479 $15,047
12/31/2004 $20,582 $16,647
03/31/2005 $19,962 $16,131
06/30/2005 $20,796 $15,697
09/30/2005 $21,194 $15,520
12/31/2005 $21,099 $15,115
03/31/2006 $21,585 $15,086
06/30/2006 $20,999 $15,695
09/30/2006 $21,716 $15,833
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
9/30/06
1-Year 1.50% 5-Year 13.61% 10-Year 8.06%
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-U.S. Dollar World Government Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Citigroup Non-U.S.
International Dollar World
Bond Fund (Class N) 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
12/31/2004 $17,669 $15,785
03/31/2005 $17,122 $15,296
06/30/2005 $17,852 $14,884
09/30/2005 $18,240 $14,716
12/31/2005 $18,141 $14,332
03/31/2006 $18,605 $14,304
06/30/2006 $18,083 $14,882
09/30/2006 $18,748 $15,013
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
9/30/06
1-Year 1.82% 5-Year 14.06% Since Inception (3/1/01) 11.92%
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, THE
10-YEAR RETURN FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD AFTER
CONVERSION. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 17 FOR FURTHER
INFORMATION.
15 | OPPENHEIMER INTERNATIONAL BOND FUND
FUND PERFORMANCE DISCUSSION
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CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer International Bond Fund (Class Y)
Citigroup Non-U.S. Dollar World Government Bond Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer Citigroup Non-U.S.
International Dollar World
Bond Fund (Class Y) Government Bond Index
09/27/2004 $10,000 $10,000
09/30/2004 $10,092 $10,000
12/31/2004 $11,270 $11,064
03/31/2005 $10,942 $10,721
06/30/2005 $11,449 $10,432
09/30/2005 $11,702 $10,315
12/31/2005 $11,684 $10,045
03/31/2006 $11,987 $10,026
06/30/2006 $11,675 $10,431
09/30/2006 $12,129 $10,523
AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 9/30/06
1-Year 3.64% 5-Year N/A Since Inception (9/27/04) 10.09%
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, THE
10-YEAR RETURN FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD AFTER
CONVERSION. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 17 FOR FURTHER
INFORMATION.
16 | 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 10-year 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.
17 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES
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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.
18 | OPPENHEIMER INTERNATIONAL BOND FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
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 examples 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, 2006.
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 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
19 | OPPENHEIMER INTERNATIONAL BOND FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
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.
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BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(4/1/06) (9/30/06) SEPTEMBER 30, 2006
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Class A Actual $1,000.00 $1,009.80 $4.90
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Class A Hypothetical 1,000.00 1,020.21 4.92
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Class B Actual 1,000.00 1,005.50 9.19
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Class B Hypothetical 1,000.00 1,015.94 9.24
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Class C Actual 1,000.00 1,006.10 8.59
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Class C Hypothetical 1,000.00 1,016.55 8.63
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Class N Actual 1,000.00 1,007.70 7.12
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Class N Hypothetical 1,000.00 1,018.00 7.16
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Class Y Actual 1,000.00 1,011.80 2.78
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Class Y Hypothetical 1,000.00 1,022.31 2.79
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 183/365
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended September 30, 2006 are as follows:
CLASS EXPENSE RATIOS
- ------------------------
Class A 0.97%
- ------------------------
Class B 1.82
- ------------------------
Class C 1.70
- ------------------------
Class N 1.41
- ------------------------
Class Y 0.55
- --------------------------------------------------------------------------------
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Transfer Agent that can be terminated at any time, without advance
notice. The "Financial Highlights" tables in the Fund's financial statements,
included in this report, also show the gross expense ratios, without such
waivers or reimbursements.
20 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS September 30, 2006
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--17.8%
- --------------------------------------------------------------------------------------------------------
U.S. Treasury Bills, 5.02%, 11/9/06 1,2,3 $ 671,270,000 $ 667,712,741
- --------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 5.25%, 2/15/29 1 90,110,000 95,312,501
- --------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 5.125%, 5/15/16 1,4 197,180,000 204,605,207
----------------
Total U.S. Government Obligations (Cost $960,250,934) 967,630,449
- --------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS--45.2%
- --------------------------------------------------------------------------------------------------------
ARGENTINA--1.3%
Argentina (Republic of) Bonds:
2%, 9/30/14 5 [ARP] 21,270,000 6,975,498
5.589%, 8/3/12 6 20,544,000 18,972,309
Series V, 7%, 3/28/11 35,185,000 33,277,187
- --------------------------------------------------------------------------------------------------------
Buenos Aires (Province of) Bonds, Bonos de Consolidacion
de Deudas, Series PBA1, 4/1/07 5,7 [ARP] 321,874 139,328
- --------------------------------------------------------------------------------------------------------
Central Bank of Argentina Bonds, 2%, 2/4/18 5 [ARP] 23,543,518 11,363,090
----------------
70,727,412
- --------------------------------------------------------------------------------------------------------
AUSTRALIA--2.3%
New South Wales Treasury Corp. Gtd. Bonds, 8%, 3/1/08 [AUD] 162,190,000 124,022,392
- --------------------------------------------------------------------------------------------------------
BELGIUM--1.8%
Belgium (Kingdom of) Bonds, Series 44, 5%, 3/28/35 [EUR] 21,695,000 32,418,290
- --------------------------------------------------------------------------------------------------------
Belgium (Kingdom of) Treasury Bills, 3.192%, 12/14/06 8 [EUR] 53,700,000 67,664,751
----------------
100,083,041
- --------------------------------------------------------------------------------------------------------
BRAZIL--1.3%
Brazil (Federal Republic of) Bonds:
8%, 1/15/18 14,015,000 15,430,515
8.75%, 2/4/25 1,990,000 2,375,065
8.875%, 10/14/19 17,724,000 21,064,974
10.50%, 7/14/14 18,700,000 23,543,300
- --------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Nts., 7.875%, 3/7/15 4,000,000 4,394,000
- --------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Unsec. Bonds, 4.75%, 4/10/07 5 [JPY] 500,000,000 4,380,952
----------------
71,188,806
- --------------------------------------------------------------------------------------------------------
BULGARIA--0.1%
Bulgaria (Republic of) Bonds:
8.25%, 1/15/15 1,500,000 1,771,875
8.25%, 1/15/15 9 1,440,000 1,701,000
----------------
3,472,875
- --------------------------------------------------------------------------------------------------------
CANADA--2.5%
Canada (Government of) Nts., 4%, 9/1/10 [CAD] 148,885,000 133,757,405
21 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------
COLOMBIA--1.7%
Colombia (Republic of) Bonds:
7.375%, 9/18/37 $ 12,096,000 $ 12,277,440
10.75%, 1/15/13 10,000,000 12,260,000
12%, 10/22/15 [COP] 75,961,000,000 36,208,987
- --------------------------------------------------------------------------------------------------------
Colombia (Republic of) Nts.:
8.25%, 12/22/14 6,655,000 7,380,395
11.75%, 3/1/10 [COP] 35,992,780,000 16,044,844
- --------------------------------------------------------------------------------------------------------
Colombia (Republic of) Unsec. Bonds, 8.125%, 5/21/24 8,290,000 9,160,450
----------------
93,332,116
- --------------------------------------------------------------------------------------------------------
DENMARK--0.5%
Denmark (Kingdom of) Bonds:
4%, 11/15/10 [DKK] 48,215,000 8,319,760
4%, 11/15/15 [DKK] 35,520,000 6,179,913
7%, 11/10/24 [DKK] 12,960,000 3,085,352
- --------------------------------------------------------------------------------------------------------
Denmark (Kingdom of) Nts., 4%, 8/15/08 [DKK] 51,660,000 8,843,486
----------------
26,428,511
- --------------------------------------------------------------------------------------------------------
EL SALVADOR--0.1%
El Salvador (Republic of) Bonds:
7.625%, 9/21/34 9 1,185,000 1,300,538
7.65%, 6/15/35 9 3,025,000 3,259,438
----------------
4,559,976
- --------------------------------------------------------------------------------------------------------
FRANCE--5.5%
France (Government of) Bonds, 3.25%, 4/25/16 [EUR] 138,875,000 169,510,408
- --------------------------------------------------------------------------------------------------------
France (Government of) Obligations Assimilables
du Tresor Bonds, 4%, 4/25/55 [EUR] 58,980,000 76,382,095
- --------------------------------------------------------------------------------------------------------
France (Government of) Treasury Bills, 3.195%, 12/14/06 8 [EUR] 43,410,000 54,693,925
----------------
300,586,428
- --------------------------------------------------------------------------------------------------------
GERMANY--5.4%
Germany (Federal Republic of) Bonds, Series 05, 4%, 1/4/37 [EUR] 83,645,000 108,696,816
- --------------------------------------------------------------------------------------------------------
Germany (Federal Republic of) Treasury Bills, Series 0906,
3.359%, 3/14/07 8 [EUR] 146,820,000 183,410,967
----------------
292,107,783
- --------------------------------------------------------------------------------------------------------
GREECE--1.2%
Greece (Republic of) Bonds, 4.60%, 5/20/13 [EUR] 50,600,000 66,963,304
- --------------------------------------------------------------------------------------------------------
GUATEMALA--0.0%
Guatemala (Republic of) Nts.:
10.25%, 11/8/11 9 160,000 189,200
10.25%, 11/8/11 525,000 620,813
----------------
810,013
22 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------
INDONESIA--0.2%
Indonesia (Republic of) Nts.:
6.75%, 3/10/14 9 $ 120,000 $ 122,700
7.25%, 4/20/15 9 200,000 210,750
- --------------------------------------------------------------------------------------------------------
Indonesia (Republic of) Unsec. Nts., 8.50%, 10/12/35 1,9 6,540,000 7,676,325
----------------
8,009,775
- --------------------------------------------------------------------------------------------------------
ISRAEL--0.8%
Israel (State of) Bonds, Series 2682, 7.50%, 3/31/14 [ILS] 167,800,000 41,815,848
- --------------------------------------------------------------------------------------------------------
ITALY--6.1%
Italy (Republic of) Nts., Certificati di Credito del Tesoro,
3.40%, 7/1/09 6 [EUR] 162,505,000 206,971,788
- --------------------------------------------------------------------------------------------------------
Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali,
4.25%, 2/1/19 [EUR] 97,545,000 126,512,504
----------------
333,484,292
- --------------------------------------------------------------------------------------------------------
JAPAN--2.8%
Japan (Government of) Bonds:
10 yr., Series 268, 1.50%, 3/20/15 [JPY] 5,766,000,000 48,669,921
Series 7, 0.80%, 3/10/16 [JPY] 12,502,395,000 103,570,105
----------------
152,240,026
- --------------------------------------------------------------------------------------------------------
MALAYSIA--0.8%
Johor Corp. Malaysia (Government of) Bonds, Series P3,
1%, 7/31/12 5 [MYR] 107,980,000 32,499,403
- --------------------------------------------------------------------------------------------------------
Malaysia (Government of) Bonds, Series 2/05, 4.72%, 9/30/15 [MYR] 39,730,000 10,821,254
----------------
43,320,657
- --------------------------------------------------------------------------------------------------------
MEXICO--0.4%
Mexican Williams Sr. Nts., 6.03%, 11/15/08 5,6 500,000 515,313
- --------------------------------------------------------------------------------------------------------
United Mexican States Bonds:
7.50%, 4/8/33 17,025,000 19,680,900
8.30%, 8/15/31 2,000,000 2,499,000
----------------
22,695,213
- --------------------------------------------------------------------------------------------------------
NIGERIA--0.0%
Central Bank of Nigeria Gtd. Bonds, Series WW, 6.25%, 11/15/20 5 1,375,000 1,372,422
- --------------------------------------------------------------------------------------------------------
Nigeria (Federal Republic of) Promissory Nts.,
Series RC, 5.092%, 1/5/10 437,317 412,788
----------------
1,785,210
- --------------------------------------------------------------------------------------------------------
PANAMA--0.4%
Panama (Republic of) Bonds:
6.70%, 1/26/36 1 20,295,000 20,193,525
9.375%, 4/1/29 1,650,000 2,136,750
----------------
22,330,275
23 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------
PERU--2.7%
Peru (Republic of) Bonds:
7.84%, 8/12/20 [PEN] 168,460,000 $ 55,018,865
8.20%, 8/12/26 5 [PEN] 14,410,000 4,800,230
8.375%, 5/3/16 1,380,000 1,597,350
9.91%, 5/5/15 [PEN] 128,732,000 47,514,405
Series 7, 8.60%, 8/12/17 [PEN] 56,965,000 19,647,361
Series 8-1, 12.25%, 8/10/11 [PEN] 18,633,000 7,148,354
- --------------------------------------------------------------------------------------------------------
Peru (Republic of) Sr. Nts., 4.533%, 2/28/16 8 2,470,409 1,385,529
- --------------------------------------------------------------------------------------------------------
Peru (Republic of) Unsec. Unsub. Bonds, 8.75%, 11/21/33 7,075,000 8,702,250
----------------
145,814,344
- --------------------------------------------------------------------------------------------------------
PHILIPPINES--0.8%
Philippines (Republic of the) Bonds:
8%, 1/15/16 6,990,000 7,706,475
9.50%, 2/2/30 6,260,000 7,731,100
- --------------------------------------------------------------------------------------------------------
Philippines (Republic of the) Unsec. Bonds, 7.75%, 1/14/31 27,044,000 28,362,395
----------------
43,799,970
- --------------------------------------------------------------------------------------------------------
POLAND--1.7%
Poland (Republic of) Bonds:
Series 0K0807, 4.191%, 8/12/07 8 [PLZ] 43,990,000 13,520,851
Series DS1013, 5%, 10/24/13 [PLZ] 55,940,000 17,660,938
Series WS0922, 5.75%, 9/23/22 [PLZ] 10,000,000 3,213,322
Series 0511, 4.25%, 5/24/11 [PLZ] 183,220,000 55,817,553
----------------
90,212,664
- --------------------------------------------------------------------------------------------------------
RUSSIA--0.1%
Russian Ministry of Finance Debs., Series VII, 3%, 5/14/11 4,180,000 3,754,978
- --------------------------------------------------------------------------------------------------------
TURKEY--0.2%
Turkey (Republic of) Bonds, 7%, 9/26/16 4,060,000 3,999,100
- --------------------------------------------------------------------------------------------------------
Turkey (Republic of) Nts.:
7.25%, 3/15/15 2,515,000 2,540,150
9.50%, 1/15/14 1,610,000 1,839,425
11%, 1/14/13 3,850,000 4,651,185
----------------
13,029,860
- --------------------------------------------------------------------------------------------------------
UNITED KINGDOM--3.9%
United Kingdom Treasury Bonds:
5%, 3/7/08 [GBP] 31,040,000 58,175,663
6%, 12/7/28 [GBP] 39,950,000 93,328,119
- --------------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts., 4%, 3/7/09 [GBP] 31,695,000 58,245,475
----------------
209,749,257
24 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------
URUGUAY--0.6%
Uruguay (Oriental Republic of) Bonds, 7.625%, 3/21/36 $ 3,210,000 $ 3,218,025
- --------------------------------------------------------------------------------------------------------
Uruguay (Oriental Republic of) Unsec. Bonds:
5%, 9/14/18 [UYU] 403,060,000 17,306,689
8%, 11/18/22 11,375,000 12,057,500
----------------
32,582,214
----------------
Total Foreign Government Obligations (Cost $2,410,658,258) 2,452,664,645
- --------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--4.5%
- --------------------------------------------------------------------------------------------------------
Aes Dominicana Energia Finance SA, 11% Sr. Nts., 12/13/15 5 7,923,000 8,200,305
- --------------------------------------------------------------------------------------------------------
Alrosa Finance SA:
8.875% Nts., 11/17/14 6,900,000 7,866,000
8.875% Nts., 11/17/14 9 4,675,000 5,329,500
- --------------------------------------------------------------------------------------------------------
Autopistas del Nordeste Cayman Ltd., 9.39% Nts., 1/15/26 5 7,186,287 7,006,630
- --------------------------------------------------------------------------------------------------------
Banco BMG SA, 9.15% Nts., 1/15/16 9 9,710,000 9,758,550
- --------------------------------------------------------------------------------------------------------
Banco Hipotecario SA, 9.75% Sr. Unsec. Nts., 4/27/16 5 4,325,000 4,422,313
- --------------------------------------------------------------------------------------------------------
Cloverie plc, 9.64% Sec. Nts., Series 2005-93, 12/20/10 5,6 3,600,000 3,605,040
- --------------------------------------------------------------------------------------------------------
Credit Suisse First Boston International, Export-Import Bank
of Ukraine Loan Participation Nts., 8.40%, 2/9/16 5,890,000 5,745,695
- --------------------------------------------------------------------------------------------------------
Eletropaulo Metropolitana SA, 19.125% Nts., 6/28/10 5 [BRR] 13,295,000 6,802,505
- --------------------------------------------------------------------------------------------------------
Gaz Capital SA, 8.625% Sr. Unsec. Nts., 4/28/34 9 7,650,000 9,543,375
- --------------------------------------------------------------------------------------------------------
Halyk Savings Bank Kazakhstan Europe BV, 7.75% Nts., 5/13/13 9 4,400,000 4,499,000
- --------------------------------------------------------------------------------------------------------
HSBC Bank plc:
9.751% Sr. Unsec. Nts., 7/8/09 8 30,220,000 18,132,000
11.601% Sr. Unsec. Nts., 1/12/10 8 42,800,000 21,742,400
12.278% Sr. Unsec. Nts., 3/9/09 8 30,220,000 17,195,180
- --------------------------------------------------------------------------------------------------------
IIRSA Norte Finance Ltd., 8.75% Sr. Nts., 5/30/24 5 8,685,000 9,010,688
- --------------------------------------------------------------------------------------------------------
Inter-American Development Bank:
6.26% Nts., 12/8/09 6 [BRR] 11,200,000 4,878,488
7.889% Nts., 1/25/12 6 [COP] 13,280,142,929 5,912,213
- --------------------------------------------------------------------------------------------------------
International Bank for Reconstruction & Development (The),
15% Nts., 1/7/10 5 [TRY] 3,000,000 1,852,096
- --------------------------------------------------------------------------------------------------------
Itabo Finance SA, 10.875% Nts., 10/5/13 9,10 1,351,000 1,375,453
- --------------------------------------------------------------------------------------------------------
Kuznetski Capital SA/Bank of Moscow, 7.375% Nts., 11/26/10 5 5,560,000 5,699,000
- --------------------------------------------------------------------------------------------------------
National Gas Co., 6.05% Nts., 1/15/36 9 4,945,000 4,762,866
- --------------------------------------------------------------------------------------------------------
National Power Corp., 9.625% Unsec. Bonds, 5/15/28 5,095,000 5,894,844
- --------------------------------------------------------------------------------------------------------
Nordic Investment Bank, 12.50% Sr. Unsec. Nts., 2/15/09 5 [TRY] 5,000,000 2,954,771
- --------------------------------------------------------------------------------------------------------
Ongko International Finance Co. BV,
10.50% Sec. Nts., 3/29/10 5,7,12 550,000 --
- --------------------------------------------------------------------------------------------------------
Pemex Project Funding Master Trust,
9.125% Unsec. Unsub. Nts., 10/13/10 4,570,000 5,127,540
- --------------------------------------------------------------------------------------------------------
Petroleum Export Ltd. Cayman SPV,
5.265% Sr. Nts., Cl. A3, 6/15/11 9 12,427,510 12,251,027
25 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES Continued
- --------------------------------------------------------------------------------------------------------
Reachcom Public Ltd., Renaissance Consumer Finance Bank
of Russia Loan Participation Nts., 10.50%, 7/27/07 5 [RUR] 131,000,000 $ 4,896,179
- --------------------------------------------------------------------------------------------------------
RSHB Capital SA/OJSC Russian Agricultural Bank,
7.175% Nts., 5/16/13 9 10,520,000 10,967,100
- --------------------------------------------------------------------------------------------------------
Salisbury International Investments Ltd., 9.657% Sec. Nts.,
Series 2006-003, Tranche E, 7/20/11 5,6 2,400,000 2,400,000
- --------------------------------------------------------------------------------------------------------
Telefonica del Peru SA, 8% Sr. Unsec. Bonds, 4/11/16 5 [PEN] 26,033,700 8,479,033
- --------------------------------------------------------------------------------------------------------
Tengizchevroil LLP, 6.124% Nts., 11/15/14 9 5,840,000 5,810,800
- --------------------------------------------------------------------------------------------------------
Tiers-BSP, 0%/8.60% Collateralized Trust, Cl. A, 6/15/97 5,11 6,065,000 2,122,750
- --------------------------------------------------------------------------------------------------------
UBS Luxembourg SA, 6.23% Sub. Nts., 2/11/15 6 8,020,000 8,093,463
- --------------------------------------------------------------------------------------------------------
VTB Capital SA, 6.25% Sr. Nts., 6/30/35 9 9,490,000 9,561,175
----------------
Total Corporate Bonds and Notes (Cost $257,999,834) 241,897,979
SHARES
- --------------------------------------------------------------------------------------------------------
COMMON STOCKS--1.9%
- --------------------------------------------------------------------------------------------------------
3i Group plc 115,759 2,027,609
- --------------------------------------------------------------------------------------------------------
Anglo American plc 47,250 1,989,269
- --------------------------------------------------------------------------------------------------------
BASF AG 25,274 2,029,330
- --------------------------------------------------------------------------------------------------------
Bayer AG 42,333 2,152,589
- --------------------------------------------------------------------------------------------------------
BNP Paribas SA 19,660 2,115,305
- --------------------------------------------------------------------------------------------------------
British Airways plc 12 268,160 2,143,914
- --------------------------------------------------------------------------------------------------------
British Land Co. plc 80,690 2,060,723
- --------------------------------------------------------------------------------------------------------
Brixton plc 209,210 2,072,162
- --------------------------------------------------------------------------------------------------------
Charter plc 12 143,610 2,293,608
- --------------------------------------------------------------------------------------------------------
Commerzbank AG 60,008 2,033,215
- --------------------------------------------------------------------------------------------------------
Corus Group plc 280,810 2,039,999
- --------------------------------------------------------------------------------------------------------
Credit Agricole SA 51,620 2,267,429
- --------------------------------------------------------------------------------------------------------
Daiwa Securities Group, Inc. 1 177,600 2,081,972
- --------------------------------------------------------------------------------------------------------
Deutsche Boerse AG 13,766 2,068,540
- --------------------------------------------------------------------------------------------------------
Deutsche Lufthansa AG 105,957 2,243,798
- --------------------------------------------------------------------------------------------------------
Deutsche Telekom AG 143,473 2,279,602
- --------------------------------------------------------------------------------------------------------
Etablissements Economiques du Casino Guichard-Perrachon SA 24,450 1,970,299
- --------------------------------------------------------------------------------------------------------
Euronext NV 23,310 2,265,647
- --------------------------------------------------------------------------------------------------------
France Telecom SA 98,790 2,267,406
- --------------------------------------------------------------------------------------------------------
Fujikura Ltd. 1 177,430 1,950,121
- --------------------------------------------------------------------------------------------------------
Furukawa Electric Co., Ltd. (The) 305,491 2,027,375
- --------------------------------------------------------------------------------------------------------
Great Portland Estates plc 12 194,950 2,208,331
- --------------------------------------------------------------------------------------------------------
Hammerson plc 86,590 2,127,096
- --------------------------------------------------------------------------------------------------------
Investec plc 163,840 1,608,981
- --------------------------------------------------------------------------------------------------------
Ishikawajima-Harima Heavy Industries Co. Ltd. 726,000 2,230,202
26 | OPPENHEIMER INTERNATIONAL BOND FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------------------------------
COMMON STOCKS Continued
- --------------------------------------------------------------------------------------------------------
JFE Holdings, Inc. 1 51,750 $ 2,028,381
- --------------------------------------------------------------------------------------------------------
Legal & General Group plc 8,130 21,692
- --------------------------------------------------------------------------------------------------------
London Stock Exchange Group plc 95,530 2,210,771
- --------------------------------------------------------------------------------------------------------
Mitchells & Butlers plc 1,920 21,192
- --------------------------------------------------------------------------------------------------------
Mitsubishi Heavy Industries Ltd. 502,854 2,088,307
- --------------------------------------------------------------------------------------------------------
Mitsubishi Materials Corp. 1 485,320 2,009,297
- --------------------------------------------------------------------------------------------------------
Mittal Steel Co. NV 86,790 3,030,898
- --------------------------------------------------------------------------------------------------------
Muenchener Rueckversicherungs-Gesellschaft AG 13,840 2,189,346
- --------------------------------------------------------------------------------------------------------
Nippon Kayaku Co. Ltd. 243,000 2,059,200
- --------------------------------------------------------------------------------------------------------
Nippon Mining Holdings, Inc. 1 286,260 2,031,223
- --------------------------------------------------------------------------------------------------------
Nomura Securities Co. Ltd. 109,140 1,921,788
- --------------------------------------------------------------------------------------------------------
Odakyu Electric Railway Co. Ltd. 329,370 2,094,026
- --------------------------------------------------------------------------------------------------------
PagesJaunes Groupe SA 73,110 2,076,646
- --------------------------------------------------------------------------------------------------------
Pioneer Corp. 110,218 1,946,806
- --------------------------------------------------------------------------------------------------------
ProSieben Sat.1 Media AG 77,843 2,161,730
- --------------------------------------------------------------------------------------------------------
Resolution plc 185,120 2,140,306
- --------------------------------------------------------------------------------------------------------
Royal & Sun Alliance Insurance Group plc 795,300 2,218,722
- --------------------------------------------------------------------------------------------------------
Salzgitter AG 23,403 2,201,979
- --------------------------------------------------------------------------------------------------------
Shinko Securities Co. Ltd. 522,000 2,074,515
- --------------------------------------------------------------------------------------------------------
Showa Shell Sekiyu K.K. 186,000 2,072,178
- --------------------------------------------------------------------------------------------------------
Societe Generale, Cl. A 12,990 2,067,239
- --------------------------------------------------------------------------------------------------------
Sumitomo Metal Industries 1 512,450 1,972,083
- --------------------------------------------------------------------------------------------------------
Vallourec SA 9,350 2,173,541
- --------------------------------------------------------------------------------------------------------
Vivendi SA 60,650 2,186,479
- --------------------------------------------------------------------------------------------------------
Volkswagen AG, Preference 37,112 2,189,703
- --------------------------------------------------------------------------------------------------------
Xstrata plc 46,710 1,930,180
----------------
Total Common Stocks (Cost $100,194,395) 103,672,750
UNITS
- --------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- --------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Oil Linked Payment Obligation Wts.,
Exp. 4/15/20 5,12 (Cost $0) 500 18,250
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------------------------------
STRUCTURED NOTES--24.0%
- --------------------------------------------------------------------------------------------------------
Citigroup Global Markets Holdings, Inc.:
Argentina (Republic of) Credit Linked Nts., 4%, 5/22/08 13 [ARP] 11,655,000 9,987,532
Argentina (Republic of) Unsec. Credit Linked Nts.,
4%, 4/16/10 13 [ARP] 10,903,383 6,224,984
27 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------
STRUCTURED NOTES Continued
- --------------------------------------------------------------------------------------------------------------------------
Citigroup Global Markets Holdings, Inc.: Continued
Brazil (Federal Republic of) Unsec. Credit Linked Nts., 10%, 1/5/10 [BRR] 38,356,000 $ 16,276,471
Brazil (Federal Republic of) Unsec. Credit Linked Nts., 10%, 1/5/10 [BRR] 59,878,000 25,409,389
Brazil (Federal Republic of) Unsec. Credit Linked Nts., 10%, 1/5/10 [BRR] 100,000,000 42,435,267
Brazil (Federal Republic of) Unsec. Credit Linked Nts., 14.809%,
1/5/10 8 [BRR] 32,035,902 9,581,008
Brazil (Federal Republic of) Unsec. Credit Linked Nts., 15.427%,
1/2/09 8 [BRR] 28,074,132 9,625,878
Brazil (Federal Republic of) Unsec. Credit Linked Nts., 15.728%,
1/3/08 8 [BRR] 24,719,335 9,694,008
Colombia (Republic of) Credit Linked Bonds, 11%, 7/24/20 [COP] 12,570,000,000 5,799,301
Colombia (Republic of) Credit Linked Nts., Series II, 15%, 4/27/12 [COP] 6,942,469,928 3,539,375
Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12 [COP] 31,110,000,000 15,860,343
Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12 [COP] 12,430,000,000 6,337,000
Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12 [COP] 11,705,100,000 5,967,435
Dominican Republic Unsec. Credit Linked Nts., 11.648%, 9/24/07
(linked to Dominican Republic Treasury Bills) 8,10 [DOP] 57,500,000 1,508,360
Dominican Republic Credit Linked Nts., 10.705%, 3/5/07
(linked to Dominican Republic Treasury Bills) 8 [DOP] 161,260,000 4,548,298
Dominican Republic Credit Linked Nts., 11.242%, 1/2/7
(linked to Dominican Republic Treasury Bills) 8 [DOP] 92,100,000 2,652,480
Dominican Republic Credit Linked Nts., 14.608%, 5/14/07
(linked to Dominican Republic Treasury Bills) 8 [DOP] 189,200,000 5,206,200
Dominican Republic Credit Linked Nts., 16.50%, 3/12/07
(linked to Dominican Republic Treasury Bills) [DOP] 205,500,000 5,782,599
Dominican Republic Credit Linked Nts., 17%, 3/12/07 [DOP] 256,400,000 7,752,410
Dominican Republic Credit Linked Nts., Series II, 15.603%, 4/23/07
(linked to Dominican Republic Treasury Bills) 8 [DOP] 118,210,000 3,278,030
Dominican Republic Unsec. Credit Linked Nts., 15.638%, 4/30/07
(linked to Dominican Republic Treasury Bills) 8 [DOP] 108,450,000 2,999,688
Dominican Republic Unsec. Credit Linked Nts., Series II, 15.736%, 4/30/07
(linked to Dominican Republic Treasury Bills) 8 [DOP] 237,770,000 6,576,634
Egypt (The Arab Republic of) Credit Linked Nts., 8.70%, 7/12/07
(linked to Egyptian Treasury Bills) 5,8 [EGP] 51,690,000 8,385,908
Egypt (The Arab Republic of) Credit Linked Nts., 9.079%, 3/22/07
(linked to Egyptian Treasury Bills) 5,8 [EGP] 43,000,000 7,178,816
Egypt (The Arab Republic of) Unsec. Credit Linked Nts., 8.50%, 2/16/08
(linked to Egyptian Treasury Bills) [EGP] 34,150,000 5,886,474
Egypt (The Arab Republic of) Unsec. Credit Linked Nts., 8.775%, 2/22/07
(linked to Egyptian Treasury Bills) 5,8 [EGP] 49,620,000 8,340,732
Nigeria (Federal Republic of) Credit Linked Nts., 12.474%, 7/22/07 8 [NGN] 1,606,440,000 11,577,382
Nigeria (Federal Republic of) Credit Linked Nts., 14.50%, 3/1/11 [NGN] 2,672,000,000 21,484,670
Nigeria (Federal Republic of) Credit Linked Nts., Series II,
14.50%, 4/4/11 [NGN] 2,032,000,000 16,353,048
Ukraine Hryvnia Unsec. Credit Linked Nts., 11.94%, 1/4/10 [UAH] 13,799,000 2,990,517
Zambia (Republic of) Credit Linked Nts., 11%, 2/21/07
(linked to Zambian Treasury Bills) [ZMK] 24,420,000,000 5,561,911
Zambia (Republic of) Credit Linked Nts., Series II, 11%, 2/21/07
(linked to Zambian Treasury Bills) [ZMK] 9,980,000,000 2,273,050
28 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------
STRUCTURED NOTES Continued
- --------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston International:
Indonesia (Republic of) Total Return Linked Nts., 12%, 9/16/11 [IDR] 116,800,000,000 $ 13,312,035
Lukoil Credit Linked Nts., Series Fbi 105, 7.25%, 11/17/09 [RUR] 321,528,000 12,194,276
Moscow (City of) Credit Linked Nts., Series Fbi 101, 10%, 12/31/10 5 [RUR] 277,800,000 11,756,387
Moscow (City of) Credit Linked Nts., Series Fbi 98, 11%, 4/23/09 [RUR] 280,840,000 11,776,955
OAO Gazprom Credit Linked Nts., 8.11%, 1/21/07 [RUR] 289,282,000 11,061,265
South African Rand Interest Bearing Linked Nts., Series FBi 43,
5.175%, 5/23/22 6 2,100,000 2,115,750
Ukraine (Republic of) Credit Linked Nts., Series EMG 13, 11.94%,
12/30/09 [UAH] 30,400,000 6,746,866
- --------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston, Inc. (Nassau Branch):
Turkey (Republic of) Credit Linked Nts., Series 2, 20.853%, 7/16/08 8,10 [TRY] 39,420,000 18,216,855
Turkey (Republic of) Credit Linked Nts., Series EM 880, 20%, 10/18/07 12,320,000 11,867,037
Turkey (Republic of) Credit Linked Nts., Series II I, 20.547%, 7/16/08 8,10 [TRY] 21,500,000 9,846,191
Ukraine (Republic of) Credit Linked Nts., Series EMG 11, 11.94%,
12/30/09 [UAH] 9,163,000 2,033,603
Ukraine (Republic of) Credit Linked Nts., Series NPC 12, 11.94%,
12/30/09 [UAH] 65,490,000 14,534,613
- --------------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG:
Argentina (Republic of) Credit Linked Nts., 4%, 12/21/11 [ARP] 35,580,000 28,544,245
Arrendadora Capita Corp. SA de CV/Capita Corp. (The) de Mexico SA
de CV Credit Linked Nts., 9.09%, 1/5/11 5 [MXN] 130,466,254 11,867,041
Arrendadora Capita Corp. SA de CV/Capita Corp. (The) de Mexico SA
de CV Credit Linked Nts., 9.65%, 1/5/11 5 [MXN] 85,964,902 7,848,578
Brazil Real Credit Linked Nts., 13.882%, 3/3/10 8 [BRR] 61,128,560 21,349,873
Brazil Real Credit Linked Nts., 6%, 8/18/10 [BRR] 15,895,000 10,487,990
Campania Total Return Linked Nts., 3.804%, 7/30/10 5,6 [EUR] 34,900,000 44,020,530
Campania Total Return Linked Nts., 3.846%, 7/30/10 5,6 [EUR] 40,150,000 50,713,807
Colombia (Republic of) Credit Linked Nts., 13.50%, 9/15/14 [COP] 13,259,000,000 6,674,491
Egypt (The Arab Republic of) Total Return Linked Nts., 8.328%,
12/12/06 (linked to Egyptian Treasury Bills) 8 [EGP] 62,500,000 10,673,560
Egypt (The Arab Republic of) Total Return Linked Nts., 9.170%, 1/30/07
(linked to Egyptian Treasury Bills) 5,8 [EGP] 37,750,000 6,419,207
European Investment Bank, Russian Federation Credit Linked Nts.,
5.502%, 1/19/10 8 8,475,000 7,217,734
Grupo TMM SA Credit Linked Nts., 6%, 9/7/12 5 5,395,000 5,402,472
Halyk Bank of Kazakhstan Total Return Linked Nts., Series I,
7.25%, 3/24/09 [KZT] 2,003,690,000 16,179,024
Indonesia (Republic of) Credit Linked Nts., 9.50%, 6/22/15 10,300,162 9,857,255
Indonesia (Republic of) Credit Linked Nts., Series III, 14.25%, 6/15/13 12,412,800 14,998,386
Indonesia (Republic of) Total Return Nts., 12.50%, 3/22/13 [IDR] 84,850,000,000 9,956,653
Nigeria (Federal Republic of) Credit Linked Nts., 12.50%, 2/24/09 [NGN] 525,300,000 4,149,604
Nigeria (Federal Republic of) Credit Linked Nts., 15%, 1/27/09 [NGN] 704,900,000 5,912,153
OAO Gazprom I Credit Nts., 8.36%, 10/20/07 1,435,000 1,547,466
OAO Gazprom II Credit Nts., 8.11%, 4/20/07 1,435,000 1,519,612
Peru (Republic of) Credit Linked Nts., 6.73%, 2/20/11 6 3,255,000 3,262,217
Romania (Republic of) 3 yr. Linked Nts., 12.25%, 10/15/07 [RON] 22,740,000 9,396,950
Romania (Republic of) 3 yr. Linked Nts., 12.89%, 9/24/07 [RON] 3,320,000 1,392,289
29 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------
STRUCTURED NOTES Continued
- --------------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG: Continued
Romania (Republic of) 3 yr. Linked Nts., 12.89%, 9/24/07 [RON] 10,000,000 $ 4,193,641
Romania (Republic of) 3 yr. Linked Nts., 12.89%, 9/24/07 [RON] 5,640,000 2,365,213
Romania (Republic of) Credit Linked Nts., 11.49%, 12/7/06 [RON] 9,118,650 3,603,071
Russian Federation Credit Linked Nts., 0.00%, 12/2/09 8 [RUR] 233,573,000 9,325,918
Russian Federation Total Return Linked Nts., Series II, 9%, 4/22/11 [RUR] 288,935,000 11,909,549
Ukraine (Republic of) 5 yr. Credit Linked Nts., 4.05%, 8/25/10 2,505,000 2,515,847
Ukraine (Republic of) 5.5 yr. Credit Linked Nts., 4.05%, 2/25/11 2,505,000 2,508,206
Ukraine (Republic of) 6 yr. Credit Linked Nts., 4.05%, 8/25/11 2,505,000 2,503,722
Ukraine (Republic of) 6.5 yr. Credit Linked Nts., 4.05%, 2/27/12 2,505,000 2,494,980
Ukraine (Republic of) 7 yr. Credit Linked Nts., 4.05%, 8/28/12 2,505,000 2,486,488
Ukraine (Republic of) Credit Linked Nts., 10.208%, 7/1/09 [UAH] 27,763,200 5,672,504
Ukraine (Republic of) Credit Linked Nts., 11.94%, 12/30/09 [UAH] 3,228,000 699,812
Ukraine (Republic of) Credit Linked Nts., 11.94%, 12/30/09 [UAH] 11,438,000 2,479,692
Ukraine (Republic of) Credit Linked Nts., 5.592%, 5/16/07 [UAH] 27,990,000 5,533,566
Ukraine (Republic of) Credit Linked Nts., 9.60%, 7/1/09 [UAH] 7,953,600 1,625,059
Ukraine (Republic of) Credit Linked Nts., Series A, 5.592%, 5/16/07 [UAH] 27,980,000 5,531,589
United Mexican States BORHIS Total Return Linked Nts.,
6.10%, 9/27/35 [MXN] 26,330,000 9,150,118
United Mexican States Credit Linked Nts., 9.52%, 1/5/11 5 [MXN] 86,081,449 7,839,644
Videocon International Ltd. Credit Linked Nts., 7.75%, 12/29/09 5 7,300,000 7,299,270
- --------------------------------------------------------------------------------------------------------------------------
Goldman Sachs International, Russian Federation Total Return
Linked Nts., 8%, 5/13/09 [RUR] 573,900,000 23,433,207
- --------------------------------------------------------------------------------------------------------------------------
ING Bank NV, Ukraine (Republic of) Credit Linked Nts., Series 725,
11.89%, 12/30/09 5 [UAH] 64,285,000 13,990,500
- --------------------------------------------------------------------------------------------------------------------------
JPMorgan Chase Bank:
Argentina (Republic of) Credit Linked Nts., 4%, 12/19/11 5 [ARP] 36,445,000 29,563,456
Brazil (Federal Republic of) Credit Linked Nts., 12.08%, 1/2/15 8 [BRR] 51,226,300 7,946,685
Brazil (Federal Republic of) Credit Linked Nts., 12.683%, 6/1/13 8 [BRR] 75,340,000 14,285,078
Brazil (Federal Republic of) Credit Linked Nts., 13.847%, 4/1/10 8 [BRR] 129,150,391 37,159,768
Brazil (Federal Republic of) Credit Linked Nts., 15.326%, 1/2/15 8 [BRR] 138,200,796 21,438,952
Brazil (Federal Republic of) Credit Linked Nts., 2.731%, 11/30/12 8 [ARP] 35,605,000 8,633,531
Brazil (Federal Republic of) Credit Linked Nts., 6%, 5/16/45 5 [BRR] 45,170,000 26,073,039
Brazil (Federal Republic of) Credit Linked Nts., Series II,
13.553%, 1/2/15 8 [BRR] 114,770,000 17,804,156
Colombia (Republic of) Credit Linked Bonds, 10.19%, 1/5/16 8 [COP] 153,800,000,000 23,517,732
Colombia (Republic of) Credit Linked Bonds, 11.198%, 8/3/20 8 [COP] 132,560,000,000 13,685,637
Peru (Republic of) Credit Linked Nts., 8.115%, 9/2/15 8 [PEN] 40,860,000 6,134,342
Russian Federation Railways Credit Linked Nts., 6.59%, 6/15/07 [RUR] 297,950,000 11,972,006
Swaziland (Kingdom of) Credit Linked Nts., 7.25%, 6/20/10 3,850,000 3,990,525
- --------------------------------------------------------------------------------------------------------------------------
Lehman Brothers International:
Romania (Republic of) Total Return Linked Nts., 7.90%, 2/9/10
(linked to Romanian Treasury Bills) [RON] 10,726,400 4,357,382
Turkey (Republic of) Total Return Linked Nts., 20%, 10/17/07
(linked to Turkish Treasury Bills) 4,252,888 4,518,694
30 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------
STRUCTURED NOTES Continued
- --------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Special Financing, Inc.:
Argentina (Republic of) Credit Linked Nts., 9.655%, 12/20/15 $ 20,000,000 $ 21,974,000
Romania ( Republic of) Total Return Linked Nts., 6.50%, 3/10/10
(linked to Romanian Treasury Bills) [RON] 30,904,100 11,793,307
Romania ( Republic of) Total Return Linked Nts., 6.75%, 3/11/08
(linked to Romanian Treasury Bills) [RON] 36,650,000 14,283,566
Romania ( Republic of) Total Return Linked Nts., 7.25%, 4/18/10
(linked to Romanian Treasury Bills) [RON] 3,105,000 1,212,512
Romania ( Republic of) Total Return Linked Nts., 7.50%, 3/6/07
(linked to Romanian Treasury Bills) [RON] 5,155,000 2,056,214
Romania ( Republic of) Total Return Linked Nts., 7.75%, 4/18/08
(linked to Romanian Treasury Bills) [RON] 3,101,000 1,231,718
Romania ( Republic of) Total Return Linked Nts., 7.75%, 4/18/08
(linked to Romanian Treasury Bills) [RON] 7,453,000 2,960,334
Romania (Republic of) Total Return Linked Nts., 7.90%, 2/12/08
(linked to Romanian Treasury Bills) [RON] 24,895,500 10,050,029
- --------------------------------------------------------------------------------------------------------------------------
Morgan Stanley & Co. International Ltd./Red Arrow
International Leasing plc:
Total Return Linked Nts., Series A, 8.375%, 6/30/12 5 [RUR] 277,994,119 10,740,375
Total Return Linked Nts., Series B, 11%, 6/30/12 5 [RUR] 220,610,000 8,447,644
- --------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital Services, Inc.:
Bank Center Credit Total Return Linked Nts., 7.52%, 6/6/08 [KZT] 3,273,000,000 25,964,247
Brazil (Federal Republic of) Sr. Linked Nts., 14.40%, 8/4/16 [BRR] 56,967,568 27,412,187
Philippines (Republic of the) Credit Linked Nts., 10.264%, 9/20/15 5 30,000,000 34,158,000
Philippines (Republic of the) Credit Linked Nts., 8.619%, 9/20/15 9 980,000 1,068,690
Philippines (Republic of the) Credit Linked Nts., 8.38%, 6/20/16 5,6 2,640,000 2,643,168
United Mexican States Credit Linked Nts., 5.64%, 11/20/15 11,760,000 11,808,216
Venezuela ( Republic of) 10 yr. Credit Linked Nts., 7.85%, 11/20/15 4,415,000 4,691,379
Venezuela ( Republic of) Credit Linked Nts., 6.49%, 5/20/10 8,435,000 8,644,188
Venezuela ( Republic of) Credit Linked Nts., 7.382%, 5/20/10 3,850,000 4,219,600
- --------------------------------------------------------------------------------------------------------------------------
UBS AG:
Indonesia (Republic of) Credit Linked Nts., 12.80%, 6/15/21 10 [IDR] 80,000,000,000 9,665,041
Israel (State of) Credit Linked Nts., 7.50%, 4/5/14 [ILS] 56,205,300 14,562,116
----------------
Total Structured Notes (Cost $1,230,497,699) 1,299,757,278
EXPIRATION STRIKE
DATES PRICE CONTRACTS
- --------------------------------------------------------------------------------------------------------------------------
OPTIONS PURCHASED--0.0%
- --------------------------------------------------------------------------------------------------------------------------
Mexican Nuevo Peso (MXN) Call 12 10/12/06 $11.40 176,016,000 1,774
- --------------------------------------------------------------------------------------------------------------------------
Mexican Nuevo Peso (MXN) Put 12 10/12/06 11.40 176,016,000 580,603
- --------------------------------------------------------------------------------------------------------------------------
New Turkish Lira (TRY)/Japanese
Yen (JPY) Put 12 1/30/07 77.00TRY 32,820,000 376,071
----------------
Total Options Purchased (Cost $1,570,481) 958,448
31 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--6.2%
- --------------------------------------------------------------------------------------------------------------------------
Undivided interest of 22.73% in joint repurchase agreement (Principal
Amount/Value $1,469,294,000, with a maturity value of $1,469,936,816) with UBS
Warburg LLC, 5.25%, dated 9/29/06, to be repurchased at $334,176,138 on 10/2/06,
collateralized by Federal National Mortgage
Assn., 5%, 2/1/36, with a value of $1,502,659,342 (Cost $334,030,000) $ 334,030,000 $ 334,030,000
- --------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (excluding Investments Purchased
with Cash Collateral from Securities Loaned) (Cost $5,295,201,601) 5,400,629,799
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--15.1% 14
- --------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED FLOATING NOTES--0.1%
Citigroup Mortgage Loan Trust, Inc., Series 2006-HE1, Cl. A1,
5.39%, 10/25/06 3,226,203 3,226,203
- --------------------------------------------------------------------------------------------------------------------------
Countrywide Asset-Backed Certificates, Series 2005-17,
Cl. 4AV1, 5.44%, 10/25/06 1,659,768 1,659,768
- --------------------------------------------------------------------------------------------------------------------------
Whitehawk CDO Funding Corp., 5.44%, 12/15/06 2,000,000 2,000,000
----------------
6,885,971
- --------------------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--13.4%
Undivided interest of 12% in joint repurchase agreement (Principal
Amount/Value $250,000,000, with a maturity value of $250,112,500)
with Cantor Fitzgerald & Co., 5.40%, dated 9/29/06, to be repurchased
at $30,013,500 on 10/2/06, collateralized by U.S. Agency Mortgages,
0.0001%-6.50%, 8/1/12-9/1/36, with a value of $255,002,127 30,000,000 30,000,000
- --------------------------------------------------------------------------------------------------------------------------
Undivided interest of 20.87% in joint repurchase agreement (Principal
Amount/Value $2,500,000,000 with a maturity value of $2,501,131,250)
with ING Financial Markets LLC, 5.43%, dated 9/29/06, to be repurchased
at $522,021,108 on 10/2/06, collateralized by U.S. Agency Mortgages,
0.00%-7%, 9/1/18-8/1/36, with a value of $2,550,003,623 521,785,000 521,785,000
- --------------------------------------------------------------------------------------------------------------------------
Undivided interest of 4.44% in joint repurchase agreement (Principal
Amount/Value $3,950,000,000, with a maturity value of $3,951,787,375)
with Nomura Securities, 5.43%, dated 9/29/06, to be repurchased at
$175,611,383 on 10/2/06, collateralized by U.S. Agency Mortgages,
0.00%-22.12%, 3/15/14-6/25/43, with a value of $4,029,000,000 175,531,955 175,531,955
----------------
727,316,955
- --------------------------------------------------------------------------------------------------------------------------
MASTER FLOATING NOTE--0.1%
CDC Financial Products, Inc., 5.43%, 10/2/06 1,000,000 1,000,000
- --------------------------------------------------------------------------------------------------------------------------
Citigroup Global Markets, Inc., 5.45%, 10/2/06 4,000,000 4,000,000
----------------
5,000,000
- --------------------------------------------------------------------------------------------------------------------------
MEDIUM-TERM FLOATING NOTE--0.3%
American Express Credit Corp., 5.34%, 10/16/06 2,000,000 2,000,000
- --------------------------------------------------------------------------------------------------------------------------
Bear Stearns, 5.37%, 10/2/06 3,000,000 3,000,000
- --------------------------------------------------------------------------------------------------------------------------
CC USA, Inc., 5.37%, 10/2/06 2,000,000 2,000,000
- --------------------------------------------------------------------------------------------------------------------------
CC USA, Inc., 5.37%, 10/2/06 3,000,000 3,000,000
32 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------
MEDIUM-TERM FLOATING NOTE Continued
Dorada Finance, Inc., 5.37%, 10/2/06 $ 3,000,000 $ 3,000,000
- --------------------------------------------------------------------------------------------------------------------------
LINKS Finance LLC, 5.37%, 10/2/06 2,000,050 2,000,050
- --------------------------------------------------------------------------------------------------------------------------
MBIA Global Funding LLC, 5.33%, 10/30/06 2,000,000 2,000,000
----------------
17,000,050
- --------------------------------------------------------------------------------------------------------------------------
YANKEE FIXED CERTIFICATE OF DEPOSIT--0.7%
Bank of Tokyo/UFJ Ltd. NY, 5.30%, 10/13/06 35,000,000 35,000,000
- --------------------------------------------------------------------------------------------------------------------------
YANKEE FLOATING CERTIFICATE OF DEPOSIT--0.5%
Natexis Banques Populaires NY, 5.37%, 10/2/06 2,000,000 2,000,000
- --------------------------------------------------------------------------------------------------------------------------
Natexis Banques Populaires NY, 5.39%, 10/2/06 1,999,709 1,999,709
- --------------------------------------------------------------------------------------------------------------------------
Societe Generale NY, 5.33%, 10/2/06 25,000,000 25,000,000
----------------
28,999,709
----------------
Total Investments Purchased with Cash Collateral
from Securities Loaned (Cost $820,202,685) 820,202,685
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $6,115,404,286) 114.7% 6,220,832,484
- --------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (14.7) (795,620,144)
----------------------------------
NET ASSETS 100.0% $ 5,425,212,340
==================================
FOOTNOTES TO STATEMENT OF INVESTMENTS
Principal amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
ARP Argentine Peso
AUD Australian Dollar
BRR Brazilian Real
CAD Canadian Dollar
COP Colombian Peso
DKK Danish Krone
DOP Dominican Republic Peso
EGP Egyptian Pounds
EUR Euro
GBP British Pound Sterling
IDR Indonesia Rupiah
ILS Israeli Shekel
JPY Japanese Yen
KZT Kazakhstan Tenge
MXN Mexican Nuevo Peso
MYR Malaysian Ringgit
NGN Nigeria Naira
PEN Peruvian New Sol
PLZ Polish Zloty
RON New Romanian Leu
RUR Russian Ruble
TRY New Turkish Lira
UAH Ukraine Hryvnia
UYU Uruguay Peso
ZMK Zambian Kwacha
33 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS Continued
1. Partial or fully-loaned security. See Note 13 of accompanying Notes.
2. A sufficient amount of securities has been designated to cover outstanding
written put options, as follows:
CONTRACTS EXPIRATION EXERCISE PREMIUM VALUE
SUBJECT TO PUT DATE PRICE RECEIVED SEE NOTE 7
- ------------------------------------------------------------------------------------------------------------------------
New Turkish Lira (TRY)/Japanese Yen (JPY) 32,820,000 1/30/07 65.00TRY $556,532 $285,577
3. A sufficient amount of securities has been designated to cover outstanding
foreign currency contracts. See Note 5 of accompanying Notes.
4. All or a portion of the security is held in collateralized accounts to cover
initial margin requirements on open futures sales contracts. The aggregate
market value of such securities is $31,067,451. See Note 6 of accompanying
Notes.
5. Illiquid security. The aggregate value of illiquid securities as of September
30, 2006 was $432,204,370, which represents 7.97% of the Fund's net assets. In
addition, the Fund has restricted currency of $2,736,749, which represents 0.05%
of the Fund's net assets. See Note 12 of accompanying Notes.
6. Represents the current interest rate for a variable or increasing rate
security.
7. Issue is in default. See Note 1 of accompanying Notes.
8. Zero coupon bond reflects effective yield on the date of purchase.
9. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $89,387,487 or 1.65% of the Fund's net
assets as of September 30, 2006.
10. When-issued security or forward commitment to be delivered and settled after
September 30, 2006. See Note 1 of accompanying Notes.
11. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
12. Non-income producing security.
13. Denotes an inflation-indexed security: coupon and principal are indexed to
the consumer price index.
14. The security/securities have been segregated to satisfy the forward
commitment to return the cash collateral received in securities lending
transactions upon the borrower's return of the securities loaned. See Note 13 of
accompanying Notes.
34 | OPPENHEIMER INTERNATIONAL BOND FUND
DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC HOLDINGS, AS A PERCENTAGE OF
TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS:
GEOGRAPHIC HOLDINGS/UNAUDITED VALUE PERCENT
- --------------------------------------------------------------------------------
United States $ 2,122,445,511 34.1%
Italy 428,218,629 6.9
Brazil 393,363,141 6.3
France 317,710,772 5.1
Germany 313,657,615 5.0
United Kingdom 236,933,632 3.8
Russia 198,613,164 3.2
Japan 182,827,500 2.9
Colombia 174,713,430 2.8
Peru 172,700,624 2.8
Argentina 171,443,942 2.8
Canada 133,757,405 2.1
Australia 124,022,392 2.0
Turkey 114,548,217 1.8
Belgium 100,083,041 1.6
Poland 90,212,664 1.5
Philippines 89,687,422 1.4
Mexico 81,738,822 1.3
Ukraine 80,093,259 1.3
Romania 68,896,226 1.1
Greece 66,963,304 1.1
Indonesia 65,799,145 1.1
Nigeria 61,262,067 1.0
Egypt 59,135,724 1.0
Dominican Republic 56,887,087 0.9
Israel 56,377,964 0.9
Kazakhstan 52,453,071 0.8
Malaysia 43,320,657 0.7
Uruguay 32,582,214 0.5
Denmark 26,428,511 0.4
Panama 22,330,275 0.4
Supranational 21,978,679 0.4
Venezuela 17,573,417 0.3
Zambia 7,834,961 0.1
India 7,299,270 0.1
The Netherlands 5,296,545 0.1
Trinidad & Tobago 4,762,866 0.1
El Salvador 4,559,976 0.1
Swaziland 3,990,525 0.1
Bulgaria 3,472,875 0.1
South Africa 2,115,750 0.0
Switzerland 1,930,180 0.0
Guatemala 810,013 0.0
-----------------------------
Total $ 6,220,832,484 100.0%
=============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES September 30, 2006
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------------------
Investments, at value (cost $6,115,404,286)--see accompanying statement of investments $ 6,220,832,484
- -------------------------------------------------------------------------------------------------------------
Cash 32,578,702
- -------------------------------------------------------------------------------------------------------------
Cash--foreign currencies (cost $3,577,638) 3,565,070
- -------------------------------------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 36,404,481
- -------------------------------------------------------------------------------------------------------------
Unrealized appreciation on swap contracts 27,854,854
- -------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns 49,351,404
Shares of beneficial interest sold 27,869,308
Investments sold (including $1,379,388 sold on a when-issued basis or forward commitment) 16,112,809
Other 192,055
----------------
Total assets 6,414,761,167
- -------------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------------
Options written, at value (premiums received $556,532)--
see accompanying statement of investments 285,577
- -------------------------------------------------------------------------------------------------------------
Return of collateral for securities loaned 820,202,685
- -------------------------------------------------------------------------------------------------------------
Unrealized depreciation on foreign currency contracts 24,712,326
- -------------------------------------------------------------------------------------------------------------
Unrealized depreciation on swap contracts 5,762,991
- -------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $42,628,839 purchased on a when-issued
basis or forward commitment) 84,662,120
Closed foreign currency contracts 32,943,432
Shares of beneficial interest redeemed 11,748,772
Dividends 3,423,011
Distribution and service plan fees 3,186,906
Futures margins 1,318,799
Transfer and shareholder servicing agent fees 756,505
Shareholder communications 335,545
Trustees' compensation 37,387
Other 172,771
----------------
Total liabilities 989,548,827
- -------------------------------------------------------------------------------------------------------------
NET ASSETS $ 5,425,212,340
================
- -------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- -------------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 935,691
- -------------------------------------------------------------------------------------------------------------
Additional paid-in capital 5,331,926,923
- -------------------------------------------------------------------------------------------------------------
Accumulated net investment income 36,828,546
- -------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (98,164,938)
- -------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation
of assets and liabilities denominated in foreign currencies 153,686,118
----------------
NET ASSETS $ 5,425,212,340
================
36 | OPPENHEIMER INTERNATIONAL BOND FUND
- -------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- -------------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $4,075,172,484 and 702,353,618 shares of beneficial interest outstanding) $ 5.80
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $ 6.09
- -------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $234,847,660
and 40,612,456 shares of beneficial interest outstanding) $ 5.78
- -------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $875,032,587
and 151,304,013 shares of beneficial interest outstanding) $ 5.78
- -------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $63,431,907
and 10,959,822 shares of beneficial interest outstanding) $ 5.79
- -------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $176,727,702 and 30,460,796 shares of beneficial interest outstanding) $ 5.80
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
37 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENT OF OPERATIONS For the Year Ended September 30, 2006
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
INVESTMENT INCOME
- -------------------------------------------------------------------------------------------
Interest $ 208,861,131
- -------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $180,646) 2,627,909
- -------------------------------------------------------------------------------------------
Portfolio lending fees 1,112,433
- -------------------------------------------------------------------------------------------
Other income 16,573
--------------
Total investment income 212,618,046
- -------------------------------------------------------------------------------------------
EXPENSES
- -------------------------------------------------------------------------------------------
Management fees 24,458,289
- -------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 8,524,862
Class B 2,295,635
Class C 7,164,664
Class N 275,556
- -------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 5,323,336
Class B 573,142
Class C 1,010,789
Class N 285,176
Class Y 10,821
- -------------------------------------------------------------------------------------------
Shareholder communications:
Class A 580,791
Class B 62,898
Class C 105,719
Class N 5,625
- -------------------------------------------------------------------------------------------
Custodian fees and expenses 467,415
- -------------------------------------------------------------------------------------------
Trustees' compensation 59,074
- -------------------------------------------------------------------------------------------
Administration service fees 1,500
- -------------------------------------------------------------------------------------------
Other 175,565
--------------
Total expenses 51,380,857
Less reduction to custodian expenses (48,473)
Less waivers and reimbursements of expenses (91,774)
--------------
Net expenses 51,240,610
- -------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 161,377,436
38 | OPPENHEIMER INTERNATIONAL BOND FUND
- -------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- -------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments $ 42,005,945
Closing and expiration of option contracts written 1,648,055
Closing and expiration of swaption contracts 389,255
Closing and expiration of futures contracts 10,032,947
Foreign currency transactions (80,955,986)
Swap contracts 1,145,100
--------------
Net realized loss (25,734,684)
- -------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments (20,007,804)
Translation of assets and liabilities denominated in foreign currencies 2,349,413
Futures contracts 16,336,628
Option contracts 270,955
Swaption contracts 82,251
Swap contracts (7,620,507)
--------------
Net change in unrealized appreciation (8,589,064)
- -------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 127,053,688
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
39 | OPPENHEIMER INTERNATIONAL BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2006 2005
- -------------------------------------------------------------------------------------------------------------
OPERATIONS
- -------------------------------------------------------------------------------------------------------------
Net investment income $ 161,377,436 $ 94,722,247
- -------------------------------------------------------------------------------------------------------------
Net realized gain (loss) (25,734,684) 101,469,820
- -------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (8,589,064) 125,469,766
--------------------------------
Net increase in net assets resulting from operations 127,053,688 321,661,833
- -------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (200,784,108) (119,863,500)
Class B (12,370,619) (11,853,673)
Class C (36,714,329) (21,678,102)
Class N (3,110,737) (1,754,272)
Class Y (5,420,742) (1,726,774)
- -------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (11,599,099) (15,265,136)
Class B (891,798) (1,931,153)
Class C (2,435,648) (3,155,872)
Class N (203,177) (225,580)
Class Y (253,487) (218,918)
- -------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- -------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A 1,502,920,202 1,399,327,451
Class B 18,514,548 44,672,998
Class C 338,152,983 305,107,070
Class N 18,829,709 26,099,719
Class Y 141,286,624 21,571,837
- -------------------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------------------
Total increase 1,872,974,010 1,940,767,928
- -------------------------------------------------------------------------------------------------------------
Beginning of period 3,552,238,330 1,611,470,402
--------------------------------
End of period (including accumulated net investment income
of $36,828,546 and $63,991,108, respectively) $5,425,212,340 $3,552,238,330
================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
40 | OPPENHEIMER INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED SEPTEMBER 30, 2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.01 $ 5.63 $ 5.33 $ 4.38 $ 3.95
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .22 1 .23 1 .13 .20 .24
Net realized and unrealized gain (loss) (.04) .62 .47 .95 .41
-------------------------------------------------------------------------
Total from investment operations .18 .85 .60 1.15 .65
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.37) (.41) (.30) (.20) (.19)
Distributions from net realized gain (.02) (.06) -- -- --
Tax return of capital distribution -- -- -- -- (.03)
-------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.39) (.47) (.30) (.20) (.22)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.80 $ 6.01 $ 5.63 $ 5.33 $ 4.38
=========================================================================
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 3.23% 15.53% 11.56% 26.67% 16.78%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $4,075,172 $2,683,900 $1,177,628 $ 429,283 $ 181,456
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $3,430,374 $1,925,344 $ 811,608 $ 285,391 $ 134,912
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 3.72% 3.85% 2.19% 3.94% 5.16%
Total expenses 0.98% 1.03% 1.13% 1.22% 1.37%
Expenses after payments and waivers
and reduction to custodian expenses 0.97% 1.02% 1.13% 1.22% 1.37%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 144% 90% 133% 341% 372%
1. Per share amounts calculated based on the average shares outstanding during
the period.
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.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
41 | OPPENHEIMER INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS B YEAR ENDED SEPTEMBER 30, 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 5.99 $ 5.61 $ 5.31 $ 4.37 $ 3.94
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .17 1 .17 1 .08 .16 .21
Net realized and unrealized gain (loss) (.04) .63 .47 .94 .40
---------------------------------------------------------------------------
Total from investment operations .13 .80 .55 1.10 .61
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.32) (.36) (.25) (.16) (.15)
Distributions from net realized gain (.02) (.06) -- -- --
Tax return of capital distribution -- -- -- -- (.03)
---------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.34) (.42) (.25) (.16) (.18)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.78 $ 5.99 $ 5.61 $ 5.31 $ 4.37
===========================================================================
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 2.35% 14.58% 10.66% 25.48% 15.90%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 234,848 $ 224,381 $ 167,621 $ 134,661 $ 100,049
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 229,871 $ 201,541 $ 153,117 $ 119,232 $ 85,244
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 2.88% 2.95% 1.40% 3.20% 4.41%
Total expenses 1.83% 4 1.89% 4 1.98% 4,5 2.03% 4 2.14% 4
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 144% 90% 133% 341% 372%
1. Per share amounts calculated based on the average shares outstanding during
the period.
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.
42 | OPPENHEIMER INTERNATIONAL BOND FUND
CLASS C YEAR ENDED SEPTEMBER 30, 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 5.99 $ 5.61 $ 5.31 $ 4.37 $ 3.94
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .17 1 .18 1 .09 .16 .21
Net realized and unrealized gain (loss) (.03) .63 .46 .94 .40
---------------------------------------------------------------------------
Total from investment operations .14 .81 .55 1.10 .61
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.33) (.37) (.25) (.16) (.15)
Distributions from net realized gain (.02) (.06) -- -- --
Tax return of capital distribution -- -- -- -- (.03)
---------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.35) (.43) (.25) (.16) (.18)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.78 $ 5.99 $ 5.61 $ 5.31 $ 4.37
===========================================================================
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 2.46% 14.70% 10.75% 25.48% 15.90%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 875,032 $ 560,138 $ 233,311 $ 90,248 $ 38,865
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 717,977 $ 401,401 $ 170,796 $ 63,198 $ 28,635
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 2.98% 3.10% 1.46% 3.15% 4.37%
Total expenses 1.71% 4 1.77% 4 1.88% 4,5 2.02% 4 2.14% 4
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 144% 90% 133% 341% 372%
1. Per share amounts calculated based on the average shares outstanding during
the period.
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.
43 | OPPENHEIMER INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS N YEAR ENDED SEPTEMBER 30, 2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.00 $ 5.61 $ 5.32 $ 4.37 $ 3.95
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .19 1 .20 1 .12 .18 .21
Net realized and unrealized gain (loss) (.04) .64 .45 .95 .42
-------------------------------------------------------------------------
Total from investment operations .15 .84 .57 1.13 .63
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.34) (.39) (.28) (.18) (.18)
Distributions from net realized gain (.02) (.06) -- -- --
Tax return of capital distribution -- -- -- -- (.03)
-------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.36) (.45) (.28) (.18) (.21)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.79 $ 6.00 $ 5.61 $ 5.32 $ 4.37
=========================================================================
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 2.78% 15.27% 11.00% 26.31% 16.23%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 63,432 $ 46,533 $ 18,641 $ 4,640 $ 1,280
- ---------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 55,216 $ 30,696 $ 10,769 $ 2,653 $ 297
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 3.29% 3.45% 1.83% 3.56% 4.87%
Total expenses 1.58% 1.47% 1.49% 1.57% 1.57%
Expenses after payments and waivers
and reduction to custodian expenses 1.42% 1.46% 1.49% 1.57% 1.57%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 144% 90% 133% 341% 372%
1. Per share amounts calculated based on the average shares outstanding during
the period.
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.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
44 | OPPENHEIMER INTERNATIONAL BOND FUND
CLASS Y YEAR ENDED SEPTEMBER 30, 2006 2005 2004 1
- ----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.01 $ 5.63 $ 5.58
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .24 2 .25 2 -- 3
Net realized and unrealized gain (loss) (.04) .63 .05
--------------------------------------------
Total from investment operations .20 .88 .05
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.39) (.44) --
Distributions from net realized gain (.02) (.06) --
Tax return of capital distribution -- -- --
--------------------------------------------
Total dividends and/or distributions
to shareholders (.41) (.50) --
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.80 $ 6.01 $ 5.63
============================================
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4 3.64% 15.96% 0.92%
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 176,728 $ 37,286 $ 14,268
- ----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 97,992 $ 25,559 $ 7,086
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income 4.11% 4.23% 4.84%
Total expenses 0.56% 0.67% 1.17%
Expenses after payments and waivers
and reduction to custodian expenses 0.56% 0.66% 1.17%
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 144% 90% 133%
1. For the period from September 27, 2004 (inception of offering) to September
30, 2004.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. Less than $0.005 per share.
4. 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.
5. Annualized for periods of less than one full year.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
45 | 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 primary investment objective is to
seek total return. As a secondary objective, the Fund seeks income when
consistent with 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 due to each class having its own expenses,
such as transfer and shareholder servicing agent fees and shareholder
communications, 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 may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. Securities listed or traded on National
Stock Exchanges or other domestic 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(R) are valued based on the
closing price provided by NASDAQ prior to the time when the Fund's assets are
valued. In the absence of a sale, the security is valued at the last sale price
on the prior trading day, if it is within the spread of the closing "bid" and
"asked" prices, and if not, at the closing bid price. Securities traded on
foreign exchanges are valued based on the last sale price on the principal
exchange on which the security is traded, as identified by the portfolio pricing
service, prior to the time when the Fund's assets are valued. In the absence of
a sale, the security is valued at the official closing price on the principal
exchange. Corporate, government and municipal debt instruments having a
remaining maturity in excess of sixty days and all mortgage-backed securities
will be valued at the mean between the "bid" and "asked" prices. Futures
contracts traded
46 | OPPENHEIMER INTERNATIONAL BOND FUND
on a commodities or futures exchange will be valued at the final settlement
price or official closing price on the principal exchange as reported by such
principal exchange at its trading session ending at, or most recently prior to,
the time when the Fund's assets are valued. 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 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 Statement of Operations. The Fund records a realized gain or loss
when a structured note is sold or matures. As of September 30, 2006, the market
value of these securities comprised 24.0% of the Fund's net assets and resulted
in unrealized cumulative gains of $69,259,579.
- --------------------------------------------------------------------------------
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, 2006, the Fund had purchased
$42,628,839 of securities issued on a when-issued basis or forward commitment
and sold $1,379,388 of securities issued 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
47 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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, 2006, securities with an aggregate market value of $139,328,
representing less than 0.01% of the Fund's net assets, were in default.
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income 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 for business. Foreign exchange rates may be 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.
- --------------------------------------------------------------------------------
INVESTMENTS WITH OFF BALANCE SHEET RISK. The Fund enters into financial
instrument transactions (such as swaps, futures and other derivatives) that may
have off-balance sheet market risk. Off-balance sheet market risk exists when
the maximum potential loss on a particular financial instrument is greater than
the value of such financial instrument, as reflected in the Fund's Statement of
Assets and Liabilities.
- --------------------------------------------------------------------------------
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
48 | OPPENHEIMER INTERNATIONAL BOND FUND
class of shares based upon the relative proportion of net assets represented by
such class. Operating expenses directly attributable to a specific class are
charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3,4 TAX PURPOSES
--------------------------------------------------------------------------
$ 72,760,781 $ 12,461,839 $ 95,753,190 $ 104,859,064
1. The Fund had $91,897,279 of post-October foreign currency losses which were
deferred.
2. The Fund had $3,855,911 of straddle losses which were deferred.
3. During the fiscal year ended September 30, 2006, the Fund did not utilize any
capital loss carryforward.
4. During the fiscal year ended September 30, 2005, the Fund did not utilize any
capital loss carryforward.
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, 2006. Net assets of
the Fund were unaffected by the reclassifications.
REDUCTION TO INCREASE TO
ACCUMULATED ACCUMULATED NET
INCREASE TO NET INVESTMENT REALIZED LOSS
PAID-IN CAPITAL LOSS ON INVESTMENTS 5
--------------------------------------------------------
$ 1,777,768 $ 69,860,537 $ 71,638,305
5. $1,777,768, all of which was long-term capital gain, was distributed in
connection with Fund share redemptions.
49 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
The tax character of distributions paid during the years ended September 30,
2006 and September 30, 2005 was as follows:
YEAR ENDED YEAR ENDED
SEPT. 30, 2006 SEPT. 30, 2005
--------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 258,400,535 $ 177,672,980
Long-term capital gain 15,383,209 --
--------------------------------
Total $ 273,783,744 $ 177,672,980
================================
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, 2006 are noted below. The
primary difference between book and tax appreciation or depreciation of
securities and other investments, if applicable, is attributable to the tax
deferral of losses or tax realization of financial statement unrealized gain or
loss.
Federal tax cost of securities $ 6,114,112,005
Federal tax cost of other investments 2,946,559,180
---------------
Total federal tax cost $ 9,060,671,185
===============
Gross unrealized appreciation $ 170,534,968
Gross unrealized depreciation (65,675,904)
---------------
Net unrealized appreciation $ 104,859,064
===============
- --------------------------------------------------------------------------------
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
50 | OPPENHEIMER INTERNATIONAL BOND FUND
the fair market value of the securities received. Interest income, which
includes accretion of discount and amortization of premium, is accrued as
earned.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts, to the extent they are not
offset by positive cash balances maintained by the Fund, at a rate equal to the
Federal Funds Rate plus 0.50%. The "Reduction to custodian expenses" line item,
if applicable, represents earnings on cash balances maintained by the Fund
during the period. Such interest expense and other custodian fees may be paid
with these earnings.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Fund's organizational documents provide current and former
trustees and officers with a limited indemnification against liabilities arising
in connection with the performance of their duties to the Fund. In the normal
course of business, the Fund may also enter into contracts that provide general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown as this would be dependent on future claims that may be made against the
Fund. The risk of material loss from such claims is considered remote.
- --------------------------------------------------------------------------------
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 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, 2006 YEAR ENDED SEPTEMBER 30, 2005
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------
CLASS A
Sold 401,071,813 $ 2,346,328,470 290,795,021 $ 1,714,084,347
Dividends and/or
distributions reinvested 28,014,878 162,673,081 17,749,603 105,430,621
Redeemed (173,146,915) (1,006,081,349) (71,447,967) (420,187,517)
-----------------------------------------------------------------
Net increase 255,939,776 $ 1,502,920,202 237,096,657 $ 1,399,327,451
=================================================================
51 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST Continued
YEAR ENDED SEPTEMBER 30, 2006 YEAR ENDED SEPTEMBER 30, 2005
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------
CLASS B
Sold 13,953,510 $ 81,256,556 15,275,934 $ 89,714,849
Dividends and/or
distributions reinvested 1,823,352 10,550,724 1,842,516 10,920,892
Redeemed (12,609,581) (73,292,732) (9,559,054) (55,962,743)
-----------------------------------------------------------------
Net increase 3,167,281 $ 18,514,548 7,559,396 $ 44,672,998
=================================================================
- --------------------------------------------------------------------------------------------
CLASS C
Sold 76,001,789 $ 443,443,673 59,355,223 $ 348,932,998
Dividends and/or
distributions reinvested 4,461,718 25,813,712 2,925,804 17,330,636
Redeemed (22,632,214) (131,104,402) (10,417,683) (61,156,564)
-----------------------------------------------------------------
Net increase 57,831,293 $ 338,152,983 51,863,344 $ 305,107,070
=================================================================
- --------------------------------------------------------------------------------------------
CLASS N
Sold 7,063,532 $ 41,194,742 5,802,889 $ 34,052,865
Dividends and/or
distributions reinvested 531,451 3,078,829 310,916 1,843,537
Redeemed (4,393,527) (25,443,862) (1,676,293) (9,796,683)
-----------------------------------------------------------------
Net increase 3,201,456 $ 18,829,709 4,437,512 $ 26,099,719
=================================================================
- --------------------------------------------------------------------------------------------
CLASS Y
Sold 24,796,488 $ 144,435,008 4,755,499 $ 27,879,481
Dividends and/or
distributions reinvested 973,953 5,648,766 328,793 1,945,692
Redeemed (1,513,656) (8,797,150) (1,416,856) (8,253,336)
-----------------------------------------------------------------
Net increase 24,256,785 $ 141,286,624 3,667,436 $ 21,571,837
=================================================================
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended September 30, 2006, were as
follows:
PURCHASES SALES
- -------------------------------------------------------------------
Investment securities $4,995,489,139 $4,563,963,982
U.S. government and government
agency obligations 292,567,597 26,867,033
- --------------------------------------------------------------------------------
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
average annual rate as shown in the following table:
52 | OPPENHEIMER INTERNATIONAL BOND FUND
FEE SCHEDULE
-------------------------------------------------
Up to $200 million of net assets 0.75%
Next $200 million of net assets 0.72
Next $200 million of net assets 0.69
Next $200 million of net assets 0.66
Next $200 million of net assets 0.60
Next $4 billion of net assets 0.50
Over $5 billion of net assets 0.48
- --------------------------------------------------------------------------------
ADMINISTRATION SERVICE FEES. 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, 2006, the Fund paid
$6,829,412 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $10,000 per
annum 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
periodically 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 periodically 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
periods. 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-based sales charge of 0.75% on Class B and
Class C shares and 0.25% on Class N shares. The Distributor also receives a
service fee of 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
53 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
such termination. The Distributor's aggregate uncompensated expenses under the
plan at September 30, 2006 for Class B, Class C and Class N shares were
$7,821,417, $11,863,557 and $710,233, 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 following table 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, 2006 $ 1,530,031 $ 177,034 $ 439,235 $ 230,872 $ 75,772
- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS 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, 2006,
OFS waived $91,774 for Class N shares. 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.
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.
54 | OPPENHEIMER INTERNATIONAL BOND FUND
As of September 30, 2006, the Fund had outstanding foreign currency contracts as
follows:
CONTRACT VALUATION
EXPIRATION AMOUNT AS OF UNREALIZED UNREALIZED
CONTRACT DESCRIPTION DATES (000S) SEPT. 30, 2006 APPRECIATION DEPRECIATION
- ---------------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Argentine Peso (ARP) 10/25/06 160,000ARP $ 51,378,226 $ -- $ 204,726
Australian Dollar (AUD) 10/13/06 1,780AUD 1,326,250 -- 12,256
Brazilian Real (BRR) 10/31/06-1/13/10 472,979BRR 192,308,713 26,984,996 306,869
British Pound
Sterling (GBP) 10/13/06-1/10/07 15,865GBP 29,729,670 -- 310,768
Canadian Dollar (CAD) 10/13/06 6,005CAD 5,374,485 10,579 --
Chilean Peso (CLP) 11/21/06-12/28/06 23,557,000CLP 43,998,440 306,931 52,317
Dominican Republic
Peso (DOP) 10/10/06 51,604DOP 1,531,274 -- 32,482
Euro (EUR) 10/13/06-3/6/07 216,690EUR 276,452,640 10,431 2,142,821
Indian Rupee (INR) 10/3/06-10/11/06 2,309,500INR 50,265,521 134,683 --
Indonesia Rupiah (IDR) 10/3/06-10/5/06 184,671,060IDR 20,018,543 10,843 10,857
Japanese Yen (JPY) 10/13/06-1/10/07 87,522,000JPY 751,074,335 -- 5,019,486
Malaysian Ringgit (MYR) 11/10/06-11/17/06 133,730MYR 36,342,276 -- 1,559,610
Mexican Nuevo
Peso (MXN) 10/24/06-11/29/06 1,402,690MXN 127,250,899 -- 1,389,731
New Turkish Lira (TRY) 10/10/06-10/26/06 122,993TRY 80,552,397 17,973 1,538,955
New Zealand Dollar (NZD) 3/5/07 166,275NZD 107,525,700 169,582 354,098
Norwegian Krone (NOK) 1/10/07 250,500NOK 38,598,733 -- 178,357
South African Rand (ZAR) 10/5/06-11/27/06 788,080ZAR 100,908,391 -- 8,750,360
South Korean Won (KRW) 10/10/06-11/2/06 51,918,000KRW 54,898,918 633,927 --
Swiss Franc (CHF) 10/13/06-3/6/07 243,405CHF 197,047,542 85,187 1,812,688
Thailand Baht (THB) 10/17/06 1,348,000THB 35,790,175 199,416 --
------------------------------
28,564,548 23,676,381
------------------------------
CONTRACTS TO SELL
Australian Dollar (AUD) 1/10/07-3/5/07 217,720AUD 161,797,313 2,906,595 --
British Pound Sterling (GBP) 2/7/07 16,000GBP 29,990,317 269,683 --
Canadian Dollar (CAD) 1/10/07 139,005CAD 124,749,271 7,283 --
Chinese Renminbi (CNY) 10/23/06 400,000CNY 50,735,188 -- 214,190
Czech Koruna (CZK) 10/23/06 1,100,000CZK 49,374,331 -- 141,909
Euro (EUR) 11/8/06-2/7/06 37,180EUR 47,437,956 616,017 --
Iceland Krona (ISK) 10/23/06 1,896,300ISK 26,903,709 -- 679,846
Japanese Yen (JPY) 10/23/06-3/5/07 19,260,000JPY 165,545,770 2,383,176 --
Swedish Krone (SEK) 10/5/06-3/5/07 1,017,260SEK 139,703,059 1,636,485 --
Swiss Franc (CHF) 10/23/06 62,000CHF 49,698,632 20,694 --
------------------------------
7,839,933 1,035,945
------------------------------
Total unrealized appreciation and depreciation $ 36,404,481 $ 24,712,326
==============================
- --------------------------------------------------------------------------------
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
55 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS Continued
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 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 at the closing and expiration of futures
contracts. The net change in unrealized appreciation and depreciation is
reported in 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, 2006, the Fund had outstanding futures contracts as follows:
VALUATION AS OF UNREALIZED
EXPIRATION NUMBER OF SEPTEMBER 30, APPRECIATION
CONTRACT DESCRIPTION DATES CONTRACTS 2006 (DEPRECIATION)
- --------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Euro-Bundesobligation, 5 yr. 12/7/06 926 $ 129,105,261 $ 425,480
Euro-Bundesobligation, 10 yr. 12/7/06 20 2,995,143 30,695
Euro-Schatz 12/7/06 1,458 192,296,040 101,354
IBEX 35 Index 10/20/06 34 5,582,810 317,911
Japan (Government of) Bonds, 10 yr. 12/11/06 376 429,077,672 2,092,210
MSCI Taiwan Stock Index 10/30/06 197 5,651,930 (71,321)
Standard & Poor's ASX 200 Index 12/21/06 191 18,434,645 283,300
Standard & Poor's 500 E-Mini 12/15/06 349 23,477,230 586,617
Standard & Poor's/MIB Index, 10 yr. 12/15/06 22 5,367,279 71,495
U.S. Long Bonds 12/19/06 2,600 292,256,250 5,968,342
U.S. Treasury Nts. 10 yr. 12/19/06 6,255 675,930,938 6,889,008
United Kingdom Long Gilt 12/27/06 211 43,472,898 355,394
-------------
17,050,485
-------------
56 | OPPENHEIMER INTERNATIONAL BOND FUND
VALUATION AS OF UNREALIZED
EXPIRATION NUMBER OF SEPTEMBER 30, APPRECIATION
CONTRACT DESCRIPTION DATES CONTRACTS 2006 (DEPRECIATION)
- --------------------------------------------------------------------------------------------
CONTRACTS TO SELL
Australia (Commonwealth of)
Bonds, 10 yr. 12/15/06 303 $ 23,433,981 $ 25,562
CAC-40 10 Index 10/20/06 291 19,418,819 (466,453)
Canadian Bonds, 10 yr. 12/18/06 543 55,934,708 (797,819)
DAX Index 12/15/06 111 21,271,446 (437,006)
FTSE 100 Index 12/15/06 391 43,826,349 (442,493)
Nikkei 225 Index 12/7/06 403 54,927,407 (271,514)
Standard & Poor's 500 E-Mini 12/15/06 81 5,448,870 (136,416)
Standard & Poor's/Toronto Stock
Exchange
60 Index 12/14/06 153 18,522,890 (341,714)
U.S. Treasury Nts., 5 yr. 12/29/06 161 16,988,016 (109,593)
-------------
(2,977,446)
-------------
$ 14,073,039
=============
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call or put options are noted
in the Statement of Investments where applicable. Contracts subject to call or
put, 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 [or commodity]
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 [or commodity]
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.
57 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. OPTION ACTIVITY Continued
Written option activity for the year ended September 30, 2006 was as follows:
PUT OPTIONS
-------------------------------
NUMBER OF AMOUNT OF
CONTRACTS PREMIUMS
- ---------------------------------------------------------------------
Options outstanding as of
September 30, 2005 -- $ --
Options written 53,496,170,000 2,348,537
Options closed or expired (53,463,350,000) (1,792,005)
-------------------------------
Options outstanding as of
September 30, 2006 32,820,000 $ 556,532
===============================
- --------------------------------------------------------------------------------
8. TOTAL RETURN SWAP CONTRACTS
A total return swap is an agreement under which a set of future cash flows is
exchanged between two counterparties. One cash flow stream will typically be
based on a reference interest rate or index and the other on the total return of
a reference asset such as a security, a basket of securities, or an index. The
total return includes appreciation or depreciation on the reference asset, plus
any interest or dividend payments. Payments under the swap are based on an
agreed upon principal amount but since this principal amount is not exchanged,
it represents neither an asset nor a liability to either counterparty, and is
referred to as notional. Total return swaps are marked to market daily using
different sources, including quotations from counterparties, pricing services,
brokers or market makers. The unrealized appreciation (depreciation) related to
the change in the valuation of the notional amount of the swap is combined with
the amount due to (owed by) the Fund at termination or settlement and disclosed
separately on the Statement of Assets and Liabilities. The net change in this
amount is included on the Statement of Operations. The Fund also records any
periodic payments received from (paid to) the counterparty, including at
termination, under such contracts as realized gain (loss) on the Statement of
Operations. The primary risks associated with total return swaps are credit
risks (if the counterparty fails to meet its obligations) and market risk (if
there is no liquid market for the agreement or unfavorable changes occur in the
reference asset).
As of September 30, 2006, the Fund had entered into the following total return
swap agreements:
58 | OPPENHEIMER INTERNATIONAL BOND FUND
UNREALIZED
SWAP NOTIONAL PAID BY RECEIVED BY TERMINATION APPRECIATION
COUNTERPARTY AMOUNT THE FUND THE FUND DATES (DEPRECIATION)
- --------------------------------------------------------------------------------------------------------------------
Six-Month
Deutsche Bank AG $ 16,760,000 BBA LIBOR 5.46% 5/13/15 $ 2,265,057
- --------------------------------------------------------------------------------------------------------------------
Goldman Sachs
Group, Inc. (The):
Six-Month
11,580,000 BBA LIBOR 5.10 1/14/15 1,487,217
Six-Month
11,580,000 BBA LIBOR 5.08 1/20/15 1,546,807
- --------------------------------------------------------------------------------------------------------------------
Goldman Sachs
International:
Price Depreciation Price Appreciation
of Sao Paulo of Sao Paulo
Stock Exchange Stock Exchange
3,775,895BRR Index Futures. Index Futures. 10/18/06 (48,884)
Price Depreciation Price Appreciation
of Sao Paulo of Sao Paulo
Stock Exchange Stock Exchange
8,017,514BRR Index Futures. Index Futures. 10/18/06 (109,437)
Price Depreciation Price Appreciation
of Standard & of Standard &
Poor's CNX Nifty Poor's CNX Nifty
248,229,300INR Index Futures. Index Futures. 10/26/06 (87,177)
Price Depreciation Price Appreciation
of Swiss Market of Swiss Market
6,596,597CHF Index Futures. Index Futures. 12/15/06 (135,681)
-------------
$ 4,917,902
=============
Notional amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
BRR Brazilian Real
CHF Swiss Franc
INR Indian Rupee
Abbreviation is as follows:
BBA LIBOR British Bankers' Association London-Interbank Offered Rate
- --------------------------------------------------------------------------------
9. INTEREST RATE SWAP CONTRACTS
An interest rate swap is an agreement under which a set of future cash flows is
exchanged between two counterparties. Interest rate swaps involve the exchange
of rights to receive or commitments to pay interest. One cash flow stream will
typically be a floating rate payment based upon a specified index while the
other is typically a fixed rate. Payments under the swap are based on an agreed
upon principal amount but since this principal amount is not exchanged, it
represents neither an asset nor a liability to either counterparty, and is
referred to as notional. Interest rate swaps are marked to market daily using
different sources, including quotations from counterparties, pricing services,
brokers or market makers. The unrealized appreciation (depreciation) related to
the change in the valuation of the notional amount of the swap is combined with
the amount due to (owed by) the Fund at termination or settlement and disclosed
separately on the Statement of Assets and Liabilities. The net change in this
amount is
59 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
9. INTEREST RATE SWAP CONTRACTS Continued
included on the Statement of Operations. The Fund also records any periodic
payments received from (paid to) the counterparty, including at termination,
under such contracts as realized gain (loss) on the Statement of Operations.
Swap agreements entail both interest rate risk and credit risk. There is a
risk, based on movements of interest rates in the future, the payments made by
the Fund under a swap agreement will be greater than the payments it received.
Credit risk arises from the possibility that the counterparty will default. If
the counterparty defaults, the Fund's loss will consist of the net amount of
contractual interest payments that the Fund has not yet received. The Manager
will monitor the creditworthiness of counterparties to the Fund's interest rate
swap transactions on an ongoing basis.
As of September 30, 2006, the Fund had entered into the following interest rate
swap agreements:
UNREALIZED
SWAP NOTIONAL PAID BY RECEIVED BY TERMINATION APPRECIATION
COUNTERPARTY AMOUNT THE FUND THE FUND DATES (DEPRECIATION)
- --------------------------------------------------------------------------------------------------------------------
Barclays
Bank plc 114,700,000MXN MXN TIIE 9.2700% 7/17/26 $ 85,119
- --------------------------------------------------------------------------------------------------------------------
Citigroup Global
Markets Holdings,Inc.:
Six-Month
16,830,000PLZ WIBO 5.5200 3/24/10 187,395
Six-Month
26,928,000PLZ WIBO 5.5500 3/25/10 305,428
489,400,000TWD 2.3200% TWD-Telerate 6/27/11 (206,249)
- --------------------------------------------------------------------------------------------------------------------
Credit Suisse
First Boston, Inc. Six-Month
(Nassau Branch) 46,785,000PLZ WIBO 4.4800 7/1/10 (423,665)
- --------------------------------------------------------------------------------------------------------------------
Credit Suisse
First Boston 28-Day
International 112,580,000MXN MXN TIIE 10.0000 7/9/15 818,622
- --------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG:
11,050,000 Six-Month LIBOR 5.2500 6/23/15 1,104,466
2,387,000,000HUF 8.4400 Six-Month BUBOR 7/4/11 (832)
- --------------------------------------------------------------------------------------------------------------------
Deutsche Bank INR MIBOR-
AG, 5 yr. 490,200,000INR 7.1750 OIS-Compound 6/27/11 (84,280)
- --------------------------------------------------------------------------------------------------------------------
Goldman Sachs
Capital Markets LP:
21,965,083BRR BZDI 17.7200 1/2/07 126,168
38,987,000BRR BZDI 18.1600 1/2/08 1,327,539
187,935,994BRR BZDI 17.1800 1/2/08 4,095,559
94,500,000MXN MXN TIIE 10.2900 6/14/15 843,703
93,375,000MXN MXN TIIE 10.4300 5/29/15 892,279
93,375,000MXN MXN TIIE 10.3000 6/1/15 821,204
55,700,000MXN MXN TIIE 10.0000 6/24/15 397,009
120,050,000MXN MXN TIIE 10.2200 1/30/15 1,000,890
60 | OPPENHEIMER INTERNATIONAL BOND FUND
UNREALIZED
SWAP NOTIONAL PAID BY RECEIVED BY TERMINATION APPRECIATION
COUNTERPARTY AMOUNT THE FUND THE FUND DATES (DEPRECIATION)
- --------------------------------------------------------------------------------------------------------------------
Goldman Sachs
Group, Inc. (The):
17,037,427BRR BZDI 17.1700% 1/2/08 $ 328,476
20,823,527BRR BZDI 17.1700 1/2/08 401,471
27,880,000BRR BZDI 14.0500 1/2/12 (21,011)
46,968,000BRR BZDI 18.0000 1/2/07 404,744
38,800,000MXN MXN TIIE 8.7000 2/5/16 (23,576)
48,030,000MXN MXN TIIE 9.4100 8/31/20 145,362
61,200,000MXN MXN TIIE 10.8500 3/5/15 724,727
91,750,000MXN MXN TIIE 9.2900 7/17/26 10,401
96,930,000MXN MXN TIIE 9.5000 8/28/25 303,423
100,000,000MXN MXN TIIE 10.7500 5/8/15 1,153,478
109,710,000MXN MXN TIIE 10.7000 5/8/15 1,234,058
140,720,000MxN MXN TIIE 9.1500 8/27/26 (11,239)
144,000,000MXN MXN TIIE 9.5100 8/26/25 465,140
289,270,000MXN MXN TIIE 9.8400 12/31/09 1,417,389
- --------------------------------------------------------------------------------------------------------------------
JPMorgan
Chase Bank:
55,370,000BRR BZDI 13.9100 1/2/12 (156,922)
114,500,000MXN MXN TIIE 9.7600 8/17/15 653,781
264,090,000ZAR 8.2900% Three-Month JIBA 6/23/08 396,788
- --------------------------------------------------------------------------------------------------------------------
Lehman Brothers
Special Financing. Inc.:
102,585,000GBP 5.2500 Six-Month LIBOR 5/21/09 (487,726)
28-Day
111,440,000MXN MXN TIIE 9.9900 7/9/15 784,058
Six-Month
55,540,000PLZ WIBO 4.5300 7/5/10 (497,496)
- --------------------------------------------------------------------------------------------------------------------
Merrill Lynch Three-Month
& Co., Inc. 574,160,000SEK STIBOR-SIDE 4.0325 6/19/12 373,765
- --------------------------------------------------------------------------------------------------------------------
Morgan Stanley
Capital Services, Inc.:
24,054,685BRR BZDI 16.8800 1/2/08 359,739
41,775,000BRR BZDI 17.5900 1/2/07 310,244
- --------------------------------------------------------------------------------------------------------------------
Santander
Central Hispano 27,880,000BRR BZDI 14.0000 1/2/12 (35,778)
- --------------------------------------------------------------------------------------------------------------------
UBS AG 505,750,000NOK 4.2200 Six-Month NIBOR 2/6/12 863,012
- --------------------------------------------------------------------------------------------------------------------
WestPac
Banking Corp. 68,660,000NZD 6.7500 Six-Month BBR 6/29/16 (413,616)
-------------
$ 19,973,047
=============
61 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
9. INTEREST RATE SWAP CONTRACTS Continued
Notional amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
BRR Brazilian Real
GBP British Pound Sterling
HUF Hungarian Forint
INR Indian Rupee
MXN Mexican Nuevo Peso
NOK Norwegian Krone
NZD New Zealand Dollar
PLZ Polish Zloty
SEK Swedish Krone
TWD New Taiwan Dollar
ZAR South African Rand
Index abbreviations are as follows:
BBR Bank Bill Rate
BUBOR Budapest Interbank Offered Rate
BZDI Brazil Cetip Interbank Deposit Rate
FRAS French Franc/Austrian Schilling
IRS India Swap Composites
JIBA South Africa Johannesburg Interbank Agreed Rate
LIBOR London-Interbank Offered Rate
MIBOR-OIS Mid Market Interest Rate for FRAS and IRS-Overnight Indexed Swap
MXN TIIE Mexican Peso-Interbank Equilibrium Interest Rate
NIBOR Norwegian Interbank Offered Rate
STIBOR Stockholm Interbank Offered Rate
WIBO Poland Warsaw Interbank Offer Bid Rate
- --------------------------------------------------------------------------------
10. CREDIT DEFAULT SWAP CONTRACTS
Credit default swaps are designed to transfer the credit exposure of fixed
income products between counterparties. The Fund may enter into credit default
swaps, both directly ("unfunded swaps") and indirectly in the form of a swap
embedded within a structured note ("funded swaps"), to protect against the risk
that a security will default. Unfunded and funded credit default swaps may be on
a single security, or a basket of securities. The Fund may take a short position
(purchaser of credit protection) or a long position (seller of credit
protection) in the credit default swap. Risks of credit default swaps include,
but are not limited to, the cost of paying for credit protection if there are no
credit events, pricing transparency when assessing the cost of a credit default
swap, counterparty risk, and the need to fund the delivery obligation (either
cash or defaulted bonds depending on whether the Fund is long or short the swap,
respectively).
The Fund would take a short position in a credit default swap (the
"unfunded swap") against a long portfolio position to decrease exposure to
specific high yield issuers. As a purchaser of credit protection under a swap
contract, the Fund pays a periodic interest fee on the notional amount to the
counterparty. This interest fee is accrued daily as a component of unrealized
appreciation (depreciation) and is recorded as realized loss upon payment. Upon
occurrence of a specific credit event with respect to the
62 | OPPENHEIMER INTERNATIONAL BOND FUND
underlying referenced debt obligation, the Fund is obligated to deliver that
security to the counterparty in exchange for receipt of the notional amount from
the counterparty. The difference between the value of the security delivered and
the notional amount received is recorded as realized gain and is included on the
Statement of Operations. Credit default swaps are marked to market daily using
different sources, including quotations from counterparties, pricing services,
brokers or market makers. The unrealized appreciation (depreciation) related to
the change in the valuation of the notional amount of the swap is combined with
the amount due to (owed by) the Fund at termination or settlement and disclosed
separately on the Statement of Assets and Liabilities. The net change in this
amount is included on the Statement of Operations.
Information regarding such credit default swaps as of September 30, 2006 is as
follows:
ANNUAL
NOTIONAL AMOUNT INTEREST
REFERENCED RECEIVED BY THE RATE PAID UNREALIZED
DEBT FUND UPON BY THE EXPIRATION APPRECIATION
COUNTERPARTY OBLIGATION CREDIT EVENT FUND DATES (DEPRECIATION)
- -------------------------------------------------------------------------------------------------------------------
Citigroup Global
Markets Holdings,
Inc.:
Hungary (Republic of) $ 7,535,000 0.4000% 12/20/15 $ 107,231
Mexico (Government of) 7,770,000 0.6475 1/20/11 (58,962)
- -------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG:
Philippines
(Republic of the) 14,000,000 3.6900 9/20/15 (705,880)
Ukraine (Republic of) 4,075,000 1.8800 3/20/11 (4,490)
- -------------------------------------------------------------------------------------------------------------------
JPMorgan
Chase Bank Russian Federation 550,000 2.4000 10/9/13 (60,934)
- -------------------------------------------------------------------------------------------------------------------
Merrill Lynch
& Co., Inc.:
Argentina
(Republic of) 10,000,000 2.6000 8/20/11 (36,775)
Philippines
(Republic of the) 18,720,000 1.7250 12/20/11 (18,000)
- -------------------------------------------------------------------------------------------------------------------
Morgan Stanley
Capital Services,
Inc.:
Colombia (Republic of) 1,980,000 3.7000 8/20/15 (212,844)
Dominican Republic 7,970,000 3.2500 6/20/11 (498,645)
Indonesia (Republic of) 4,900,000 1.6800 3/20/11 (61,017)
Venezuela (Republic of) 8,435,000 2.2000 5/20/10 (326,114)
Venezuela (Republic of) 4,415,000 3.4800 11/20/15 (354,220)
-------------
$ (2,230,650)
=============
The Fund would take a long position in the credit default swap note (the "funded
swap") to increase the exposure to specific high yield corporate issuers. As a
seller of credit protection under a swap contract, the Fund receives a periodic
interest fee on the notional
63 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
10. CREDIT DEFAULT SWAP CONTRACTS Continued
amount from the counterparty. This interest fee is accrued daily as a component
of unrealized appreciation (depreciation) and is recorded as realized gain upon
receipt. Upon occurrence of a specific credit event with respect to the
underlying referenced debt obligation, the Fund receives that security from the
counterparty in exchange for payment of the notional amount to the counterparty.
The difference between the value of the security received and the notional
amount paid is recorded as realized loss and is included on the Statement of
Operations. Credit default swaps are marked to market daily using different
sources, including quotations from counterparties, pricing services, brokers or
market makers. The unrealized appreciation (depreciation) related to the change
in the valuation of the notional amount of the swap is combined with the amount
due to (owed by) the Fund at termination or settlement and disclosed separately
on the Statement of Assets and Liabilities. The net change in this amount is
included on the Statement of Operations.
Information regarding such credit default swaps as of September 30, 2006 is as
follows:
ANNUAL
NOTIONAL AMOUNT INTEREST
REFERENCED PAID BY THE RATE RECEIVED UNREALIZED
DEBT FUND UPON BY THE EXPIRATION APPRECIATION
COUNTERPARTY OBLIGATION CREDIT EVENT FUND DATES (DEPRECIATION)
- -------------------------------------------------------------------------------------------------------------------
Citigroup Global
Markets Holdings,
Inc. Russian Federation $ 7,770,000 0.6475% 1/20/11 $ 47,497
- -------------------------------------------------------------------------------------------------------------------
JPMorgan
Chase Bank Ukraine (Republic of) 1,056,000 1.9200 8/20/11 3,988
- -------------------------------------------------------------------------------------------------------------------
Morgan Stanley
Capital Services, Inc.:
Indonesia (Republic of) 4,900,000 1.6700 6/20/11 45,062
Istanbul Bond Co. SA
for Finansbank 17,390,000 1.3000 3/24/13 (580,734)
- -------------------------------------------------------------------------------------------------------------------
Lehman Brothers
Special Financing, Inc.:
Argentina (Republic of) 5,000,000 2.5500 9/20/11 (21,381)
Brazil
(Federal Republic of) 5,000,000 2.0000 9/20/16 (27,308)
Colombia (Republic of) 5,000,000 2.1100 9/20/16 (37,423)
Panama (Republic of) 5,000,000 1.7800 9/20/16 (14,695)
Philippines
(Republic of the) 5,000,000 2.4700 9/20/16 16,558
------------
$ (568,436)
============
- --------------------------------------------------------------------------------
11. SWAPTION TRANSACTIONS
The Fund may enter into a swaption transaction, whereby a contract that grants
the holder, in return for payment of the purchase price (the "premium") of the
option, the right, but not the obligation, to enter into an interest rate swap
at a preset rate within a
64 | OPPENHEIMER INTERNATIONAL BOND FUND
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. The Fund generally will incur a greater risk when it
writes a swaption than when it purchases a swaption. When the Fund purchases a
swaption it risks losing only the amount of the premium they have paid should
the Manager decide to let the option expire unexercised. When the Fund writes a
swaption it will become obligated, upon exercise of the option, according to the
terms of the underlying agreement. Swaptions written are reported as a liability
in the Statement of Assets and Liabilities.
Written swaption activity for the year ended September 30, 2006 was as follows:
CALL SWAPTIONS
-----------------------------------
NOTIONAL AMOUNT OF
AMOUNT PREMIUMS
- -------------------------------------------------------------------------------
Swaptions outstanding as of
September 30, 2005 $ 61,360,000 $ 251,576
Swaptions written 124,200,000 138,106
Swaptions closed or expired (185,560,000) (389,682)
-----------------------------------
Swaptions outstanding as of
September 30, 2006 $ -- $ --
===================================
- --------------------------------------------------------------------------------
12. ILLIQUID OR RESTRICTED SECURITIES AND CURRENCY
As of September 30, 2006, 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.
Securities that are illiquid or restricted are marked with the applicable
footnote on the Statement of Investments. Information concerning restricted
currency is as follows:
ACQUISITION VALUATION AS OF UNREALIZED
CURRENCY DATES COST SEPT. 30, 2006 DEPRECIATION
- --------------------------------------------------------------------------------------
Argentine Peso (ARP) 6/21/06-9/30/06 $ 2,749,057 $ 2,736,749 $ 12,308
- --------------------------------------------------------------------------------
13. 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
securities, letters of credit or cash, against the loaned securities and
maintains collateral in an amount not less than 100% of
65 | OPPENHEIMER INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
13. SECURITIES LENDING Continued
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
each day. If the Fund is undercollateralized at the close of business due to an
increase in market value of securities on loan, additional collateral is
requested from the borrowing counterparty and is delivered to the Fund on the
next business day. Cash collateral may be invested in approved investments and
the Fund bears the risk of any loss in value of these investments. The Fund
retains a portion of the interest earned from the collateral. 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. The Fund continues to
receive the economic benefit of interest or dividends paid on the securities
loaned in the form of a substitute payment received from the borrower. As of
September 30, 2006, the Fund had on loan securities valued at $946,481,870,
which are included in the Statement of Assets and Liabilities as "Investments,
at value" and, when applicable, as "Receivable for Investments sold." Collateral
of $957,213,764 was received for the loans, of which $820,202,685 was received
in cash and subsequently invested in approved investments or held as cash.
- --------------------------------------------------------------------------------
14. RECENT ACCOUNTING PRONOUNCEMENTS
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Fund's tax returns to determine whether it
is "more-likely-than-not" that tax positions taken in the Fund's tax return will
be ultimately sustained. A tax liability and expense must be recorded in respect
of any tax position that, in Management's judgment, will not be fully realized.
FIN 48 is effective for fiscal years beginning after December 15, 2006. As of
September 30, 2006, the Manager is evaluating the implications of FIN 48. Its
impact in the Fund's financial statements has not yet been determined.
In September 2006, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 157, FAIR VALUE
MEASUREMENTS. This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and expands
disclosures about fair value measurements. SFAS No. 157 applies to fair value
measurements already required or permitted by existing standards. SFAS No. 157
is effective for financial statements issued for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years. As of September
30, 2006, the Manager does not believe the adoption of SFAS No. 157 will
materially impact the financial statement amounts; however, additional
disclosures may be required about the inputs used to develop the measurements
and the effect of certain of the measurements on changes in net assets for the
period.
66 | OPPENHEIMER INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
15. LITIGATION
A consolidated amended complaint was filed as a putative class action against
the Manager and the Transfer Agent and other defendants (including 51 of the
Oppenheimer funds including the Fund) in the U.S. District Court for the
Southern District of New York on January 10, 2005 and was amended on March 4,
2005. The complaint alleged, among other things, that the Manager charged
excessive fees for distribution and other costs, and that by permitting and/or
participating in those actions, the Directors/Trustees and the Officers of the
funds breached their fiduciary duties to fund shareholders under the Investment
Company Act of 1940 and at common law. The plaintiffs sought unspecified
damages, an accounting of all fees paid, and an award of attorneys' fees and
litigation expenses.
In response to the defendants' motions to dismiss the suit, seven of the
eight counts in the complaint, including the claims against certain of the
Oppenheimer funds, as nominal defendants, and against certain present and former
Directors, Trustees and Officers of the funds, and the Distributor, as
defendants, were dismissed with prejudice, by court order dated March 10, 2006,
and the remaining count against the Manager and the Transfer Agent was dismissed
with prejudice by court order dated April 5, 2006. The plaintiffs filed an
appeal of those dismissals on May 11, 2006.
The Manager believes that the allegations contained in the complaint are
without merit and that there are substantial grounds to sustain the district
court's rulings. The Manager also believes that it is premature to render any
opinion as to the likelihood of an outcome unfavorable to it, the funds, the
Directors/Trustees or the Officers on the appeal of the decisions of the
district court, and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss.
67 | 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, 2006, 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 each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with 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.
The Fund is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audit includes consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of September 30, 2006, by correspondence with the
custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. 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, 2006, 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 each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Denver, Colorado
November 15, 2006
68 | OPPENHEIMER INTERNATIONAL BOND FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2007, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2006. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Capital gain distributions of $0.0236 per share were paid to Class A,
Class B, Class C, Class N and Class Y shareholders, respectively, on December
29, 2005. Whether received in stock or in cash, the capital gain distribution
should be treated by shareholders as a gain from the sale of the capital assets
held for more than one year (long-term capital gains).
None of the dividends paid by the Fund during the fiscal year ended
September 30, 2006 are eligible for the corporate dividend-received deduction.
A portion, if any, of the dividends paid by the Fund during the fiscal
year ended September 30, 2006 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. $1,917,430 of the Fund's fiscal year taxable income may be eligible
for the lower individual income tax rates. In early 2007, shareholders of record
will receive information regarding the percentage of distributions that are
eligible for lower individual income tax rates.
Recent tax legislation allows a regulated investment company to designate
distributions not designated as capital gain distributions, as either interest
related dividends or short-term capital gain dividends, both of which are exempt
from the U.S. withholding tax applicable to non U.S. taxpayers. For the fiscal
year ended September 30, 2006, $32,380,690 or 12.53% of the ordinary
distributions paid by the Fund qualifies as an interest related dividend.
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.
69 | 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 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 voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in the Form N-PX filing 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
http://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.
70 | OPPENHEIMER INTERNATIONAL BOND FUND
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER
FUND, LENGTH OF SERVICE, AGE TRUSTEESHIPS/DIRECTORSHIPS HELD; NUMBER OF PORTFOLIOS IN THE FUND
COMPLEX CURRENTLY OVERSEEN
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY,
TRUSTEES CENTENNIAL, COLORADO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE
TERM, OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
WILLIAM L. ARMSTRONG, President, Colorado Christian University (since 2006); Chairman of the
Chairman of the Board following private mortgage banking companies: Cherry Creek Mortgage
of Trustees (since 2003), Company (since 1991), Centennial State Mortgage Company (since 1994),
Trustee (since 1999) and The El Paso Mortgage Company (since 1993); Chairman of the
Age: 69 following private companies: Ambassador Media Corporation (since 1984)
and Broadway Ventures (since 1984); Director of the following:
Helmerich & Payne, Inc. (oil and gas drilling/production company)
(since 1992), Campus Crusade for Christ (since 1991) and The Lynde and
Harry Bradley Foundation, Inc. (non-profit organization) (since
2002); former Chairman of the following: Transland Financial Services,
Inc. (private mortgage banking company) (1997-2003), Great Frontier
Insurance (insurance agency) (1995-2000), Frontier Real Estate, Inc.
(residential real estate brokerage) (1994-2000) and Frontier Title
(title insurance agency) (1995-2000); former Director of the
following: UNUMProvident (insurance company) (1991-2004), Storage
Technology Corporation (computer equipment company) (1991-2003) and
International Family Entertainment (television channel) (1992-1997);
U.S. Senator (January 1979-January 1991). Oversees 37 portfolios in
the OppenheimerFunds complex.
ROBERT G. AVIS, Director and President of A.G. Edwards Capital, Inc. (General Partner
Trustee (since 1995) of private equity funds) (until February 2001); Chairman, President
Age: 75 and Chief Executive Officer of A.G. Edwards Capital, Inc. (until March
2000); Director of A.G. Edwards & Sons, Inc. (brokerage company)
(until 2000) and A.G. Edwards Trust Company (investment adviser)
(until 2000); Vice Chairman and Director of A.G. Edwards, Inc. (until
March 1999); Vice Chairman of A.G. Edwards & Sons, Inc. (until March
1999); Chairman of A.G. Edwards Trust Company (until March 1999) and
A.G.E. Asset Management (investment adviser) (until March 1999).
Oversees 37 portfolios in the OppenheimerFunds complex.
GEORGE C. BOWEN, Assistant Secretary and Director of Centennial Asset Management
Trustee (since 1998) Corporation (December 1991-April 1999); President, Treasurer and
Age: 70 Director of Centennial Capital Corporation (June 1989-April 1999);
Chief Executive Officer and Director of MultiSource Services, Inc.
(March 1996-April 1999); Mr. Bowen held several positions with the
Manager and with subsidiary or affiliated companies of the Manager
(September 1987-April 1999). Oversees 37 portfolios in the
OppenheimerFunds complex.
EDWARD L. CAMERON, Member of The Life Guard of Mount Vernon (George Washington historical
Trustee (since 1999) site) (since June 2000); Director of Genetic ID, Inc. (biotech
Age: 68 company) (March 2001-May 2002); Partner at PricewaterhouseCoopers LLP
(accounting firm) (July 1974-June 1999); Chairman of Price Waterhouse
LLP Global Investment Management Industry Services Group (accounting
firm) (July 1994-June 1998). Oversees 37 portfolios in the
OppenheimerFunds complex.
71 | OPPENHEIMER INTERNATIONAL BOND FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
JON S. FOSSEL, Director of UNUMProvident (insurance company) (since June 2002);
Trustee (since 1995) Director of Northwestern Energy Corp. (public utility corporation)
Age: 64 (since November 2004); Director of P.R. Pharmaceuticals (October
1999-October 2003); Director of Rocky Mountain Elk Foundation
(non-profit organization) (February 1998-February 2003 and since
February 2005); Chairman and Director (until October 1996) and
President and Chief Executive Officer (until October 1995) of the
Manager; President, Chief Executive Officer and Director of the
following: Oppenheimer Acquisition Corp. ("OAC") (parent holding
company of the Manager), Shareholders Services, Inc. and Shareholder
Financial Services, Inc. (until October 1995). Oversees 37 portfolios
in the OppenheimerFunds complex.
SAM FREEDMAN, Director of Colorado UpLIFT (charitable organization) (since September
Trustee (since 1996) 1984). Mr. Freedman held several positions with the Manager and with
Age: 66 subsidiary or affiliated companies of the Manager (until October
1994). Oversees 37 portfolios in the OppenheimerFunds complex.
BEVERLY L. HAMILTON, Trustee of Monterey Institute for International Studies (educational
Trustee (since 2002) organization) (since February 2000); Board Member of Middlebury
Age: 60 College (educational organization) (since December 2005); Director
of The California Endowment (philanthropic organization) (since April
2002); Director (February 2002-2005) and Chairman of Trustees (since
2006) of the Community Hospital of Monterey Peninsula; Director
(October 1991-2005) and Vice Chairman (since 2006) of American Funds'
Emerging Markets Growth Fund, Inc. (mutual fund); President of ARCO
Investment Management Company (February 1991-April 2000); Member of
the investment committees of The Rockefeller Foundation (since 2001)
and The University of Michigan (since 2000); Advisor at Credit Suisse
First Boston's Sprout venture capital unit (venture capital fund)
(1994-January 2005); Trustee of MassMutual Institutional Funds
(investment company) (1996-June 2004); Trustee of MML Series
Investment Fund (investment company) (April 1989-June 2004); Member of
the investment committee of Hartford Hospital (2000-2003); and Advisor
to Unilever (Holland) pension fund (2000-2003). Oversees 37 portfolios
in the OppenheimerFunds complex.
ROBERT J. MALONE, Director of Jones International University (educational organization)
Trustee (since 2002) (since August 2005); Chairman, Chief Executive Officer and Director of
Age: 62 Steele Street State Bank (commercial banking) (since August 2003);
Director of Colorado UpLIFT (charitable organization) (since 1986);
Trustee of the Gallagher Family Foundation (non-profit organization)
(since 2000); Former Chairman of U.S. Bank-Colorado (subsidiary of
U.S. Bancorp and formerly Colorado National Bank) (July 1996-April
1999); Director of Commercial Assets, Inc. (real estate investment
trust) (1993-2000); Director of Jones Knowledge, Inc. (2001-July
2004); and Director of U.S. Exploration, Inc. (oil and gas
exploration) (1997-February 2004). Oversees 37 portfolios in the
OppenheimerFunds complex.
F. WILLIAM MARSHALL, JR., Trustee of MassMutual Select Funds (formerly MassMutual Institutional
Trustee (since 2000) Funds) (investment company) (since 1996) and MML Series Investment
Age: 64 Fund (investment company) (since 1996); Trustee (since 1987) and
Chairman (1994-2005) of the Investment Committee of the Worcester
Polytech Institute (private university); President and Treasurer of
the SIS Funds (private charitable fund) (since January 1999); Chairman
of SIS & Family Bank, F.S.B. (formerly SIS Bank) (commercial bank)
(January 1999-July 1999); and Executive Vice President of Peoples
Heritage Financial Group, Inc. (commercial bank) (January 1999-July
1999). Oversees 39 portfolios in the OppenheimerFunds complex.
72 | OPPENHEIMER INTERNATIONAL BOND FUND
- ---------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY
AND OFFICER STREET, 11TH FLOOR, NEW YORK, NEW YORK 10281-1008. MR. MURPHY SERVES
AS A TRUSTEE FOR AN INDEFINITE TERM, OR UNTIL HIS RESIGNATION,
RETIREMENT, DEATH OR REMOVAL AND AS AN OFFICER FOR AN /INDEFINITE
TERM, OR UNTIL HIS RESIGNATION, RETIREMENT, DEATH OR REMOVAL. MR.
MURPHY IS AN INTERESTED TRUSTEE DUE TO HIS POSITIONS WITH
OPPENHEIMERFUNDS, INC. AND ITS AFFILIATES.
JOHN V. MURPHY, Chairman, Chief Executive Officer and Director (since June 2001) and
Trustee, President and President (since September 2000) of the Manager; President and
Principal Executive Officer director or trustee of other Oppenheimer funds; President and Director
(since 2001) of OAC and of Oppenheimer Partnership Holdings, Inc. (holding company
Age: 57 subsidiary of the Manager) (since July 2001); Director of
OppenheimerFunds Distributor, Inc. (subsidiary of the Manager) (since
November 2001); Chairman and Director of Shareholder Services, Inc.
and of Shareholder Financial Services, Inc. (transfer agent sub-
sidiaries of the Manager) (since July 2001); President and Director of
OppenheimerFunds Legacy Program (charitable trust program established
by the Manager) (since July 2001); 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 2001) and Director (since July 2001) of
Oppenheimer Real Asset Management, Inc.; Executive Vice President of
Massachusetts Mutual Life Insurance Company (OAC's parent company)
(since February 1997); Director of DLB Acquisition Corporation
(holding company parent of Babson Capital Management LLC) (since
June 1995); Member of the Investment Company Institute's Board of
Governors (since October 3, 2003); Chief Operating Officer of the
Manager (September 2000-June 2001); President and Trustee of MML
Series Investment Fund and MassMutual Select Funds (open-end
investment companies) (November 1999-November 2001); Director of C.M.
Life Insurance Company (September 1999-August 2000); President, Chief
Executive Officer and Director of MML Bay State Life Insurance Company
(September 1999-August 2000); Director of Emerald Isle Bancorp and
Hibernia Savings Bank (wholly-owned subsidiary of Emerald Isle
Bancorp) (June 1989-June 1998). Oversees 92 portfolios in the
OppenheimerFunds complex.
- ---------------------------------------------------------------------------------------------------------
OTHER OFFICERS THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR
OF THE FUND MESSRS. STEINMETZ, ZACK, GILLESPIE AND MS. BLOOMBERG, TWO WORLD
FINANCIAL CENTER, 225 LIBERTY STREET, NEW YORK, NEW YORK 10281-1008,
FOR MESSRS. VANDEHEY, WIXTED, PETERSEN, SZILAGYI AND MS. IVES, 6803 S.
TUCSON WAY, CENTENNIAL, COLORADO 80112-3924. EACH OFFICER SERVES FOR
AN INDEFINITE TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH
OR REMOVAL.
ARTHUR P. STEINMETZ, Senior Vice President of the Manager (since March 1993) and of
Vice President and Portfolio HarbourView Asset Management Corporation (since March 2000). An
Manager (since 1993) officer of 3 portfolios in the OppenheimerFunds complex.
Age: 47
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager
Vice President and Chief (since March 2004); Vice President of OppenheimerFunds Distributor,
Compliance Officer Inc., Centennial Asset Management Corporation and Shareholder
(since 2004) Services, Inc. (since June 1983); Vice President and Director of
Age: 56 Internal Audit of the Manager (1997-February 2004). An officer of 92
portfolios in the OppenheimerFunds complex.
73 | OPPENHEIMER INTERNATIONAL BOND FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999);
Treasurer and Principal Treasurer of the following: HarbourView Asset Management Corporation,
Financial and Accounting Shareholder Financial Services, Inc., Shareholder Services, Inc.,
Officer (since 1999) Oppenheimer Real Asset Management Corporation, and Oppenheimer
Age: 47 Partnership Holdings, Inc. (since March 1999), OFI Private
Investments, Inc. (since March 2000), OppenheimerFunds International
Ltd. and OppenheimerFunds plc (since May 2000), OFI Institutional
Asset Management, Inc. (since November 2000), and OppenheimerFunds
Legacy Program (since June 2003); Treasurer and Chief Financial
Officer of OFI Trust Company (trust company subsidiary of the Manager)
(since May 2000); Assistant Treasurer of the following: OAC (since
March 1999), Centennial Asset Management Corporation (March
1999-October 2003) and OppenheimerFunds Legacy Program (April
2000-June 2003); Principal and Chief Operating Officer of Bankers
Trust Company-Mutual Fund Services Division (March 1995-March 1999).
An officer of 92 portfolios in the OppenheimerFunds complex.
BRIAN S. PETERSEN, Assistant Vice President of the Manager (since August 2002);
Assistant Treasurer Manager/Financial Product Accounting of the Manager (November
(since 2004) 1998-July 2002). An officer of 92 portfolios in the OppenheimerFunds
Age: 36 complex.
BRIAN C. SZILAGYI, Assistant Vice President of the Manager (since July 2004); Director of
Assistant Treasurer Financial Reporting and Compliance of First Data Corporation (April
(since 2005) 2003-July 2004); Manager of Compliance of Berger Financial Group LLC
Age: 36 (May 2001-March 2003); Director of Mutual Fund Operations at American
Data Services, Inc. (September 2000-May 2001). An officer of 92
portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel
Vice President and Secretary (since March 2002) of the Manager; General Counsel and Director of the
(since 2001) Distributor (since December 2001); General Counsel of Centennial Asset
Age: 58 Management Corporation (since December 2001); Senior Vice President
and General Counsel of HarbourView Asset Management Corporation (since
December 2001); Secretary and General Counsel of OAC (since November
2001); Assistant Secretary (since September 1997) and Director (since
November 2001) of OppenheimerFunds International Ltd. and
OppenheimerFunds plc; Vice President and Director of Oppenheimer
Partnership Holdings, Inc. (since December 2002); Director of
Oppenheimer Real Asset Management, Inc. (since November 2001); Senior
Vice President, General Counsel and Director of Shareholder Financial
Services, Inc. and Shareholder Services, Inc. (since December 2001);
Senior Vice President, General Counsel and Director of OFI Private
Investments, Inc. and OFI Trust Company (since November 2001); Vice
President of OppenheimerFunds Legacy Program (since June 2003); Senior
Vice President and General Counsel of OFI Institutional Asset
Management, Inc. (since November 2001); Director of OppenheimerFunds
(Asia) Limited (since December 2003); 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 the following: Shareholder Services,
Inc. (May 1985-November 2001), Shareholder Financial Services, Inc.
(November 1989-November 2001), and OppenheimerFunds International Ltd.
(September 1997-November 2001). An officer of 92 portfolios in the
OppenheimerFunds complex.
74 | OPPENHEIMER INTERNATIONAL BOND FUND
LISA I. BLOOMBERG, Vice President and Associate Counsel of the Manager (since May 2004);
Assistant Secretary First Vice President (April 2001-April 2004), Associate General
(since 2004) Counsel (December 2000-April 2004), Corporate Vice President (May
Age: 38 1999-April 2001) and Assistant General Counsel (May 1999-December
2000) of UBS Financial Services Inc. (formerly, PaineWebber
Incorporated). An officer of 92 portfolios in the OppenheimerFunds
complex.
KATHLEEN T. IVES, Vice President (since June 1998) and Senior Counsel and Assistant
Assistant Secretary Secretary (since October 2003) of the Manager; Vice President (since
(since 2001) 1999) and Assistant Secretary (since October 2003) of the Distributor;
Age: 41 Assistant Secretary of Centennial Asset Management Corporation (since
October 2003); Vice President and Assistant Secretary of Shareholder
Services, Inc. (since 1999); Assistant Secretary of OppenheimerFunds
Legacy Program and Shareholder Financial Services, Inc. (since
December 2001); Assistant Counsel of the Manager (August 1994-October
2003). An officer of 92 portfolios in the OppenheimerFunds complex.
PHILLIP S. GILLESPIE, Senior Vice President and Deputy General Counsel of the Manager (since
Assistant Secretary September 2004); First Vice President (2000-September 2004), Director
(since 2004) (2000-September 2004) and Vice President (1998-2000) of Merrill Lynch
Age: 42 Investment Management. An officer of 92 portfolios in the
OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND OFFICERS AND IS AVAILABLE WITHOUT CHARGE, UPON
REQUEST, BY CALLING 1.800.525.7048.
75 | 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, are audit committee financial experts and that
Messrs. Cameron and Bowen are "independent" for purposes of this Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $36,000 in fiscal 2006 and $27,000 in fiscal 2005.
(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 $40,000 for fiscal 2006 and no such fees for fiscal 2005 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 services include: IRS private letter ruling.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees in fiscal 2006 and $6,667 in fiscal 2005to the
registrant.
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 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 services include: Audit of the tax provision for certain structured
instruments.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $9,757 in fiscal 2006 and no such fees in fiscal 2005.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years 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 include compliance review.
(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.
Under applicable laws, pre-approval of non-audit services maybe 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 $49,757 in fiscal 2006 and $6,667 in fiscal
2005 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) No such services were rendered.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's Governance Committee (the "Committee") will evaluate potential
Board candidates to assess their qualifications. The Committee shall have
the authority, upon approval of the Board, to retain an executive search
firm to assist in this effort. The Committee may consider recommendations
by business and personal contacts of current Board members and by
executive search firms which the Committee may engage from time to time
and may also consider shareholder recommendations. The Committee may
consider the advice and recommendation of the Funds' investment manager
and its affiliates in making the selection.
2. The Committee shall screen candidates for Board membership. The Committee
has not established specific qualifications that it believes must be met
by a trustee nominee. In evaluating trustee nominees, the Committee
considers, among other things, an individual's background, skills, and
experience; whether the individual is an "interested person" as defined in
the Investment Company Act of 1940; and whether the individual would be
deemed an "audit committee financial expert" within the meaning of
applicable SEC rules. The Committee also considers whether the
individual's background, skills, and experience will complement the
background, skills, and experience of other nominees and will contribute
to the Board. There are no differences in the manner in which the
Committee evaluates nominees for trustees based on whether the nominee is
recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the Board at
such times as the Committee meets to consider new nominees for the Board.
The Committee shall have the sole discretion to determine the candidates
to present to the Board and, in such cases where required, to
shareholders. Recommendations for trustee nominees should, at a minimum,
be accompanied by the following:
o the name, address, and business, educational, and/or other pertinent
background of the person being recommended;
o a statement concerning whether the person is an "interested person"
as defined in the Investment Company Act of 1940;
o any other information that the Funds would be required to include in
a proxy statement concerning the person if he or she was nominated;
and
o the name and address of the person submitting the recommendation
and, if that person is a shareholder, the period for which that
person held Fund shares.
The recommendation also can include any additional information which the
person submitting it believes would assist the Committee in evaluating the
recommendation.
4. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company (the parent company of the
Funds' investment adviser) would be deemed an "interested person" under
the Investment Company Act of 1940. In addition, certain other
relationships with Massachusetts Mutual Life Insurance Company or its
subsidiaries, with registered broker-dealers, or with the Funds' outside
legal counsel may cause a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a trustee,
Committee members and other directors customarily interview the individual
in person. In addition, the individual customarily is asked to complete a
detailed questionnaire which is designed to elicit information which must
be disclosed under SEC and stock exchange rules and to determine whether
the individual is subject to any statutory disqualification from serving
as a trustee of a registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the registrant's disclosure controls and procedures
(as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR
270.30a-3(c)) as of 08/31/2006, the registrant's principal executive officer and
principal financial officer found the registrant's disclosure controls and
procedures to provide reasonable assurances that information required to be
disclosed by the 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.
There have been no changes in the registrant's internal controls over financial
reporting that occurred during the registrant's second fiscal quarter of the
period covered by this
report that have materially affected, or are reasonably likely to materially
affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) (1) Exhibit attached hereto.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Exhibit attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Oppenheimer International Bond Fund
By: /S/ JOHN V. MURPHY
----------------------------
John V. Murphy
Principal Executive Officer
Date: 11/15/2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /S/ JOHN V. MURPHY
----------------------------
John V. Murphy
Principal Executive Officer
Date: 11/15/2006
By: /S/ BRIAN W. WIXTED
----------------------------
Brian W. Wixted
Principal Financial Officer
Date: 11/15/2006