-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Cen1rfIdBY+1Z+TJGNU0d6Kx7Ke+kPu/8uaNi1PksP04M6QzKWSR1OHZL15AOf8u +dkhUdP0CiQBLnC61QXO9Q== 0000912057-99-007453.txt : 19991129 0000912057-99-007453.hdr.sgml : 19991129 ACCESSION NUMBER: 0000912057-99-007453 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991126 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER INTERNATIONAL BOND FUND CENTRAL INDEX KEY: 0000939800 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07255 FILM NUMBER: 99764615 BUSINESS ADDRESS: STREET 1: 6803 S TUCSON WAY CITY: ENGLEWOOD STATE: CO ZIP: 80112 BUSINESS PHONE: 3036713200 MAIL ADDRESS: STREET 1: 3410 SOUTH GALENA STREET CITY: DENVER STATE: CO ZIP: 80231 N-30D 1 N-30D [PHOTO] Annual Report September 30, 1999 Oppenheimer INTERNATIONAL BOND FUND [LOGO] OPPENHEIMERFUNDS-Registered Trademark- The Right Way To Invest - -------------------------------------------------------------------------------- REPORT HIGHLIGHTS - -------------------------------------------------------------------------------- CONTENTS 1 President's Letter 3 An Interview with your Fund's Manager 8 Fund Performance 14 FINANCIAL STATEMENTS 41 INDEPENDENT AUDITORS' REPORT 42 Federal Income Tax Information 43 Officers and Trustees 44 OppenheimerFunds Family DECLINING BOND PRICES IN THE WAKE OF 1998'S GLOBAL FINANCIAL CRISIS were only partially offset by stable-to-rising bond prices so far in 1999. We believe that higher yielding bonds--SUCH AS EMERGING MARKETS DEBT AND LOWER RATED, INVESTMENT-GRADE SECURITIES--currently offer attractive values in the international fixed income markets. As bond prices continue to recover from the effects of last year's financial crisis, WE ARE OPTIMISTIC ABOUT THE POTENTIAL FOR CAPITAL APPRECIATION.
- --------------------------------------- AVERAGE ANNUAL TOTAL RETURNS For the 1-Year Period Ended 9/30/99 * CLASS A Without Sales Chg. With Sales Chg. - --------------------------------------- 10.58% 5.33% CLASS B Without Sales Chg. With Sales Chg. - --------------------------------------- 9.79% 4.90% CLASS C Without Sales Chg. With Sales Chg. - --------------------------------------- 9.80% 8.82% - ---------------------------------------
------------------ NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE ------------------ * See page 12 for further details. - -------------------------------------------------------------------------------- PRESIDENT'S LETTER - -------------------------------------------------------------------------------- [PHOTO] JAMES C. SWAIN Chairman Oppenheimer International Bond Fund BRIDGET A. MACASKILL President Oppenheimer International Bond Fund DEAR SHAREHOLDER, In many ways, the 1999 investment environment has, so far, unfolded as many expected it would, producing both attractive opportunities and formidable challenges for investors. On the economic front, early worries about the effects of global weakness in the wake of last year's credit and currency crises have abated. Instead, as many economies around the world begin to strengthen, concerns now center around whether the U.S. economy may be growing too quickly. Throughout the year, consumers in the United States have continued to spend and borrow heavily, more than offsetting any temporary slowdown in the industrial and export sectors. The economy's strength has not gone unnoticed by the nation's monetary policymakers. In an effort to ward off emerging inflationary pressures, the Federal Reserve Board increased short-term interest rates this past summer. Market reaction to robust economic growth has been mixed. The U.S. bond market has generally declined, as fixed income investors became increasingly concerned about the effects of rising interest rates. In the stock market, the performance of large-capitalization growth stocks, which has driven the market's advance over the past few years, has begun to moderate, and many previously out-of-favor value-oriented mid-cap and small-cap stocks have rallied. At the same time, a healthy percentage of actively managed, diversified portfolios have once again begun to outperform unmanaged stock indices such as Standard & Poor's 500. 1 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- PRESIDENT'S LETTER - -------------------------------------------------------------------------------- At OppenheimerFunds, we applaud the Fed's pre-emptive strike against inflation. In our view, history has repeatedly demonstrated that most financial assets do best in a low-inflation environment. What's more, we believe that the move to higher interest rates should be temporary. One recent development IS quite troublesome to us however: the increasing popularity of "day trading" among individuals seeking to make fast money in a volatile stock market. In our opinion, day trading is not investing, it is gambling. Experience proves that without extensive research and analysis, attempting to time short-term price swings is a fool's errand. Instead, we continue to encourage investors to maintain a long-term perspective that is measured in years, not days. Finally, while we remain alert to the potential impact of the Y2K issue, we are encouraged by the progress made in addressing the matter. At OppenheimerFunds, our shareholder accounting systems are already Y2K compliant, and we have successfully participated in all required industrywide tests. We intend to continue retesting our systems in order to help further protect against any potential problems. After all, whether in our computer accounting systems or the financial markets, managing risk is an important part of what makes OppenheimerFunds THE RIGHT WAY TO INVEST. Sincerely, /s/ James C. Swain /s/ Bridget A. Macaskill James C. Swain Bridget A. Macaskill October 21, 1999 2 OPPENHEIMER INTERNATIONAL BOND FUND AN INTERVIEW WITH YOUR FUND'S MANAGER [PHOTO] PORTFOLIO MANAGEMENT TEAM (L TO R) Art Steinmetz (Portfolio Manager) David Negri Q.HOW DID OPPENHEIMER INTERNATIONAL BOND FUND PERFORM DURING THE ONE-YEAR PERIOD THAT ENDED SEPTEMBER 30, 1999? A. Given very challenging conditions in the world's fixed income markets, we are pleased with the Fund's performance over the past year. Poor market performance in the wake of last year's currency and credit crises in the emerging markets was only partially offset by greater market stability in 1999. The Fund's Class A shares were ranked 1 of 55 among international income funds for the one-year period ended September 30, 1999, as ranked by Lipper Analytical Services.(1) HOW WOULD YOU CHARACTERIZE THE INVESTMENT ENVIRONMENT OVER THE PAST YEAR?(2) The international bond markets have been highly volatile, especially in the emerging markets of Asia, Latin America and Eastern Europe. When the reporting period began on October 1, 1998, we were in the midst of the global financial crisis, which had spread from Asia to Russia, and was threatening Latin America. What's more, the bond markets were further unsettled by problems experienced by a number of hedge funds during the summer of 1998. These large, highly leveraged, private investment companies were forced to sell large amounts of bonds into an already troubled market, causing many bond prices to plummet. 1. Source: Lipper Analytical Services, Inc., 9/30/99. See page 12 for further details. 2. Investing in foreign bonds entails higher expenses and risks, such as foreign currency fluctuations. Investing in junk bonds carries greater risk of volatility and default. 3 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- AN INTERVIEW WITH YOUR FUND'S MANAGER - -------------------------------------------------------------------------------- "YIELD SPREADS HAVE NEVER BEEN MUCH WIDER THAN THEY ARE TODAY, DESPITE THE FACT THAT THERE ARE INDIVIDUAL GOVERNMENTS AND COMPANIES THAT ARE FISCALLY STRONG." In 1999, both the global financial crisis and hedge fund problems have appeared to ease. Signs began to emerge early in the year that troubled emerging market economies were stabilizing, and bond prices began to rise from depressed levels. However, we have not yet seen enough evidence that those economies have truly recovered. As a result of continuing economic weakness, bond prices in local currency terms have not yet rebounded enough to retrace all of their previous declines. On average, international bond issuers have been earning their coupon rates so far in 1999. HOW HAVE THE VARIOUS EMERGING MARKETS IN WHICH THE FUND INVESTS FARED OVER THE PAST YEAR? Just as Southeast Asian economies were the first to succumb to the global credit and currency crisis, they have also been the first to start to recover. Many of these emerging nations have begun to implement the reforms necessary to strengthen their troubled banking and financial systems. As a result, overseas investors have become more comfortable committing capital to the region, and greater liquidity has helped these markets rally. We've also seen signs of stabilization in certain areas of Eastern Europe. Although Russia remains mired in the problems that led to default on its government debt during the summer of 1998, other nations in the region have enjoyed stronger economic conditions. For example, our investments in Turkey have performed quite well. Latin America was the last region to catch the so-called "Asian contagion," and remains in recession. However, we expect Latin American bond markets to recover when economic conditions there improve. 4 OPPENHEIMER INTERNATIONAL BOND FUND HOW HAVE FIXED INCOME MARKETS FARED IN THE DEVELOPED REGIONS? The Japanese bond market has ranked among the top performers over the past year. This is especially true for U.S. investors, who benefited from a strengthening of the Japanese yen relative to the U.S. dollar. While the Japanese economy has remained in recession, the government appears to be serious about implementing long-awaited financial reforms. As a result, investors took advantage of attractive values in Japanese bonds based on the not-yet-realized expectation that the recession will end. On the other hand, European bond markets have generally languished amid slower-than-expected economic growth. Returns for U.S. investors from European bonds have suffered because of the weakening of Europe's new currency, the euro, relative to the U.S. dollar. HOW WAS THE FUND MANAGED IN THIS ENVIRONMENT? We have continued to emphasize emerging market debt over bonds from the developed markets. Within the emerging markets, we have focused on Southeast Asia, where we have identified attractive currency and bond values in the wake of the global financial crisis. As these securities and currencies rebound from depressed levels, we expect the Fund to benefit. By the same token, we have de-emphasized investments in Latin American markets. In our view, these economies may be slow to recover. While attractive values in Latin American bonds and currencies exist, higher U.S. interest rates are likely to adversely affect bond prices there. Therefore, we do not yet believe that the time is right to increase our exposure to this region. We have also maintained a relatively low exposure to Japanese bonds. In hindsight, a larger position would have helped the Fund benefit from the strengthening of the Japanese yen. From a fundamental investment standpoint, however, we believe that other areas of the world currently offer better potential. 5 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- AN INTERVIEW WITH YOUR FUND'S MANAGER - --------------------------------------------------------------------------------
- -------------------------------- AVERAGE ANNUAL TOTAL RETURNS For the Periods Ended 9/30/99(3) CLASS A Since 1 year Inception - -------------------------------- 5.33% 5.95% CLASS B Since 1 year Inception - -------------------------------- 4.90% 6.01% CLASS C Since 1 year Inception - -------------------------------- 8.82% 6.33% - -------------------------------- STANDARDIZED YIELDS(4) For the 30 Days Ended 9/30/99 - -------------------------------- CLASS A 15.42% - -------------------------------- CLASS B 15.43 - -------------------------------- CLASS C 15.43 - --------------------------------
After de-emphasizing the developed markets of Europe for most of the reporting period, we recently began to increase our exposure to European bonds and the euro. That's because we expect European economic growth to accelerate relative to U.S. growth, which should produce currency-related gains. WHERE ARE YOU CURRENTLY FINDING THE MOST ATTRACTIVE VALUES IN INTERNATIONAL BONDS? In our opinion, the most attractive values can be found in the higher yielding sectors of the fixed income markets. This includes securities that offer higher income payments as an incentive for investors to accept their higher risk, such as emerging market debt. Emerging market bonds have offered yields at the high end of their range relative to developed market bonds, providing the potential for capital appreciation. Although we have not yet seen that potential realized, we believe that it will occur when and if investors become convinced that economic recovery is truly underway. We have also found attractive opportunities in investment-grade bonds rated below the triple-A rated range. Double-A and single-A credits have offered significantly higher yields than their triple-A rated counterparts, providing both highly competitive income payments and the potential for capital appreciation as these yield differences moderate. For example, despite their implicit government backing, German mortgage-backed securities recently provided yields about 50 percentage points greater than direct obligations of the German government. Historically, the average yield difference has been just 15 percentage points. 3. See page 12 for further details. 4. Standardized yield is based on net investment income for the 30-day period ended September 30, 1999. Falling share prices will tend to artificially raise yields. 6 OPPENHEIMER INTERNATIONAL BOND FUND REGIONAL ALLOCATION(5) [Chart] - -------------------------------- - - Latin America 28.9% - - Europe 24.0 - - Asia 20.5 - - Middle East/ Africa 11.4 - - United States/ Canada 7.9 - - Emerging Europe 7.3 - -------------------------------- WHAT IS YOUR OUTLOOK FOR THE FORESEEABLE FUTURE? We are cautiously optimistic. We have attempted to position the fund to take advantage of good values in emerging market and lower quality investment-grade bonds. If, as we expect, many of the world's economies gain strength, these investments should provide above-average total returns, including high yields and price appreciation. Nonetheless, we are prepared for continued volatility in the fixed income markets over the short term. Higher U.S. interest rates implemented by the Federal Reserve Board over the summer may adversely affect international bond markets, for example. However, once this round of rate hikes is over, we believe the stage will be set for very attractive returns over the longer term. Having the patience and discipline to weather short-term volatility on the road to longer term gains is the essence of our investment strategy, and is an important reason Oppenheimer International Bond Fund is part of THE RIGHT WAY TO INVEST.
TOP 10 COUNTRY HOLDINGS(5) - ----------------------------------------------------------- Germany 7.7% - ----------------------------------------------------------- Argentina 7.4 - ----------------------------------------------------------- Mexico 7.2 - ----------------------------------------------------------- United States 6.3 - ----------------------------------------------------------- Turkey 6.2 - ----------------------------------------------------------- Brazil 6.0 - ----------------------------------------------------------- Indonesia 4.7 - ----------------------------------------------------------- Norway 4.1 - ----------------------------------------------------------- Venezuela 3.7 - ----------------------------------------------------------- Italy 3.5
5. Portfolio is subject to change. Percentages are as of September 30, 1999, and are based on total market value of investments. 7 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- FUND PERFORMANCE - -------------------------------------------------------------------------------- HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION, BY THE MANAGER, OF THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED SEPTEMBER 30, 1999, FOLLOWED BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO TWO APPROPRIATE BROAD-BASED MARKET INDICES. MANAGEMENT'S DISCUSSION OF PERFORMANCE. During the fiscal year that ended September 30, 1999, Oppenheimer International Bond Fund's performance was influenced by declining bond prices in international markets. Nevertheless, the Fund generated good returns for the period. In this environment, the Manager attempted to position the Fund to take advantage of depressed values and widened yield spreads. During the period, the Manager continued to emphasize emerging market debt over bonds from the developed markets. Within the emerging markets, the Fund was focused on Southeast Asia, where attractive currency and bond values were identified in the wake of the global financial crisis. At the same time, investments in Latin American and Japanese markets were de-emphasized. In Europe, the Fund's exposure to European bonds and the euro was recently increased, as management expects economic growth in the region to accelerate. The Fund's portfolio holdings, allocations and strategies are subject to change. COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the performance of a hypothetical $10,000 investment in each class of shares of the Fund held from the inception date of June 15, 1995, until September 30, 1999. The Fund's performance reflects the deduction of the maximum initial sales charge on Class A shares, the applicable contingent deferred sales charge on Class B and Class C shares, and reinvestments of all dividends and capital gains distributions. 8 OPPENHEIMER INTERNATIONAL BOND FUND The performance of each class of the Fund's shares is compared to two indices because the Fund invests in debt securities issued by governments in both developed countries and emerging market countries and in debt securities issued by companies located in those countries. In the Manager's view, no one index adequately combines both types of investments. Performance is compared to the Salomon Brothers Non-U.S. Dollar World Government Bond Index, a subset of the Salomon Brothers World Government Bond Index. The Salomon Brothers Non-U.S. Dollar World Government Bond Index is a market-capitalization-weighted benchmark that tracks the performance of 13 government bond markets including Australia, Canada, Japan and 10 European countries. Thus, the Index does not reflect the performance of the fixed income markets in either the United States or in any emerging market countries. In addition, it is comprised of only government bonds and does not reflect the performance of corporate bonds. Performance is also compared to the Salomon Brothers Brady Bond Index, which provides a total return benchmark for emerging market country bonds. It is designed to allow direct comparison of the developing country debt market with other markets. A Brady Bond is a bond that is exchanged for debt or new money under the debt restructuring program initiated in 1990 by the U.S. Department of the Treasury. 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 or countries in the indices. 9 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- FUND PERFORMANCE - -------------------------------------------------------------------------------- CLASS A SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer International Bond Fund (Class A), Salomon Brothers Non-U.S. Dollar World Government Bond Index and Salomon Brothers Brady Bond Index [GRAPH] Oppenheimer International Bond Fund Class A $12,818 Salomon Brothers Non-U.S. Dollar World Government Bond Index $11,331 Salomon Brothers Brady Bond Index $18,865
AVERAGE ANNUAL TOTAL RETURN OF CLASS A SHARES OF THE FUND AT 9/30/99(1) 1-YEAR 5.33% LIFE 5.95% CLASS B SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer International Bond Fund (Class B), Salomon Brothers Non-U.S. Dollar World Government Bond Index and Salomon Brothers Brady Bond Index [GRAPH] Oppenheimer International Bond Fund Class B $12,844 Salomon Brothers Non-U.S. Dollar World Government Bond Index $11,331 Salomon Brothers Brady Bond Index $18,865
AVERAGE ANNUAL TOTAL RETURN OF CLASS B SHARES OF THE FUND AT 9/30/99(1) 1-YEAR 4.90% LIFE 6.01% 10 OPPENHEIMER INTERNATIONAL BOND FUND CLASS C SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer International Bond Fund (Class C), Salomon Brothers Non-U.S. Dollar World Government Bond Index and Salomon Brothers Brady Bond Index [GRAPH] Oppenheimer International Bond Fund Class C $13,014 Salomon Brothers Non-U.S. Dollar World Government Bond Index $11,331 Salomon Brothers Brady Bond Index $18,865
AVERAGE ANNUAL TOTAL RETURN OF CLASS C SHARES OF THE FUND AT 9/30/99(1) 1 YEAR 8.82% LIFE 6.33% The performance information for both indices in the graphs begins on 5/31/95. 1. See page 12 for further details. Past performance is not predictive of future performance. 11 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- NOTES - -------------------------------------------------------------------------------- IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. THE FUND'S PERFORMANCE MAY FROM TIME TO TIME BE SUBJECT TO SUBSTANTIAL SHORT-TERM CHANGES, PARTICULARLY DURING PERIODS OF MARKET OR INTEREST RATE VOLATILITY. FOR UPDATES ON THE FUND'S PERFORMANCE, PLEASE CONTACT YOUR FINANCIAL ADVISOR, CALL US AT 1.800.525.7048 OR VISIT OUR WEBSITE, WWW.OPPENHEIMERFUNDS.COM. 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. CLASS A shares were first publicly offered on 6/15/95. The average annual total returns are shown net of the applicable 4.75% maximum initial sales charge. CLASS B shares of the Fund were first publicly offered on 6/15/95. The average annual total returns are shown net of the applicable 5% and 2% contingent deferred sales charges, respectively, for the one-year period and the life of the class. The ending account value in the graph is net of the applicable 2% contingent deferred sales charge. 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. The average annual total returns are shown net of the applicable 1% contingent deferred sales charge for the one-year period. Class C shares are subject to an annual 0.75% asset-based sales charge. An explanation of the different performance calculations is in the Fund's prospectus. LIPPER RANKING. Based on the comparisons between changes in net asset value without considering sales charges, with dividends and capital gains distributions reinvested. The Fund's Class A shares were ranked 1 of 55 (one-year) and 25 of 38 (three-year) among international income funds for the periods ended 9/30/99. 12 OPPENHEIMER INTERNATIONAL BOND FUND FINANCIALS 13 OPPENHEIMER INTERNATIONAL BOND FUND - ------------------------------------------------------------------------------- STATEMENT OF INVESTMENTS SEPTEMBER 30, 1999 - -------------------------------------------------------------------------------
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- MORTGAGE-BACKED OBLIGATIONS--1.0% Nykredit AS, 7% Cv. Bonds, 10/1/29 [DKK] (Cost $2,624,089) 18,690,000 $ 2,599,924 - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- U.S. GOVERNMENT OBLIGATIONS--0.7% Federal National Mortgage Assn. Sr. Unsub. Medium-Term Nts., 6.50%, 7/10/02 [AUD] 1,310,000 864,779 ------------------------------------------------------------------------------------------------------------------- Federal National Mortgage Assn. Sr. Unsub. Nts., 6.375%, 8/15/07 [AUD] 1,365,000 867,944 ----------- Total U.S. Government Obligations (Cost $1,667,637) 1,732,723 - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- FOREIGN GOVERNMENT OBLIGATIONS--58.7% - ------------------------------------------------------------------------------------------------------------------- ARGENTINA--5.5% Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas, Series I, 2.828%, 4/1/07(2) [ARP] 5,096,437 3,390,992 - ------------------------------------------------------------------------------------------------------------------- Argentina (Republic of) Global Unsec. Unsub. Bonds, Series BGL5, 11.375%, 1/30/17 2,450,000 2,309,125 - ------------------------------------------------------------------------------------------------------------------- Argentina (Republic of) Nts., Series REGS, 11.75%, 2/12/07 [ARP] 7,425,000 6,349,645 - ------------------------------------------------------------------------------------------------------------------- Buenos Aires (Province of) Bonds, Series PBA1, 2.828%, 4/1/07(2) [ARP] 2,681,784 1,667,202 ----------- 13,716,964 - ------------------------------------------------------------------------------------------------------------------- BRAZIL--5.7% Brazil (Federal Republic of) Bonds, 11.625%, 4/15/04 520,000 486,226 - ------------------------------------------------------------------------------------------------------------------- Brazil (Federal Republic of) Capitalization Bonds, 20 yr., 8%, 4/15/14 8,797,260 5,509,285 - ------------------------------------------------------------------------------------------------------------------- Brazil (Federal Republic of) Debt Conversion Bonds, 5.938%, 4/15/12(2) 8,342,000 5,026,055 - ------------------------------------------------------------------------------------------------------------------- Brazil (Federal Republic of) Interest Due & Unpaid Bonds, 6.50%, 1/1/01(2) 2,127,654 2,063,824 - ------------------------------------------------------------------------------------------------------------------- Brazil (Federal Republic of) Unsec. Bonds, 9.375%, 4/7/08 1,530,000 1,204,875 ----------- 14,290,265 - ------------------------------------------------------------------------------------------------------------------- BULGARIA--1.8% Bulgaria (Republic of) Front-Loaded Interest Reduction Bearer Bonds, Tranche A, 2.75%, 7/28/12(3) 7,255,000 4,570,650 - ------------------------------------------------------------------------------------------------------------------- CANADA--1.5% Canada (Government of) Bonds, Series J24, 10.25%, 2/1/04 4,650,000 3,714,652 - ------------------------------------------------------------------------------------------------------------------- COLOMBIA--0.4% Colombia (Republic of) Nts., 7.25%, 2/23/04 665,000 536,315 - ------------------------------------------------------------------------------------------------------------------- Colombia (Republic of) Unsec. Bonds, 10.875%, 3/9/04 560,000 552,168 ----------- 1,088,483 - ------------------------------------------------------------------------------------------------------------------- ECUADOR--0.1% Ecuador (Republic of) Debs., 2/27/15(4) 110,613 18,528 - ------------------------------------------------------------------------------------------------------------------- Ecuador (Republic of) Past Due Interest Bonds, 2/27/15(4) 948,945 158,948 ----------- 177,476
14 OPPENHEIMER INTERNATIONAL BOND FUND
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------- GERMANY--3.6% Germany (Republic of) Bonds: 6.25%, 4/26/06 [EUR] 952,484 $1,090,476 6.75%, 5/13/04 [DEM] 510,000 591,490 Series 98, 5.25%, 1/4/08 [DEM] 4,645,000 4,982,048 Zero Coupon, 5.66%, 7/4/27(5)[EUR] 5,000,000 989,385 - ------------------------------------------------------------------------------------------------------------------- Germany (Republic of) Stripped Bonds, Series JA24, Zero Coupon, 5.54%, 1/4/24(5)[EUR] 5,865,000 1,472,157 ----------- 9,125,556 - ------------------------------------------------------------------------------------------------------------------- GREAT BRITAIN--1.7% United Kingdom Treasury Bonds, 10%, 9/8/03 [GBP] 2,285,000 4,233,562 - ------------------------------------------------------------------------------------------------------------------- INDONESIA--0.4% Bank Negara Indonesia Unsec. Nts., 6.405%, 10/25/01(2) 1,000,000 765,000 - ------------------------------------------------------------------------------------------------------------------- Perusahaan Listr, 17% Nts., 8/21/01(6) [IDR] 2,000,000,000 125,673 - ------------------------------------------------------------------------------------------------------------------- PT Hutama Karya Promissory Nts., Zero Coupon, 4/9/99(4,6) [IDR] 5,000,000,000 164,572 ----------- 1,055,245 - ------------------------------------------------------------------------------------------------------------------- ITALY--3.4% Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali: 9.50%, 2/1/06 [EUR] 5,330,000 7,040,501 10.50%, 9/1/05 [EUR] 1,044,254 1,427,309 ----------- 8,467,810 - ------------------------------------------------------------------------------------------------------------------- IVORY COAST--1.8% Ivory Coast (Government of) Front Loaded Interest Reduction Bonds: 2%, 3/29/18(3) [FRF] 21,325,000 701,114 2%, 3/29/18(3) 6,915,000 1,417,575 ----------- - ------------------------------------------------------------------------------------------------------------------- Ivory Coast (Government of) Past Due Interest Bonds, Series F, 1.90%, 3/29/18(3) [FRF] 55,748,000 2,353,298 ----------- 4,471,987 - ------------------------------------------------------------------------------------------------------------------- JAPAN--2.3% Japan (Government of) Bonds, Series 141, 6.50%, 6/20/01 [JPY] 545,000,000 5,658,336 - ------------------------------------------------------------------------------------------------------------------- JORDAN--2.0% Hashemite (Kingdom of Jordan) Bonds, Series DEF, 5.50%, 12/23/23(3) 890,000 539,563 - ------------------------------------------------------------------------------------------------------------------- Hashemite (Kingdom of Jordan) Disc. Bonds, 6.188%, 12/23/23(2) 6,815,000 4,463,825 ----------- 5,003,388
15 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- STATEMENT OF INVESTMENTS CONTINUED - --------------------------------------------------------------------------------
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------- MEXICO--3.7% Mexican Williams Sr. Nts., 5.83%, 11/15/08(2,8) $ 500,000 $ 442,500 - ------------------------------------------------------------------------------------------------------------------- Petroleos Mexicanos Debs., 14.50%, 3/31/06(6) [GBP] 1,280,000 2,382,076 - ------------------------------------------------------------------------------------------------------------------- United Mexican States Bonds, 11.375%, 9/15/16 6,000,000 6,345,000 ----------- 9,169,576 - ------------------------------------------------------------------------------------------------------------------- MOROCCO--0.0% Morocco (Kingdom of) Loan Participation Agreement, Tranche A, 2.018%, 1/1/09(2) [JPY] 18,095,235 126,299 - ------------------------------------------------------------------------------------------------------------------- NEW ZEALAND--0.7% New Zealand (Government of) Bonds, 7%, 7/15/09 [NZD] 3,265,000 1,692,902 - ------------------------------------------------------------------------------------------------------------------- NIGERIA--1.0% Nigeria (Federal Republic of) Promissory Nts., Series RC, 5.092%, 1/5/10 4,092,394 2,401,151 - ------------------------------------------------------------------------------------------------------------------- NORWAY--4.0% Norway (Government of) Bonds, 9.50%, 10/31/02 [NOK] 69,930,000 9,926,858 - ------------------------------------------------------------------------------------------------------------------- PANAMA--0.7% Panama (Republic of) Interest Reduction Bonds, 4.25%, 7/17/14(2) 625,000 453,125 - ------------------------------------------------------------------------------------------------------------------- Panama (Republic of) Past Due Interest Debs., 5.819%, 7/17/16(2) 1,824,725 1,309,241 ----------- 1,762,366 - ------------------------------------------------------------------------------------------------------------------- PERU--1.9% Peru (Republic of) Sr. Nts., Zero Coupon, 4.53%, 2/28/16(5) 11,209,525 4,794,314 - ------------------------------------------------------------------------------------------------------------------- POLAND--0.4% Poland (Republic of) Bonds, 12%, 6/12/01 [PLZ] 4,800,000 1,137,181 - ------------------------------------------------------------------------------------------------------------------- RUSSIA--1.7% Russia (Government of) Principal Loan Debs., Series 24 yr., 12/15/20(4) 17,760,000 1,653,900 - ------------------------------------------------------------------------------------------------------------------- Russia (Government of) Sr. Unsec. Unsub. Nts., 11.75%, 6/10/03 720,000 379,080 - ------------------------------------------------------------------------------------------------------------------- Russia (Government of) Unsec. Bonds, 11%, 7/24/18 2,565,000 1,083,713 - ------------------------------------------------------------------------------------------------------------------- Russian Federation Unsec. Unsub. Nts.: 8.75%, 7/24/05 1,775,000 736,625 12.75%, 6/24/28 720,000 340,416 ----------- 4,193,734
16 OPPENHEIMER INTERNATIONAL BOND FUND
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------- SLOVAKIA--1.0% Slovenska Sporitelna AS Bank Sub. Nts., 6.61%, 12/20/06(2) $ 1,800,000 $ 1,350,000 - ------------------------------------------------------------------------------------------------------------------- Vseobenona Uverova Banka Unsec. Sub. Nts., 7.011%, 12/28/06(2) 1,640,000 1,164,400 ----------- 2,514,400 - ------------------------------------------------------------------------------------------------------------------- SOUTH AFRICA--2.2% South Africa (Republic of) Bonds: Series 153, 13%, 8/31/10 [ZAR] 28,724,000 4,277,147 Series 175, 9%, 10/15/02 [ZAR] 8,100,000 1,199,214 ----------- 5,476,361 - ------------------------------------------------------------------------------------------------------------------- SPAIN--1.8% Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado, 8.80%, 4/30/06 [EUR] 1,700,000 2,187,989 10%, 2/28/05 [EUR] 1,760,000 2,325,802 ----------- 4,513,791 - ------------------------------------------------------------------------------------------------------------------- THE NETHERLANDS--2.4% The Netherlands (Government of) Bonds: 6%, 1/15/06 [EUR] 1,070,000 1,206,214 7.75%, 3/1/05 [EUR] 3,950,000 4,797,798 ----------- 6,004,012 - ------------------------------------------------------------------------------------------------------------------- TURKEY--2.6% Turkey (Republic of) Treasury Bills, Zero Coupon, 78.57%, 8/23/00(5) [TRL] 5,610,000,000,000 6,625,225 - ------------------------------------------------------------------------------------------------------------------- VENEZUELA--3.6% Venezuela (Republic of) Disc. Bonds, Series DL, 6.312%, 12/18/07(2) 9,452,804 7,337,739 - ------------------------------------------------------------------------------------------------------------------- Venezuela (Republic of) Front-Loaded Interest Reduction Bonds, Series A, 6.875%, 3/31/07(2) 892,857 676,339 - ------------------------------------------------------------------------------------------------------------------- Venezuela (Republic of) Unsec. Bonds, 9.25%, 9/15/27 1,350,000 891,000 ----------- 8,905,078 - ------------------------------------------------------------------------------------------------------------------- VIETNAM--0.8% Vietnam (Government of) Bonds, 3%, 3/12/28(2) 7,095,000 1,995,469 ----------- Total Foreign Government Obligations (Cost $155,782,210) 146,813,091
17 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- STATEMENT OF INVESTMENTS CONTINUED - --------------------------------------------------------------------------------
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- LOAN PARTICIPATIONS--6.6% Algeria (Republic of) Reprofiled Debt Loan Participation Nts.: Tranche 1, 1.063%, 9/4/06(2) [JPY] 56,945,454 $ 248,705 Tranche 1, 6.812%, 9/4/06(2,6) 6,854,363 5,106,501 Tranche A, 2.175%, 3/4/00(2) [JPY] 9,490,909 86,468 Tranche A, 7.50%, 3/4/00(2,6) 179,424 176,060 - ------------------------------------------------------------------------------------------------------------------- Algeria (Republic of) Unrestructured Nts., 6.615%, 1/22/01(6) [JPY] 286,100,000 2,586,374 - ------------------------------------------------------------------------------------------------------------------- Jamaica (Government of) 1990 Refinancing Agreement Nts., Tranche A, 6.125%, 10/16/00(2,6) 49,999 47,625 - ------------------------------------------------------------------------------------------------------------------- Morocco (Kingdom of) Loan Participation Agreement, Tranche B, 5.906%, 1/1/09(2,6) 1,674,000 1,514,970 - ------------------------------------------------------------------------------------------------------------------- Panama Working Capital Loan Sinking Fund Nts., 5.597%, 1/13/00(2,6) 250,000 228,750 - ------------------------------------------------------------------------------------------------------------------- PT Bank Negara Indonesia Gtd. Nts.: Series 3 yr., 9.156%, 8/25/01(2,6) 1,670,000 1,411,150 Series 4 yr., 9.406%, 8/25/02(2,6) 890,000 725,350 - ------------------------------------------------------------------------------------------------------------------- PT Lippo Bank Nts.: 8.906%, 8/25/00(2,6) 1,050,000 934,500 9.156%, 8/25/01(2,6) 1,575,000 1,330,875 9.406%, 8/25/02(2,6) 350,000 285,250 - ------------------------------------------------------------------------------------------------------------------- Trinidad & Tobago Loan Participation Agreement: Tranche A, 1.148%, 9/30/00(2,6) [JPY] 46,763,636 399,689 Tranche B, 1.148%, 9/30/00(2,6) [JPY] 155,863,426 1,332,166 ----------- Total Loan Participations (Cost $14,825,954) 16,414,433 - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- CORPORATE BONDS AND NOTES--12.3% - ------------------------------------------------------------------------------------------------------------------- CHEMICALS--1.3% Reliance Industries Ltd.: 10.25% Unsec. Debs., Series B, 1/15/2097 3,900,000 3,126,412 10.25% Unsec. Nts., Series B, 1/15/20977 250,000 200,411 ----------- 3,326,823 - ------------------------------------------------------------------------------------------------------------------- CONSUMER DURABLES--0.0% TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(6,8) 70,000 77,987 - ------------------------------------------------------------------------------------------------------------------- ENERGY--0.5% Empresa Electrica del Norte Grande SA, 7.75% Bonds, 3/15/06(6,8) 2,310,000 1,229,992 - ------------------------------------------------------------------------------------------------------------------- FINANCIAL--6.8% Aktiebolaget Spintab, 5.50% Bonds, Series 169, 9/17/03 [SEK] 13,800,000 1,655,083 - ------------------------------------------------------------------------------------------------------------------- Allgemeine Hypotheken Bank AG, 5% Sec. Nts., Series 501, 9/2/09 [EUR] 1,400,000 1,425,023 - ------------------------------------------------------------------------------------------------------------------- Bakrie Investindo: Zero Coupon Promissory Nts., 3/16/99(4,6) [IDR] 5,990,000,000 107,540 Zero Coupon Promissory Nts., 7/10/1998(4,6) [IDR] 2,000,000,000 35,907
18 OPPENHEIMER INTERNATIONAL BOND FUND
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------- FINANCIAL CONTINUED Bayerische Vereinsbank AG, 5% Sec. Nts., Series 661, 7/28/04 [DEM] 4,990,208 $ 5,365,592 - ------------------------------------------------------------------------------------------------------------------- Dresdner Funding Trust II, 5.79% Sub. Nts., 6/30/11(6,8) [EUR] 2,670,000 2,622,037 - ------------------------------------------------------------------------------------------------------------------- Federal National Mortgage Assn., 6.875% Sr. Unsec. Nts., 6/7/02 [GBP] 2,370,000 3,917,790 - ------------------------------------------------------------------------------------------------------------------- Ongko International Finance Co. BV, 10.50% Gtd. Nts., 3/29/04(4,6) 365,000 12,775 - ------------------------------------------------------------------------------------------------------------------- PT Polysindo Eka Perkasa: 11% Nts., 6/18/03(4,6) 500,000 65,000 11% Nts., 7/2/03(4,6) 1,000,000 130,000 20% Nts., 3/6/00(4) [IDR] 3,000,000,000 46,679 24% Nts., 6/16/03(4) [IDR] 2,000,000,000 31,119 24% Nts., 6/19/03(4) [IDR] 4,107,500,000 63,911 - ------------------------------------------------------------------------------------------------------------------- SanLuis Corp., SA de CV, 8.875% Sr. Unsec. Nts., 3/18/08 1,770,000 1,500,075 ----------- 16,978,531 - ------------------------------------------------------------------------------------------------------------------- HOUSING--0.5% Internacional de Ceramica SA, 9.75% Unsec Unsub. Nts., 8/1/02(7,9,10) 700,000 563,500 - ------------------------------------------------------------------------------------------------------------------- Internacional de Ceramica SA, 9.75% Unsec Unsub. Nts., 8/1/02 750,000 603,750 ----------- 1,167,250 - ------------------------------------------------------------------------------------------------------------------- MANUFACTURING--0.0% Mechala Group Jamaica Ltd., 12% Bonds, 2/15/02(4,6,8) 250,000 93,125 - ------------------------------------------------------------------------------------------------------------------- MEDIA/ENTERTAINMENT: TELECOMMUNICATIONS--2.9% Netia Holdings BV, 0%/11% Sr. Disc. Nts., 11/1/07(11) [DEM] 1,300,000 440,657 - ------------------------------------------------------------------------------------------------------------------- Netia Holdings II BV, 13.50% Sr. Nts., 6/15/09(7) [EUR] 2,650,000 2,804,611 - ------------------------------------------------------------------------------------------------------------------- NTL, Inc., 9.50% Sr. Unsec. Unsub. Nts., Series B, 4/1/08 [GBP] 580,000 940,874 - ------------------------------------------------------------------------------------------------------------------- Telewest Communications plc, 0%/9.875% Sr. Nts., 4/15/09(7,11) [GBP] 3,110,000 3,073,115 ----------- 7,259,257 - ------------------------------------------------------------------------------------------------------------------- TRANSPORTATION--0.3% General Motors Acceptance Corp., 6.875% Nts., Series EC, 9/9/04 [GBP] 430,000 696,447 ----------- Total Corporate Bonds and Notes (Cost $35,178,491) 30,829,412
19 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- STATEMENT OF INVESTMENTS CONTINUED - --------------------------------------------------------------------------------
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- STRUCTURED INSTRUMENTS--12.5% Citibank (New York) Mexican Linked Nts.: 27.40%, 9/20/01 $ 2,775,000 $ 2,769,450 28.60%, 9/13/01 2,570,000 2,564,860 - ------------------------------------------------------------------------------------------------------------------- Deutsche Bank AG: Indonesian Rupiah Linked Nts., 13.86%, 8/3/00 2,220,000 1,777,110 Indonesian Rupiah Linked Nts., 13.667%, 6/30/00 2,665,000 2,097,355 New York, Philippine Peso/Japanese Yen Linked Nts., 10.55%, 5/12/00 2,600,000 2,097,420 Russian OFZ Linked Nts.: 25%, 2/6/02(2) [RUR] 625,200 2,029 25%, 5/22/02(2) [RUR] 625,200 1,920 25%, 6/5/02(2) [RUR] 625,200 1,930 25%, 9/18/02(2) [RUR] 625,200 1,823 25%, 10/9/02(2) [RUR] 625,200 1,779 25%, 1/22/03(2) [RUR] 625,200 1,670 25%, 2/5/03(2) [RUR] 625,200 1,685 25%, 5/21/03(2) [RUR] 625,200 1,630 25%, 6/4/03(2) [RUR] 625,200 1,623 25%, 9/17/03(2) [RUR] 625,200 1,598 25%, 10/8/03(2) [RUR] 625,200 1,563 25%, 1/21/04(2) [RUR] 625,200 1,494 - ------------------------------------------------------------------------------------------------------------------- Deutsche Morgan Grenfell, Russian OFZ Linked Nts., Zero Coupon, 187.65%, 12/15/01(5) [RUR] 2,143,000 3,864 - ------------------------------------------------------------------------------------------------------------------- Hong Kong & Shanghai Banking Corp. Linked Receipt Nts., Linked to the Korean Exchange Bank Floating Nts. due 12/23/99, Zero Coupon, 13.32%, 12/28/99(5) 2,900,000 2,831,125 - ------------------------------------------------------------------------------------------------------------------- Lehman Brothers Holdings, Inc. Russian OFZ Linked Nts.: Series L, 25%, 2/6/02(2) [RUR] 566,080 10,812 Series L, 25%, 5/22/02(2) [RUR] 566,080 10,229 Series L, 25%, 6/5/02(2) [RUR] 566,080 10,274 Series L, 25%, 9/18/02(2) [RUR] 566,080 9,713 Series L, 25%, 10/9/02(2) [RUR] 566,080 9,473 Series L, 25%, 1/22/03(2) [RUR] 566,080 8,888 Series L, 25%, 2/5/03(2) [RUR] 566,080 8,973 Series L, 25%, 5/21/03(2) [RUR] 566,080 8,681 Series L, 25%, 6/4/03(2) [RUR] 566,080 8,636 Series L, 25%, 9/17/03(2) [RUR] 566,080 8,513 Series L, 25%, 10/8/03(2) [RUR] 566,080 8,210 Series L, 25%, 1/21/04(2) [RUR] 566,080 7,986 Series L, Zero Coupon, 53.77%, 12/15/01(5) [RUR] 1,940,000 20,588 - ------------------------------------------------------------------------------------------------------------------- Merrill Lynch & Co. Inc. Turkey Treasury Bond Linked Nts.: 81%, 1/9/01(2) [TRL] 1,926,700,000,000 4,455,825 85.25%, 1/7/01(2) [TRL] 1,110,000,000,000 2,567,066 87.165%, 1/7/01(2) [TRL] 541,348,794,013 1,237,731
20 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- STATEMENT OF INVESTMENTS CONTINUED - --------------------------------------------------------------------------------
FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- STRUCTURED INSTRUMENTS CONTINUED Standard Chartered Bank: Argentine Peso Linked Nts., 13.512%, 3/10/00 $ 2,612,000 $ 2,632,635 Argentine Peso Linked Nts., 16.10%, 3/3/00 1,300,000 1,312,740 Indian Rupee/Japanese Yen Linked Nts., Zero Coupon, 12.73%, 8/17/01(5) 3,525,000 2,586,998 Indonesian Rupiah Linked Nts., 18.19%, 8/18/00 1,300,000 1,251,250 Philippine Peso/Japanese Yen Linked Nts., 16.04%, 5/10/00 1,300,000 974,350 ----------- Total Structured Instruments (Cost $34,690,328) 31,311,499 DATE STRIKE CONTRACTS - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- OPTIONS PURCHASED--0.0% European Monetary Unit Call Opt. 10/4/99 EUR 1.078 26,840,000 66,832 - ------------------------------------------------------------------------------------------------------------------- Hong Kong Dollar Put Opt. 1/11/00 HKD 7.894 22,497,900 2,025 - ------------------------------------------------------------------------------------------------------------------- Japanese Yen Call Opt. 10/6/99 JPY 100.000 259,000,000 -- - ------------------------------------------------------------------------------------------------------------------- Japanese Yen Call Opt. 10/27/99 JPY 106.600 128,000,000 25,728 - ------------------------------------------------------------------------------------------------------------------- Japanese Yen Call Opt. 10/20/99 JPY 108.500 533,000,000 15,457 - ------------------------------------------------------------------------------------------------------------------- Mexican Peso Put Opt.6 10/8/99 MXN 11.000 29,810,000 2,981 ----------- Total Options Purchased (Cost $778,039) 113,023 FACE AMOUNT(1) - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------- REPURCHASE AGREEMENTS--3.8% Repurchase agreement with PaineWebber, Inc., 5.29%, dated 9/30/99, to be repurchased at $9,401,381 on 10/1/99, collateralized by U.S. Treasury Bills, 12/23/99--7/20/00, with a value of $8,629,184, U. S. Treasury Nts., 7.875%, 11/15/04, with a value of $964,883 (Cost $9,400,000) $ 9,400,000 9,400,000 - ------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $254,946,748) 95.6% 239,214,105 - ------------------------------------------------------------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 4.4 11,110,186 ----------- ----------- NET ASSETS 100.0% $250,324,291 ----------- ----------- ----------- -----------
21 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- STATEMENT OF INVESTMENTS CONTINUED - -------------------------------------------------------------------------------- FOOTNOTES TO STATEMENT OF INVESTMENTS 1. Face amount is reported in U.S. Dollars, except for those denoted in the following currencies: ARP Argentine Peso IDR Indonesian Rupiah AUD Australian Dollar JPY Japanese Yen CAD Canadian Dollar MXN Mexican Nuevo Peso DEM German Mark NOK Norwegian Krone DKK Danish Krone NZD New Zealand Dollar EUR Euro PLZ Polish Zloty FRF French Franc RUR Russian Ruble GBP British Pound Sterling SEK Swedish Krona HKD Hong Kong Dollar TRL Turkish Lira 2. Represents the current interest rate for a variable rate security. 3. Represents the current interest rate for an increasing rate security. 4. Non-income-producing--issuer is in default. 5. For zero coupon bonds, the interest rate shown is the effective yield on the date of purchase. 6. Identifies issues considered to be illiquid or restricted--See Note 8 of Notes to Financial Statements. 7. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $6,641,637 or 2.65% of the Fund's net assets as of September 30, 1999. 8. Securities with an aggregate market value of $479,250 are held in collateralized accounts to cover initial margin requirements on open futures sales contracts. See Note 6 of Notes to Financial Statements. 9. A sufficient amount of liquid assets has been designated to cover outstanding written options, as follows:
FACE CONTRACTS EXPIRATION EXERCISE PREMIUM MARKET VALUE SUBJECT TO PUT DATE PRICE RECEIVED SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------------------- Mexican Nuevo Peso Put Option 29,810,000 10/8/99 MXN 11.00 $ 66,937 $ -- Polish Zloty Put Option 22,273,537 11/4/99 PLZ 4.18 121,790 54,080 ---------------------------- $188,727 $54,080 ---------------------------- ----------------------------
10. A sufficient amount of securities has been designated to cover outstanding foreign currency exchange contracts. See Note 5 of Notes to Financial Statements. 11. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. 22 OPPENHEIMER INTERNATIONAL BOND FUND FOOTNOTES TO STATEMENT OF INVESTMENTS CONTINUED DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC DIVERSIFICATION, AS A PERCENTAGE OF TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS:
GEOGRAPHIC DIVERSIFICATION MARKET VALUE PERCENT - ---------------------------------------------------------------------------------------- Germany $ 18,538,210 7.7% Argentina 17,662,338 7.4 Mexico 17,171,211 7.2 United States 15,068,133 6.3 Turkey 14,885,847 6.2 Brazil 14,290,265 6.0 Indonesia 11,361,016 4.7 Norway 9,926,858 4.1 Venezuela 8,905,079 3.7 Italy 8,467,809 3.5 Algeria 8,204,107 3.4 Great Britain 7,306,678 3.1 The Netherlands 6,004,012 2.5 India 5,913,820 2.5 Japan 5,658,336 2.4 South Africa 5,476,361 2.3 Jordan 5,003,388 2.1 Peru 4,794,314 2.0 Bulgaria 4,570,650 1.9 Spain 4,513,792 1.9 Ivory Coast 4,471,986 1.9 Poland 4,382,450 1.8 Russia 4,349,319 1.8 Canada 3,714,652 1.6 Philippines 3,071,770 1.3 Korea, Republic of (South) 2,831,125 1.2 Denmark 2,599,924 1.1 Slovakia 2,514,400 1.1 Nigeria 2,401,151 1.0 Vietnam 1,995,469 0.8 Panama 1,991,116 0.8 Australia 1,732,723 0.7 Trinidad & Tobago 1,731,855 0.7 New Zealand 1,692,902 0.7 Sweden 1,655,083 0.7 Morocco 1,641,269 0.7 Chile 1,229,992 0.5 Colombia 1,088,482 0.5 Ecuador 177,476 0.1 Jamaica 140,750 0.1 Switzerland 77,987 0.0 -------------------------------- Total $239,214,105 100.0% -------------------------------- --------------------------------
See accompanying Notes to Financial Statements. 23 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1999 - --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- ASSETS Investments, at value (cost $254,946,748)--see accompanying statement $ 239,214,105 - ---------------------------------------------------------------------------------------------------- Cash 195,474 - ---------------------------------------------------------------------------------------------------- Unrealized appreciation on foreign currency exchange contracts--Note 5 1,271,564 - ---------------------------------------------------------------------------------------------------- Receivables and other assets: Interest and principal paydowns 6,194,641 Investments sold 5,428,257 Shares of beneficial interest sold 1,718,895 Daily variation on futures contracts--Note 6 99,997 Other 302,339 --------------- Total assets 254,425,272 - ---------------------------------------------------------------------------------------------------- LIABILITIES Unrealized depreciation on foreign currency exchange contracts--Note 5 139,602 - ---------------------------------------------------------------------------------------------------- Options written, at value (premiums received $188,727)-- see accompanying statement--Note 7 54,080 - ---------------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased 1,717,292 Dividends 1,289,101 Shares of beneficial interest redeemed 564,799 Distribution and service plan fees 148,440 Closed foreign currency exchange contracts 75,197 Transfer and shareholder servicing agent fees 37,037 Daily variation on futures contracts--Note 6 10,507 Other 64,926 --------------- Total liabilities 4,100,981 - ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- NET ASSETS $250,324,291 --------------- --------------- - ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS Paid-in capital $317,506,115 - ---------------------------------------------------------------------------------------------------- Undistributed net investment income 744,959 - ---------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (53,337,044) - ---------------------------------------------------------------------------------------------------- Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies (14,589,739) --------------- Net assets $250,324,291 --------------- ---------------
24 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 $102,236,116 and 24,151,631 shares of beneficial interest outstanding) $4.23 Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $4.44 - ------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $118,632,046 and 28,102,977 shares of beneficial interest outstanding) $4.22 - ------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $29,456,129 and 6,980,102 shares of beneficial interest outstanding) $4.22
See accompanying Notes to Financial Statements. 25 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS For the Year Ended September 30, 1999 - --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- INVESTMENT INCOME Interest (net of foreign withholding taxes of $89,821) $ 37,345,712 - ---------------------------------------------------------------------------------------------------- Dividends (net of foreign withholding taxes of $1,627) 9,222 --------------- Total income 37,354,934 - ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- EXPENSES Management fees--Note 4 1,886,864 - ---------------------------------------------------------------------------------------------------- Distribution and service plan fees--Note 4: Class A 248,547 Class B 1,228,808 Class C 289,134 - ---------------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees--Note 4 414,642 - ---------------------------------------------------------------------------------------------------- Shareholder reports 127,249 - ---------------------------------------------------------------------------------------------------- Custodian fees and expenses 68,597 - ---------------------------------------------------------------------------------------------------- Legal, auditing and other professional fees 18,327 - ---------------------------------------------------------------------------------------------------- Trustees' compensation 2,423 - ---------------------------------------------------------------------------------------------------- Other 78,633 --------------- Total expenses 4,363,224 Less expenses paid indirectly--Note 1 (40,358) --------------- Net expenses 4,322,866 - ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME 33,032,068 - ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investments (12,342,461) Closing of futures contracts (1,258,647) Closing and expiration of option contracts written--Note 7 1,080,328 Foreign currency transactions (13,602,130) --------------- Net realized loss (26,122,910) - ---------------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation on: Investments 15,641,368 Translation of assets and liabilities denominated in foreign currencies 1,895,302 --------------- Net change 17,536,670 --------------- Net realized and unrealized loss (8,586,240) - ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $24,445,828 --------------- ---------------
See accompanying Notes to Financial Statements. 26 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 1999 1998 - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income $ 33,032,068 $ 28,345,575 - ---------------------------------------------------------------------------------------------------------------- Net realized loss (26,122,910) (32,072,921) - ---------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation 17,536,670 (33,393,415) -------------------------------------- Net increase (decrease) in net assets resulting from operations 24,445,828 (37,120,761) - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income: Class A (12,490,131) (11,278,509) Class B (14,069,900) (12,501,126) Class C (3,315,800) (2,851,020) - ---------------------------------------------------------------------------------------------------------------- Distributions from net realized gain: Class A -- (464,690) Class B -- (544,637) Class C -- (123,007) - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS Net increase in net assets resulting from beneficial interest transactions--Note 2: Class A 7,013,720 8,857,621 Class B 1,272,305 28,481,664 Class C 2,430,203 6,178,227 - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- NET ASSETS Total increase (decrease) 5,286,225 (21,366,238) - ---------------------------------------------------------------------------------------------------------------- Beginning of period 245,038,066 266,404,304 -------------------------------------- End of period (including undistributed net investment income of $744,959 and $1,061,401, respectively) $250,324,291 $245,038,066 -------------------------------------- --------------------------------------
See accompanying Notes to Financial Statements. 27 OPPENHEIMER INTERNATIONAL BOND FUND - ------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------
CLASS A YEAR ENDED SEPTEMBER 30, 1999 1998 1997 1996 1995(1) - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA Net asset value, beginning of period $4.32 $5.51 $5.49 $5.10 $5.00 - --------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .58 .56 .52 .52 .15 Net realized and unrealized gain (loss) (.14) (1.20) .08 .40 .10 ---------------------------------------------------------------- Total income (loss) from investment operations .44 (.64) .60 .92 .25 - --------------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.53) (.53) (.53) (.53) (.15) Distributions from net realized gain -- (.02) (.05) -- -- ---------------------------------------------------------------- Total dividends and distributions to shareholders (.53) (.55) (.58) (.53) (.15) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.23 $4.32 $5.51 $5.49 $5.10 ---------------------------------------------------------------- ---------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE(2) 10.58% (12.50)% 11.33% 18.82% 5.13% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $102,236 $ 97,404 $114,847 $52,128 $3,984 - ---------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $101,948 $108,264 $ 89,112 $19,817 $2,566 - --------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(3) Net investment income 13.47% 11.09% 9.24% 9.60% 9.94% Expenses, before voluntary assumption and indirect expenses 1.26% 1.24%(4) 1.28%(4) 1.59%(4) 1.59%(4) Expenses, net of voluntary assumption and indirect expenses 1.25% N/A N/A 1.49% 0.41% - ----------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(5) 285% 446% 280% 273% 122%
1. For the period from June 15, 1995 (commencement of operations) to September 30, 1995. 2. Assumes a $1,000 hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 3. Annualized for periods of less than one full year. 4. Expense ratio reflects the effect of expenses paid indirectly by the Fund. 5. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended September 30, 1999, were $628,527,274 and $544,904,486, respectively. See accompanying Notes to Financial Statements 28 OPPENHEIMER INTERNATIONAL BOND FUND
CLASS B YEAR ENDED SEPTEMBER 30, 1999 1998 1997 1996 1995(1) - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA Net asset value, beginning of period $4.31 $5.50 $5.48 $5.10 $5.00 - ----------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .55 .52 .48 .48 .14 Net realized and unrealized gain (loss) (.14) (1.20) .07 .39 .10 ---------------------------------------------------------------- Total income (loss) from investment operations .41 (.68) .55 .87 .24 - ----------------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.50) (.49) (.48) (.49) (.14) Distributions from net realized gain -- (.02) (.05) -- -- ---------------------------------------------------------------- Total dividends and distributions to shareholders (.50) (.51) (.53) (.49) (.14) - ----------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.22 $4.31 $5.50 $5.48 $5.10 ---------------------------------------------------------------- ---------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE(2) 9.79% (13.16)% 10.52% 17.71% 4.92% - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $118,632 $119,998 $122,874 $45,207 $3,238 - ----------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $122,878 $128,789 $ 87,557 $17,891 $1,125 - ----------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(3) Net investment income 12.70% 10.33% 8.57% 8.81% 9.20% Expenses, before voluntary assumption and indirect expenses 2.02% 2.00%(4) 2.04%(4) 2.36%(4) 2.21%(4) Expenses, net of voluntary assumption and indirect expenses 2.01% N/A N/A 2.26% 0.89% - ----------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(5) 285% 446% 280% 273% 122%
1. For the period from June 15, 1995 (commencement of operations) to September 30, 1995. 2. Assumes a $1,000 hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 3. Annualized for periods of less than one full year. 4. Expense ratio reflects the effect of expenses paid indirectly by the Fund. 5. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended September 30, 1999, were $628,527,274 and $544,904,486, respectively. See accompanying Notes to Financial Statements 29 OPPENHEIMER INTERNATIONAL BOND FUND FINANCIAL HIGHLIGHTS Continued
CLASS C YEAR ENDED SEPTEMBER 30, 1999 1998 1997 1996 1995(1) - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA Net asset value, beginning of period $4.31 $5.50 $5.48 $5.09 $5.00 - ----------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .55 .52 .48 .48 .14 Net realized and unrealized gain (loss) (.14) (1.20) .07 .39 .09 ---------------------------------------------------------------- Total income (loss) from investment operations .41 (.68) .55 .87 .23 - ----------------------------------------------------------------------------------------------------------------------------- Dividends and distributions to shareholders: Dividends from net investment income (.50) (.49) (.48) (.48) (.14) Distributions from net realized gain -- (.02) (.05) -- -- ---------------------------------------------------------------- Total dividends and distributions to shareholders (.50) (.51) (.53) (.48) (.14) - ----------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.22 $4.31 $5.50 $5.48 $5.09 ---------------------------------------------------------------- ---------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE(2) 9.80% (13.16)% 10.52% 17.92% 4.73% - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $29,456 $27,636 $28,684 $10,282 $201 - ----------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $28,918 $29,336 $19,883 $ 4,039 $ 97 - ----------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(3) Net investment income 12.76% 10.33% 8.62% 8.76% 9.36% Expenses, before voluntary assumption and indirect expenses 2.02% 2.00%(4) 2.04%(4) 2.36%(4) 2.26%(4) Expenses, net of voluntary assumption and indirect expenses 2.01% N/A N/A 2.25% 0.85% - ----------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(5) 285% 446% 280% 273% 122%
1. For the period from June 15, 1995 (commencement of operations) to September 30, 1995. 2. Assumes a $1,000 hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 3. Annualized for periods of less than one full year. 4. Expense ratio reflects the effect of expenses paid indirectly by the Fund. 5. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended September 30, 1999, were $628,527,274 and $544,904,486, respectively. See accompanying Notes to Financial Statements 30 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 with a single series of the same name. The Fund is registered as a diversified, open-end management investment company under the Investment Company Act of 1940, as amended. The Fund's investment objective is to seek total return. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B and Class C shares. Class A shares are sold with a front-end sales charge on investments up to $1 million. Class B and Class C shares may be subject to a contingent deferred sales charge (CDSC). All classes of shares have identical rights to earnings, assets and voting privileges, except that each class has its own expenses directly attributable to that class and exclusive voting rights with respect to matters affecting that class. Classes A, B and C have separate distribution and/or service plans. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. - -------------------------------------------------------------------------------- SECURITIES VALUATION. Portfolio securities are valued at the close of the New York Stock Exchange on each trading day. Listed and unlisted securities for which such information is regularly reported are valued at the last sale price of the day or, in the absence of sales, at values based on the closing bid or the last sale price on the prior trading day. Long-term and short-term "non-money market" debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Such securities which cannot be valued by an approved portfolio pricing service are valued using dealer-supplied valuations provided the Manager is satisfied that the firm rendering the quotes is reliable and that the quotes reflect current market value, or are valued under consistently applied procedures established by the Board of Trustees to determine fair value in good faith. Short-term "money market type" debt securities having a remaining maturity of 60 days or less are valued at cost (or last determined market value) adjusted for amortization to maturity of any premium or discount. Foreign currency exchange contracts are valued based on the closing prices of the foreign currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. Options are valued based upon the last sale price on the principal exchange on which the option is traded or, in the absence of any transactions that day, the value is based upon the last sale price on the prior trading date if it is within the spread between the closing bid and asked prices. If the last sale price is outside the spread, the closing bid is used. - -------------------------------------------------------------------------------- STRUCTURED NOTES. The Fund invests in foreign currency-linked structured notes whose market value and redemption price are linked to foreign currency exchange rates. The structured notes may be leveraged, which increases the notes' volatility relative to the face of the security. Fluctuations in value of these securities are recorded as unrealized gains and losses in the accompanying financial statements. As of September 30, 1999, the market value of these securities comprised 12.50% of the Fund's net assets and resulted in realized and unrealized losses of $4,894,003. The Fund also hedges a portion of the foreign currency exposure generated by these securities, as discussed in Note 5. 31 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued SECURITY CREDIT RISK. The Fund invests in high yield securities, which may be subject to a greater degree of credit risk, greater market fluctuations and risk of loss of income and principal, and may be more sensitive to economic conditions than lower yielding, higher rated fixed income securities. The Fund may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. As of September 30, 1999, securities with an aggregate market value of $2,581,104, representing 1.03% of the Fund's net assets, were in default. - -------------------------------------------------------------------------------- FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of foreign securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited. - -------------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. - -------------------------------------------------------------------------------- FEDERAL TAXES. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to shareholders. Therefore, no federal income or excise tax provision is required. As of September 30, 1999, the Fund had available for federal tax purposes an unused capital loss carryover of approximately $27,469,000, which expires between 2006 and 2007. 32 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- 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. - -------------------------------------------------------------------------------- CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Also, due to timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Fund. The Fund adjusts the classification of distributions to shareholders to reflect the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, during the year ended September 30, 1999, amounts have been reclassified to reflect a decrease in undistributed net investment income of $3,472,679. Accumulated net realized loss on investments was decreased by the same amount. - -------------------------------------------------------------------------------- EXPENSE OFFSET ARRANGEMENTS. Expenses paid indirectly represent a reduction of custodian fees for earnings on cash balances maintained by the Fund. - -------------------------------------------------------------------------------- OTHER. Investment transactions are accounted for as of trade date and dividend income is recorded on the ex-dividend date. Discount on securities purchased is amortized over the life of the respective securities, in accordance with federal income tax requirements. Realized gains and losses on investments and options written and unrealized appreciation and depreciation are determined on an identified cost basis, which is the same basis used for federal income tax purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at the current market value of the underlying security. Interest on payment-in-kind debt instruments is accrued as income at the coupon rate and a market adjustment is made periodically. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 33 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST The Fund has authorized an unlimited number of no par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:
YEAR ENDED SEPTEMBER 30, 1999 YEAR ENDED SEPTEMBER 30, 1998 SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------- CLASS A Sold 11,247,933 $ 48,852,991 11,871,238 $ 60,193,894 Dividends and/or distributions reinvested 1,806,309 7,837,034 1,567,641 7,767,951 Redeemed (11,446,723) (49,676,305) (11,744,939) (59,104,224) ----------------------------------------------------------- Net increase 1,607,519 $ 7,013,720 1,693,940 $ 8,857,621 ----------------------------------------------------------- ----------------------------------------------------------- - -------------------------------------------------------------------------------------- CLASS B Sold 7,369,029 $ 32,003,600 12,461,105 $ 62,756,778 Dividends and/or distributions reinvested 1,549,542 6,704,118 1,334,005 6,596,728 Redeemed (8,655,920) (37,435,413) (8,302,252) (40,871,842) ----------------------------------------------------------- Net increase 262,651 $ 1,272,305 5,492,858 $ 28,481,664 ----------------------------------------------------------- ----------------------------------------------------------- - -------------------------------------------------------------------------------------- CLASS C Sold 2,727,759 $ 11,829,225 3,210,030 $ 16,168,643 Dividends and/or distributions reinvested 450,539 1,948,375 387,861 1,917,981 Redeemed (2,613,007) (11,347,397) (2,401,923) (11,908,397) ----------------------------------------------------------- Net increase 565,291 $ 2,430,203 1,195,968 $ 6,178,227 ----------------------------------------------------------- -----------------------------------------------------------
- -------------------------------------------------------------------------------- 3. UNREALIZED GAINS AND LOSSES ON SECURITIES As of September 30, 1999, net unrealized depreciation on securities and options written of $15,597,996 was composed of gross appreciation of $5,185,272, and gross depreciation of $20,783,268. 34 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- 4. MANAGEMENT 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 an annual fee of 0.75% of the first $200 million of average annual net assets of the Fund, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% of the next $200 million and 0.50% of average annual net assets in excess of $1 billion. The Fund's management fee for the year ended September 30, 1999 was 0.74% of average annual net assets for each class of shares. - -------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, is the transfer and shareholder servicing agent for the Fund and other Oppenheimer funds. OFS's total costs of providing such services are allocated ratably to these funds. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN FEES. Under its General Distributor's Agreement with the Manager, the Distributor acts as the Fund's principal underwriter in the continuous public offering of the different classes of shares of the Fund. The compensation paid to (or retained by) the Distributor from the sale of shares or on the redemption of shares is shown in the table below for the period indicated.
AGGREGATE CLASS A COMMISSIONS COMMISSIONS COMMISSIONS FRONT-END FRONT-END ON CLASS A ON CLASS B ON CLASS C SALES CHARGES SALES CHARGES SHARES SHARES SHARES ON CLASS A RETAINED BY ADVANCED BY ADVANCED BY ADVANCED BY YEAR ENDED SHARES DISTRIBUTOR DISTRIBUTOR(1) DISTRIBUTOR(1) DISTRIBUTOR(1) - --------------------------------------------------------------------------------------------------------- September 30, 1999 $427,421 $118,394 $41,586 $887,632 $83,883
1. The Distributor advances commission payments to dealers for certain sales of Class A shares and for sales of Class B and Class C shares from its own resources at the time of sale.
CLASS A CLASS B CLASS C CONTINGENT DEFERRED CONTINGENT DEFERRED CONTINGENT DEFERRED SALES CHARGES SALES CHARGES SALES CHARGES YEAR ENDED RETAINED BY DISTRIBUTOR RETAINED BY DISTRIBUTOR RETAINED BY DISTRIBUTOR - ------------------------------------------------------------------------------------------------------ September 30, 1999 $-- $435,700 $8,730
The Fund has adopted a Service Plan for Class A shares and Distribution and Service Plans for Class B and Class C shares under Rule 12b-1 of the Investment Company Act. Under those plans the Fund pays the Distributor for all or a portion of its costs incurred in connection with the distribution and/or servicing of the shares of the particular class. 35 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued CLASS A SERVICE PLAN FEES. Under the Class A service plan, the Distributor currently uses the fees it receives from the Fund to pay brokers, dealers and other financial institutions. The Class A service plan permits reimbursements to the Distributor at a rate of up to 0.25% of average annual net assets of Class A shares. The Distributor makes payments to plan recipients quarterly at an annual rate not to exceed 0.25% of the average annual net assets consisting of Class A shares of the Fund. For the fiscal year ended September 30, 1999, payments under the Class A Plan totaled $248,547, all of which was paid by the Distributor to recipients. That included $15,717 paid to an affiliate of the Distributor's parent company. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent years. - -------------------------------------------------------------------------------- CLASS B AND CLASS C DISTRIBUTION AND SERVICE PLAN FEES. Under each plan, service fees and distribution fees are computed on the average of the net asset value of shares in the respective class, determined as of the close of each regular business day during the period. The Class B and Class C plans provide for the Distributor to be compensated at a flat rate, whether the Distributor's distribution expenses are more or less than the amounts paid by the Fund under the plan during the period for which the fee is paid. The Distributor retains the asset-based sales charge on Class B shares. The Distributor retains the asset-based sales charge on Class C shares during the first year the shares are outstanding. The asset-based sales charges on Class B and Class C shares allow investors to buy shares without a front-end sales charge while allowing the Distributor to compensate dealers that sell those shares. The Distributor's actual expenses in selling Class B and Class C shares may be more than the payments it receives from the contingent deferred sales charges collected on redeemed shares and from the Fund under the plans. If either the Class B or the Class C plan is terminated by the Fund, the Board of Trustees may allow the Fund to continue payments of the asset-based sales charge to the Distributor for distributing shares before the plan was terminated. The plans allow for the carry-forward of distribution expenses, to be recovered from asset-based sales charges in subsequent fiscal periods. Distribution fees paid to the Distributor for the year ended September 30, 1999, were as follows:
DISTRIBUTOR'S DISTRIBUTOR'S AGGREGATE UNREIMBURSED UNREIMBURSED EXPENSES AS % TOTAL PAYMENTS AMOUNT RETAINED EXPENSES OF NET ASSETS UNDER PLAN BY DISTRIBUTOR UNDER PLAN OF CLASS - --------------------------------------------------------------------------------------------- Class B Plan $1,228,808 $1,008,649 $5,605,885 4.73% Class C Plan 289,134 154,968 554,577 1.88
36 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- 5. FOREIGN CURRENCY TRANSLATION The accounting records of the Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of foreign securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. As of September 30, 1999, the Fund had outstanding foreign currency contracts as follows:
VALUATION CONTRACT AS OF EXPIRATION AMOUNT SEPTEMBER UNREALIZED UNREALIZED CONTRACT DESCRIPTION DATES (000'S) 30, 1999 APPRECIATION DEPRECIATION - --------------------------------------------------------------------------------------------------------------------- CONTRACTS TO PURCHASE Euro (EUR) 11/19/99 EUR 2,481 $ 2,653,276 $ 54,716 $ -- Euro (EUR) 11/24/99 EUR 2,430 2,599,383 52,572 -- Japanese Yen (JPY) 10/4/99 JPY 1,725,000 16,211,683 1,056,522 -- ----------------------------- 1,163,810 -- ----------------------------- CONTRACTS TO SELL Australian Dollar (AUD) 11/17/99 AUD 1,450 947,010 -- 5,771 British Pound Sterling (GBP) 10/12/99 GBP 3,505 5,772,481 -- 93,961 British Pound Sterling (GBP) 11/29/99 GBP 1,480 2,437,606 -- 3,213 British Pound Sterling (GBP) 11/19/99 GBP 1,600 2,635,217 -- 36,657 Japanese Yen (JPY) 11/24/99 JPY 262,829 2,489,801 157,010 -- New Zealand Dollar (NZD) 11/15/99 NZD 3,320 1,716,077 50,744 -- ----------------------------- 107,754 139,602 ----------------------------- Total Unrealized Appreciation and Depreciation $1,271,564 $139,602 ----------------------------- -----------------------------
37 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6. FUTURES CONTRACTS The Fund may buy and sell futures contracts in order to gain exposure to or to seek to protect against changes in interest rates. The Fund may also buy or write put or call options on these futures contracts. The Fund generally sells futures contracts to hedge against increases in interest rates and the resulting negative effect on the value of fixed rate portfolio securities. The Fund may also purchase futures contracts to gain exposure to changes in interest rates as it may be more efficient or cost effective than actually buying fixed income securities. Upon entering into a futures contract, the Fund is required to deposit either cash or securities (initial margin) in an amount equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund may recognize a realized gain or loss when the contract is closed or expires. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Statement of Investments. The Statement of Assets and Liabilities reflects a receivable and/or payable for the daily mark to market for variation margin. Risks of entering into futures contracts (and related options) include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. As of September 30, 1999, the Fund had outstanding futures contracts as follows:
VALUATION AS OF UNREALIZED EXPIRATION NUMBER OF SEPTEMBER 30, APPRECIATION CONTRACT DESCRIPTION DATE CONTRACTS 1999 (DEPRECIATION) - --------------------------------------------------------------------------------------------- CONTRACTS TO PURCHASE Euro-German Foreign Government 12/8/99 384 $42,875,367 $ (75,764) U.S. Long Bond 12/20/99 49 5,582,938 (80,774) U.S. Treasury 10 yr. 12/20/99 1 110,125 266 ---------- (156,272) ---------- CONTRACTS TO SELL U.K. Long Gilt 12/24/99 11 1,928,438 44,746 ---------- $(111,526) ---------- ----------
38 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- 7. OPTION ACTIVITY The Fund may buy and sell put and call options, or write put and covered call options on portfolio securities in order to produce incremental earnings or protect against changes in the value of portfolio securities. The Fund generally purchases put options or writes covered call options to hedge against adverse movements in the value of portfolio holdings. When an option is written, the Fund receives a premium and becomes obligated to sell or purchase the underlying security at a fixed price, upon exercise of the option. Options are valued daily based upon the last sale price on the principal exchange on which the option is traded and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss upon the expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. Securities designated to cover outstanding call options are noted in the Statement of Investments where applicable. Shares subject to call, expiration date, exercise price, premium received and market value are detailed in a note to the Statement of Investments. Options written are reported as a liability in the Statement of Assets and Liabilities. Gains and losses are reported in the Statement of Operations. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Written option activity for the year ended September 30, 1999, was as follows:
CALL OPTIONS PUT OPTIONS ----------------------------------------------------------------------------------------- NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF OPTIONS PREMIUMS OPTIONS PREMIUMS - ----------------------------------------------------------------------------------------------------------------------------- Options outstanding as of September 30, 1998 1,783,440,000 $ 404,348 2,105,362,820 $ 318,516 Options written 2,687,021,594 1,262,262 2,240,924,421 1,734,986 Options closed or expired (2,686,295,380) (935,602) (4,281,896,081) (1,324,600) Options exercised (1,784,166,214) (731,008) (12,307,623) (540,175) ----------------------------------------------------------------------------------------- Options outstanding as of September 30, 1999 -- $ -- 52,083,537 $ 188,727 ----------------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------
39 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 8. ILLIQUID OR RESTRICTED SECURITIES As of September 30, 1999, investments in securities included issues that are illiquid or restricted. Restricted securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Trustees as reflecting fair value. A security may also be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Fund intends to invest no more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid or restricted securities. Certain restricted securities, eligible for resale to qualified institutional investors, are not subject to that limitation. The aggregate value of illiquid or restricted securities subject to this limitation as of September 30, 1999, was $23,128,925, which represents 9.24% of the Fund's net assets, of which $77,987 is considered restricted. Information concerning restricted securities is as follows:
VALUATION PER UNIT AS OF SEPTEMBER 30, SECURITY ACQUISITION DATE COST PER UNIT 1999 - --------------------------------------------------------------------------------------------------------------- BONDS Tag Heuer International SA, 12% Sr. Sub. Nts., 12/15/05 5/14/96 105.25% 111.41% - --------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------
9. BANK BORROWINGS The Fund may borrow from a bank for temporary or emergency purposes including, without limitation, funding of shareholder redemptions provided asset coverage for borrowings exceeds 300%. The Fund has entered into an agreement which enables it to participate with other Oppenheimer funds in an unsecured line of credit with a bank, which permits borrowings up to $400 million, collectively. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the average unutilized amount of the credit facility at a rate of 0.0575% per annum. The Fund had no borrowings outstanding during the year ended September 30, 1999. 40 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- INDEPENDENT AUDITORS' REPORT - -------------------------------------------------------------------------------- TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER INTERNATIONAL BOND FUND: We have audited the accompanying statement of assets and liabilities, including the statement of investments, of Oppenheimer International Bond Fund as of September 30, 1999, the related statement of operations for the year then ended, the statements of changes in net assets for the years ended September 30, 1999 and September 30, 1998, and the financial highlights for the period June 15, 1995, to September 30, 1999. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 1999, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of Oppenheimer International Bond Fund as of September 30, 1999, the results of its operations, the changes in its net assets, and the financial highlights for the respective stated periods, in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP Denver, Colorado October 21, 1999 41 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- FEDERAL INCOME TAX INFORMATION UNAUDITED - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- In early 2000, shareholders will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 1999. Regulations of the U.S. Treasury Department require the Fund to report information to the Internal Revenue Service. None of the dividends paid by the Fund during the fiscal year ended September 30, 1999, are eligible for the corporate dividend-received deduction. 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 regulations, we recommend that you consult your tax advisor for specific guidance. 42 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- A SERIES OF OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- OFFICERS AND TRUSTEES James C. Swain, Trustee and Chairman of the Board Bridget A. Macaskill, Trustee and President William H. Armstrong, Trustee Robert G. Avis, Trustee William A. Baker, Trustee George C. Bowen, Trustee Jon S. Fossel, Trustee Sam Freedman, Trustee Raymond J. Kalinowski, Trustee C. Howard Kast, Trustee Robert M. Kirchner, Trustee Ned M. Steel, Trustee Arthur P. Steinmetz, Vice President Andrew J. Donohue, Vice President and Secretary Brian W. Wixted, Treasurer Robert G. Zack, Assistant Secretary Robert J. Bishop, Assistant Treasurer Scott T. Farrar, Assistant Treasurer - -------------------------------------------------------------------------------- INVESTMENT ADVISOR OppenheimerFunds, Inc. - -------------------------------------------------------------------------------- DISTRIBUTOR OppenheimerFunds Distributor, Inc. - -------------------------------------------------------------------------------- TRANSFER AND OppenheimerFunds Services SHAREHOLDER SERVICING AGENT - -------------------------------------------------------------------------------- CUSTODIAN OF The Bank of New York PORTFOLIO SECURITIES - -------------------------------------------------------------------------------- INDEPENDENT AUDITORS Deloitte & Touche LLP - -------------------------------------------------------------------------------- LEGAL COUNSEL Myer, Swanson, Adams & Wolf, P.C. This is a copy of a report to shareholders of Oppenheimer International Bond Fund. This report must be preceded or accompanied by a Prospectus of Oppenheimer International Bond Fund. For material information concerning the Fund, see the Prospectus. SHARES OF OPPENHEIMER FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT GUARANTEED BY ANY BANK, ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. 43 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- OPPENHEIMERFUNDS FAMILY - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ GLOBAL EQUITY Developing Markets Fund Global Fund International Small Company Fund Quest Global Value Fund Europe Fund Global Growth & Income Fund International Growth Fund - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ EQUITY STOCK STOCK & BOND Enterprise Fund(1) Main Street-Registered TradeMark- Growth & Income Fund Discovery Fund Quest Opportunity Value Fund Main Street-Registered Trademark- Total Return Fund Small Cap Fund Quest Small Cap Value Fund Quest Balanced Value Fund MidCap Fund Capital Income Fund(2) Capital Appreciation Fund Multiple Strategies Fund Growth Fund Disciplined Allocation Fund Disciplined Value Fund Convertible Securities Fund Quest Value Fund Trinity Growth Fund SPECIALTY Trinity Core Fund Real Asset Fund Trinity Value Fund Gold & Special Minerals Fund - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ FIXED INCOME TAXABLE MUNICIPAL International Bond Fund California Municipal Fund(3) World Bond Fund Main Street California Municipal Fund(3) High Yield Fund Florida Municipal Fund(3) Champion Income Fund New Jersey Municipal Fund(3) Strategic Income Fund New York Municipal Fund(3) Bond Fund Pennsylvania Municipal Fund(3) Senior Floating Rate Fund Municipal Bond Fund U.S. Government Trust Insured Municipal Fund Limited-Term Government Fund Intermediate Municipal Fund ROCHESTER DIVISION Rochester Fund Municipals Limited Term New York Municipal Fund - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ MONEY MARKET(4) Money Market Fund Cash Reserves
1. Effective July 1, 1999, this fund is closed to new investors. See prospectus for details. 2. On 4/1/99, the Fund's name was changed from "Oppenheimer Equity Income Fund." 3. Available to investors only in certain states. 4. An investment in money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although these funds may seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds. Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two World Trade Center, New York, NY 10048-0203. - -C- Copyright 1999 OppenheimerFunds, Inc. All rights reserved. 44 OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- INFORMATION AND SERVICES - -------------------------------------------------------------------------------- As an Oppenheimer fund shareholder, you can benefit from special services designed to make investing simple. Whether it's automatic investment plans, timely market updates, or immediate account access, you can count on us whenever you need assistance. So call us today, or visit our website--we're here to help. - -------------------------------------------------------------------------------- INTERNET 24-hr access to account information and transactions www.oppenheimerfunds.com GENERAL INFORMATION Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET 1.800.525.7048 TELEPHONE TRANSACTIONS Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET 1.800.852.8457 PHONELINK 24-hr automated information and automated transactions 1.800.533.3310 TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD) Mon-Fri 8:30am-7pm ET 1.800.843.4461 OPPENHEIMERFUNDS INFORMATION Hotline 24 hours a day, timely and insightful messages on the economy and issues that may affect your investments 1.800.835.3104 TRANSFER AND SHAREHOLDER SERVICING AGENT OppenheimerFunds Services P.O. Box 5270, Denver, CO 80217-5270 - -------------------------------------------------------------------------------- [LOGO] OPPENHEIMERFUNDS-REGISTERED TRADEMARK- DISTRIBUTOR, INC. RA0880.001.0999 November 29, 1999 -----END PRIVACY-ENHANCED MESSAGE-----