-----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, A2yEZVTIdYHPO0eiA51zxR0e/q6QTNTzM9yoZ26bS00sozovZu7Q+hiTawuCRBKc 2ntZZ7taSPrxC2gMi4HCRQ== 0000935069-06-003131.txt : 20061127 0000935069-06-003131.hdr.sgml : 20061127 20061127125016 ACCESSION NUMBER: 0000935069-06-003131 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060930 FILED AS OF DATE: 20061127 DATE AS OF CHANGE: 20061127 EFFECTIVENESS DATE: 20061127 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER INTERNATIONAL BOND FUND CENTRAL INDEX KEY: 0000939800 IRS NUMBER: 841308320 STATE OF INCORPORATION: MA FISCAL YEAR END: 0931 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-07255 FILM NUMBER: 061238885 BUSINESS ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 BUSINESS PHONE: 3037683200 MAIL ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 0000939800 S000007072 OPPENHEIMER INTERNATIONAL BOND FUND C000019293 A C000019294 B C000019295 C C000019296 N C000019297 Y N-CSR 1 ra880_35570ncsr.txt RA880_35570NCSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-07255 OPPENHEIMER INTERNATIONAL BOND FUND (Exact name of registrant as specified in charter) 6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924 (Address of principal executive offices) (Zip code) ROBERT G. ZACK, ESQ. OPPENHEIMERFUNDS, INC. TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1008 (Name and address of agent for service) Registrant's telephone number, including area code: (303) 768-3200 Date of fiscal year end: SEPTEMBER Date of reporting period: 09/30/2006 ITEM 1. REPORTS TO STOCKHOLDERS. TOP HOLDINGS AND ALLOCATIONS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOP TEN GEOGRAPHICAL HOLDINGS - -------------------------------------------------------------------------------- United States 34.1% - -------------------------------------------------------------------------------- Italy 6.9 - -------------------------------------------------------------------------------- Brazil 6.3 - -------------------------------------------------------------------------------- France 5.1 - -------------------------------------------------------------------------------- Germany 5.0 - -------------------------------------------------------------------------------- United Kingdom 3.8 - -------------------------------------------------------------------------------- Russia 3.2 - -------------------------------------------------------------------------------- Japan 2.9 - -------------------------------------------------------------------------------- Colombia 2.8 - -------------------------------------------------------------------------------- Peru 2.8 Portfolio holdings and allocations are subject to change. Percentages are as of September 30, 2006, and are based on the total market value of investments. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- REGIONAL ALLOCATION [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] United States/Canada 36.2% Europe 24.0 Latin America 18.3 Asia 9.0 Emerging Europe 7.2 Middle East/Africa 4.9 Supranational 0.4 Portfolio holdings and allocations are subject to change. Percentages are as of September 30, 2006, and are based on the total market value of investments. - -------------------------------------------------------------------------------- 9 | OPPENHEIMER INTERNATIONAL BOND FUND FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED SEPTEMBER 30, 2006, FOLLOWED BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE BROAD-BASED MARKET INDEX. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. Over the 12-month period ended September 30, 2006, Oppenheimer International Bond Fund's Class A shares (without sales charge) produced higher returns than its benchmark, the Citigroup Non-U.S. Dollar World Government Bond Index, and finished in the first quartile of all funds reported in the Lipper International Income Funds category. The Fund benefited early in the reporting period from its emphasis on bonds and currencies from the emerging markets, which continued to gain value in a robust global economy. The Fund's investments in Brazil, Mexico, Turkey and Russia produced particularly attractive returns as these nations made progress toward reforming their financial systems and taming inflation. Conversely, the Fund maintained relatively light holdings of bonds and currencies from the developed markets of Europe and Japan, which produced relatively lackluster returns at the time. In the spring of 2006, surging commodity prices and weakening housing markets in the United States sparked concerns among global investors that a U.S. economic slowdown might precede a downturn in international economic conditions. As investors grew more risk-averse, global market volatility intensified, and the Fund's overweighted position in emerging market bonds detracted modestly from its relative performance. The Fund's returns also were undermined to a mild degree by unfortunate timing in the trading of yen and euros in the currency markets. However, these setbacks were not sufficient to completely erase the reporting period's previous gains. In addition, the effects of market weakness in 2006 were offset by strong results from our security selection and duration management strategies. We recently have focused more intently on mortgage- and asset-backed securities from international issuers, enabling the Fund to capture incrementally higher yields. In the spring of 2006, we began to increase the Fund's average duration--a measure of sensitivity to changing interest rates--toward a range that is closer to industry averages. This change helped the Fund participate more fully in periodic rallies during the second half of the reporting period. COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the performance of a hypothetical $10,000 investment in each class of shares of the Fund held until September 30, 2006. In the case of Class A, Class B and Class C shares, performance is measured over a ten-fiscal-year period. In the case of Class N shares, performance is measured from inception of the Class on March 1, 2001. In the case of Class Y shares, performance is measured from inception of the Class on September 27, 2004. The Fund's performance 10 | OPPENHEIMER INTERNATIONAL BOND FUND reflects the deduction of the maximum initial sales charge on Class A shares, the applicable contingent deferred sales charge on Class B, Class C and Class N shares, and reinvestments of all dividends and capital gains distributions. The Fund's performance is compared to the Citigroup Non-U.S. Dollar World Government Bond Index, a subset of the Citigroup World Government Bond Index. The Citigroup Non-U.S. Dollar World Government Bond Index is a market capitalization weighted benchmark that tracks the performance of government bond markets including Australia, Canada, Japan and various European countries. Thus, the index does not reflect the performance of the fixed income markets in either the United States or in any emerging market countries. In addition, it is comprised of only government bonds and does not reflect the performance of corporate bonds. Index performance reflects the reinvestment of dividends but does not consider the effect of capital gains or transaction costs, and none of the data in the graphs that follow shows the effect of taxes. The Fund's performance reflects the effects of Fund business and operating expenses. While index comparisons may be useful to provide a benchmark for the Fund's performance, it must be noted that the Fund's investments are not limited to the securities in the indices. 11 | OPPENHEIMER INTERNATIONAL BOND FUND FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- CLASS A SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer International Bond Fund (Class A) Citigroup Non-U.S. Dollar World Government Bond Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer Citigroup Non-U.S. International Dollar World Bond Fund (Class A) Government Bond Index 09/30/1996 $ 9,525 $10,000 12/31/1996 $10,000 $10,212 03/31/1997 $10,074 $ 9,622 06/30/1997 $10,354 $ 9,894 09/30/1997 $10,604 $ 9,914 12/31/1997 $10,246 $ 9,777 03/31/1998 $10,389 $ 9,817 06/30/1998 $10,287 $ 9,981 09/30/1998 $ 9,279 $10,940 12/31/1998 $ 9,800 $11,516 03/31/1999 $ 9,780 $10,959 06/30/1999 $10,114 $10,467 09/30/1999 $10,261 $11,107 12/31/1999 $10,878 $10,932 03/31/2000 $11,327 $10,805 06/30/2000 $11,196 $10,720 09/30/2000 $11,177 $10,235 12/31/2000 $11,623 $10,645 03/31/2001 $11,322 $10,122 06/30/2001 $11,372 $ 9,923 09/30/2001 $11,333 $10,692 12/31/2001 $11,872 $10,268 03/31/2002 $12,127 $10,076 06/30/2002 $13,103 $11,484 09/30/2002 $13,234 $11,810 12/31/2002 $14,343 $12,526 03/31/2003 $14,772 $12,993 06/30/2003 $15,922 $13,540 09/30/2003 $16,764 $13,912 12/31/2003 $18,055 $14,845 03/31/2004 $18,979 $15,079 06/30/2004 $17,983 $14,569 09/30/2004 $18,702 $15,047 12/31/2004 $20,864 $16,647 03/31/2005 $20,276 $16,131 06/30/2005 $21,160 $15,697 09/30/2005 $21,606 $15,520 12/31/2005 $21,551 $15,115 03/31/2006 $22,088 $15,086 06/30/2006 $21,492 $15,695 09/30/2006 $22,304 $15,833 AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT 9/30/06 1-Year -1.68% 5-Year 13.39% 10-Year 8.35% 12 | OPPENHEIMER INTERNATIONAL BOND FUND CLASS B SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer International Bond Fund (Class B) Citigroup Non-U.S. Dollar World Government Bond Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer Citigroup Non-U.S. International Dollar World Bond Fund (Class B) Government Bond Index 09/30/1996 $10,000 $10,000 12/31/1996 $10,480 $10,212 03/31/1997 $10,538 $ 9,622 06/30/1997 $10,811 $ 9,894 09/30/1997 $11,052 $ 9,914 12/31/1997 $10,660 $ 9,777 03/31/1998 $10,789 $ 9,817 06/30/1998 $10,663 $ 9,981 09/30/1998 $ 9,597 $10,940 12/31/1998 $10,118 $11,516 03/31/1999 $10,079 $10,959 06/30/1999 $10,405 $10,467 09/30/1999 $10,537 $11,107 12/31/1999 $11,152 $10,932 03/31/2000 $11,593 $10,805 06/30/2000 $11,412 $10,720 09/30/2000 $11,374 $10,235 12/31/2000 $11,833 $10,645 03/31/2001 $11,504 $10,122 06/30/2001 $11,533 $ 9,923 09/30/2001 $11,470 $10,692 12/31/2001 $11,964 $10,268 03/31/2002 $12,228 $10,076 06/30/2002 $13,189 $11,484 09/30/2002 $13,274 $11,810 12/31/2002 $14,385 $12,526 03/31/2003 $14,815 $12,993 06/30/2003 $15,969 $13,540 09/30/2003 $16,814 $13,912 12/31/2003 $18,109 $14,845 03/31/2004 $19,036 $15,079 06/30/2004 $18,036 $14,569 09/30/2004 $18,758 $15,047 12/31/2004 $20,926 $16,647 03/31/2005 $20,336 $16,131 06/30/2005 $21,223 $15,697 09/30/2005 $21,671 $15,520 12/31/2005 $21,615 $15,115 03/31/2006 $22,154 $15,086 06/30/2006 $21,555 $15,695 09/30/2006 $22,370 $15,833 AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT 9/30/06 1-Year -2.48% 5-Year 13.30% 10-Year 8.39% THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE, REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 4.75%; FOR CLASS B SHARES, THE CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE 10-YEAR RETURN FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 17 FOR FURTHER INFORMATION. 13 | OPPENHEIMER INTERNATIONAL BOND FUND FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- CLASS C SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer International Bond Fund (Class C) Citigroup Non-U.S. Dollar World Government Bond Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer Citigroup Non-U.S. International Dollar World Bond Fund (Class C) Government Bond Index 09/30/1996 $10,000 $10,000 12/31/1996 $10,480 $10,212 03/31/1997 $10,519 $ 9,622 06/30/1997 $10,812 $ 9,894 09/30/1997 $11,052 $ 9,914 12/31/1997 $10,660 $ 9,777 03/31/1998 $10,789 $ 9,817 06/30/1998 $10,663 $ 9,981 09/30/1998 $ 9,598 $10,940 12/31/1998 $10,119 $11,516 03/31/1999 $10,080 $10,959 06/30/1999 $10,407 $10,467 09/30/1999 $10,538 $11,107 12/31/1999 $11,153 $10,932 03/31/2000 $11,594 $10,805 06/30/2000 $11,414 $10,720 09/30/2000 $11,376 $10,235 12/31/2000 $11,836 $10,645 03/31/2001 $11,507 $10,122 06/30/2001 $11,535 $ 9,923 09/30/2001 $11,473 $10,692 12/31/2001 $11,967 $10,268 03/31/2002 $12,231 $10,076 06/30/2002 $13,192 $11,484 09/30/2002 $13,297 $11,810 12/31/2002 $14,352 $12,526 03/31/2003 $14,754 $12,993 06/30/2003 $15,876 $13,540 09/30/2003 $16,685 $13,912 12/31/2003 $17,939 $14,845 03/31/2004 $18,857 $15,079 06/30/2004 $17,799 $14,569 09/30/2004 $18,479 $15,047 12/31/2004 $20,582 $16,647 03/31/2005 $19,962 $16,131 06/30/2005 $20,796 $15,697 09/30/2005 $21,194 $15,520 12/31/2005 $21,099 $15,115 03/31/2006 $21,585 $15,086 06/30/2006 $20,999 $15,695 09/30/2006 $21,716 $15,833 AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT 9/30/06 1-Year 1.50% 5-Year 13.61% 10-Year 8.06% 14 | OPPENHEIMER INTERNATIONAL BOND FUND CLASS N SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer International Bond Fund (Class N) Citigroup Non-U.S. Dollar World Government Bond Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer Citigroup Non-U.S. International Dollar World Bond Fund (Class N) Government Bond Index 03/01/2001 $10,000 $10,000 03/31/2001 $ 9,706 $ 9,598 06/30/2001 $ 9,747 $ 9,409 09/30/2001 $ 9,712 $10,139 12/31/2001 $10,144 $ 9,736 03/31/2002 $10,380 $ 9,554 06/30/2002 $11,208 $10,889 09/30/2002 $11,287 $11,198 12/31/2002 $12,225 $11,877 03/31/2003 $12,583 $12,320 06/30/2003 $13,552 $12,838 09/30/2003 $14,257 $13,192 12/31/2003 $15,315 $14,077 03/31/2004 $16,115 $14,298 06/30/2004 $15,227 $13,814 09/30/2004 $15,824 $14,268 12/31/2004 $17,669 $15,785 03/31/2005 $17,122 $15,296 06/30/2005 $17,852 $14,884 09/30/2005 $18,240 $14,716 12/31/2005 $18,141 $14,332 03/31/2006 $18,605 $14,304 06/30/2006 $18,083 $14,882 09/30/2006 $18,748 $15,013 AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT 9/30/06 1-Year 1.82% 5-Year 14.06% Since Inception (3/1/01) 11.92% THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE, REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 4.75%; FOR CLASS B SHARES, THE CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE 10-YEAR RETURN FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 17 FOR FURTHER INFORMATION. 15 | OPPENHEIMER INTERNATIONAL BOND FUND FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- CLASS Y SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer International Bond Fund (Class Y) Citigroup Non-U.S. Dollar World Government Bond Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer Citigroup Non-U.S. International Dollar World Bond Fund (Class Y) Government Bond Index 09/27/2004 $10,000 $10,000 09/30/2004 $10,092 $10,000 12/31/2004 $11,270 $11,064 03/31/2005 $10,942 $10,721 06/30/2005 $11,449 $10,432 09/30/2005 $11,702 $10,315 12/31/2005 $11,684 $10,045 03/31/2006 $11,987 $10,026 06/30/2006 $11,675 $10,431 09/30/2006 $12,129 $10,523 AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 9/30/06 1-Year 3.64% 5-Year N/A Since Inception (9/27/04) 10.09% THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE, REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 4.75%; FOR CLASS B SHARES, THE CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, THE 10-YEAR RETURN FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. SEE PAGE 17 FOR FURTHER INFORMATION. 16 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES - -------------------------------------------------------------------------------- Total returns and the ending account values in the graphs include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. The Fund's total returns shown do not reflect the deduction of income taxes on an individual's investment. Taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares. INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. The Fund's investment strategy and focus can change over time. The mention of specific fund holdings does not constitute a recommendation by OppenheimerFunds, Inc. CLASS A shares of the Fund were first publicly offered on 6/15/95. Unless otherwise noted, Class A returns include the current maximum initial sales charge of 4.75%. CLASS B shares of the Fund were first publicly offered on 6/15/95. Unless otherwise noted, Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to Class A shares 72 months after purchase, the 10-year return for Class B uses Class A performance for the period after conversion. Class B shares are subject to an annual 0.75% asset-based sales charge. CLASS C shares of the Fund were first publicly offered on 6/15/95. Unless otherwise noted, Class C returns include the contingent deferred sales charge of 1% for the 1-year period. Class C shares are subject to an annual 0.75% asset-based sales charge. CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares are offered only through retirement plans. Unless otherwise noted, Class N returns include the contingent deferred sales charge of 1% for the 1-year period. Class N shares are subject to an annual 0.25% asset-based sales charge. 17 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES - -------------------------------------------------------------------------------- CLASS Y shares of the Fund were first publicly offered on 9/27/04. Class Y shares are offered only to certain institutional investors under special agreement with the Distributor. This Class has a limited operating history. An explanation of the calculation of performance is in the Fund's Statement of Additional Information. 18 | OPPENHEIMER INTERNATIONAL BOND FUND FUND EXPENSES - -------------------------------------------------------------------------------- FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions; and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended September 30, 2006. ACTUAL EXPENSES. The "actual" lines of the table provide information about actual account values and actual expenses. You may use the information on this line for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the "actual" line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the table provide information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio for each class of shares, and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or contingent deferred sales charges (loads), or a $12.00 fee imposed annually on accounts valued at less than $500.00 (subject to exceptions described in 19 | OPPENHEIMER INTERNATIONAL BOND FUND FUND EXPENSES - -------------------------------------------------------------------------------- the Statement of Additional Information). Therefore, the "hypothetical" lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- BEGINNING ENDING EXPENSES ACCOUNT ACCOUNT PAID DURING VALUE VALUE 6 MONTHS ENDED (4/1/06) (9/30/06) SEPTEMBER 30, 2006 - -------------------------------------------------------------------------------- Class A Actual $1,000.00 $1,009.80 $4.90 - -------------------------------------------------------------------------------- Class A Hypothetical 1,000.00 1,020.21 4.92 - -------------------------------------------------------------------------------- Class B Actual 1,000.00 1,005.50 9.19 - -------------------------------------------------------------------------------- Class B Hypothetical 1,000.00 1,015.94 9.24 - -------------------------------------------------------------------------------- Class C Actual 1,000.00 1,006.10 8.59 - -------------------------------------------------------------------------------- Class C Hypothetical 1,000.00 1,016.55 8.63 - -------------------------------------------------------------------------------- Class N Actual 1,000.00 1,007.70 7.12 - -------------------------------------------------------------------------------- Class N Hypothetical 1,000.00 1,018.00 7.16 - -------------------------------------------------------------------------------- Class Y Actual 1,000.00 1,011.80 2.78 - -------------------------------------------------------------------------------- Class Y Hypothetical 1,000.00 1,022.31 2.79 Hypothetical assumes 5% annual return before expenses. Expenses are equal to the Fund's annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). Those annualized expense ratios based on the 6-month period ended September 30, 2006 are as follows: CLASS EXPENSE RATIOS - ------------------------ Class A 0.97% - ------------------------ Class B 1.82 - ------------------------ Class C 1.70 - ------------------------ Class N 1.41 - ------------------------ Class Y 0.55 - -------------------------------------------------------------------------------- The expense ratios reflect voluntary waivers or reimbursements of expenses by the Fund's Transfer Agent that can be terminated at any time, without advance notice. The "Financial Highlights" tables in the Fund's financial statements, included in this report, also show the gross expense ratios, without such waivers or reimbursements. 20 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS September 30, 2006 - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------- U.S. GOVERNMENT OBLIGATIONS--17.8% - -------------------------------------------------------------------------------------------------------- U.S. Treasury Bills, 5.02%, 11/9/06 1,2,3 $ 671,270,000 $ 667,712,741 - -------------------------------------------------------------------------------------------------------- U.S. Treasury Bonds, 5.25%, 2/15/29 1 90,110,000 95,312,501 - -------------------------------------------------------------------------------------------------------- U.S. Treasury Nts., 5.125%, 5/15/16 1,4 197,180,000 204,605,207 ---------------- Total U.S. Government Obligations (Cost $960,250,934) 967,630,449 - -------------------------------------------------------------------------------------------------------- FOREIGN GOVERNMENT OBLIGATIONS--45.2% - -------------------------------------------------------------------------------------------------------- ARGENTINA--1.3% Argentina (Republic of) Bonds: 2%, 9/30/14 5 [ARP] 21,270,000 6,975,498 5.589%, 8/3/12 6 20,544,000 18,972,309 Series V, 7%, 3/28/11 35,185,000 33,277,187 - -------------------------------------------------------------------------------------------------------- Buenos Aires (Province of) Bonds, Bonos de Consolidacion de Deudas, Series PBA1, 4/1/07 5,7 [ARP] 321,874 139,328 - -------------------------------------------------------------------------------------------------------- Central Bank of Argentina Bonds, 2%, 2/4/18 5 [ARP] 23,543,518 11,363,090 ---------------- 70,727,412 - -------------------------------------------------------------------------------------------------------- AUSTRALIA--2.3% New South Wales Treasury Corp. Gtd. Bonds, 8%, 3/1/08 [AUD] 162,190,000 124,022,392 - -------------------------------------------------------------------------------------------------------- BELGIUM--1.8% Belgium (Kingdom of) Bonds, Series 44, 5%, 3/28/35 [EUR] 21,695,000 32,418,290 - -------------------------------------------------------------------------------------------------------- Belgium (Kingdom of) Treasury Bills, 3.192%, 12/14/06 8 [EUR] 53,700,000 67,664,751 ---------------- 100,083,041 - -------------------------------------------------------------------------------------------------------- BRAZIL--1.3% Brazil (Federal Republic of) Bonds: 8%, 1/15/18 14,015,000 15,430,515 8.75%, 2/4/25 1,990,000 2,375,065 8.875%, 10/14/19 17,724,000 21,064,974 10.50%, 7/14/14 18,700,000 23,543,300 - -------------------------------------------------------------------------------------------------------- Brazil (Federal Republic of) Nts., 7.875%, 3/7/15 4,000,000 4,394,000 - -------------------------------------------------------------------------------------------------------- Brazil (Federal Republic of) Unsec. Bonds, 4.75%, 4/10/07 5 [JPY] 500,000,000 4,380,952 ---------------- 71,188,806 - -------------------------------------------------------------------------------------------------------- BULGARIA--0.1% Bulgaria (Republic of) Bonds: 8.25%, 1/15/15 1,500,000 1,771,875 8.25%, 1/15/15 9 1,440,000 1,701,000 ---------------- 3,472,875 - -------------------------------------------------------------------------------------------------------- CANADA--2.5% Canada (Government of) Nts., 4%, 9/1/10 [CAD] 148,885,000 133,757,405
21 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------- COLOMBIA--1.7% Colombia (Republic of) Bonds: 7.375%, 9/18/37 $ 12,096,000 $ 12,277,440 10.75%, 1/15/13 10,000,000 12,260,000 12%, 10/22/15 [COP] 75,961,000,000 36,208,987 - -------------------------------------------------------------------------------------------------------- Colombia (Republic of) Nts.: 8.25%, 12/22/14 6,655,000 7,380,395 11.75%, 3/1/10 [COP] 35,992,780,000 16,044,844 - -------------------------------------------------------------------------------------------------------- Colombia (Republic of) Unsec. Bonds, 8.125%, 5/21/24 8,290,000 9,160,450 ---------------- 93,332,116 - -------------------------------------------------------------------------------------------------------- DENMARK--0.5% Denmark (Kingdom of) Bonds: 4%, 11/15/10 [DKK] 48,215,000 8,319,760 4%, 11/15/15 [DKK] 35,520,000 6,179,913 7%, 11/10/24 [DKK] 12,960,000 3,085,352 - -------------------------------------------------------------------------------------------------------- Denmark (Kingdom of) Nts., 4%, 8/15/08 [DKK] 51,660,000 8,843,486 ---------------- 26,428,511 - -------------------------------------------------------------------------------------------------------- EL SALVADOR--0.1% El Salvador (Republic of) Bonds: 7.625%, 9/21/34 9 1,185,000 1,300,538 7.65%, 6/15/35 9 3,025,000 3,259,438 ---------------- 4,559,976 - -------------------------------------------------------------------------------------------------------- FRANCE--5.5% France (Government of) Bonds, 3.25%, 4/25/16 [EUR] 138,875,000 169,510,408 - -------------------------------------------------------------------------------------------------------- France (Government of) Obligations Assimilables du Tresor Bonds, 4%, 4/25/55 [EUR] 58,980,000 76,382,095 - -------------------------------------------------------------------------------------------------------- France (Government of) Treasury Bills, 3.195%, 12/14/06 8 [EUR] 43,410,000 54,693,925 ---------------- 300,586,428 - -------------------------------------------------------------------------------------------------------- GERMANY--5.4% Germany (Federal Republic of) Bonds, Series 05, 4%, 1/4/37 [EUR] 83,645,000 108,696,816 - -------------------------------------------------------------------------------------------------------- Germany (Federal Republic of) Treasury Bills, Series 0906, 3.359%, 3/14/07 8 [EUR] 146,820,000 183,410,967 ---------------- 292,107,783 - -------------------------------------------------------------------------------------------------------- GREECE--1.2% Greece (Republic of) Bonds, 4.60%, 5/20/13 [EUR] 50,600,000 66,963,304 - -------------------------------------------------------------------------------------------------------- GUATEMALA--0.0% Guatemala (Republic of) Nts.: 10.25%, 11/8/11 9 160,000 189,200 10.25%, 11/8/11 525,000 620,813 ---------------- 810,013
22 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------- INDONESIA--0.2% Indonesia (Republic of) Nts.: 6.75%, 3/10/14 9 $ 120,000 $ 122,700 7.25%, 4/20/15 9 200,000 210,750 - -------------------------------------------------------------------------------------------------------- Indonesia (Republic of) Unsec. Nts., 8.50%, 10/12/35 1,9 6,540,000 7,676,325 ---------------- 8,009,775 - -------------------------------------------------------------------------------------------------------- ISRAEL--0.8% Israel (State of) Bonds, Series 2682, 7.50%, 3/31/14 [ILS] 167,800,000 41,815,848 - -------------------------------------------------------------------------------------------------------- ITALY--6.1% Italy (Republic of) Nts., Certificati di Credito del Tesoro, 3.40%, 7/1/09 6 [EUR] 162,505,000 206,971,788 - -------------------------------------------------------------------------------------------------------- Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali, 4.25%, 2/1/19 [EUR] 97,545,000 126,512,504 ---------------- 333,484,292 - -------------------------------------------------------------------------------------------------------- JAPAN--2.8% Japan (Government of) Bonds: 10 yr., Series 268, 1.50%, 3/20/15 [JPY] 5,766,000,000 48,669,921 Series 7, 0.80%, 3/10/16 [JPY] 12,502,395,000 103,570,105 ---------------- 152,240,026 - -------------------------------------------------------------------------------------------------------- MALAYSIA--0.8% Johor Corp. Malaysia (Government of) Bonds, Series P3, 1%, 7/31/12 5 [MYR] 107,980,000 32,499,403 - -------------------------------------------------------------------------------------------------------- Malaysia (Government of) Bonds, Series 2/05, 4.72%, 9/30/15 [MYR] 39,730,000 10,821,254 ---------------- 43,320,657 - -------------------------------------------------------------------------------------------------------- MEXICO--0.4% Mexican Williams Sr. Nts., 6.03%, 11/15/08 5,6 500,000 515,313 - -------------------------------------------------------------------------------------------------------- United Mexican States Bonds: 7.50%, 4/8/33 17,025,000 19,680,900 8.30%, 8/15/31 2,000,000 2,499,000 ---------------- 22,695,213 - -------------------------------------------------------------------------------------------------------- NIGERIA--0.0% Central Bank of Nigeria Gtd. Bonds, Series WW, 6.25%, 11/15/20 5 1,375,000 1,372,422 - -------------------------------------------------------------------------------------------------------- Nigeria (Federal Republic of) Promissory Nts., Series RC, 5.092%, 1/5/10 437,317 412,788 ---------------- 1,785,210 - -------------------------------------------------------------------------------------------------------- PANAMA--0.4% Panama (Republic of) Bonds: 6.70%, 1/26/36 1 20,295,000 20,193,525 9.375%, 4/1/29 1,650,000 2,136,750 ---------------- 22,330,275
23 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------- PERU--2.7% Peru (Republic of) Bonds: 7.84%, 8/12/20 [PEN] 168,460,000 $ 55,018,865 8.20%, 8/12/26 5 [PEN] 14,410,000 4,800,230 8.375%, 5/3/16 1,380,000 1,597,350 9.91%, 5/5/15 [PEN] 128,732,000 47,514,405 Series 7, 8.60%, 8/12/17 [PEN] 56,965,000 19,647,361 Series 8-1, 12.25%, 8/10/11 [PEN] 18,633,000 7,148,354 - -------------------------------------------------------------------------------------------------------- Peru (Republic of) Sr. Nts., 4.533%, 2/28/16 8 2,470,409 1,385,529 - -------------------------------------------------------------------------------------------------------- Peru (Republic of) Unsec. Unsub. Bonds, 8.75%, 11/21/33 7,075,000 8,702,250 ---------------- 145,814,344 - -------------------------------------------------------------------------------------------------------- PHILIPPINES--0.8% Philippines (Republic of the) Bonds: 8%, 1/15/16 6,990,000 7,706,475 9.50%, 2/2/30 6,260,000 7,731,100 - -------------------------------------------------------------------------------------------------------- Philippines (Republic of the) Unsec. Bonds, 7.75%, 1/14/31 27,044,000 28,362,395 ---------------- 43,799,970 - -------------------------------------------------------------------------------------------------------- POLAND--1.7% Poland (Republic of) Bonds: Series 0K0807, 4.191%, 8/12/07 8 [PLZ] 43,990,000 13,520,851 Series DS1013, 5%, 10/24/13 [PLZ] 55,940,000 17,660,938 Series WS0922, 5.75%, 9/23/22 [PLZ] 10,000,000 3,213,322 Series 0511, 4.25%, 5/24/11 [PLZ] 183,220,000 55,817,553 ---------------- 90,212,664 - -------------------------------------------------------------------------------------------------------- RUSSIA--0.1% Russian Ministry of Finance Debs., Series VII, 3%, 5/14/11 4,180,000 3,754,978 - -------------------------------------------------------------------------------------------------------- TURKEY--0.2% Turkey (Republic of) Bonds, 7%, 9/26/16 4,060,000 3,999,100 - -------------------------------------------------------------------------------------------------------- Turkey (Republic of) Nts.: 7.25%, 3/15/15 2,515,000 2,540,150 9.50%, 1/15/14 1,610,000 1,839,425 11%, 1/14/13 3,850,000 4,651,185 ---------------- 13,029,860 - -------------------------------------------------------------------------------------------------------- UNITED KINGDOM--3.9% United Kingdom Treasury Bonds: 5%, 3/7/08 [GBP] 31,040,000 58,175,663 6%, 12/7/28 [GBP] 39,950,000 93,328,119 - -------------------------------------------------------------------------------------------------------- United Kingdom Treasury Nts., 4%, 3/7/09 [GBP] 31,695,000 58,245,475 ---------------- 209,749,257
24 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------- URUGUAY--0.6% Uruguay (Oriental Republic of) Bonds, 7.625%, 3/21/36 $ 3,210,000 $ 3,218,025 - -------------------------------------------------------------------------------------------------------- Uruguay (Oriental Republic of) Unsec. Bonds: 5%, 9/14/18 [UYU] 403,060,000 17,306,689 8%, 11/18/22 11,375,000 12,057,500 ---------------- 32,582,214 ---------------- Total Foreign Government Obligations (Cost $2,410,658,258) 2,452,664,645 - -------------------------------------------------------------------------------------------------------- CORPORATE BONDS AND NOTES--4.5% - -------------------------------------------------------------------------------------------------------- Aes Dominicana Energia Finance SA, 11% Sr. Nts., 12/13/15 5 7,923,000 8,200,305 - -------------------------------------------------------------------------------------------------------- Alrosa Finance SA: 8.875% Nts., 11/17/14 6,900,000 7,866,000 8.875% Nts., 11/17/14 9 4,675,000 5,329,500 - -------------------------------------------------------------------------------------------------------- Autopistas del Nordeste Cayman Ltd., 9.39% Nts., 1/15/26 5 7,186,287 7,006,630 - -------------------------------------------------------------------------------------------------------- Banco BMG SA, 9.15% Nts., 1/15/16 9 9,710,000 9,758,550 - -------------------------------------------------------------------------------------------------------- Banco Hipotecario SA, 9.75% Sr. Unsec. Nts., 4/27/16 5 4,325,000 4,422,313 - -------------------------------------------------------------------------------------------------------- Cloverie plc, 9.64% Sec. Nts., Series 2005-93, 12/20/10 5,6 3,600,000 3,605,040 - -------------------------------------------------------------------------------------------------------- Credit Suisse First Boston International, Export-Import Bank of Ukraine Loan Participation Nts., 8.40%, 2/9/16 5,890,000 5,745,695 - -------------------------------------------------------------------------------------------------------- Eletropaulo Metropolitana SA, 19.125% Nts., 6/28/10 5 [BRR] 13,295,000 6,802,505 - -------------------------------------------------------------------------------------------------------- Gaz Capital SA, 8.625% Sr. Unsec. Nts., 4/28/34 9 7,650,000 9,543,375 - -------------------------------------------------------------------------------------------------------- Halyk Savings Bank Kazakhstan Europe BV, 7.75% Nts., 5/13/13 9 4,400,000 4,499,000 - -------------------------------------------------------------------------------------------------------- HSBC Bank plc: 9.751% Sr. Unsec. Nts., 7/8/09 8 30,220,000 18,132,000 11.601% Sr. Unsec. Nts., 1/12/10 8 42,800,000 21,742,400 12.278% Sr. Unsec. Nts., 3/9/09 8 30,220,000 17,195,180 - -------------------------------------------------------------------------------------------------------- IIRSA Norte Finance Ltd., 8.75% Sr. Nts., 5/30/24 5 8,685,000 9,010,688 - -------------------------------------------------------------------------------------------------------- Inter-American Development Bank: 6.26% Nts., 12/8/09 6 [BRR] 11,200,000 4,878,488 7.889% Nts., 1/25/12 6 [COP] 13,280,142,929 5,912,213 - -------------------------------------------------------------------------------------------------------- International Bank for Reconstruction & Development (The), 15% Nts., 1/7/10 5 [TRY] 3,000,000 1,852,096 - -------------------------------------------------------------------------------------------------------- Itabo Finance SA, 10.875% Nts., 10/5/13 9,10 1,351,000 1,375,453 - -------------------------------------------------------------------------------------------------------- Kuznetski Capital SA/Bank of Moscow, 7.375% Nts., 11/26/10 5 5,560,000 5,699,000 - -------------------------------------------------------------------------------------------------------- National Gas Co., 6.05% Nts., 1/15/36 9 4,945,000 4,762,866 - -------------------------------------------------------------------------------------------------------- National Power Corp., 9.625% Unsec. Bonds, 5/15/28 5,095,000 5,894,844 - -------------------------------------------------------------------------------------------------------- Nordic Investment Bank, 12.50% Sr. Unsec. Nts., 2/15/09 5 [TRY] 5,000,000 2,954,771 - -------------------------------------------------------------------------------------------------------- Ongko International Finance Co. BV, 10.50% Sec. Nts., 3/29/10 5,7,12 550,000 -- - -------------------------------------------------------------------------------------------------------- Pemex Project Funding Master Trust, 9.125% Unsec. Unsub. Nts., 10/13/10 4,570,000 5,127,540 - -------------------------------------------------------------------------------------------------------- Petroleum Export Ltd. Cayman SPV, 5.265% Sr. Nts., Cl. A3, 6/15/11 9 12,427,510 12,251,027
25 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------- CORPORATE BONDS AND NOTES Continued - -------------------------------------------------------------------------------------------------------- Reachcom Public Ltd., Renaissance Consumer Finance Bank of Russia Loan Participation Nts., 10.50%, 7/27/07 5 [RUR] 131,000,000 $ 4,896,179 - -------------------------------------------------------------------------------------------------------- RSHB Capital SA/OJSC Russian Agricultural Bank, 7.175% Nts., 5/16/13 9 10,520,000 10,967,100 - -------------------------------------------------------------------------------------------------------- Salisbury International Investments Ltd., 9.657% Sec. Nts., Series 2006-003, Tranche E, 7/20/11 5,6 2,400,000 2,400,000 - -------------------------------------------------------------------------------------------------------- Telefonica del Peru SA, 8% Sr. Unsec. Bonds, 4/11/16 5 [PEN] 26,033,700 8,479,033 - -------------------------------------------------------------------------------------------------------- Tengizchevroil LLP, 6.124% Nts., 11/15/14 9 5,840,000 5,810,800 - -------------------------------------------------------------------------------------------------------- Tiers-BSP, 0%/8.60% Collateralized Trust, Cl. A, 6/15/97 5,11 6,065,000 2,122,750 - -------------------------------------------------------------------------------------------------------- UBS Luxembourg SA, 6.23% Sub. Nts., 2/11/15 6 8,020,000 8,093,463 - -------------------------------------------------------------------------------------------------------- VTB Capital SA, 6.25% Sr. Nts., 6/30/35 9 9,490,000 9,561,175 ---------------- Total Corporate Bonds and Notes (Cost $257,999,834) 241,897,979
SHARES - -------------------------------------------------------------------------------------------------------- COMMON STOCKS--1.9% - -------------------------------------------------------------------------------------------------------- 3i Group plc 115,759 2,027,609 - -------------------------------------------------------------------------------------------------------- Anglo American plc 47,250 1,989,269 - -------------------------------------------------------------------------------------------------------- BASF AG 25,274 2,029,330 - -------------------------------------------------------------------------------------------------------- Bayer AG 42,333 2,152,589 - -------------------------------------------------------------------------------------------------------- BNP Paribas SA 19,660 2,115,305 - -------------------------------------------------------------------------------------------------------- British Airways plc 12 268,160 2,143,914 - -------------------------------------------------------------------------------------------------------- British Land Co. plc 80,690 2,060,723 - -------------------------------------------------------------------------------------------------------- Brixton plc 209,210 2,072,162 - -------------------------------------------------------------------------------------------------------- Charter plc 12 143,610 2,293,608 - -------------------------------------------------------------------------------------------------------- Commerzbank AG 60,008 2,033,215 - -------------------------------------------------------------------------------------------------------- Corus Group plc 280,810 2,039,999 - -------------------------------------------------------------------------------------------------------- Credit Agricole SA 51,620 2,267,429 - -------------------------------------------------------------------------------------------------------- Daiwa Securities Group, Inc. 1 177,600 2,081,972 - -------------------------------------------------------------------------------------------------------- Deutsche Boerse AG 13,766 2,068,540 - -------------------------------------------------------------------------------------------------------- Deutsche Lufthansa AG 105,957 2,243,798 - -------------------------------------------------------------------------------------------------------- Deutsche Telekom AG 143,473 2,279,602 - -------------------------------------------------------------------------------------------------------- Etablissements Economiques du Casino Guichard-Perrachon SA 24,450 1,970,299 - -------------------------------------------------------------------------------------------------------- Euronext NV 23,310 2,265,647 - -------------------------------------------------------------------------------------------------------- France Telecom SA 98,790 2,267,406 - -------------------------------------------------------------------------------------------------------- Fujikura Ltd. 1 177,430 1,950,121 - -------------------------------------------------------------------------------------------------------- Furukawa Electric Co., Ltd. (The) 305,491 2,027,375 - -------------------------------------------------------------------------------------------------------- Great Portland Estates plc 12 194,950 2,208,331 - -------------------------------------------------------------------------------------------------------- Hammerson plc 86,590 2,127,096 - -------------------------------------------------------------------------------------------------------- Investec plc 163,840 1,608,981 - -------------------------------------------------------------------------------------------------------- Ishikawajima-Harima Heavy Industries Co. Ltd. 726,000 2,230,202
26 | OPPENHEIMER INTERNATIONAL BOND FUND
VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------------------------------- COMMON STOCKS Continued - -------------------------------------------------------------------------------------------------------- JFE Holdings, Inc. 1 51,750 $ 2,028,381 - -------------------------------------------------------------------------------------------------------- Legal & General Group plc 8,130 21,692 - -------------------------------------------------------------------------------------------------------- London Stock Exchange Group plc 95,530 2,210,771 - -------------------------------------------------------------------------------------------------------- Mitchells & Butlers plc 1,920 21,192 - -------------------------------------------------------------------------------------------------------- Mitsubishi Heavy Industries Ltd. 502,854 2,088,307 - -------------------------------------------------------------------------------------------------------- Mitsubishi Materials Corp. 1 485,320 2,009,297 - -------------------------------------------------------------------------------------------------------- Mittal Steel Co. NV 86,790 3,030,898 - -------------------------------------------------------------------------------------------------------- Muenchener Rueckversicherungs-Gesellschaft AG 13,840 2,189,346 - -------------------------------------------------------------------------------------------------------- Nippon Kayaku Co. Ltd. 243,000 2,059,200 - -------------------------------------------------------------------------------------------------------- Nippon Mining Holdings, Inc. 1 286,260 2,031,223 - -------------------------------------------------------------------------------------------------------- Nomura Securities Co. Ltd. 109,140 1,921,788 - -------------------------------------------------------------------------------------------------------- Odakyu Electric Railway Co. Ltd. 329,370 2,094,026 - -------------------------------------------------------------------------------------------------------- PagesJaunes Groupe SA 73,110 2,076,646 - -------------------------------------------------------------------------------------------------------- Pioneer Corp. 110,218 1,946,806 - -------------------------------------------------------------------------------------------------------- ProSieben Sat.1 Media AG 77,843 2,161,730 - -------------------------------------------------------------------------------------------------------- Resolution plc 185,120 2,140,306 - -------------------------------------------------------------------------------------------------------- Royal & Sun Alliance Insurance Group plc 795,300 2,218,722 - -------------------------------------------------------------------------------------------------------- Salzgitter AG 23,403 2,201,979 - -------------------------------------------------------------------------------------------------------- Shinko Securities Co. Ltd. 522,000 2,074,515 - -------------------------------------------------------------------------------------------------------- Showa Shell Sekiyu K.K. 186,000 2,072,178 - -------------------------------------------------------------------------------------------------------- Societe Generale, Cl. A 12,990 2,067,239 - -------------------------------------------------------------------------------------------------------- Sumitomo Metal Industries 1 512,450 1,972,083 - -------------------------------------------------------------------------------------------------------- Vallourec SA 9,350 2,173,541 - -------------------------------------------------------------------------------------------------------- Vivendi SA 60,650 2,186,479 - -------------------------------------------------------------------------------------------------------- Volkswagen AG, Preference 37,112 2,189,703 - -------------------------------------------------------------------------------------------------------- Xstrata plc 46,710 1,930,180 ---------------- Total Common Stocks (Cost $100,194,395) 103,672,750 UNITS - -------------------------------------------------------------------------------------------------------- RIGHTS, WARRANTS AND CERTIFICATES--0.0% - -------------------------------------------------------------------------------------------------------- Venezuela (Republic of) Oil Linked Payment Obligation Wts., Exp. 4/15/20 5,12 (Cost $0) 500 18,250 PRINCIPAL AMOUNT - -------------------------------------------------------------------------------------------------------- STRUCTURED NOTES--24.0% - -------------------------------------------------------------------------------------------------------- Citigroup Global Markets Holdings, Inc.: Argentina (Republic of) Credit Linked Nts., 4%, 5/22/08 13 [ARP] 11,655,000 9,987,532 Argentina (Republic of) Unsec. Credit Linked Nts., 4%, 4/16/10 13 [ARP] 10,903,383 6,224,984
27 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------------------- STRUCTURED NOTES Continued - -------------------------------------------------------------------------------------------------------------------------- Citigroup Global Markets Holdings, Inc.: Continued Brazil (Federal Republic of) Unsec. Credit Linked Nts., 10%, 1/5/10 [BRR] 38,356,000 $ 16,276,471 Brazil (Federal Republic of) Unsec. Credit Linked Nts., 10%, 1/5/10 [BRR] 59,878,000 25,409,389 Brazil (Federal Republic of) Unsec. Credit Linked Nts., 10%, 1/5/10 [BRR] 100,000,000 42,435,267 Brazil (Federal Republic of) Unsec. Credit Linked Nts., 14.809%, 1/5/10 8 [BRR] 32,035,902 9,581,008 Brazil (Federal Republic of) Unsec. Credit Linked Nts., 15.427%, 1/2/09 8 [BRR] 28,074,132 9,625,878 Brazil (Federal Republic of) Unsec. Credit Linked Nts., 15.728%, 1/3/08 8 [BRR] 24,719,335 9,694,008 Colombia (Republic of) Credit Linked Bonds, 11%, 7/24/20 [COP] 12,570,000,000 5,799,301 Colombia (Republic of) Credit Linked Nts., Series II, 15%, 4/27/12 [COP] 6,942,469,928 3,539,375 Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12 [COP] 31,110,000,000 15,860,343 Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12 [COP] 12,430,000,000 6,337,000 Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12 [COP] 11,705,100,000 5,967,435 Dominican Republic Unsec. Credit Linked Nts., 11.648%, 9/24/07 (linked to Dominican Republic Treasury Bills) 8,10 [DOP] 57,500,000 1,508,360 Dominican Republic Credit Linked Nts., 10.705%, 3/5/07 (linked to Dominican Republic Treasury Bills) 8 [DOP] 161,260,000 4,548,298 Dominican Republic Credit Linked Nts., 11.242%, 1/2/7 (linked to Dominican Republic Treasury Bills) 8 [DOP] 92,100,000 2,652,480 Dominican Republic Credit Linked Nts., 14.608%, 5/14/07 (linked to Dominican Republic Treasury Bills) 8 [DOP] 189,200,000 5,206,200 Dominican Republic Credit Linked Nts., 16.50%, 3/12/07 (linked to Dominican Republic Treasury Bills) [DOP] 205,500,000 5,782,599 Dominican Republic Credit Linked Nts., 17%, 3/12/07 [DOP] 256,400,000 7,752,410 Dominican Republic Credit Linked Nts., Series II, 15.603%, 4/23/07 (linked to Dominican Republic Treasury Bills) 8 [DOP] 118,210,000 3,278,030 Dominican Republic Unsec. Credit Linked Nts., 15.638%, 4/30/07 (linked to Dominican Republic Treasury Bills) 8 [DOP] 108,450,000 2,999,688 Dominican Republic Unsec. Credit Linked Nts., Series II, 15.736%, 4/30/07 (linked to Dominican Republic Treasury Bills) 8 [DOP] 237,770,000 6,576,634 Egypt (The Arab Republic of) Credit Linked Nts., 8.70%, 7/12/07 (linked to Egyptian Treasury Bills) 5,8 [EGP] 51,690,000 8,385,908 Egypt (The Arab Republic of) Credit Linked Nts., 9.079%, 3/22/07 (linked to Egyptian Treasury Bills) 5,8 [EGP] 43,000,000 7,178,816 Egypt (The Arab Republic of) Unsec. Credit Linked Nts., 8.50%, 2/16/08 (linked to Egyptian Treasury Bills) [EGP] 34,150,000 5,886,474 Egypt (The Arab Republic of) Unsec. Credit Linked Nts., 8.775%, 2/22/07 (linked to Egyptian Treasury Bills) 5,8 [EGP] 49,620,000 8,340,732 Nigeria (Federal Republic of) Credit Linked Nts., 12.474%, 7/22/07 8 [NGN] 1,606,440,000 11,577,382 Nigeria (Federal Republic of) Credit Linked Nts., 14.50%, 3/1/11 [NGN] 2,672,000,000 21,484,670 Nigeria (Federal Republic of) Credit Linked Nts., Series II, 14.50%, 4/4/11 [NGN] 2,032,000,000 16,353,048 Ukraine Hryvnia Unsec. Credit Linked Nts., 11.94%, 1/4/10 [UAH] 13,799,000 2,990,517 Zambia (Republic of) Credit Linked Nts., 11%, 2/21/07 (linked to Zambian Treasury Bills) [ZMK] 24,420,000,000 5,561,911 Zambia (Republic of) Credit Linked Nts., Series II, 11%, 2/21/07 (linked to Zambian Treasury Bills) [ZMK] 9,980,000,000 2,273,050
28 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------------------- STRUCTURED NOTES Continued - -------------------------------------------------------------------------------------------------------------------------- Credit Suisse First Boston International: Indonesia (Republic of) Total Return Linked Nts., 12%, 9/16/11 [IDR] 116,800,000,000 $ 13,312,035 Lukoil Credit Linked Nts., Series Fbi 105, 7.25%, 11/17/09 [RUR] 321,528,000 12,194,276 Moscow (City of) Credit Linked Nts., Series Fbi 101, 10%, 12/31/10 5 [RUR] 277,800,000 11,756,387 Moscow (City of) Credit Linked Nts., Series Fbi 98, 11%, 4/23/09 [RUR] 280,840,000 11,776,955 OAO Gazprom Credit Linked Nts., 8.11%, 1/21/07 [RUR] 289,282,000 11,061,265 South African Rand Interest Bearing Linked Nts., Series FBi 43, 5.175%, 5/23/22 6 2,100,000 2,115,750 Ukraine (Republic of) Credit Linked Nts., Series EMG 13, 11.94%, 12/30/09 [UAH] 30,400,000 6,746,866 - -------------------------------------------------------------------------------------------------------------------------- Credit Suisse First Boston, Inc. (Nassau Branch): Turkey (Republic of) Credit Linked Nts., Series 2, 20.853%, 7/16/08 8,10 [TRY] 39,420,000 18,216,855 Turkey (Republic of) Credit Linked Nts., Series EM 880, 20%, 10/18/07 12,320,000 11,867,037 Turkey (Republic of) Credit Linked Nts., Series II I, 20.547%, 7/16/08 8,10 [TRY] 21,500,000 9,846,191 Ukraine (Republic of) Credit Linked Nts., Series EMG 11, 11.94%, 12/30/09 [UAH] 9,163,000 2,033,603 Ukraine (Republic of) Credit Linked Nts., Series NPC 12, 11.94%, 12/30/09 [UAH] 65,490,000 14,534,613 - -------------------------------------------------------------------------------------------------------------------------- Deutsche Bank AG: Argentina (Republic of) Credit Linked Nts., 4%, 12/21/11 [ARP] 35,580,000 28,544,245 Arrendadora Capita Corp. SA de CV/Capita Corp. (The) de Mexico SA de CV Credit Linked Nts., 9.09%, 1/5/11 5 [MXN] 130,466,254 11,867,041 Arrendadora Capita Corp. SA de CV/Capita Corp. (The) de Mexico SA de CV Credit Linked Nts., 9.65%, 1/5/11 5 [MXN] 85,964,902 7,848,578 Brazil Real Credit Linked Nts., 13.882%, 3/3/10 8 [BRR] 61,128,560 21,349,873 Brazil Real Credit Linked Nts., 6%, 8/18/10 [BRR] 15,895,000 10,487,990 Campania Total Return Linked Nts., 3.804%, 7/30/10 5,6 [EUR] 34,900,000 44,020,530 Campania Total Return Linked Nts., 3.846%, 7/30/10 5,6 [EUR] 40,150,000 50,713,807 Colombia (Republic of) Credit Linked Nts., 13.50%, 9/15/14 [COP] 13,259,000,000 6,674,491 Egypt (The Arab Republic of) Total Return Linked Nts., 8.328%, 12/12/06 (linked to Egyptian Treasury Bills) 8 [EGP] 62,500,000 10,673,560 Egypt (The Arab Republic of) Total Return Linked Nts., 9.170%, 1/30/07 (linked to Egyptian Treasury Bills) 5,8 [EGP] 37,750,000 6,419,207 European Investment Bank, Russian Federation Credit Linked Nts., 5.502%, 1/19/10 8 8,475,000 7,217,734 Grupo TMM SA Credit Linked Nts., 6%, 9/7/12 5 5,395,000 5,402,472 Halyk Bank of Kazakhstan Total Return Linked Nts., Series I, 7.25%, 3/24/09 [KZT] 2,003,690,000 16,179,024 Indonesia (Republic of) Credit Linked Nts., 9.50%, 6/22/15 10,300,162 9,857,255 Indonesia (Republic of) Credit Linked Nts., Series III, 14.25%, 6/15/13 12,412,800 14,998,386 Indonesia (Republic of) Total Return Nts., 12.50%, 3/22/13 [IDR] 84,850,000,000 9,956,653 Nigeria (Federal Republic of) Credit Linked Nts., 12.50%, 2/24/09 [NGN] 525,300,000 4,149,604 Nigeria (Federal Republic of) Credit Linked Nts., 15%, 1/27/09 [NGN] 704,900,000 5,912,153 OAO Gazprom I Credit Nts., 8.36%, 10/20/07 1,435,000 1,547,466 OAO Gazprom II Credit Nts., 8.11%, 4/20/07 1,435,000 1,519,612 Peru (Republic of) Credit Linked Nts., 6.73%, 2/20/11 6 3,255,000 3,262,217 Romania (Republic of) 3 yr. Linked Nts., 12.25%, 10/15/07 [RON] 22,740,000 9,396,950 Romania (Republic of) 3 yr. Linked Nts., 12.89%, 9/24/07 [RON] 3,320,000 1,392,289
29 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------------------- STRUCTURED NOTES Continued - -------------------------------------------------------------------------------------------------------------------------- Deutsche Bank AG: Continued Romania (Republic of) 3 yr. Linked Nts., 12.89%, 9/24/07 [RON] 10,000,000 $ 4,193,641 Romania (Republic of) 3 yr. Linked Nts., 12.89%, 9/24/07 [RON] 5,640,000 2,365,213 Romania (Republic of) Credit Linked Nts., 11.49%, 12/7/06 [RON] 9,118,650 3,603,071 Russian Federation Credit Linked Nts., 0.00%, 12/2/09 8 [RUR] 233,573,000 9,325,918 Russian Federation Total Return Linked Nts., Series II, 9%, 4/22/11 [RUR] 288,935,000 11,909,549 Ukraine (Republic of) 5 yr. Credit Linked Nts., 4.05%, 8/25/10 2,505,000 2,515,847 Ukraine (Republic of) 5.5 yr. Credit Linked Nts., 4.05%, 2/25/11 2,505,000 2,508,206 Ukraine (Republic of) 6 yr. Credit Linked Nts., 4.05%, 8/25/11 2,505,000 2,503,722 Ukraine (Republic of) 6.5 yr. Credit Linked Nts., 4.05%, 2/27/12 2,505,000 2,494,980 Ukraine (Republic of) 7 yr. Credit Linked Nts., 4.05%, 8/28/12 2,505,000 2,486,488 Ukraine (Republic of) Credit Linked Nts., 10.208%, 7/1/09 [UAH] 27,763,200 5,672,504 Ukraine (Republic of) Credit Linked Nts., 11.94%, 12/30/09 [UAH] 3,228,000 699,812 Ukraine (Republic of) Credit Linked Nts., 11.94%, 12/30/09 [UAH] 11,438,000 2,479,692 Ukraine (Republic of) Credit Linked Nts., 5.592%, 5/16/07 [UAH] 27,990,000 5,533,566 Ukraine (Republic of) Credit Linked Nts., 9.60%, 7/1/09 [UAH] 7,953,600 1,625,059 Ukraine (Republic of) Credit Linked Nts., Series A, 5.592%, 5/16/07 [UAH] 27,980,000 5,531,589 United Mexican States BORHIS Total Return Linked Nts., 6.10%, 9/27/35 [MXN] 26,330,000 9,150,118 United Mexican States Credit Linked Nts., 9.52%, 1/5/11 5 [MXN] 86,081,449 7,839,644 Videocon International Ltd. Credit Linked Nts., 7.75%, 12/29/09 5 7,300,000 7,299,270 - -------------------------------------------------------------------------------------------------------------------------- Goldman Sachs International, Russian Federation Total Return Linked Nts., 8%, 5/13/09 [RUR] 573,900,000 23,433,207 - -------------------------------------------------------------------------------------------------------------------------- ING Bank NV, Ukraine (Republic of) Credit Linked Nts., Series 725, 11.89%, 12/30/09 5 [UAH] 64,285,000 13,990,500 - -------------------------------------------------------------------------------------------------------------------------- JPMorgan Chase Bank: Argentina (Republic of) Credit Linked Nts., 4%, 12/19/11 5 [ARP] 36,445,000 29,563,456 Brazil (Federal Republic of) Credit Linked Nts., 12.08%, 1/2/15 8 [BRR] 51,226,300 7,946,685 Brazil (Federal Republic of) Credit Linked Nts., 12.683%, 6/1/13 8 [BRR] 75,340,000 14,285,078 Brazil (Federal Republic of) Credit Linked Nts., 13.847%, 4/1/10 8 [BRR] 129,150,391 37,159,768 Brazil (Federal Republic of) Credit Linked Nts., 15.326%, 1/2/15 8 [BRR] 138,200,796 21,438,952 Brazil (Federal Republic of) Credit Linked Nts., 2.731%, 11/30/12 8 [ARP] 35,605,000 8,633,531 Brazil (Federal Republic of) Credit Linked Nts., 6%, 5/16/45 5 [BRR] 45,170,000 26,073,039 Brazil (Federal Republic of) Credit Linked Nts., Series II, 13.553%, 1/2/15 8 [BRR] 114,770,000 17,804,156 Colombia (Republic of) Credit Linked Bonds, 10.19%, 1/5/16 8 [COP] 153,800,000,000 23,517,732 Colombia (Republic of) Credit Linked Bonds, 11.198%, 8/3/20 8 [COP] 132,560,000,000 13,685,637 Peru (Republic of) Credit Linked Nts., 8.115%, 9/2/15 8 [PEN] 40,860,000 6,134,342 Russian Federation Railways Credit Linked Nts., 6.59%, 6/15/07 [RUR] 297,950,000 11,972,006 Swaziland (Kingdom of) Credit Linked Nts., 7.25%, 6/20/10 3,850,000 3,990,525 - -------------------------------------------------------------------------------------------------------------------------- Lehman Brothers International: Romania (Republic of) Total Return Linked Nts., 7.90%, 2/9/10 (linked to Romanian Treasury Bills) [RON] 10,726,400 4,357,382 Turkey (Republic of) Total Return Linked Nts., 20%, 10/17/07 (linked to Turkish Treasury Bills) 4,252,888 4,518,694
30 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------------------- STRUCTURED NOTES Continued - -------------------------------------------------------------------------------------------------------------------------- Lehman Brothers Special Financing, Inc.: Argentina (Republic of) Credit Linked Nts., 9.655%, 12/20/15 $ 20,000,000 $ 21,974,000 Romania ( Republic of) Total Return Linked Nts., 6.50%, 3/10/10 (linked to Romanian Treasury Bills) [RON] 30,904,100 11,793,307 Romania ( Republic of) Total Return Linked Nts., 6.75%, 3/11/08 (linked to Romanian Treasury Bills) [RON] 36,650,000 14,283,566 Romania ( Republic of) Total Return Linked Nts., 7.25%, 4/18/10 (linked to Romanian Treasury Bills) [RON] 3,105,000 1,212,512 Romania ( Republic of) Total Return Linked Nts., 7.50%, 3/6/07 (linked to Romanian Treasury Bills) [RON] 5,155,000 2,056,214 Romania ( Republic of) Total Return Linked Nts., 7.75%, 4/18/08 (linked to Romanian Treasury Bills) [RON] 3,101,000 1,231,718 Romania ( Republic of) Total Return Linked Nts., 7.75%, 4/18/08 (linked to Romanian Treasury Bills) [RON] 7,453,000 2,960,334 Romania (Republic of) Total Return Linked Nts., 7.90%, 2/12/08 (linked to Romanian Treasury Bills) [RON] 24,895,500 10,050,029 - -------------------------------------------------------------------------------------------------------------------------- Morgan Stanley & Co. International Ltd./Red Arrow International Leasing plc: Total Return Linked Nts., Series A, 8.375%, 6/30/12 5 [RUR] 277,994,119 10,740,375 Total Return Linked Nts., Series B, 11%, 6/30/12 5 [RUR] 220,610,000 8,447,644 - -------------------------------------------------------------------------------------------------------------------------- Morgan Stanley Capital Services, Inc.: Bank Center Credit Total Return Linked Nts., 7.52%, 6/6/08 [KZT] 3,273,000,000 25,964,247 Brazil (Federal Republic of) Sr. Linked Nts., 14.40%, 8/4/16 [BRR] 56,967,568 27,412,187 Philippines (Republic of the) Credit Linked Nts., 10.264%, 9/20/15 5 30,000,000 34,158,000 Philippines (Republic of the) Credit Linked Nts., 8.619%, 9/20/15 9 980,000 1,068,690 Philippines (Republic of the) Credit Linked Nts., 8.38%, 6/20/16 5,6 2,640,000 2,643,168 United Mexican States Credit Linked Nts., 5.64%, 11/20/15 11,760,000 11,808,216 Venezuela ( Republic of) 10 yr. Credit Linked Nts., 7.85%, 11/20/15 4,415,000 4,691,379 Venezuela ( Republic of) Credit Linked Nts., 6.49%, 5/20/10 8,435,000 8,644,188 Venezuela ( Republic of) Credit Linked Nts., 7.382%, 5/20/10 3,850,000 4,219,600 - -------------------------------------------------------------------------------------------------------------------------- UBS AG: Indonesia (Republic of) Credit Linked Nts., 12.80%, 6/15/21 10 [IDR] 80,000,000,000 9,665,041 Israel (State of) Credit Linked Nts., 7.50%, 4/5/14 [ILS] 56,205,300 14,562,116 ---------------- Total Structured Notes (Cost $1,230,497,699) 1,299,757,278
EXPIRATION STRIKE DATES PRICE CONTRACTS - -------------------------------------------------------------------------------------------------------------------------- OPTIONS PURCHASED--0.0% - -------------------------------------------------------------------------------------------------------------------------- Mexican Nuevo Peso (MXN) Call 12 10/12/06 $11.40 176,016,000 1,774 - -------------------------------------------------------------------------------------------------------------------------- Mexican Nuevo Peso (MXN) Put 12 10/12/06 11.40 176,016,000 580,603 - -------------------------------------------------------------------------------------------------------------------------- New Turkish Lira (TRY)/Japanese Yen (JPY) Put 12 1/30/07 77.00TRY 32,820,000 376,071 ---------------- Total Options Purchased (Cost $1,570,481) 958,448
31 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS--6.2% - -------------------------------------------------------------------------------------------------------------------------- Undivided interest of 22.73% in joint repurchase agreement (Principal Amount/Value $1,469,294,000, with a maturity value of $1,469,936,816) with UBS Warburg LLC, 5.25%, dated 9/29/06, to be repurchased at $334,176,138 on 10/2/06, collateralized by Federal National Mortgage Assn., 5%, 2/1/36, with a value of $1,502,659,342 (Cost $334,030,000) $ 334,030,000 $ 334,030,000 - -------------------------------------------------------------------------------------------------------------------------- Total Investments, at Value (excluding Investments Purchased with Cash Collateral from Securities Loaned) (Cost $5,295,201,601) 5,400,629,799 - -------------------------------------------------------------------------------------------------------------------------- INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--15.1% 14 - -------------------------------------------------------------------------------------------------------------------------- ASSET-BACKED FLOATING NOTES--0.1% Citigroup Mortgage Loan Trust, Inc., Series 2006-HE1, Cl. A1, 5.39%, 10/25/06 3,226,203 3,226,203 - -------------------------------------------------------------------------------------------------------------------------- Countrywide Asset-Backed Certificates, Series 2005-17, Cl. 4AV1, 5.44%, 10/25/06 1,659,768 1,659,768 - -------------------------------------------------------------------------------------------------------------------------- Whitehawk CDO Funding Corp., 5.44%, 12/15/06 2,000,000 2,000,000 ---------------- 6,885,971 - -------------------------------------------------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS--13.4% Undivided interest of 12% in joint repurchase agreement (Principal Amount/Value $250,000,000, with a maturity value of $250,112,500) with Cantor Fitzgerald & Co., 5.40%, dated 9/29/06, to be repurchased at $30,013,500 on 10/2/06, collateralized by U.S. Agency Mortgages, 0.0001%-6.50%, 8/1/12-9/1/36, with a value of $255,002,127 30,000,000 30,000,000 - -------------------------------------------------------------------------------------------------------------------------- Undivided interest of 20.87% in joint repurchase agreement (Principal Amount/Value $2,500,000,000 with a maturity value of $2,501,131,250) with ING Financial Markets LLC, 5.43%, dated 9/29/06, to be repurchased at $522,021,108 on 10/2/06, collateralized by U.S. Agency Mortgages, 0.00%-7%, 9/1/18-8/1/36, with a value of $2,550,003,623 521,785,000 521,785,000 - -------------------------------------------------------------------------------------------------------------------------- Undivided interest of 4.44% in joint repurchase agreement (Principal Amount/Value $3,950,000,000, with a maturity value of $3,951,787,375) with Nomura Securities, 5.43%, dated 9/29/06, to be repurchased at $175,611,383 on 10/2/06, collateralized by U.S. Agency Mortgages, 0.00%-22.12%, 3/15/14-6/25/43, with a value of $4,029,000,000 175,531,955 175,531,955 ---------------- 727,316,955 - -------------------------------------------------------------------------------------------------------------------------- MASTER FLOATING NOTE--0.1% CDC Financial Products, Inc., 5.43%, 10/2/06 1,000,000 1,000,000 - -------------------------------------------------------------------------------------------------------------------------- Citigroup Global Markets, Inc., 5.45%, 10/2/06 4,000,000 4,000,000 ---------------- 5,000,000 - -------------------------------------------------------------------------------------------------------------------------- MEDIUM-TERM FLOATING NOTE--0.3% American Express Credit Corp., 5.34%, 10/16/06 2,000,000 2,000,000 - -------------------------------------------------------------------------------------------------------------------------- Bear Stearns, 5.37%, 10/2/06 3,000,000 3,000,000 - -------------------------------------------------------------------------------------------------------------------------- CC USA, Inc., 5.37%, 10/2/06 2,000,000 2,000,000 - -------------------------------------------------------------------------------------------------------------------------- CC USA, Inc., 5.37%, 10/2/06 3,000,000 3,000,000
32 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - -------------------------------------------------------------------------------------------------------------------------- MEDIUM-TERM FLOATING NOTE Continued Dorada Finance, Inc., 5.37%, 10/2/06 $ 3,000,000 $ 3,000,000 - -------------------------------------------------------------------------------------------------------------------------- LINKS Finance LLC, 5.37%, 10/2/06 2,000,050 2,000,050 - -------------------------------------------------------------------------------------------------------------------------- MBIA Global Funding LLC, 5.33%, 10/30/06 2,000,000 2,000,000 ---------------- 17,000,050 - -------------------------------------------------------------------------------------------------------------------------- YANKEE FIXED CERTIFICATE OF DEPOSIT--0.7% Bank of Tokyo/UFJ Ltd. NY, 5.30%, 10/13/06 35,000,000 35,000,000 - -------------------------------------------------------------------------------------------------------------------------- YANKEE FLOATING CERTIFICATE OF DEPOSIT--0.5% Natexis Banques Populaires NY, 5.37%, 10/2/06 2,000,000 2,000,000 - -------------------------------------------------------------------------------------------------------------------------- Natexis Banques Populaires NY, 5.39%, 10/2/06 1,999,709 1,999,709 - -------------------------------------------------------------------------------------------------------------------------- Societe Generale NY, 5.33%, 10/2/06 25,000,000 25,000,000 ---------------- 28,999,709 ---------------- Total Investments Purchased with Cash Collateral from Securities Loaned (Cost $820,202,685) 820,202,685 - -------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $6,115,404,286) 114.7% 6,220,832,484 - -------------------------------------------------------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (14.7) (795,620,144) ---------------------------------- NET ASSETS 100.0% $ 5,425,212,340 ==================================
FOOTNOTES TO STATEMENT OF INVESTMENTS Principal amount is reported in U.S. Dollars, except for those denoted in the following currencies: ARP Argentine Peso AUD Australian Dollar BRR Brazilian Real CAD Canadian Dollar COP Colombian Peso DKK Danish Krone DOP Dominican Republic Peso EGP Egyptian Pounds EUR Euro GBP British Pound Sterling IDR Indonesia Rupiah ILS Israeli Shekel JPY Japanese Yen KZT Kazakhstan Tenge MXN Mexican Nuevo Peso MYR Malaysian Ringgit NGN Nigeria Naira PEN Peruvian New Sol PLZ Polish Zloty RON New Romanian Leu RUR Russian Ruble TRY New Turkish Lira UAH Ukraine Hryvnia UYU Uruguay Peso ZMK Zambian Kwacha 33 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- FOOTNOTES TO STATEMENT OF INVESTMENTS Continued 1. Partial or fully-loaned security. See Note 13 of accompanying Notes. 2. A sufficient amount of securities has been designated to cover outstanding written put options, as follows:
CONTRACTS EXPIRATION EXERCISE PREMIUM VALUE SUBJECT TO PUT DATE PRICE RECEIVED SEE NOTE 7 - ------------------------------------------------------------------------------------------------------------------------ New Turkish Lira (TRY)/Japanese Yen (JPY) 32,820,000 1/30/07 65.00TRY $556,532 $285,577
3. A sufficient amount of securities has been designated to cover outstanding foreign currency contracts. See Note 5 of accompanying Notes. 4. All or a portion of the security is held in collateralized accounts to cover initial margin requirements on open futures sales contracts. The aggregate market value of such securities is $31,067,451. See Note 6 of accompanying Notes. 5. Illiquid security. The aggregate value of illiquid securities as of September 30, 2006 was $432,204,370, which represents 7.97% of the Fund's net assets. In addition, the Fund has restricted currency of $2,736,749, which represents 0.05% of the Fund's net assets. See Note 12 of accompanying Notes. 6. Represents the current interest rate for a variable or increasing rate security. 7. Issue is in default. See Note 1 of accompanying Notes. 8. Zero coupon bond reflects effective yield on the date of purchase. 9. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $89,387,487 or 1.65% of the Fund's net assets as of September 30, 2006. 10. When-issued security or forward commitment to be delivered and settled after September 30, 2006. See Note 1 of accompanying Notes. 11. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. 12. Non-income producing security. 13. Denotes an inflation-indexed security: coupon and principal are indexed to the consumer price index. 14. The security/securities have been segregated to satisfy the forward commitment to return the cash collateral received in securities lending transactions upon the borrower's return of the securities loaned. See Note 13 of accompanying Notes. 34 | OPPENHEIMER INTERNATIONAL BOND FUND DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC HOLDINGS, AS A PERCENTAGE OF TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS: GEOGRAPHIC HOLDINGS/UNAUDITED VALUE PERCENT - -------------------------------------------------------------------------------- United States $ 2,122,445,511 34.1% Italy 428,218,629 6.9 Brazil 393,363,141 6.3 France 317,710,772 5.1 Germany 313,657,615 5.0 United Kingdom 236,933,632 3.8 Russia 198,613,164 3.2 Japan 182,827,500 2.9 Colombia 174,713,430 2.8 Peru 172,700,624 2.8 Argentina 171,443,942 2.8 Canada 133,757,405 2.1 Australia 124,022,392 2.0 Turkey 114,548,217 1.8 Belgium 100,083,041 1.6 Poland 90,212,664 1.5 Philippines 89,687,422 1.4 Mexico 81,738,822 1.3 Ukraine 80,093,259 1.3 Romania 68,896,226 1.1 Greece 66,963,304 1.1 Indonesia 65,799,145 1.1 Nigeria 61,262,067 1.0 Egypt 59,135,724 1.0 Dominican Republic 56,887,087 0.9 Israel 56,377,964 0.9 Kazakhstan 52,453,071 0.8 Malaysia 43,320,657 0.7 Uruguay 32,582,214 0.5 Denmark 26,428,511 0.4 Panama 22,330,275 0.4 Supranational 21,978,679 0.4 Venezuela 17,573,417 0.3 Zambia 7,834,961 0.1 India 7,299,270 0.1 The Netherlands 5,296,545 0.1 Trinidad & Tobago 4,762,866 0.1 El Salvador 4,559,976 0.1 Swaziland 3,990,525 0.1 Bulgaria 3,472,875 0.1 South Africa 2,115,750 0.0 Switzerland 1,930,180 0.0 Guatemala 810,013 0.0 ----------------------------- Total $ 6,220,832,484 100.0% ============================= SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 35 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF ASSETS AND LIABILITIES September 30, 2006 - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------- ASSETS - ------------------------------------------------------------------------------------------------------------- Investments, at value (cost $6,115,404,286)--see accompanying statement of investments $ 6,220,832,484 - ------------------------------------------------------------------------------------------------------------- Cash 32,578,702 - ------------------------------------------------------------------------------------------------------------- Cash--foreign currencies (cost $3,577,638) 3,565,070 - ------------------------------------------------------------------------------------------------------------- Unrealized appreciation on foreign currency contracts 36,404,481 - ------------------------------------------------------------------------------------------------------------- Unrealized appreciation on swap contracts 27,854,854 - ------------------------------------------------------------------------------------------------------------- Receivables and other assets: Interest, dividends and principal paydowns 49,351,404 Shares of beneficial interest sold 27,869,308 Investments sold (including $1,379,388 sold on a when-issued basis or forward commitment) 16,112,809 Other 192,055 ---------------- Total assets 6,414,761,167 - ------------------------------------------------------------------------------------------------------------- LIABILITIES - ------------------------------------------------------------------------------------------------------------- Options written, at value (premiums received $556,532)-- see accompanying statement of investments 285,577 - ------------------------------------------------------------------------------------------------------------- Return of collateral for securities loaned 820,202,685 - ------------------------------------------------------------------------------------------------------------- Unrealized depreciation on foreign currency contracts 24,712,326 - ------------------------------------------------------------------------------------------------------------- Unrealized depreciation on swap contracts 5,762,991 - ------------------------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased (including $42,628,839 purchased on a when-issued basis or forward commitment) 84,662,120 Closed foreign currency contracts 32,943,432 Shares of beneficial interest redeemed 11,748,772 Dividends 3,423,011 Distribution and service plan fees 3,186,906 Futures margins 1,318,799 Transfer and shareholder servicing agent fees 756,505 Shareholder communications 335,545 Trustees' compensation 37,387 Other 172,771 ---------------- Total liabilities 989,548,827 - ------------------------------------------------------------------------------------------------------------- NET ASSETS $ 5,425,212,340 ================ - ------------------------------------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS - ------------------------------------------------------------------------------------------------------------- Par value of shares of beneficial interest $ 935,691 - ------------------------------------------------------------------------------------------------------------- Additional paid-in capital 5,331,926,923 - ------------------------------------------------------------------------------------------------------------- Accumulated net investment income 36,828,546 - ------------------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (98,164,938) - ------------------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 153,686,118 ---------------- NET ASSETS $ 5,425,212,340 ================
36 | OPPENHEIMER INTERNATIONAL BOND FUND
- ------------------------------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE - ------------------------------------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net assets of $4,075,172,484 and 702,353,618 shares of beneficial interest outstanding) $ 5.80 Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $ 6.09 - ------------------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $234,847,660 and 40,612,456 shares of beneficial interest outstanding) $ 5.78 - ------------------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $875,032,587 and 151,304,013 shares of beneficial interest outstanding) $ 5.78 - ------------------------------------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $63,431,907 and 10,959,822 shares of beneficial interest outstanding) $ 5.79 - ------------------------------------------------------------------------------------------------------------- Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $176,727,702 and 30,460,796 shares of beneficial interest outstanding) $ 5.80
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 37 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF OPERATIONS For the Year Ended September 30, 2006 - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------- INVESTMENT INCOME - ------------------------------------------------------------------------------------------- Interest $ 208,861,131 - ------------------------------------------------------------------------------------------- Dividends (net of foreign withholding taxes of $180,646) 2,627,909 - ------------------------------------------------------------------------------------------- Portfolio lending fees 1,112,433 - ------------------------------------------------------------------------------------------- Other income 16,573 -------------- Total investment income 212,618,046 - ------------------------------------------------------------------------------------------- EXPENSES - ------------------------------------------------------------------------------------------- Management fees 24,458,289 - ------------------------------------------------------------------------------------------- Distribution and service plan fees: Class A 8,524,862 Class B 2,295,635 Class C 7,164,664 Class N 275,556 - ------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 5,323,336 Class B 573,142 Class C 1,010,789 Class N 285,176 Class Y 10,821 - ------------------------------------------------------------------------------------------- Shareholder communications: Class A 580,791 Class B 62,898 Class C 105,719 Class N 5,625 - ------------------------------------------------------------------------------------------- Custodian fees and expenses 467,415 - ------------------------------------------------------------------------------------------- Trustees' compensation 59,074 - ------------------------------------------------------------------------------------------- Administration service fees 1,500 - ------------------------------------------------------------------------------------------- Other 175,565 -------------- Total expenses 51,380,857 Less reduction to custodian expenses (48,473) Less waivers and reimbursements of expenses (91,774) -------------- Net expenses 51,240,610 - ------------------------------------------------------------------------------------------- NET INVESTMENT INCOME 161,377,436
38 | OPPENHEIMER INTERNATIONAL BOND FUND
- ------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - ------------------------------------------------------------------------------------------- Net realized gain (loss) on: Investments $ 42,005,945 Closing and expiration of option contracts written 1,648,055 Closing and expiration of swaption contracts 389,255 Closing and expiration of futures contracts 10,032,947 Foreign currency transactions (80,955,986) Swap contracts 1,145,100 -------------- Net realized loss (25,734,684) - ------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on: Investments (20,007,804) Translation of assets and liabilities denominated in foreign currencies 2,349,413 Futures contracts 16,336,628 Option contracts 270,955 Swaption contracts 82,251 Swap contracts (7,620,507) -------------- Net change in unrealized appreciation (8,589,064) - ------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 127,053,688 ==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 39 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2006 2005 - ------------------------------------------------------------------------------------------------------------- OPERATIONS - ------------------------------------------------------------------------------------------------------------- Net investment income $ 161,377,436 $ 94,722,247 - ------------------------------------------------------------------------------------------------------------- Net realized gain (loss) (25,734,684) 101,469,820 - ------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (8,589,064) 125,469,766 -------------------------------- Net increase in net assets resulting from operations 127,053,688 321,661,833 - ------------------------------------------------------------------------------------------------------------- DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------------------- Dividends from net investment income: Class A (200,784,108) (119,863,500) Class B (12,370,619) (11,853,673) Class C (36,714,329) (21,678,102) Class N (3,110,737) (1,754,272) Class Y (5,420,742) (1,726,774) - ------------------------------------------------------------------------------------------------------------- Distributions from net realized gain: Class A (11,599,099) (15,265,136) Class B (891,798) (1,931,153) Class C (2,435,648) (3,155,872) Class N (203,177) (225,580) Class Y (253,487) (218,918) - ------------------------------------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS - ------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from beneficial interest transactions: Class A 1,502,920,202 1,399,327,451 Class B 18,514,548 44,672,998 Class C 338,152,983 305,107,070 Class N 18,829,709 26,099,719 Class Y 141,286,624 21,571,837 - ------------------------------------------------------------------------------------------------------------- NET ASSETS - ------------------------------------------------------------------------------------------------------------- Total increase 1,872,974,010 1,940,767,928 - ------------------------------------------------------------------------------------------------------------- Beginning of period 3,552,238,330 1,611,470,402 -------------------------------- End of period (including accumulated net investment income of $36,828,546 and $63,991,108, respectively) $5,425,212,340 $3,552,238,330 ================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 40 | OPPENHEIMER INTERNATIONAL BOND FUND FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
CLASS A YEAR ENDED SEPTEMBER 30, 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 6.01 $ 5.63 $ 5.33 $ 4.38 $ 3.95 - --------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .22 1 .23 1 .13 .20 .24 Net realized and unrealized gain (loss) (.04) .62 .47 .95 .41 ------------------------------------------------------------------------- Total from investment operations .18 .85 .60 1.15 .65 - --------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.37) (.41) (.30) (.20) (.19) Distributions from net realized gain (.02) (.06) -- -- -- Tax return of capital distribution -- -- -- -- (.03) ------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.39) (.47) (.30) (.20) (.22) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 5.80 $ 6.01 $ 5.63 $ 5.33 $ 4.38 ========================================================================= - --------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 3.23% 15.53% 11.56% 26.67% 16.78% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $4,075,172 $2,683,900 $1,177,628 $ 429,283 $ 181,456 - --------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $3,430,374 $1,925,344 $ 811,608 $ 285,391 $ 134,912 - --------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 3.72% 3.85% 2.19% 3.94% 5.16% Total expenses 0.98% 1.03% 1.13% 1.22% 1.37% Expenses after payments and waivers and reduction to custodian expenses 0.97% 1.02% 1.13% 1.22% 1.37% - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 144% 90% 133% 341% 372%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 3. Annualized for periods of less than one full year. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 41 | OPPENHEIMER INTERNATIONAL BOND FUND FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
CLASS B YEAR ENDED SEPTEMBER 30, 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ----------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 5.99 $ 5.61 $ 5.31 $ 4.37 $ 3.94 - ----------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .17 1 .17 1 .08 .16 .21 Net realized and unrealized gain (loss) (.04) .63 .47 .94 .40 --------------------------------------------------------------------------- Total from investment operations .13 .80 .55 1.10 .61 - ----------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.32) (.36) (.25) (.16) (.15) Distributions from net realized gain (.02) (.06) -- -- -- Tax return of capital distribution -- -- -- -- (.03) --------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.34) (.42) (.25) (.16) (.18) - ----------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 5.78 $ 5.99 $ 5.61 $ 5.31 $ 4.37 =========================================================================== - ----------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 2.35% 14.58% 10.66% 25.48% 15.90% - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 234,848 $ 224,381 $ 167,621 $ 134,661 $ 100,049 - ----------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 229,871 $ 201,541 $ 153,117 $ 119,232 $ 85,244 - ----------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 2.88% 2.95% 1.40% 3.20% 4.41% Total expenses 1.83% 4 1.89% 4 1.98% 4,5 2.03% 4 2.14% 4 - ----------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 144% 90% 133% 341% 372%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 3. Annualized for periods of less than one full year. 4. Reduction to custodian expenses less than 0.01%. 5. Voluntary waiver of transfer agent fees less than 0.01%. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 42 | OPPENHEIMER INTERNATIONAL BOND FUND
CLASS C YEAR ENDED SEPTEMBER 30, 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ----------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 5.99 $ 5.61 $ 5.31 $ 4.37 $ 3.94 - ----------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .17 1 .18 1 .09 .16 .21 Net realized and unrealized gain (loss) (.03) .63 .46 .94 .40 --------------------------------------------------------------------------- Total from investment operations .14 .81 .55 1.10 .61 - ----------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.33) (.37) (.25) (.16) (.15) Distributions from net realized gain (.02) (.06) -- -- -- Tax return of capital distribution -- -- -- -- (.03) --------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.35) (.43) (.25) (.16) (.18) - ----------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 5.78 $ 5.99 $ 5.61 $ 5.31 $ 4.37 =========================================================================== - ----------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 2.46% 14.70% 10.75% 25.48% 15.90% - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 875,032 $ 560,138 $ 233,311 $ 90,248 $ 38,865 - ----------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 717,977 $ 401,401 $ 170,796 $ 63,198 $ 28,635 - ----------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 2.98% 3.10% 1.46% 3.15% 4.37% Total expenses 1.71% 4 1.77% 4 1.88% 4,5 2.02% 4 2.14% 4 - ----------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 144% 90% 133% 341% 372%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 3. Annualized for periods of less than one full year. 4. Reduction to custodian expenses less than 0.01%. 5. Voluntary waiver of transfer agent fees less than 0.01%. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 43 | OPPENHEIMER INTERNATIONAL BOND FUND FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
CLASS N YEAR ENDED SEPTEMBER 30, 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 6.00 $ 5.61 $ 5.32 $ 4.37 $ 3.95 - --------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .19 1 .20 1 .12 .18 .21 Net realized and unrealized gain (loss) (.04) .64 .45 .95 .42 ------------------------------------------------------------------------- Total from investment operations .15 .84 .57 1.13 .63 - --------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.34) (.39) (.28) (.18) (.18) Distributions from net realized gain (.02) (.06) -- -- -- Tax return of capital distribution -- -- -- -- (.03) ------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.36) (.45) (.28) (.18) (.21) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 5.79 $ 6.00 $ 5.61 $ 5.32 $ 4.37 ========================================================================= - --------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 2.78% 15.27% 11.00% 26.31% 16.23% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 63,432 $ 46,533 $ 18,641 $ 4,640 $ 1,280 - --------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 55,216 $ 30,696 $ 10,769 $ 2,653 $ 297 - --------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 3.29% 3.45% 1.83% 3.56% 4.87% Total expenses 1.58% 1.47% 1.49% 1.57% 1.57% Expenses after payments and waivers and reduction to custodian expenses 1.42% 1.46% 1.49% 1.57% 1.57% - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 144% 90% 133% 341% 372%
1. Per share amounts calculated based on the average shares outstanding during the period. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 3. Annualized for periods of less than one full year. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 44 | OPPENHEIMER INTERNATIONAL BOND FUND
CLASS Y YEAR ENDED SEPTEMBER 30, 2006 2005 2004 1 - ---------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ---------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 6.01 $ 5.63 $ 5.58 - ---------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .24 2 .25 2 -- 3 Net realized and unrealized gain (loss) (.04) .63 .05 -------------------------------------------- Total from investment operations .20 .88 .05 - ---------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.39) (.44) -- Distributions from net realized gain (.02) (.06) -- Tax return of capital distribution -- -- -- -------------------------------------------- Total dividends and/or distributions to shareholders (.41) (.50) -- - ---------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 5.80 $ 6.01 $ 5.63 ============================================ - ---------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 4 3.64% 15.96% 0.92% - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 176,728 $ 37,286 $ 14,268 - ---------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 97,992 $ 25,559 $ 7,086 - ---------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 5 Net investment income 4.11% 4.23% 4.84% Total expenses 0.56% 0.67% 1.17% Expenses after payments and waivers and reduction to custodian expenses 0.56% 0.66% 1.17% - ---------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 144% 90% 133%
1. For the period from September 27, 2004 (inception of offering) to September 30, 2004. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Less than $0.005 per share. 4. Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 5. Annualized for periods of less than one full year. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 45 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer International Bond Fund (the Fund) is a registered investment company organized as a Massachusetts Business Trust. The Fund is registered as a non-diversified, open-end management investment company under the Investment Company Act of 1940, as amended. The Fund's primary investment objective is to seek total return. As a secondary objective, the Fund seeks income when consistent with total return. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B, Class C, Class N and Class Y shares. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B, Class C and Class N shares are sold without a front-end sales charge but may be subject to a contingent deferred sales charge (CDSC). Class N shares are sold only through retirement plans. Retirement plans that offer Class N shares may impose charges on those accounts. Class Y shares are sold to certain institutional investors without either a front-end sales charge or a CDSC, however, the institutional investor may impose charges on those accounts. All classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. Class A, B, C and N have separate distribution and/or service plans. No such plan has been adopted for Class Y shares. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. - -------------------------------------------------------------------------------- SECURITIES VALUATION. The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (the "Exchange"), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business. Securities may be valued primarily using dealer-supplied valuations or a portfolio pricing service authorized by the Board of Trustees. Securities listed or traded on National Stock Exchanges or other domestic exchanges are valued based on the last sale price of the security traded on that exchange prior to the time when the Fund's assets are valued. Securities traded on NASDAQ(R) are valued based on the closing price provided by NASDAQ prior to the time when the Fund's assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the closing "bid" and "asked" prices, and if not, at the closing bid price. Securities traded on foreign exchanges are valued based on the last sale price on the principal exchange on which the security is traded, as identified by the portfolio pricing service, prior to the time when the Fund's assets are valued. In the absence of a sale, the security is valued at the official closing price on the principal exchange. Corporate, government and municipal debt instruments having a remaining maturity in excess of sixty days and all mortgage-backed securities will be valued at the mean between the "bid" and "asked" prices. Futures contracts traded 46 | OPPENHEIMER INTERNATIONAL BOND FUND on a commodities or futures exchange will be valued at the final settlement price or official closing price on the principal exchange as reported by such principal exchange at its trading session ending at, or most recently prior to, the time when the Fund's assets are valued. Securities (including restricted securities) for which market quotations are not readily available are valued at their fair value. Foreign and domestic securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund's assets are valued but after the close of their respective exchanges will be fair valued. Fair value is determined in good faith using consistently applied procedures under the supervision of the Board of Trustees. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). - -------------------------------------------------------------------------------- STRUCTURED NOTES. The Fund invests in structured notes whose market values, interest rates and/or redemption prices are linked to the performance of underlying foreign currencies, interest rate spreads, stock market indices, prices of individual securities, commodities or other financial instruments or the occurrence of other specific events. The structured notes are often leveraged, increasing the volatility of each note's market value relative to the change in the underlying linked financial element or event. Fluctuations in value of these securities are recorded as unrealized gains and losses in the accompanying Statement of Operations. The Fund records a realized gain or loss when a structured note is sold or matures. As of September 30, 2006, the market value of these securities comprised 24.0% of the Fund's net assets and resulted in unrealized cumulative gains of $69,259,579. - -------------------------------------------------------------------------------- SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment for securities that have been purchased by the Fund on a when-issued basis or forward commitment can take place up to ten days or more after the trade date. Normally the settlement date occurs within six months after the trade date; however, the Fund may, from time to time, purchase securities whose settlement date extends six months or more beyond trade date. During this period, such securities do not earn interest, are subject to market fluctuation and may increase or decrease in value prior to their delivery. The Fund maintains internally designated assets with a market value equal to or greater than the amount of its purchase commitments. The purchase of securities on a when-issued basis or forward commitment may increase the volatility of the Fund's net asset value to the extent the Fund executes such transactions while remaining substantially fully invested. The Fund may also sell securities that it purchased on a when-issued basis or forward commitment prior to settlement of the original purchase. As of September 30, 2006, the Fund had purchased $42,628,839 of securities issued on a when-issued basis or forward commitment and sold $1,379,388 of securities issued on a when-issued basis or forward commitment. - -------------------------------------------------------------------------------- SECURITY CREDIT RISK. The Fund invests in high-yield securities, which may be subject to a greater degree of credit risk, market fluctuations and loss of income and principal, and 47 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued may be more sensitive to economic conditions than lower-yielding, higher-rated fixed-income securities. The Fund may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. As of September 30, 2006, securities with an aggregate market value of $139,328, representing less than 0.01% of the Fund's net assets, were in default. - -------------------------------------------------------------------------------- FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in U.S. dollars. The values of securities denominated in foreign currencies and amounts related to the purchase and sale of foreign securities and foreign investment income are translated into U.S. dollars as of the close of the New York Stock Exchange (the "Exchange"), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business. Foreign exchange rates may be valued primarily using dealer supplied valuations or a portfolio pricing service authorized by the Board of Trustees. Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the values of assets and liabilities, including investments in securities at fiscal period end, resulting from changes in exchange rates. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. - -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other affiliated funds advised by the Manager, may transfer uninvested cash balances into joint trading accounts on a daily basis. These balances are invested in one or more repurchase agreements. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. In the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. - -------------------------------------------------------------------------------- INVESTMENTS WITH OFF BALANCE SHEET RISK. The Fund enters into financial instrument transactions (such as swaps, futures and other derivatives) that may have off-balance sheet market risk. Off-balance sheet market risk exists when the maximum potential loss on a particular financial instrument is greater than the value of such financial instrument, as reflected in the Fund's Statement of Assets and Liabilities. - -------------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each 48 | OPPENHEIMER INTERNATIONAL BOND FUND class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. - -------------------------------------------------------------------------------- FEDERAL TAXES. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders, therefore, no federal income or excise tax provision is required. The tax components of capital shown in the table below represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes. NET UNREALIZED APPRECIATION BASED ON COST OF SECURITIES AND UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME INCOME GAIN CARRYFORWARD 1,2,3,4 TAX PURPOSES -------------------------------------------------------------------------- $ 72,760,781 $ 12,461,839 $ 95,753,190 $ 104,859,064 1. The Fund had $91,897,279 of post-October foreign currency losses which were deferred. 2. The Fund had $3,855,911 of straddle losses which were deferred. 3. During the fiscal year ended September 30, 2006, the Fund did not utilize any capital loss carryforward. 4. During the fiscal year ended September 30, 2005, the Fund did not utilize any capital loss carryforward. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund. Accordingly, the following amounts have been reclassified for September 30, 2006. Net assets of the Fund were unaffected by the reclassifications. REDUCTION TO INCREASE TO ACCUMULATED ACCUMULATED NET INCREASE TO NET INVESTMENT REALIZED LOSS PAID-IN CAPITAL LOSS ON INVESTMENTS 5 -------------------------------------------------------- $ 1,777,768 $ 69,860,537 $ 71,638,305 5. $1,777,768, all of which was long-term capital gain, was distributed in connection with Fund share redemptions. 49 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued The tax character of distributions paid during the years ended September 30, 2006 and September 30, 2005 was as follows: YEAR ENDED YEAR ENDED SEPT. 30, 2006 SEPT. 30, 2005 -------------------------------------------------------------------------- Distributions paid from: Ordinary income $ 258,400,535 $ 177,672,980 Long-term capital gain 15,383,209 -- -------------------------------- Total $ 273,783,744 $ 177,672,980 ================================ The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of September 30, 2006 are noted below. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss. Federal tax cost of securities $ 6,114,112,005 Federal tax cost of other investments 2,946,559,180 --------------- Total federal tax cost $ 9,060,671,185 =============== Gross unrealized appreciation $ 170,534,968 Gross unrealized depreciation (65,675,904) --------------- Net unrealized appreciation $ 104,859,064 =============== - -------------------------------------------------------------------------------- TRUSTEES' COMPENSATION. The Board of Trustees has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of "Other" within the asset section of the Statement of Assets and Liabilities. Deferral of trustees' fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund's assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the Plan. - -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. Income distributions, if any, are declared daily and paid monthly. Capital gain distributions, if any, are declared and paid annually. - -------------------------------------------------------------------------------- INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at 50 | OPPENHEIMER INTERNATIONAL BOND FUND the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. - -------------------------------------------------------------------------------- CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may include interest expense incurred by the Fund on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Fund pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by the Fund, at a rate equal to the Federal Funds Rate plus 0.50%. The "Reduction to custodian expenses" line item, if applicable, represents earnings on cash balances maintained by the Fund during the period. Such interest expense and other custodian fees may be paid with these earnings. - -------------------------------------------------------------------------------- SECURITY TRANSACTIONS. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. - -------------------------------------------------------------------------------- INDEMNIFICATIONS. The Fund's organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote. - -------------------------------------------------------------------------------- OTHER. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:
YEAR ENDED SEPTEMBER 30, 2006 YEAR ENDED SEPTEMBER 30, 2005 SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------------- CLASS A Sold 401,071,813 $ 2,346,328,470 290,795,021 $ 1,714,084,347 Dividends and/or distributions reinvested 28,014,878 162,673,081 17,749,603 105,430,621 Redeemed (173,146,915) (1,006,081,349) (71,447,967) (420,187,517) ----------------------------------------------------------------- Net increase 255,939,776 $ 1,502,920,202 237,096,657 $ 1,399,327,451 =================================================================
51 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST Continued
YEAR ENDED SEPTEMBER 30, 2006 YEAR ENDED SEPTEMBER 30, 2005 SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------------- CLASS B Sold 13,953,510 $ 81,256,556 15,275,934 $ 89,714,849 Dividends and/or distributions reinvested 1,823,352 10,550,724 1,842,516 10,920,892 Redeemed (12,609,581) (73,292,732) (9,559,054) (55,962,743) ----------------------------------------------------------------- Net increase 3,167,281 $ 18,514,548 7,559,396 $ 44,672,998 ================================================================= - -------------------------------------------------------------------------------------------- CLASS C Sold 76,001,789 $ 443,443,673 59,355,223 $ 348,932,998 Dividends and/or distributions reinvested 4,461,718 25,813,712 2,925,804 17,330,636 Redeemed (22,632,214) (131,104,402) (10,417,683) (61,156,564) ----------------------------------------------------------------- Net increase 57,831,293 $ 338,152,983 51,863,344 $ 305,107,070 ================================================================= - -------------------------------------------------------------------------------------------- CLASS N Sold 7,063,532 $ 41,194,742 5,802,889 $ 34,052,865 Dividends and/or distributions reinvested 531,451 3,078,829 310,916 1,843,537 Redeemed (4,393,527) (25,443,862) (1,676,293) (9,796,683) ----------------------------------------------------------------- Net increase 3,201,456 $ 18,829,709 4,437,512 $ 26,099,719 ================================================================= - -------------------------------------------------------------------------------------------- CLASS Y Sold 24,796,488 $ 144,435,008 4,755,499 $ 27,879,481 Dividends and/or distributions reinvested 973,953 5,648,766 328,793 1,945,692 Redeemed (1,513,656) (8,797,150) (1,416,856) (8,253,336) ----------------------------------------------------------------- Net increase 24,256,785 $ 141,286,624 3,667,436 $ 21,571,837 =================================================================
- -------------------------------------------------------------------------------- 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the year ended September 30, 2006, were as follows: PURCHASES SALES - ------------------------------------------------------------------- Investment securities $4,995,489,139 $4,563,963,982 U.S. government and government agency obligations 292,567,597 26,867,033 - -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for a fee at an average annual rate as shown in the following table: 52 | OPPENHEIMER INTERNATIONAL BOND FUND FEE SCHEDULE ------------------------------------------------- Up to $200 million of net assets 0.75% Next $200 million of net assets 0.72 Next $200 million of net assets 0.69 Next $200 million of net assets 0.66 Next $200 million of net assets 0.60 Next $4 billion of net assets 0.50 Over $5 billion of net assets 0.48 - -------------------------------------------------------------------------------- ADMINISTRATION SERVICE FEES. The Fund pays the Manager a fee of $1,500 per year for preparing and filing the Fund's tax returns. - -------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended September 30, 2006, the Fund paid $6,829,412 to OFS for services to the Fund. Additionally, Class Y shares are subject to minimum fees of $10,000 per annum for assets of $10 million or more. The Class Y shares are subject to the minimum fees in the event that the per account fee does not equal or exceed the applicable minimum fees. OFS may voluntarily waive the minimum fees. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor) acts as the Fund's principal underwriter in the continuous public offering of the Fund's classes of shares. - -------------------------------------------------------------------------------- SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A shares. It reimburses the Distributor for a portion of its costs incurred for services provided to accounts that hold Class A shares. Reimbursement is made periodically at an annual rate of up to 0.25% of the average annual net assets of Class A shares of the Fund. The Distributor currently uses all of those fees to pay dealers, brokers, banks and other financial institutions periodically for providing personal services and maintenance of accounts of their customers that hold Class A shares. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent periods. Fees incurred by the Fund under the plan are detailed in the Statement of Operations. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund has adopted Distribution and Service Plans for Class B, Class C and Class N shares to compensate the Distributor for its services in connection with the distribution of those shares and servicing accounts. Under the plans, the Fund pays the Distributor an annual asset-based sales charge of 0.75% on Class B and Class C shares and 0.25% on Class N shares. The Distributor also receives a service fee of 0.25% per year under each plan. If either the Class B, Class C or Class N plan is terminated by the Fund or by the shareholders of a class, the Board of Trustees and its independent trustees must determine whether the Distributor shall be entitled to payment from the Fund of all or a portion of the service fee and/or asset-based sales charge in respect to shares sold prior to the effective date of 53 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued such termination. The Distributor's aggregate uncompensated expenses under the plan at September 30, 2006 for Class B, Class C and Class N shares were $7,821,417, $11,863,557 and $710,233, respectively. Fees incurred by the Fund under the plans are detailed in the Statement of Operations. - -------------------------------------------------------------------------------- SALES CHARGES. Front-end sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. The sales charges retained by the Distributor from the sale of shares and the CDSC retained by the Distributor on the redemption of shares is shown in the following table for the period indicated.
CLASS A CLASS B CLASS C CLASS N CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR - ----------------------------------------------------------------------------------------------- September 30, 2006 $ 1,530,031 $ 177,034 $ 439,235 $ 230,872 $ 75,772
- -------------------------------------------------------------------------------- WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. During the year ended September 30, 2006, OFS waived $91,774 for Class N shares. This undertaking may be amended or withdrawn at any time. - -------------------------------------------------------------------------------- 5. FOREIGN CURRENCY CONTRACTS A foreign currency contract is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Fund may enter into foreign currency contracts to settle specific purchases or sales of securities denominated in a foreign currency and for protection from adverse exchange rate fluctuation. Risks to the Fund include the potential inability of the counterparty to meet the terms of the contract. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using prevailing foreign currency exchange rates. Unrealized appreciation and depreciation on foreign currency contracts are reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations with the change in unrealized appreciation or depreciation. The Fund may realize a gain or loss upon the closing or settlement of the foreign transaction. Contracts closed or settled with the same broker are recorded as net realized gains or losses. Such realized gains and losses are reported with all other foreign currency gains and losses in the Statement of Operations. 54 | OPPENHEIMER INTERNATIONAL BOND FUND As of September 30, 2006, the Fund had outstanding foreign currency contracts as follows:
CONTRACT VALUATION EXPIRATION AMOUNT AS OF UNREALIZED UNREALIZED CONTRACT DESCRIPTION DATES (000S) SEPT. 30, 2006 APPRECIATION DEPRECIATION - --------------------------------------------------------------------------------------------------------------- CONTRACTS TO PURCHASE Argentine Peso (ARP) 10/25/06 160,000ARP $ 51,378,226 $ -- $ 204,726 Australian Dollar (AUD) 10/13/06 1,780AUD 1,326,250 -- 12,256 Brazilian Real (BRR) 10/31/06-1/13/10 472,979BRR 192,308,713 26,984,996 306,869 British Pound Sterling (GBP) 10/13/06-1/10/07 15,865GBP 29,729,670 -- 310,768 Canadian Dollar (CAD) 10/13/06 6,005CAD 5,374,485 10,579 -- Chilean Peso (CLP) 11/21/06-12/28/06 23,557,000CLP 43,998,440 306,931 52,317 Dominican Republic Peso (DOP) 10/10/06 51,604DOP 1,531,274 -- 32,482 Euro (EUR) 10/13/06-3/6/07 216,690EUR 276,452,640 10,431 2,142,821 Indian Rupee (INR) 10/3/06-10/11/06 2,309,500INR 50,265,521 134,683 -- Indonesia Rupiah (IDR) 10/3/06-10/5/06 184,671,060IDR 20,018,543 10,843 10,857 Japanese Yen (JPY) 10/13/06-1/10/07 87,522,000JPY 751,074,335 -- 5,019,486 Malaysian Ringgit (MYR) 11/10/06-11/17/06 133,730MYR 36,342,276 -- 1,559,610 Mexican Nuevo Peso (MXN) 10/24/06-11/29/06 1,402,690MXN 127,250,899 -- 1,389,731 New Turkish Lira (TRY) 10/10/06-10/26/06 122,993TRY 80,552,397 17,973 1,538,955 New Zealand Dollar (NZD) 3/5/07 166,275NZD 107,525,700 169,582 354,098 Norwegian Krone (NOK) 1/10/07 250,500NOK 38,598,733 -- 178,357 South African Rand (ZAR) 10/5/06-11/27/06 788,080ZAR 100,908,391 -- 8,750,360 South Korean Won (KRW) 10/10/06-11/2/06 51,918,000KRW 54,898,918 633,927 -- Swiss Franc (CHF) 10/13/06-3/6/07 243,405CHF 197,047,542 85,187 1,812,688 Thailand Baht (THB) 10/17/06 1,348,000THB 35,790,175 199,416 -- ------------------------------ 28,564,548 23,676,381 ------------------------------ CONTRACTS TO SELL Australian Dollar (AUD) 1/10/07-3/5/07 217,720AUD 161,797,313 2,906,595 -- British Pound Sterling (GBP) 2/7/07 16,000GBP 29,990,317 269,683 -- Canadian Dollar (CAD) 1/10/07 139,005CAD 124,749,271 7,283 -- Chinese Renminbi (CNY) 10/23/06 400,000CNY 50,735,188 -- 214,190 Czech Koruna (CZK) 10/23/06 1,100,000CZK 49,374,331 -- 141,909 Euro (EUR) 11/8/06-2/7/06 37,180EUR 47,437,956 616,017 -- Iceland Krona (ISK) 10/23/06 1,896,300ISK 26,903,709 -- 679,846 Japanese Yen (JPY) 10/23/06-3/5/07 19,260,000JPY 165,545,770 2,383,176 -- Swedish Krone (SEK) 10/5/06-3/5/07 1,017,260SEK 139,703,059 1,636,485 -- Swiss Franc (CHF) 10/23/06 62,000CHF 49,698,632 20,694 -- ------------------------------ 7,839,933 1,035,945 ------------------------------ Total unrealized appreciation and depreciation $ 36,404,481 $ 24,712,326 ==============================
- -------------------------------------------------------------------------------- 6. FUTURES CONTRACTS A futures contract is a commitment to buy or sell a specific amount of a commodity or financial instrument at a negotiated price on a stipulated future date. Futures contracts are traded on a commodity exchange. The Fund may buy and sell futures contracts that relate to broadly based securities indices (financial futures) or debt securities (interest 55 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6. FUTURES CONTRACTS Continued rate futures) in order to gain exposure to or protection from changes in market value of stocks and bonds or interest rates. The Fund may also buy or write put or call options on these futures contracts. The Fund generally sells futures contracts as a hedge against increases in interest rates and decreases in market value of portfolio securities. The Fund may also purchase futures contracts to gain exposure to market changes as it may be more efficient or cost effective than actually buying securities. Upon entering into a futures contract, the Fund is required to deposit either cash or securities (initial margin) in an amount equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or has expired. Cash held by the broker to cover initial margin requirements on open futures contracts is noted in the Statement of Assets and Liabilities. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Statement of Investments. The Statement of Assets and Liabilities reflects a receivable and/or payable for the daily mark to market for variation margin. Realized gains and losses are reported in the Statement of Operations at the closing and expiration of futures contracts. The net change in unrealized appreciation and depreciation is reported in the Statement of Operations. Risks of entering into futures contracts (and related options) include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. As of September 30, 2006, the Fund had outstanding futures contracts as follows:
VALUATION AS OF UNREALIZED EXPIRATION NUMBER OF SEPTEMBER 30, APPRECIATION CONTRACT DESCRIPTION DATES CONTRACTS 2006 (DEPRECIATION) - -------------------------------------------------------------------------------------------- CONTRACTS TO PURCHASE Euro-Bundesobligation, 5 yr. 12/7/06 926 $ 129,105,261 $ 425,480 Euro-Bundesobligation, 10 yr. 12/7/06 20 2,995,143 30,695 Euro-Schatz 12/7/06 1,458 192,296,040 101,354 IBEX 35 Index 10/20/06 34 5,582,810 317,911 Japan (Government of) Bonds, 10 yr. 12/11/06 376 429,077,672 2,092,210 MSCI Taiwan Stock Index 10/30/06 197 5,651,930 (71,321) Standard & Poor's ASX 200 Index 12/21/06 191 18,434,645 283,300 Standard & Poor's 500 E-Mini 12/15/06 349 23,477,230 586,617 Standard & Poor's/MIB Index, 10 yr. 12/15/06 22 5,367,279 71,495 U.S. Long Bonds 12/19/06 2,600 292,256,250 5,968,342 U.S. Treasury Nts. 10 yr. 12/19/06 6,255 675,930,938 6,889,008 United Kingdom Long Gilt 12/27/06 211 43,472,898 355,394 ------------- 17,050,485 -------------
56 | OPPENHEIMER INTERNATIONAL BOND FUND
VALUATION AS OF UNREALIZED EXPIRATION NUMBER OF SEPTEMBER 30, APPRECIATION CONTRACT DESCRIPTION DATES CONTRACTS 2006 (DEPRECIATION) - -------------------------------------------------------------------------------------------- CONTRACTS TO SELL Australia (Commonwealth of) Bonds, 10 yr. 12/15/06 303 $ 23,433,981 $ 25,562 CAC-40 10 Index 10/20/06 291 19,418,819 (466,453) Canadian Bonds, 10 yr. 12/18/06 543 55,934,708 (797,819) DAX Index 12/15/06 111 21,271,446 (437,006) FTSE 100 Index 12/15/06 391 43,826,349 (442,493) Nikkei 225 Index 12/7/06 403 54,927,407 (271,514) Standard & Poor's 500 E-Mini 12/15/06 81 5,448,870 (136,416) Standard & Poor's/Toronto Stock Exchange 60 Index 12/14/06 153 18,522,890 (341,714) U.S. Treasury Nts., 5 yr. 12/29/06 161 16,988,016 (109,593) ------------- (2,977,446) ------------- $ 14,073,039 =============
- -------------------------------------------------------------------------------- 7. OPTION ACTIVITY The Fund may buy and sell put and call options, or write put and covered call options on portfolio securities in order to produce incremental earnings or protect against changes in the value of portfolio securities. The Fund generally purchases put options or writes covered call options to hedge against adverse movements in the value of portfolio holdings. When an option is written, the Fund receives a premium and becomes obligated to sell or purchase the underlying security at a fixed price, upon exercise of the option. Options are valued daily based upon the last sale price on the principal exchange on which the option is traded and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss upon the expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. Securities designated to cover outstanding call or put options are noted in the Statement of Investments where applicable. Contracts subject to call or put, expiration date, exercise price, premium received and market value are detailed in a note to the Statement of Investments. Options written are reported as a liability in the Statement of Assets and Liabilities. Realized gains and losses are reported in the Statement of Operations. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security [or commodity] increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the security [or commodity] decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. 57 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 7. OPTION ACTIVITY Continued Written option activity for the year ended September 30, 2006 was as follows: PUT OPTIONS ------------------------------- NUMBER OF AMOUNT OF CONTRACTS PREMIUMS - --------------------------------------------------------------------- Options outstanding as of September 30, 2005 -- $ -- Options written 53,496,170,000 2,348,537 Options closed or expired (53,463,350,000) (1,792,005) ------------------------------- Options outstanding as of September 30, 2006 32,820,000 $ 556,532 =============================== - -------------------------------------------------------------------------------- 8. TOTAL RETURN SWAP CONTRACTS A total return swap is an agreement under which a set of future cash flows is exchanged between two counterparties. One cash flow stream will typically be based on a reference interest rate or index and the other on the total return of a reference asset such as a security, a basket of securities, or an index. The total return includes appreciation or depreciation on the reference asset, plus any interest or dividend payments. Payments under the swap are based on an agreed upon principal amount but since this principal amount is not exchanged, it represents neither an asset nor a liability to either counterparty, and is referred to as notional. Total return swaps are marked to market daily using different sources, including quotations from counterparties, pricing services, brokers or market makers. The unrealized appreciation (depreciation) related to the change in the valuation of the notional amount of the swap is combined with the amount due to (owed by) the Fund at termination or settlement and disclosed separately on the Statement of Assets and Liabilities. The net change in this amount is included on the Statement of Operations. The Fund also records any periodic payments received from (paid to) the counterparty, including at termination, under such contracts as realized gain (loss) on the Statement of Operations. The primary risks associated with total return swaps are credit risks (if the counterparty fails to meet its obligations) and market risk (if there is no liquid market for the agreement or unfavorable changes occur in the reference asset). As of September 30, 2006, the Fund had entered into the following total return swap agreements: 58 | OPPENHEIMER INTERNATIONAL BOND FUND
UNREALIZED SWAP NOTIONAL PAID BY RECEIVED BY TERMINATION APPRECIATION COUNTERPARTY AMOUNT THE FUND THE FUND DATES (DEPRECIATION) - -------------------------------------------------------------------------------------------------------------------- Six-Month Deutsche Bank AG $ 16,760,000 BBA LIBOR 5.46% 5/13/15 $ 2,265,057 - -------------------------------------------------------------------------------------------------------------------- Goldman Sachs Group, Inc. (The): Six-Month 11,580,000 BBA LIBOR 5.10 1/14/15 1,487,217 Six-Month 11,580,000 BBA LIBOR 5.08 1/20/15 1,546,807 - -------------------------------------------------------------------------------------------------------------------- Goldman Sachs International: Price Depreciation Price Appreciation of Sao Paulo of Sao Paulo Stock Exchange Stock Exchange 3,775,895BRR Index Futures. Index Futures. 10/18/06 (48,884) Price Depreciation Price Appreciation of Sao Paulo of Sao Paulo Stock Exchange Stock Exchange 8,017,514BRR Index Futures. Index Futures. 10/18/06 (109,437) Price Depreciation Price Appreciation of Standard & of Standard & Poor's CNX Nifty Poor's CNX Nifty 248,229,300INR Index Futures. Index Futures. 10/26/06 (87,177) Price Depreciation Price Appreciation of Swiss Market of Swiss Market 6,596,597CHF Index Futures. Index Futures. 12/15/06 (135,681) ------------- $ 4,917,902 =============
Notional amount is reported in U.S. Dollars, except for those denoted in the following currencies: BRR Brazilian Real CHF Swiss Franc INR Indian Rupee Abbreviation is as follows: BBA LIBOR British Bankers' Association London-Interbank Offered Rate - -------------------------------------------------------------------------------- 9. INTEREST RATE SWAP CONTRACTS An interest rate swap is an agreement under which a set of future cash flows is exchanged between two counterparties. Interest rate swaps involve the exchange of rights to receive or commitments to pay interest. One cash flow stream will typically be a floating rate payment based upon a specified index while the other is typically a fixed rate. Payments under the swap are based on an agreed upon principal amount but since this principal amount is not exchanged, it represents neither an asset nor a liability to either counterparty, and is referred to as notional. Interest rate swaps are marked to market daily using different sources, including quotations from counterparties, pricing services, brokers or market makers. The unrealized appreciation (depreciation) related to the change in the valuation of the notional amount of the swap is combined with the amount due to (owed by) the Fund at termination or settlement and disclosed separately on the Statement of Assets and Liabilities. The net change in this amount is 59 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 9. INTEREST RATE SWAP CONTRACTS Continued included on the Statement of Operations. The Fund also records any periodic payments received from (paid to) the counterparty, including at termination, under such contracts as realized gain (loss) on the Statement of Operations. Swap agreements entail both interest rate risk and credit risk. There is a risk, based on movements of interest rates in the future, the payments made by the Fund under a swap agreement will be greater than the payments it received. Credit risk arises from the possibility that the counterparty will default. If the counterparty defaults, the Fund's loss will consist of the net amount of contractual interest payments that the Fund has not yet received. The Manager will monitor the creditworthiness of counterparties to the Fund's interest rate swap transactions on an ongoing basis. As of September 30, 2006, the Fund had entered into the following interest rate swap agreements:
UNREALIZED SWAP NOTIONAL PAID BY RECEIVED BY TERMINATION APPRECIATION COUNTERPARTY AMOUNT THE FUND THE FUND DATES (DEPRECIATION) - -------------------------------------------------------------------------------------------------------------------- Barclays Bank plc 114,700,000MXN MXN TIIE 9.2700% 7/17/26 $ 85,119 - -------------------------------------------------------------------------------------------------------------------- Citigroup Global Markets Holdings,Inc.: Six-Month 16,830,000PLZ WIBO 5.5200 3/24/10 187,395 Six-Month 26,928,000PLZ WIBO 5.5500 3/25/10 305,428 489,400,000TWD 2.3200% TWD-Telerate 6/27/11 (206,249) - -------------------------------------------------------------------------------------------------------------------- Credit Suisse First Boston, Inc. Six-Month (Nassau Branch) 46,785,000PLZ WIBO 4.4800 7/1/10 (423,665) - -------------------------------------------------------------------------------------------------------------------- Credit Suisse First Boston 28-Day International 112,580,000MXN MXN TIIE 10.0000 7/9/15 818,622 - -------------------------------------------------------------------------------------------------------------------- Deutsche Bank AG: 11,050,000 Six-Month LIBOR 5.2500 6/23/15 1,104,466 2,387,000,000HUF 8.4400 Six-Month BUBOR 7/4/11 (832) - -------------------------------------------------------------------------------------------------------------------- Deutsche Bank INR MIBOR- AG, 5 yr. 490,200,000INR 7.1750 OIS-Compound 6/27/11 (84,280) - -------------------------------------------------------------------------------------------------------------------- Goldman Sachs Capital Markets LP: 21,965,083BRR BZDI 17.7200 1/2/07 126,168 38,987,000BRR BZDI 18.1600 1/2/08 1,327,539 187,935,994BRR BZDI 17.1800 1/2/08 4,095,559 94,500,000MXN MXN TIIE 10.2900 6/14/15 843,703 93,375,000MXN MXN TIIE 10.4300 5/29/15 892,279 93,375,000MXN MXN TIIE 10.3000 6/1/15 821,204 55,700,000MXN MXN TIIE 10.0000 6/24/15 397,009 120,050,000MXN MXN TIIE 10.2200 1/30/15 1,000,890
60 | OPPENHEIMER INTERNATIONAL BOND FUND
UNREALIZED SWAP NOTIONAL PAID BY RECEIVED BY TERMINATION APPRECIATION COUNTERPARTY AMOUNT THE FUND THE FUND DATES (DEPRECIATION) - -------------------------------------------------------------------------------------------------------------------- Goldman Sachs Group, Inc. (The): 17,037,427BRR BZDI 17.1700% 1/2/08 $ 328,476 20,823,527BRR BZDI 17.1700 1/2/08 401,471 27,880,000BRR BZDI 14.0500 1/2/12 (21,011) 46,968,000BRR BZDI 18.0000 1/2/07 404,744 38,800,000MXN MXN TIIE 8.7000 2/5/16 (23,576) 48,030,000MXN MXN TIIE 9.4100 8/31/20 145,362 61,200,000MXN MXN TIIE 10.8500 3/5/15 724,727 91,750,000MXN MXN TIIE 9.2900 7/17/26 10,401 96,930,000MXN MXN TIIE 9.5000 8/28/25 303,423 100,000,000MXN MXN TIIE 10.7500 5/8/15 1,153,478 109,710,000MXN MXN TIIE 10.7000 5/8/15 1,234,058 140,720,000MxN MXN TIIE 9.1500 8/27/26 (11,239) 144,000,000MXN MXN TIIE 9.5100 8/26/25 465,140 289,270,000MXN MXN TIIE 9.8400 12/31/09 1,417,389 - -------------------------------------------------------------------------------------------------------------------- JPMorgan Chase Bank: 55,370,000BRR BZDI 13.9100 1/2/12 (156,922) 114,500,000MXN MXN TIIE 9.7600 8/17/15 653,781 264,090,000ZAR 8.2900% Three-Month JIBA 6/23/08 396,788 - -------------------------------------------------------------------------------------------------------------------- Lehman Brothers Special Financing. Inc.: 102,585,000GBP 5.2500 Six-Month LIBOR 5/21/09 (487,726) 28-Day 111,440,000MXN MXN TIIE 9.9900 7/9/15 784,058 Six-Month 55,540,000PLZ WIBO 4.5300 7/5/10 (497,496) - -------------------------------------------------------------------------------------------------------------------- Merrill Lynch Three-Month & Co., Inc. 574,160,000SEK STIBOR-SIDE 4.0325 6/19/12 373,765 - -------------------------------------------------------------------------------------------------------------------- Morgan Stanley Capital Services, Inc.: 24,054,685BRR BZDI 16.8800 1/2/08 359,739 41,775,000BRR BZDI 17.5900 1/2/07 310,244 - -------------------------------------------------------------------------------------------------------------------- Santander Central Hispano 27,880,000BRR BZDI 14.0000 1/2/12 (35,778) - -------------------------------------------------------------------------------------------------------------------- UBS AG 505,750,000NOK 4.2200 Six-Month NIBOR 2/6/12 863,012 - -------------------------------------------------------------------------------------------------------------------- WestPac Banking Corp. 68,660,000NZD 6.7500 Six-Month BBR 6/29/16 (413,616) ------------- $ 19,973,047 =============
61 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 9. INTEREST RATE SWAP CONTRACTS Continued Notional amount is reported in U.S. Dollars, except for those denoted in the following currencies: BRR Brazilian Real GBP British Pound Sterling HUF Hungarian Forint INR Indian Rupee MXN Mexican Nuevo Peso NOK Norwegian Krone NZD New Zealand Dollar PLZ Polish Zloty SEK Swedish Krone TWD New Taiwan Dollar ZAR South African Rand Index abbreviations are as follows: BBR Bank Bill Rate BUBOR Budapest Interbank Offered Rate BZDI Brazil Cetip Interbank Deposit Rate FRAS French Franc/Austrian Schilling IRS India Swap Composites JIBA South Africa Johannesburg Interbank Agreed Rate LIBOR London-Interbank Offered Rate MIBOR-OIS Mid Market Interest Rate for FRAS and IRS-Overnight Indexed Swap MXN TIIE Mexican Peso-Interbank Equilibrium Interest Rate NIBOR Norwegian Interbank Offered Rate STIBOR Stockholm Interbank Offered Rate WIBO Poland Warsaw Interbank Offer Bid Rate - -------------------------------------------------------------------------------- 10. CREDIT DEFAULT SWAP CONTRACTS Credit default swaps are designed to transfer the credit exposure of fixed income products between counterparties. The Fund may enter into credit default swaps, both directly ("unfunded swaps") and indirectly in the form of a swap embedded within a structured note ("funded swaps"), to protect against the risk that a security will default. Unfunded and funded credit default swaps may be on a single security, or a basket of securities. The Fund may take a short position (purchaser of credit protection) or a long position (seller of credit protection) in the credit default swap. Risks of credit default swaps include, but are not limited to, the cost of paying for credit protection if there are no credit events, pricing transparency when assessing the cost of a credit default swap, counterparty risk, and the need to fund the delivery obligation (either cash or defaulted bonds depending on whether the Fund is long or short the swap, respectively). The Fund would take a short position in a credit default swap (the "unfunded swap") against a long portfolio position to decrease exposure to specific high yield issuers. As a purchaser of credit protection under a swap contract, the Fund pays a periodic interest fee on the notional amount to the counterparty. This interest fee is accrued daily as a component of unrealized appreciation (depreciation) and is recorded as realized loss upon payment. Upon occurrence of a specific credit event with respect to the 62 | OPPENHEIMER INTERNATIONAL BOND FUND underlying referenced debt obligation, the Fund is obligated to deliver that security to the counterparty in exchange for receipt of the notional amount from the counterparty. The difference between the value of the security delivered and the notional amount received is recorded as realized gain and is included on the Statement of Operations. Credit default swaps are marked to market daily using different sources, including quotations from counterparties, pricing services, brokers or market makers. The unrealized appreciation (depreciation) related to the change in the valuation of the notional amount of the swap is combined with the amount due to (owed by) the Fund at termination or settlement and disclosed separately on the Statement of Assets and Liabilities. The net change in this amount is included on the Statement of Operations. Information regarding such credit default swaps as of September 30, 2006 is as follows:
ANNUAL NOTIONAL AMOUNT INTEREST REFERENCED RECEIVED BY THE RATE PAID UNREALIZED DEBT FUND UPON BY THE EXPIRATION APPRECIATION COUNTERPARTY OBLIGATION CREDIT EVENT FUND DATES (DEPRECIATION) - ------------------------------------------------------------------------------------------------------------------- Citigroup Global Markets Holdings, Inc.: Hungary (Republic of) $ 7,535,000 0.4000% 12/20/15 $ 107,231 Mexico (Government of) 7,770,000 0.6475 1/20/11 (58,962) - ------------------------------------------------------------------------------------------------------------------- Deutsche Bank AG: Philippines (Republic of the) 14,000,000 3.6900 9/20/15 (705,880) Ukraine (Republic of) 4,075,000 1.8800 3/20/11 (4,490) - ------------------------------------------------------------------------------------------------------------------- JPMorgan Chase Bank Russian Federation 550,000 2.4000 10/9/13 (60,934) - ------------------------------------------------------------------------------------------------------------------- Merrill Lynch & Co., Inc.: Argentina (Republic of) 10,000,000 2.6000 8/20/11 (36,775) Philippines (Republic of the) 18,720,000 1.7250 12/20/11 (18,000) - ------------------------------------------------------------------------------------------------------------------- Morgan Stanley Capital Services, Inc.: Colombia (Republic of) 1,980,000 3.7000 8/20/15 (212,844) Dominican Republic 7,970,000 3.2500 6/20/11 (498,645) Indonesia (Republic of) 4,900,000 1.6800 3/20/11 (61,017) Venezuela (Republic of) 8,435,000 2.2000 5/20/10 (326,114) Venezuela (Republic of) 4,415,000 3.4800 11/20/15 (354,220) ------------- $ (2,230,650) =============
The Fund would take a long position in the credit default swap note (the "funded swap") to increase the exposure to specific high yield corporate issuers. As a seller of credit protection under a swap contract, the Fund receives a periodic interest fee on the notional 63 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 10. CREDIT DEFAULT SWAP CONTRACTS Continued amount from the counterparty. This interest fee is accrued daily as a component of unrealized appreciation (depreciation) and is recorded as realized gain upon receipt. Upon occurrence of a specific credit event with respect to the underlying referenced debt obligation, the Fund receives that security from the counterparty in exchange for payment of the notional amount to the counterparty. The difference between the value of the security received and the notional amount paid is recorded as realized loss and is included on the Statement of Operations. Credit default swaps are marked to market daily using different sources, including quotations from counterparties, pricing services, brokers or market makers. The unrealized appreciation (depreciation) related to the change in the valuation of the notional amount of the swap is combined with the amount due to (owed by) the Fund at termination or settlement and disclosed separately on the Statement of Assets and Liabilities. The net change in this amount is included on the Statement of Operations. Information regarding such credit default swaps as of September 30, 2006 is as follows:
ANNUAL NOTIONAL AMOUNT INTEREST REFERENCED PAID BY THE RATE RECEIVED UNREALIZED DEBT FUND UPON BY THE EXPIRATION APPRECIATION COUNTERPARTY OBLIGATION CREDIT EVENT FUND DATES (DEPRECIATION) - ------------------------------------------------------------------------------------------------------------------- Citigroup Global Markets Holdings, Inc. Russian Federation $ 7,770,000 0.6475% 1/20/11 $ 47,497 - ------------------------------------------------------------------------------------------------------------------- JPMorgan Chase Bank Ukraine (Republic of) 1,056,000 1.9200 8/20/11 3,988 - ------------------------------------------------------------------------------------------------------------------- Morgan Stanley Capital Services, Inc.: Indonesia (Republic of) 4,900,000 1.6700 6/20/11 45,062 Istanbul Bond Co. SA for Finansbank 17,390,000 1.3000 3/24/13 (580,734) - ------------------------------------------------------------------------------------------------------------------- Lehman Brothers Special Financing, Inc.: Argentina (Republic of) 5,000,000 2.5500 9/20/11 (21,381) Brazil (Federal Republic of) 5,000,000 2.0000 9/20/16 (27,308) Colombia (Republic of) 5,000,000 2.1100 9/20/16 (37,423) Panama (Republic of) 5,000,000 1.7800 9/20/16 (14,695) Philippines (Republic of the) 5,000,000 2.4700 9/20/16 16,558 ------------ $ (568,436) ============
- -------------------------------------------------------------------------------- 11. SWAPTION TRANSACTIONS The Fund may enter into a swaption transaction, whereby a contract that grants the holder, in return for payment of the purchase price (the "premium") of the option, the right, but not the obligation, to enter into an interest rate swap at a preset rate within a 64 | OPPENHEIMER INTERNATIONAL BOND FUND specified period of time, with the writer of the contract. The writer receives premiums and bears the risk of unfavorable changes in the preset rate on the underlying interest rate swap. Swaption contracts written by the Fund do not give rise to counterparty credit risk as they obligate the Fund, not its counterparty, to perform. The Fund generally will incur a greater risk when it writes a swaption than when it purchases a swaption. When the Fund purchases a swaption it risks losing only the amount of the premium they have paid should the Manager decide to let the option expire unexercised. When the Fund writes a swaption it will become obligated, upon exercise of the option, according to the terms of the underlying agreement. Swaptions written are reported as a liability in the Statement of Assets and Liabilities. Written swaption activity for the year ended September 30, 2006 was as follows: CALL SWAPTIONS ----------------------------------- NOTIONAL AMOUNT OF AMOUNT PREMIUMS - ------------------------------------------------------------------------------- Swaptions outstanding as of September 30, 2005 $ 61,360,000 $ 251,576 Swaptions written 124,200,000 138,106 Swaptions closed or expired (185,560,000) (389,682) ----------------------------------- Swaptions outstanding as of September 30, 2006 $ -- $ -- =================================== - -------------------------------------------------------------------------------- 12. ILLIQUID OR RESTRICTED SECURITIES AND CURRENCY As of September 30, 2006, investments in securities included issues that are illiquid or restricted. Restricted securities are purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Trustees as reflecting fair value. A security may also be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Fund will not invest more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid or restricted securities. Certain restricted securities, eligible for resale to qualified institutional investors, are not subject to that limitation. Securities that are illiquid or restricted are marked with the applicable footnote on the Statement of Investments. Information concerning restricted currency is as follows:
ACQUISITION VALUATION AS OF UNREALIZED CURRENCY DATES COST SEPT. 30, 2006 DEPRECIATION - -------------------------------------------------------------------------------------- Argentine Peso (ARP) 6/21/06-9/30/06 $ 2,749,057 $ 2,736,749 $ 12,308
- -------------------------------------------------------------------------------- 13. SECURITIES LENDING The Fund lends portfolio securities from time to time in order to earn additional income. In return, the Fund receives collateral in the form of securities, letters of credit or cash, against the loaned securities and maintains collateral in an amount not less than 100% of 65 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 13. SECURITIES LENDING Continued the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business each day. If the Fund is undercollateralized at the close of business due to an increase in market value of securities on loan, additional collateral is requested from the borrowing counterparty and is delivered to the Fund on the next business day. Cash collateral may be invested in approved investments and the Fund bears the risk of any loss in value of these investments. The Fund retains a portion of the interest earned from the collateral. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund could experience delays and cost in recovering the securities loaned or in gaining access to the collateral. The Fund continues to receive the economic benefit of interest or dividends paid on the securities loaned in the form of a substitute payment received from the borrower. As of September 30, 2006, the Fund had on loan securities valued at $946,481,870, which are included in the Statement of Assets and Liabilities as "Investments, at value" and, when applicable, as "Receivable for Investments sold." Collateral of $957,213,764 was received for the loans, of which $820,202,685 was received in cash and subsequently invested in approved investments or held as cash. - -------------------------------------------------------------------------------- 14. RECENT ACCOUNTING PRONOUNCEMENTS In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement No. 109, ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Fund's tax returns to determine whether it is "more-likely-than-not" that tax positions taken in the Fund's tax return will be ultimately sustained. A tax liability and expense must be recorded in respect of any tax position that, in Management's judgment, will not be fully realized. FIN 48 is effective for fiscal years beginning after December 15, 2006. As of September 30, 2006, the Manager is evaluating the implications of FIN 48. Its impact in the Fund's financial statements has not yet been determined. In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 157, FAIR VALUE MEASUREMENTS. This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 applies to fair value measurements already required or permitted by existing standards. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. As of September 30, 2006, the Manager does not believe the adoption of SFAS No. 157 will materially impact the financial statement amounts; however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements on changes in net assets for the period. 66 | OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- 15. LITIGATION A consolidated amended complaint was filed as a putative class action against the Manager and the Transfer Agent and other defendants (including 51 of the Oppenheimer funds including the Fund) in the U.S. District Court for the Southern District of New York on January 10, 2005 and was amended on March 4, 2005. The complaint alleged, among other things, that the Manager charged excessive fees for distribution and other costs, and that by permitting and/or participating in those actions, the Directors/Trustees and the Officers of the funds breached their fiduciary duties to fund shareholders under the Investment Company Act of 1940 and at common law. The plaintiffs sought unspecified damages, an accounting of all fees paid, and an award of attorneys' fees and litigation expenses. In response to the defendants' motions to dismiss the suit, seven of the eight counts in the complaint, including the claims against certain of the Oppenheimer funds, as nominal defendants, and against certain present and former Directors, Trustees and Officers of the funds, and the Distributor, as defendants, were dismissed with prejudice, by court order dated March 10, 2006, and the remaining count against the Manager and the Transfer Agent was dismissed with prejudice by court order dated April 5, 2006. The plaintiffs filed an appeal of those dismissals on May 11, 2006. The Manager believes that the allegations contained in the complaint are without merit and that there are substantial grounds to sustain the district court's rulings. The Manager also believes that it is premature to render any opinion as to the likelihood of an outcome unfavorable to it, the funds, the Directors/Trustees or the Officers on the appeal of the decisions of the district court, and that no estimate can yet be made with any degree of certainty as to the amount or range of any potential loss. 67 | OPPENHEIMER INTERNATIONAL BOND FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER INTERNATIONAL BOND FUND: We have audited the accompanying statement of assets and liabilities of Oppenheimer International Bond Fund, including the statement of investments, as of September 30, 2006, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of September 30, 2006, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer International Bond Fund as of September 30, 2006, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Denver, Colorado November 15, 2006 68 | OPPENHEIMER INTERNATIONAL BOND FUND FEDERAL INCOME TAX INFORMATION Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- In early 2007, if applicable, shareholders of record will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 2006. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. Capital gain distributions of $0.0236 per share were paid to Class A, Class B, Class C, Class N and Class Y shareholders, respectively, on December 29, 2005. Whether received in stock or in cash, the capital gain distribution should be treated by shareholders as a gain from the sale of the capital assets held for more than one year (long-term capital gains). None of the dividends paid by the Fund during the fiscal year ended September 30, 2006 are eligible for the corporate dividend-received deduction. A portion, if any, of the dividends paid by the Fund during the fiscal year ended September 30, 2006 which are not designated as capital gain distributions are eligible for lower individual income tax rates to the extent that the Fund has received qualified dividend income as stipulated by recent tax legislation. $1,917,430 of the Fund's fiscal year taxable income may be eligible for the lower individual income tax rates. In early 2007, shareholders of record will receive information regarding the percentage of distributions that are eligible for lower individual income tax rates. Recent tax legislation allows a regulated investment company to designate distributions not designated as capital gain distributions, as either interest related dividends or short-term capital gain dividends, both of which are exempt from the U.S. withholding tax applicable to non U.S. taxpayers. For the fiscal year ended September 30, 2006, $32,380,690 or 12.53% of the ordinary distributions paid by the Fund qualifies as an interest related dividend. The foregoing information is presented to assist shareholders in reporting distributions received from the Fund to the Internal Revenue Service. Because of the complexity of the federal regulations which may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax advisor for specific guidance. 69 | OPPENHEIMER INTERNATIONAL BOND FUND PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF INVESTMENTS Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which the Fund votes proxies relating to securities ("portfolio proxies") held by the Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to file Form N-PX, with its complete proxy voting record for the 12 months ended June 30th, no later than August 31st of each year. The Fund's voting record is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at www.sec.gov. The Fund files its complete schedule of portfolio holdings with the SEC for the first quarter and the third quarter of each fiscal year on Form N-Q. The Fund's Form N-Q filings are available on the SEC's website at http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public Reference Room in Washington D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. 70 | OPPENHEIMER INTERNATIONAL BOND FUND TRUSTEES AND OFFICERS Unaudited - --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------- NAME, POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER FUND, LENGTH OF SERVICE, AGE TRUSTEESHIPS/DIRECTORSHIPS HELD; NUMBER OF PORTFOLIOS IN THE FUND COMPLEX CURRENTLY OVERSEEN INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY, TRUSTEES CENTENNIAL, COLORADO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL. WILLIAM L. ARMSTRONG, President, Colorado Christian University (since 2006); Chairman of the Chairman of the Board following private mortgage banking companies: Cherry Creek Mortgage of Trustees (since 2003), Company (since 1991), Centennial State Mortgage Company (since 1994), Trustee (since 1999) and The El Paso Mortgage Company (since 1993); Chairman of the Age: 69 following private companies: Ambassador Media Corporation (since 1984) and Broadway Ventures (since 1984); Director of the following: Helmerich & Payne, Inc. (oil and gas drilling/production company) (since 1992), Campus Crusade for Christ (since 1991) and The Lynde and Harry Bradley Foundation, Inc. (non-profit organization) (since 2002); former Chairman of the following: Transland Financial Services, Inc. (private mortgage banking company) (1997-2003), Great Frontier Insurance (insurance agency) (1995-2000), Frontier Real Estate, Inc. (residential real estate brokerage) (1994-2000) and Frontier Title (title insurance agency) (1995-2000); former Director of the following: UNUMProvident (insurance company) (1991-2004), Storage Technology Corporation (computer equipment company) (1991-2003) and International Family Entertainment (television channel) (1992-1997); U.S. Senator (January 1979-January 1991). Oversees 37 portfolios in the OppenheimerFunds complex. ROBERT G. AVIS, Director and President of A.G. Edwards Capital, Inc. (General Partner Trustee (since 1995) of private equity funds) (until February 2001); Chairman, President Age: 75 and Chief Executive Officer of A.G. Edwards Capital, Inc. (until March 2000); Director of A.G. Edwards & Sons, Inc. (brokerage company) (until 2000) and A.G. Edwards Trust Company (investment adviser) (until 2000); Vice Chairman and Director of A.G. Edwards, Inc. (until March 1999); Vice Chairman of A.G. Edwards & Sons, Inc. (until March 1999); Chairman of A.G. Edwards Trust Company (until March 1999) and A.G.E. Asset Management (investment adviser) (until March 1999). Oversees 37 portfolios in the OppenheimerFunds complex. GEORGE C. BOWEN, Assistant Secretary and Director of Centennial Asset Management Trustee (since 1998) Corporation (December 1991-April 1999); President, Treasurer and Age: 70 Director of Centennial Capital Corporation (June 1989-April 1999); Chief Executive Officer and Director of MultiSource Services, Inc. (March 1996-April 1999); Mr. Bowen held several positions with the Manager and with subsidiary or affiliated companies of the Manager (September 1987-April 1999). Oversees 37 portfolios in the OppenheimerFunds complex. EDWARD L. CAMERON, Member of The Life Guard of Mount Vernon (George Washington historical Trustee (since 1999) site) (since June 2000); Director of Genetic ID, Inc. (biotech Age: 68 company) (March 2001-May 2002); Partner at PricewaterhouseCoopers LLP (accounting firm) (July 1974-June 1999); Chairman of Price Waterhouse LLP Global Investment Management Industry Services Group (accounting firm) (July 1994-June 1998). Oversees 37 portfolios in the OppenheimerFunds complex.
71 | OPPENHEIMER INTERNATIONAL BOND FUND TRUSTEES AND OFFICERS Unaudited / Continued - -------------------------------------------------------------------------------- JON S. FOSSEL, Director of UNUMProvident (insurance company) (since June 2002); Trustee (since 1995) Director of Northwestern Energy Corp. (public utility corporation) Age: 64 (since November 2004); Director of P.R. Pharmaceuticals (October 1999-October 2003); Director of Rocky Mountain Elk Foundation (non-profit organization) (February 1998-February 2003 and since February 2005); Chairman and Director (until October 1996) and President and Chief Executive Officer (until October 1995) of the Manager; President, Chief Executive Officer and Director of the following: Oppenheimer Acquisition Corp. ("OAC") (parent holding company of the Manager), Shareholders Services, Inc. and Shareholder Financial Services, Inc. (until October 1995). Oversees 37 portfolios in the OppenheimerFunds complex. SAM FREEDMAN, Director of Colorado UpLIFT (charitable organization) (since September Trustee (since 1996) 1984). Mr. Freedman held several positions with the Manager and with Age: 66 subsidiary or affiliated companies of the Manager (until October 1994). Oversees 37 portfolios in the OppenheimerFunds complex. BEVERLY L. HAMILTON, Trustee of Monterey Institute for International Studies (educational Trustee (since 2002) organization) (since February 2000); Board Member of Middlebury Age: 60 College (educational organization) (since December 2005); Director of The California Endowment (philanthropic organization) (since April 2002); Director (February 2002-2005) and Chairman of Trustees (since 2006) of the Community Hospital of Monterey Peninsula; Director (October 1991-2005) and Vice Chairman (since 2006) of American Funds' Emerging Markets Growth Fund, Inc. (mutual fund); President of ARCO Investment Management Company (February 1991-April 2000); Member of the investment committees of The Rockefeller Foundation (since 2001) and The University of Michigan (since 2000); Advisor at Credit Suisse First Boston's Sprout venture capital unit (venture capital fund) (1994-January 2005); Trustee of MassMutual Institutional Funds (investment company) (1996-June 2004); Trustee of MML Series Investment Fund (investment company) (April 1989-June 2004); Member of the investment committee of Hartford Hospital (2000-2003); and Advisor to Unilever (Holland) pension fund (2000-2003). Oversees 37 portfolios in the OppenheimerFunds complex. ROBERT J. MALONE, Director of Jones International University (educational organization) Trustee (since 2002) (since August 2005); Chairman, Chief Executive Officer and Director of Age: 62 Steele Street State Bank (commercial banking) (since August 2003); Director of Colorado UpLIFT (charitable organization) (since 1986); Trustee of the Gallagher Family Foundation (non-profit organization) (since 2000); Former Chairman of U.S. Bank-Colorado (subsidiary of U.S. Bancorp and formerly Colorado National Bank) (July 1996-April 1999); Director of Commercial Assets, Inc. (real estate investment trust) (1993-2000); Director of Jones Knowledge, Inc. (2001-July 2004); and Director of U.S. Exploration, Inc. (oil and gas exploration) (1997-February 2004). Oversees 37 portfolios in the OppenheimerFunds complex. F. WILLIAM MARSHALL, JR., Trustee of MassMutual Select Funds (formerly MassMutual Institutional Trustee (since 2000) Funds) (investment company) (since 1996) and MML Series Investment Age: 64 Fund (investment company) (since 1996); Trustee (since 1987) and Chairman (1994-2005) of the Investment Committee of the Worcester Polytech Institute (private university); President and Treasurer of the SIS Funds (private charitable fund) (since January 1999); Chairman of SIS & Family Bank, F.S.B. (formerly SIS Bank) (commercial bank) (January 1999-July 1999); and Executive Vice President of Peoples Heritage Financial Group, Inc. (commercial bank) (January 1999-July 1999). Oversees 39 portfolios in the OppenheimerFunds complex.
72 | OPPENHEIMER INTERNATIONAL BOND FUND - --------------------------------------------------------------------------------------------------------- INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY AND OFFICER STREET, 11TH FLOOR, NEW YORK, NEW YORK 10281-1008. MR. MURPHY SERVES AS A TRUSTEE FOR AN INDEFINITE TERM, OR UNTIL HIS RESIGNATION, RETIREMENT, DEATH OR REMOVAL AND AS AN OFFICER FOR AN /INDEFINITE TERM, OR UNTIL HIS RESIGNATION, RETIREMENT, DEATH OR REMOVAL. MR. MURPHY IS AN INTERESTED TRUSTEE DUE TO HIS POSITIONS WITH OPPENHEIMERFUNDS, INC. AND ITS AFFILIATES. JOHN V. MURPHY, Chairman, Chief Executive Officer and Director (since June 2001) and Trustee, President and President (since September 2000) of the Manager; President and Principal Executive Officer director or trustee of other Oppenheimer funds; President and Director (since 2001) of OAC and of Oppenheimer Partnership Holdings, Inc. (holding company Age: 57 subsidiary of the Manager) (since July 2001); Director of OppenheimerFunds Distributor, Inc. (subsidiary of the Manager) (since November 2001); Chairman and Director of Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer agent sub- sidiaries of the Manager) (since July 2001); President and Director of OppenheimerFunds Legacy Program (charitable trust program established by the Manager) (since July 2001); Director of the following investment advisory subsidiaries of the Manager: OFI Institutional Asset Management, Inc., Centennial Asset Management Corporation, Trinity Investment Management Corporation and Tremont Capital Management, Inc. (since November 2001), HarbourView Asset Management Corporation and OFI Private Investments, Inc. (since July 2001); President (since November 2001) and Director (since July 2001) of Oppenheimer Real Asset Management, Inc.; Executive Vice President of Massachusetts Mutual Life Insurance Company (OAC's parent company) (since February 1997); Director of DLB Acquisition Corporation (holding company parent of Babson Capital Management LLC) (since June 1995); Member of the Investment Company Institute's Board of Governors (since October 3, 2003); Chief Operating Officer of the Manager (September 2000-June 2001); President and Trustee of MML Series Investment Fund and MassMutual Select Funds (open-end investment companies) (November 1999-November 2001); Director of C.M. Life Insurance Company (September 1999-August 2000); President, Chief Executive Officer and Director of MML Bay State Life Insurance Company (September 1999-August 2000); Director of Emerald Isle Bancorp and Hibernia Savings Bank (wholly-owned subsidiary of Emerald Isle Bancorp) (June 1989-June 1998). Oversees 92 portfolios in the OppenheimerFunds complex. - --------------------------------------------------------------------------------------------------------- OTHER OFFICERS THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR OF THE FUND MESSRS. STEINMETZ, ZACK, GILLESPIE AND MS. BLOOMBERG, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, NEW YORK, NEW YORK 10281-1008, FOR MESSRS. VANDEHEY, WIXTED, PETERSEN, SZILAGYI AND MS. IVES, 6803 S. TUCSON WAY, CENTENNIAL, COLORADO 80112-3924. EACH OFFICER SERVES FOR AN INDEFINITE TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL. ARTHUR P. STEINMETZ, Senior Vice President of the Manager (since March 1993) and of Vice President and Portfolio HarbourView Asset Management Corporation (since March 2000). An Manager (since 1993) officer of 3 portfolios in the OppenheimerFunds complex. Age: 47 MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager Vice President and Chief (since March 2004); Vice President of OppenheimerFunds Distributor, Compliance Officer Inc., Centennial Asset Management Corporation and Shareholder (since 2004) Services, Inc. (since June 1983); Vice President and Director of Age: 56 Internal Audit of the Manager (1997-February 2004). An officer of 92 portfolios in the OppenheimerFunds complex.
73 | OPPENHEIMER INTERNATIONAL BOND FUND TRUSTEES AND OFFICERS Unaudited / Continued - -------------------------------------------------------------------------------- BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer and Principal Treasurer of the following: HarbourView Asset Management Corporation, Financial and Accounting Shareholder Financial Services, Inc., Shareholder Services, Inc., Officer (since 1999) Oppenheimer Real Asset Management Corporation, and Oppenheimer Age: 47 Partnership Holdings, Inc. (since March 1999), OFI Private Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. and OppenheimerFunds plc (since May 2000), OFI Institutional Asset Management, Inc. (since November 2000), and OppenheimerFunds Legacy Program (since June 2003); Treasurer and Chief Financial Officer of OFI Trust Company (trust company subsidiary of the Manager) (since May 2000); Assistant Treasurer of the following: OAC (since March 1999), Centennial Asset Management Corporation (March 1999-October 2003) and OppenheimerFunds Legacy Program (April 2000-June 2003); Principal and Chief Operating Officer of Bankers Trust Company-Mutual Fund Services Division (March 1995-March 1999). An officer of 92 portfolios in the OppenheimerFunds complex. BRIAN S. PETERSEN, Assistant Vice President of the Manager (since August 2002); Assistant Treasurer Manager/Financial Product Accounting of the Manager (November (since 2004) 1998-July 2002). An officer of 92 portfolios in the OppenheimerFunds Age: 36 complex. BRIAN C. SZILAGYI, Assistant Vice President of the Manager (since July 2004); Director of Assistant Treasurer Financial Reporting and Compliance of First Data Corporation (April (since 2005) 2003-July 2004); Manager of Compliance of Berger Financial Group LLC Age: 36 (May 2001-March 2003); Director of Mutual Fund Operations at American Data Services, Inc. (September 2000-May 2001). An officer of 92 portfolios in the OppenheimerFunds complex. ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel Vice President and Secretary (since March 2002) of the Manager; General Counsel and Director of the (since 2001) Distributor (since December 2001); General Counsel of Centennial Asset Age: 58 Management Corporation (since December 2001); Senior Vice President and General Counsel of HarbourView Asset Management Corporation (since December 2001); Secretary and General Counsel of OAC (since November 2001); Assistant Secretary (since September 1997) and Director (since November 2001) of OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President and Director of Oppenheimer Partnership Holdings, Inc. (since December 2002); Director of Oppenheimer Real Asset Management, Inc. (since November 2001); Senior Vice President, General Counsel and Director of Shareholder Financial Services, Inc. and Shareholder Services, Inc. (since December 2001); Senior Vice President, General Counsel and Director of OFI Private Investments, Inc. and OFI Trust Company (since November 2001); Vice President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice President and General Counsel of OFI Institutional Asset Management, Inc. (since November 2001); Director of OppenheimerFunds (Asia) Limited (since December 2003); Senior Vice President (May 1985-December 2003), Acting General Counsel (November 2001-February 2002) and Associate General Counsel (May 1981-October 2001) of the Manager; Assistant Secretary of the following: Shareholder Services, Inc. (May 1985-November 2001), Shareholder Financial Services, Inc. (November 1989-November 2001), and OppenheimerFunds International Ltd. (September 1997-November 2001). An officer of 92 portfolios in the OppenheimerFunds complex.
74 | OPPENHEIMER INTERNATIONAL BOND FUND LISA I. BLOOMBERG, Vice President and Associate Counsel of the Manager (since May 2004); Assistant Secretary First Vice President (April 2001-April 2004), Associate General (since 2004) Counsel (December 2000-April 2004), Corporate Vice President (May Age: 38 1999-April 2001) and Assistant General Counsel (May 1999-December 2000) of UBS Financial Services Inc. (formerly, PaineWebber Incorporated). An officer of 92 portfolios in the OppenheimerFunds complex. KATHLEEN T. IVES, Vice President (since June 1998) and Senior Counsel and Assistant Assistant Secretary Secretary (since October 2003) of the Manager; Vice President (since (since 2001) 1999) and Assistant Secretary (since October 2003) of the Distributor; Age: 41 Assistant Secretary of Centennial Asset Management Corporation (since October 2003); Vice President and Assistant Secretary of Shareholder Services, Inc. (since 1999); Assistant Secretary of OppenheimerFunds Legacy Program and Shareholder Financial Services, Inc. (since December 2001); Assistant Counsel of the Manager (August 1994-October 2003). An officer of 92 portfolios in the OppenheimerFunds complex. PHILLIP S. GILLESPIE, Senior Vice President and Deputy General Counsel of the Manager (since Assistant Secretary September 2004); First Vice President (2000-September 2004), Director (since 2004) (2000-September 2004) and Vice President (1998-2000) of Merrill Lynch Age: 42 Investment Management. An officer of 92 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION ABOUT THE FUND'S TRUSTEES AND OFFICERS AND IS AVAILABLE WITHOUT CHARGE, UPON REQUEST, BY CALLING 1.800.525.7048. 75 | OPPENHEIMER INTERNATIONAL BOND FUND ITEM 2. CODE OF ETHICS. The registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The Board of Trustees of the registrant has determined that Edward L. Cameron, the Chairman of the Board's Audit Committee, and George C. Bowen, a member of the Board's Audit Committee, are audit committee financial experts and that Messrs. Cameron and Bowen are "independent" for purposes of this Item 3. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Audit Fees The principal accountant for the audit of the registrant's annual financial statements billed $36,000 in fiscal 2006 and $27,000 in fiscal 2005. (b) Audit-Related Fees The principal accountant for the audit of the registrant's annual financial statements billed no such fees to the registrant during the last two fiscal years. The principal accountant for the audit of the registrant's annual financial statements billed $40,000 for fiscal 2006 and no such fees for fiscal 2005 to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. Such services include: IRS private letter ruling. (c) Tax Fees The principal accountant for the audit of the registrant's annual financial statements billed no such fees in fiscal 2006 and $6,667 in fiscal 2005to the registrant. The principal accountant for the audit of the registrant's annual financial statements billed no such fees to the registrant during the last two fiscal years to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. Such services include: Audit of the tax provision for certain structured instruments. (d) All Other Fees The principal accountant for the audit of the registrant's annual financial statements billed $9,757 in fiscal 2006 and no such fees in fiscal 2005. The principal accountant for the audit of the registrant's annual financial statements billed no such fees during the last two fiscal years to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. Such fees include compliance review. (e) (1) During its regularly scheduled periodic meetings, the registrant's audit committee will pre-approve all audit, audit-related, tax and other services to be provided by the principal accountants of the registrant. The audit committee has delegated pre-approval authority to its Chairman for any subsequent new engagements that arise between regularly scheduled meeting dates provided that any fees such pre-approved are presented to the audit committee at its next regularly scheduled meeting. Under applicable laws, pre-approval of non-audit services maybe waived provided that: 1) the aggregate amount of all such services provided constitutes no more than five percent of the total amount of fees paid by the registrant to it principal accountant during the fiscal year in which services are provided 2) such services were not recognized by the registrant at the time of engagement as non-audit services and 3) such services are promptly brought to the attention of the audit committee of the registrant and approved prior to the completion of the audit. (2) 100% (f) Not applicable as less than 50%. (g) The principal accountant for the audit of the registrant's annual financial statements billed $49,757 in fiscal 2006 and $6,667 in fiscal 2005 to the registrant and the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant related to non-audit fees. Those billings did not include any prohibited non-audit services as defined by the Securities Exchange Act of 1934. (h) No such services were rendered. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. THE FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS 1. The Fund's Governance Committee (the "Committee") will evaluate potential Board candidates to assess their qualifications. The Committee shall have the authority, upon approval of the Board, to retain an executive search firm to assist in this effort. The Committee may consider recommendations by business and personal contacts of current Board members and by executive search firms which the Committee may engage from time to time and may also consider shareholder recommendations. The Committee may consider the advice and recommendation of the Funds' investment manager and its affiliates in making the selection. 2. The Committee shall screen candidates for Board membership. The Committee has not established specific qualifications that it believes must be met by a trustee nominee. In evaluating trustee nominees, the Committee considers, among other things, an individual's background, skills, and experience; whether the individual is an "interested person" as defined in the Investment Company Act of 1940; and whether the individual would be deemed an "audit committee financial expert" within the meaning of applicable SEC rules. The Committee also considers whether the individual's background, skills, and experience will complement the background, skills, and experience of other nominees and will contribute to the Board. There are no differences in the manner in which the Committee evaluates nominees for trustees based on whether the nominee is recommended by a shareholder. 3. The Committee may consider nominations from shareholders for the Board at such times as the Committee meets to consider new nominees for the Board. The Committee shall have the sole discretion to determine the candidates to present to the Board and, in such cases where required, to shareholders. Recommendations for trustee nominees should, at a minimum, be accompanied by the following: o the name, address, and business, educational, and/or other pertinent background of the person being recommended; o a statement concerning whether the person is an "interested person" as defined in the Investment Company Act of 1940; o any other information that the Funds would be required to include in a proxy statement concerning the person if he or she was nominated; and o the name and address of the person submitting the recommendation and, if that person is a shareholder, the period for which that person held Fund shares. The recommendation also can include any additional information which the person submitting it believes would assist the Committee in evaluating the recommendation. 4. Shareholders should note that a person who owns securities issued by Massachusetts Mutual Life Insurance Company (the parent company of the Funds' investment adviser) would be deemed an "interested person" under the Investment Company Act of 1940. In addition, certain other relationships with Massachusetts Mutual Life Insurance Company or its subsidiaries, with registered broker-dealers, or with the Funds' outside legal counsel may cause a person to be deemed an "interested person." 5. Before the Committee decides to nominate an individual as a trustee, Committee members and other directors customarily interview the individual in person. In addition, the individual customarily is asked to complete a detailed questionnaire which is designed to elicit information which must be disclosed under SEC and stock exchange rules and to determine whether the individual is subject to any statutory disqualification from serving as a trustee of a registered investment company. ITEM 11. CONTROLS AND PROCEDURES. Based on their evaluation of the registrant's disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR 270.30a-3(c)) as of 08/31/2006, the registrant's principal executive officer and principal financial officer found the registrant's disclosure controls and procedures to provide reasonable assurances that information required to be disclosed by the registrant in the reports that it files under the Securities Exchange Act of 1934 (a) is accumulated and communicated to registrant's management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure, and (b) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the U.S. Securities and Exchange Commission. There have been no changes in the registrant's internal controls over financial reporting that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a) (1) Exhibit attached hereto. (2) Exhibits attached hereto. (3) Not applicable. (b) Exhibit attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Oppenheimer International Bond Fund By: /S/ JOHN V. MURPHY ---------------------------- John V. Murphy Principal Executive Officer Date: 11/15/2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /S/ JOHN V. MURPHY ---------------------------- John V. Murphy Principal Executive Officer Date: 11/15/2006 By: /S/ BRIAN W. WIXTED ---------------------------- Brian W. Wixted Principal Financial Officer Date: 11/15/2006 EX-99.CERT 2 ra880_35570ex302.txt RA880_35570EX302 Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, John V. Murphy, certify that: 1. I have reviewed this report on Form N-CSR of Oppenheimer International Bond Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of Trustees (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 11/15/2006 /S/ JOHN V. MURPHY - ------------------------------ John V. Murphy Principal Executive Officer Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, Brian W. Wixted, certify that: 1. I have reviewed this report on Form N-CSR of Oppenheimer International Bond Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of Trustees (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 11/15/2006 /S/ BRIAN W. WIXTED - ----------------------------- Brian W. Wixted Principal Financial Officer EX-99.906CERT 3 ra880_35570ex906.txt RA880_35570EX906 EX-99.906CERT Section 906 Certifications CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 John V. Murphy, Principal Executive Officer, and Brian W. Wixted, Principal Financial Officer, of Oppenheimer International Bond Fund (the "Registrant"), each certify to the best of his knowledge that: 1. The Registrant's periodic report on Form N-CSR for the period ended 08/31/2006 (the "Form N-CSR") fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Form N-CSR filed with the Commission. Principal Executive Officer Principal Financial Officer Oppenheimer International Bond Fund Oppenheimer International Bond Fund /S/ JOHN V. MURPHY /S/ BRIAN W. WIXTED - ----------------------------------- ----------------------------------- John V. Murphy Brian W. Wixted Date: 11/15/2006 Date: 11/15/2006 EX-99.CODE ETH 4 ra880_35570ex99codeeth.txt RA880_35570EX99CODEETH EX-99.CODE ETH CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS OF THE OPPENHEIMER FUNDS AND OF OPPENHEIMERFUNDS, INC. This Code of Ethics for Principal Executive and Senior Financial Officers (referred to in this document as the "Code") has been adopted by each of the investment companies for which OppenheimerFunds, Inc. or one of its subsidiaries or affiliates (referred to collectively in this document as "OFI") acts as investment adviser (individually, a "Fund" and collectively, the "Funds"), and by OFI to effectuate compliance with Section 406 under the Sarbanes-Oxley Act of 2002 and the rules adopted to implement Section 406. This Code applies to OFI's and each Fund's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions ("Covered Officers"). A listing of positions currently within the ambit of Covered Officers is attached as EXHIBIT A. 1 1. PURPOSE OF THE CODE This Code sets forth standards and procedures that are reasonably designed to deter wrongdoing and promote: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely, and understandable disclosure in reports and documents that a Fund files with, or submits to, the U.S. Securities and Exchange Commission ("SEC") and in other public communications made by the Fund; o compliance with applicable governmental laws, rules and regulations; o the prompt internal reporting of violations of this Code to the Code Administrator identified below; and o accountability for adherence to this Code. In general, the principles that govern honest and ethical conduct, including the avoidance of conflicts of interest between personal and professional relationships, reflect, - ---------- 1 The obligations imposed by this Code on Covered Officers are separate from and in addition to any obligations that may be imposed on such persons as Covered Persons under the Code of Ethics adopted by OFI and the Funds under Rule 17j-1 of the Investment Company Act of 1940, as amended and any other code of conduct applicable to Covered Officers in whatever capacity they serve. This Code does not incorporate by reference any provisions of the Rule 17j-1 Code of Ethics and accordingly, any violations or waivers granted under the Rule 17j-1 Code of Ethics will not be considered a violation or waiver under this Code. at the minimum, the following: (1) the duty at all times in performing any responsibilities as a Fund financial officer, controller, accountant or principal executive officer to place the interests of the Funds ahead of personal interests; (2) the fundamental standard that Covered Officers should not take inappropriate advantage of their positions; (3) the duty to assure that a Fund's financial statements and reports to its shareholders are prepared honestly and accurately in accordance with applicable rules, regulations and accounting standards; and (4) the duty to conduct the Funds' business and affairs in an honest and ethical manner. Each Covered Officer should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. It is acknowledged that, as a result of the contractual relationship between each Fund and OFI, of which the Covered Officers are also officers or employees, and subject to OFI's fiduciary duties to each Fund, the Covered Officers will, in the normal course of their duties, be involved in establishing policies and implementing decisions that will have different effects on OFI and the Funds. It is further acknowledged that the participation of the Covered Officers in such activities is inherent in the contractual relationship between each Fund and OFI and is consistent with the expectations of the Board of Trustees/Directors of the performance by the Covered Officers of their duties as officers of the Funds. 1. PROHIBITIONS The specific provisions and reporting requirements of this Code are concerned primarily with promoting honest and ethical conduct and avoiding conflicts of interest in personal and professional relationships. No Covered Officer may use information concerning the business and affairs of a Fund, including the investment intentions of a Fund, or use his or her ability to influence such investment intentions, for personal gain to himself or herself, his or her family or friends or any other person or in a manner detrimental to the interests of a Fund or its shareholders. No Covered Officer may use his or her personal influence or personal relationships to influence the preparation and issuance of financial reports of a Fund whereby the Covered Officer would benefit personally to the detriment of the Fund and its shareholders. No Covered Officer shall intentionally for any reason take any action or fail to take any action in connection with his or her official acts on behalf of a Fund that causes the Fund to violate applicable laws, rules and regulations. No Covered Officer shall, in connection with carrying out his or her official duties and responsibilities on behalf of a Fund: (i) employ any device, scheme or artifice to defraud a Fund or its shareholders; (ii) intentionally cause a Fund to make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading in its official documents, regulatory filings, financial statements or communications to the public; (iii) engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any Fund or its shareholders; (iv) engage in any manipulative practice with respect to any Fund; (v) use his or her personal influence or personal relationships to influence any business decision, investment decisions, or financial reporting by a Fund whereby the Covered Officer would benefit personally to the detriment of the Fund or its shareholders; (vi) intentionally cause a Fund to fail to comply with applicable laws, rules and regulations, including failure to comply with the requirement of full, fair, accurate, understandable and timely disclosure in reports and documents that a Fund files with, or submits to, the SEC and in other public communications made by the Fund; (vii) intentionally mislead or omit to provide material information to the Fund's independent auditors or to the Board of Trustees/Directors or the officers of the Fund or its investment adviser in connection with financial reporting matters; (viii) fail to notify the Code Administrator or the Chief Executive Officer of the Fund or its investment adviser promptly if he or she becomes aware of any existing or potential violations of this Code or applicable laws; (ix) retaliate against others for, or otherwise discourage the reporting of, actual or apparent violations of this Code; or (x) fails to acknowledge or certify compliance with this Code if requested to do so. 3. REPORTS OF CONFLICTS OF INTERESTS If a Covered Officer becomes aware of a conflict of interest under this Code or, to the Covered Officer's reasonable belief, the appearance of one, he or she must immediately report the matter to the Code's Administrator. If the Code Administrator is involved or believed to be involved in the conflict of interest or appearance of conflict of interest, the Covered Officer shall report the matter directly to the OFI's Chief Executive Officer. Upon receipt of a report of a conflict, the Code Administrator will take prompt steps to determine whether a conflict of interest exists. If the Code Administrator determines that an actual conflict of interest exists, the Code Administrator will take steps to resolve the conflict. If the Code Administrator determines that the appearance of a conflict exists, the Code Administrator will take appropriate steps to remedy such appearance. If the Code Administrator determines that no conflict or appearance of a conflict exists, the Code Administrator shall meet with the Covered Officer to advise him or her of such finding and of his or her reason for taking no action. In lieu of determining whether a conflict or appearance of conflict exists, the Code Administrator may in his or her discretion refer the matter to the Fund's Board of Trustees/Directors. 4. WAIVERS Any Covered Officer requesting a waiver of any of the provisions of this Code must submit a written request for such waiver to the Code Administrator, setting forth the basis of such request and all necessary facts upon which such request can be evaluated. The Code Administrator shall review such request and make a written determination thereon, which shall be binding. The Code Administrator may in reviewing such request, consult at his discretion with legal counsel to OFI or to the Fund. In determining whether to waive any of the provisions of this Code, the Code Administrator shall consider whether the proposed waiver: (i) is prohibited by this Code; (ii) is consistent with honest and ethical conduct; and (iii) will result in a conflict of interest between the Covered Officer's personal and professional obligations to a Fund. In lieu of determining whether to grant a waiver, the Code Administrator in his or her discretion may refer the matter to the appropriate Fund's Board of Trustees/Directors. 5. REPORTING REQUIREMENTS (a) Each Covered Officer shall, upon becoming subject to this Code, be provided with a copy of this Code and shall affirm in writing that he or she has received, read, understands and shall adhere to this Code. (b) At least annually, all Covered Officers shall be provided with a copy of this Code and shall certify that they have read and understand this Code and recognize that they are subject thereto. (c) At least annually, all Covered Officers shall certify that they have complied with the requirements of this Code and that they have disclosed or reported any violations of this Code to the Code Administrator or the Chief Executive Officer of the Fund or its investment adviser. (d) The Code Administrator shall submit a quarterly report to the Board of Trustees/Directors of each Fund containing (i) a description of any report of a conflict of interest or apparent conflict and the disposition thereof; (ii) a description of any request for a waiver from this Code and the disposition thereof; (iii) any violation of the Code that has been reported or found and the sanction imposed; (iv) interpretations issued under the Code by the Code Administrator; and (v) any other significant information arising under the Code including any proposed amendments. (e) Each Covered Officer shall notify the Code Administrator promptly if he or she knows of or has a reasonable belief that any violation of this Code has occurred or is likely to occur. Failure to do so is itself a violation of this Code. (f) Any changes to or waivers of this Code, including "implicit" waivers as defined in applicable SEC rules, will, to the extent required, be disclosed by the Code Administrator or his or her designee as provided by applicable SEC rules. 2 6. ANNUAL RENEWAL At least annually, the Board of Trustees/Directors of each Fund shall review the Code and determine whether any amendments (including any amendments that may be recommended by OFI or the Fund's legal counsel) are necessary or desirable, and shall consider whether to renew and/or amend the Code. 7. SANCTIONS Any violation of this Code of Ethics shall be subject to the imposition of such sanctions by OFI as may be deemed appropriate under the circumstances to achieve the purposes of this Code and may include, without limitation, a letter of censure, suspension from employment or termination of employment, in the sole discretion of OFI. 8. ADMINISTRATION AND CONSTRUCTION (a) The administration of this Code of Ethics shall be the responsibility of OFI's General Counsel or his designee as the "Code Administrator" of this Code, acting under the terms of this Code and the oversight of the Trustees/Directors of the Funds. (b) The duties of such Code Administrator will include: (i) Continuous maintenance of a current list of the names of all Covered Officers; (ii) Furnishing all Covered Officers a copy of this Code and initially and periodically informing them of their duties and obligations thereunder; (iii) Maintaining or supervising the maintenance of all records required by this Code, including records of waivers granted hereunder; - ---------- 2 An "implicit waiver" is the failure to take action within a reasonable period of time regarding a material departure from a provision of this Code that has been made known to the General Counsel, the Code Administrator, an executive officer of the Fund or OFI. (iv) Issuing interpretations of this Code which appear to the Code Administrator to be consistent with the objectives of this Code and any applicable laws or regulations; (v) Conducting such inspections or investigations as shall reasonably be required to detect and report any violations of this Code, with his or her recommendations, to the Chief Executive Officer of OFI and to the Trustees/Directors of the affected Fund(s) or any committee appointed by them to deal with such information; and (vi) Periodically conducting educational training programs as needed to explain and reinforce the terms of this Code. (c) In carrying out the duties and responsibilities described under this Code, the Code Administrator may consult with legal counsel, who may include legal counsel to the applicable Funds, and such other persons as the Administrator shall deem necessary or desirable. The Code Administrator shall be protected from any liability hereunder or under any applicable law, rule or regulation, for decisions made in good faith based upon his or her reasonable judgment. 9. REQUIRED RECORDS The Administrator shall maintain and cause to be maintained in an easily accessible place, the following records for the period required by applicable SEC rules (currently six years following the end of the fiscal year of OFI in which the applicable event or report occurred): (a) A copy of any Code which has been in effect during the period; (b) A record of any violation of any such Code and of any action taken as a result of such violation, during the period; (c) A copy of each annual report pursuant to the Code made by a Covered Officer during the period; (d) A copy of each report made by the Code Administrator pursuant to this Code during the period; (e) A list of all Covered Officers who are or have been required to make reports pursuant to this Code during the period, plus those person(s) who are or were responsible for reviewing these reports; (f) A record of any request to waive any requirement of this Code, the decision thereon and the reasons supporting the decision; and (g) A record of any report of any conflict of interest or appearance of a conflict of interest received by the Code Administrator or discovered by the Code Administrator during the period, the decision thereon and the reasons supporting the decision. 10. AMENDMENTS AND MODIFICATIONS Other than non-substantive or administrative changes, this Code may not be amended or modified unless approved or ratified by the Board of Trustees/Directors of each Fund. 11. CONFIDENTIALITY. This Code is identified for the internal use of the Funds and OFI. Reports and records prepared or maintained under this Code are considered confidential and shall be maintained and protected accordingly to the extent permitted by applicable laws, rules and regulations. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Trustees/Directors of the affected Fund(s) and their counsel, the independent auditors of the affected Funds and/or OFI, and to OFI, except as such disclosure may be required pursuant to applicable judicial or regulatory process. Dated as of: June 25, 2003, as revised July 31, 2006 Adopted by Board I of the Oppenheimer Funds June 13, 2003, revisions approved August 10, 2006 /S/ ROBERT G. ZACK - ------------------ Robert G. Zack, Secretary Adopted by Board II of the Oppenheimer/Centennial Funds June 24, 2003, revisions approved August 30, 2006 /S/ ROBERT G. ZACK - ------------------ Robert G. Zack, Secretary Adopted by Board III of the Oppenheimer Funds June 9, 2003, revisions approved July 31, 2006 /S/ ROBERT G. ZACK - ------------------ Robert G. Zack, Secretary Robert G. Zack, Secretary Adopted by the Boards of Directors of OppenheimerFunds, Inc. and its subsidiaries and affiliates that act as investment adviser to the Oppenheimer or Centennial funds June 1, 2003 /S/ ROBERT G. ZACK - ------------------ Robert G. Zack, Senior Vice President and General Counsel Exhibit A Positions Covered by this Code of Ethics for Senior Officers EACH OPPENHEIMER OR CENTENNIAL FUND Principal Executive Officer Principal Financial Officer Treasurer Assistant Treasurer PERSONNEL OF OFI WHO BY VIRTUE OF THEIR JOBS PERFORM CRITICAL FINANCIAL AND ACCOUNTING FUNCTIONS FOR OFI ON BEHALF OF A FUND, INCLUDING: Chief Financial Officer Treasurer Senior Vice President/Fund Accounting Vice President/Fund Accounting -----END PRIVACY-ENHANCED MESSAGE-----