-----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, QnaIJwBGW9yBE2YMG92XQS8p5Qst2+FNbg1Da7yskb7FEqH+/oA8y/utwhEivD3b PCqA5TY0IuaQhqmGeiYa+g== 0000935069-07-002753.txt : 20071127 0000935069-07-002753.hdr.sgml : 20071127 20071126184628 ACCESSION NUMBER: 0000935069-07-002753 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20070930 FILED AS OF DATE: 20071127 DATE AS OF CHANGE: 20071126 EFFECTIVENESS DATE: 20071127 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: 071267495 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_42753ncsr.txt RA880_42753NCSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-07255 --------- Oppenheimer International Bond Fund ----------------------------------- (Exact name of registrant as specified in charter) 6803 South Tucson Way, Centennial, Colorado 80112-3924 ------------------------------------------------------ (Address of principal executive offices) (Zip code) Robert G. Zack, Esq. OppenheimerFunds, Inc. Two World Financial Center, New York, New York 10281-1008 --------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (303) 768-3200 -------------- Date of fiscal year end: September 30 ------------ Date of reporting period: 09/30/2007 ---------- ITEM 1. REPORTS TO STOCKHOLDERS. TOP HOLDINGS AND ALLOCATIONS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOP TEN GEOGRAPHICAL HOLDINGS - -------------------------------------------------------------------------------- United States 24.3% - -------------------------------------------------------------------------------- United Kingdom 7.6 - -------------------------------------------------------------------------------- Germany 7.5 - -------------------------------------------------------------------------------- Japan 7.0 - -------------------------------------------------------------------------------- Brazil 5.7 - -------------------------------------------------------------------------------- Italy 4.9 - -------------------------------------------------------------------------------- France 4.6 - -------------------------------------------------------------------------------- Australia 3.5 - -------------------------------------------------------------------------------- Russia 3.3 - -------------------------------------------------------------------------------- Canada 3.0 Portfolio holdings and allocations are subject to change. Percentages are as of September 30, 2007, 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.] Europe 32.6% United States/Canada 27.3 Latin America 14.4 Asia 14.2 Emerging Europe 5.6 Middle East/Africa 5.5 Supranational 0.4 Portfolio holdings and allocations are subject to change. Percentages are as of September 30, 2007, 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, 2007, FOLLOWED BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE BROAD-BASED MARKET INDEX. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. The Fund continued to fare quite well. The Fund's Class A shares (without sales charge) significantly outperformed its benchmark, the Citigroup Non-U.S. Dollar World Government Bond Index, 15.18% versus 9.50%, respectively. The Fund's Class A shares (without sales charge) ranked 3rd out of 71 funds in the Lipper International Income Funds category over the reporting period, significantly outperforming the average return of the category, which was 8.69%. Robust total returns from emerging-market bonds combined to drive the Fund's strong relative performance over the reporting period. We focused primarily on markets where the rate of inflation and long-term bond yields have been falling due to improved credit and economic fundamentals. Among Latin American markets, Brazil and, to a lesser extent, Mexico have produced attractive returns as these nations drew down debt, reduced their budget deficits and became more significant participants in world trade. In Eastern Europe, Turkey has prospered through reforms designed to help it qualify for inclusion in the European Union. We also have found attractive opportunities in bonds from Russia and other parts of the former Soviet Union. Among developed markets, we have maintained relatively light exposure to Japan, where bond yields have remained very low in a persistently weak economic environment. We also have largely avoided bonds and currencies of industrialized commodity producers, such as Canada, Australia and New Zealand, where we believe high current account deficits may lead to heightened volatility. Otherwise, we have attempted to diversify holdings across the developed nations of Europe, where robust economic growth has led to higher bond yields. To manage risks in this environment, we generally have focused on government securities, and we have maintained a neutral duration. Finally, the Fund benefited during the reporting period from unhedged currency exposure as the U.S. dollar continued to deteriorate relative to most foreign currencies. We currently expect global economic growth to remain strong, particularly in the emerging markets, and we have seen no evidence that the decline of the U.S. dollar is complete. However, we are aware that some emerging markets have already posted impressive rallies, and further gains may be more modest. Accordingly, to reduce risks, we recently trimmed the Fund's positions in some emerging markets. Please remember that investing in foreign markets entails additional risks, including the risks associated with currency fluctuations and political uncertainties, as described in the prospectus. 10 | OPPENHEIMER INTERNATIONAL BOND FUND 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, 2007. 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 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.] Citigroup Non-U.S. Dollar Oppenheimer International World Government Bond Bond Fund (Class A) Index 09/30/1997 $ 9,525 $10,000 12/31/1997 $ 9,203 $ 9,861 03/31/1998 $ 9,332 $ 9,902 06/30/1998 $ 9,240 $10,067 09/30/1998 $ 8,335 $11,035 12/31/1998 $ 8,802 $11,616 03/31/1999 $ 8,784 $11,054 06/30/1999 $ 9,085 $10,557 09/30/1999 $ 9,217 $11,203 12/31/1999 $ 9,771 $11,027 03/31/2000 $10,174 $10,899 06/30/2000 $10,057 $10,812 09/30/2000 $10,040 $10,323 12/31/2000 $10,440 $10,736 03/31/2001 $10,170 $10,210 06/30/2001 $10,215 $10,009 09/30/2001 $10,180 $10,785 12/31/2001 $10,664 $10,356 03/31/2002 $10,893 $10,163 06/30/2002 $11,769 $11,583 09/30/2002 $11,888 $11,912 12/31/2002 $12,883 $12,634 03/31/2003 $13,268 $13,105 06/30/2003 $14,302 $13,656 09/30/2003 $15,058 $14,032 12/31/2003 $16,218 $14,974 03/31/2004 $17,048 $15,209 06/30/2004 $16,153 $14,694 09/30/2004 $16,799 $15,177 12/31/2004 $18,741 $16,791 03/31/2005 $18,213 $16,270 06/30/2005 $19,007 $15,833 09/30/2005 $19,408 $15,654 12/31/2005 $19,358 $15,245 03/31/2006 $19,840 $15,216 06/30/2006 $19,305 $15,830 09/30/2006 $20,034 $15,970 12/31/2006 $21,031 $16,304 03/31/2007 $21,590 $16,481 06/30/2007 $22,020 $16,178 09/30/2007 $23,075 $17,488 AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT 9/30/07 1-Year 9.71% 5-Year 13.08% 10-Year 8.72% 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.] Citigroup Non-U.S. Dollar Oppenheimer International World Government Bond Bond Fund (Class B) Index 09/30/1997 $10,000 $10,000 12/31/1997 $ 9,645 $ 9,861 03/31/1998 $ 9,762 $ 9,902 06/30/1998 $ 9,648 $10,067 09/30/1998 $ 8,684 $11,035 12/31/1998 $ 9,155 $11,616 03/31/1999 $ 9,119 $11,054 06/30/1999 $ 9,415 $10,557 09/30/1999 $ 9,534 $11,203 12/31/1999 $10,091 $11,027 03/31/2000 $10,490 $10,899 06/30/2000 $10,326 $10,812 09/30/2000 $10,291 $10,323 12/31/2000 $10,707 $10,736 03/31/2001 $10,410 $10,210 06/30/2001 $10,436 $10,009 09/30/2001 $10,379 $10,785 12/31/2001 $10,826 $10,356 03/31/2002 $11,065 $10,163 06/30/2002 $11,934 $11,583 09/30/2002 $12,030 $11,912 12/31/2002 $12,985 $12,634 03/31/2003 $13,377 $13,105 06/30/2003 $14,363 $13,656 09/30/2003 $15,130 $14,032 12/31/2003 $16,295 $14,974 03/31/2004 $17,129 $15,209 06/30/2004 $16,230 $14,694 09/30/2004 $16,879 $15,177 12/31/2004 $18,830 $16,791 03/31/2005 $18,300 $16,270 06/30/2005 $19,097 $15,833 09/30/2005 $19,500 $15,654 12/31/2005 $19,450 $15,245 03/31/2006 $19,935 $15,216 06/30/2006 $19,397 $15,830 09/30/2006 $20,129 $15,970 12/31/2006 $21,132 $16,304 03/31/2007 $21,692 $16,481 06/30/2007 $22,124 $16,178 09/30/2007 $23,185 $17,488 AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT 9/30/07 1-Year 9.26% 5-Year 12.98% 10-Year 8.77% 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.] Citigroup Non-U.S. Dollar Oppenheimer International World Government Bond Bond Fund (Class C) Index 09/30/1997 $10,000 $10,000 12/31/1997 $ 9,645 $ 9,861 03/31/1998 $ 9,762 $ 9,902 06/30/1998 $ 9,648 $10,067 09/30/1998 $ 8,684 $11,035 12/31/1998 $ 9,156 $11,616 03/31/1999 $ 9,120 $11,054 06/30/1999 $ 9,416 $10,557 09/30/1999 $ 9,535 $11,203 12/31/1999 $10,092 $11,027 03/31/2000 $10,491 $10,899 06/30/2000 $10,328 $10,812 09/30/2000 $10,293 $10,323 12/31/2000 $10,709 $10,736 03/31/2001 $10,411 $10,210 06/30/2001 $10,437 $10,009 09/30/2001 $10,381 $10,785 12/31/2001 $10,828 $10,356 03/31/2002 $11,067 $10,163 06/30/2002 $11,936 $11,583 09/30/2002 $12,031 $11,912 12/31/2002 $12,986 $12,634 03/31/2003 $13,349 $13,105 06/30/2003 $14,365 $13,656 09/30/2003 $15,097 $14,032 12/31/2003 $16,231 $14,974 03/31/2004 $17,062 $15,209 06/30/2004 $16,105 $14,694 09/30/2004 $16,720 $15,177 12/31/2004 $18,623 $16,791 03/31/2005 $18,061 $16,270 06/30/2005 $18,816 $15,833 09/30/2005 $19,177 $15,654 12/31/2005 $19,091 $15,245 03/31/2006 $19,531 $15,216 06/30/2006 $19,000 $15,830 09/30/2006 $19,649 $15,970 12/31/2006 $20,593 $16,304 03/31/2007 $21,102 $16,481 06/30/2007 $21,484 $16,178 09/30/2007 $22,476 $17,488 AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT 9/30/07 1-Year 13.39% 5-Year 13.31% 10-Year 8.44% 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.] Citigroup Non-U.S. Dollar Oppenheimer International World Government Bond Bond Fund (Class N) 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 12/31/2006 $19,630 $15,327 03/31/2007 $20,162 $15,494 06/30/2007 $20,508 $15,209 09/30/2007 $21,505 $16,440 AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT 9/30/07 1-Year 13.71% 5-Year 13.76% Since Inception (3/1/01) 12.34% 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.] Citigroup Non-U.S. Dollar Oppenheimer International World Government Bond Bond Fund (Class Y) 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 12/31/2006 $12,746 $10,743 03/31/2007 $13,096 $10,859 06/30/2007 $13,370 $10,660 09/30/2007 $14,024 $11,523 AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 9/30/07 1-Year 15.63% 5-Year N/A Since Inception (9/27/04) 11.90% 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. 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, 2007. 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 Continued - -------------------------------------------------------------------------------- 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 (4/1/07) (9/30/07) SEPTEMBER 30, 2007 - -------------------------------------------------------------------------------- Class A Actual $1,000.00 $1,068.80 $4.78 - -------------------------------------------------------------------------------- Class A Hypothetical 1,000.00 1,020.46 4.67 - -------------------------------------------------------------------------------- Class B Actual 1,000.00 1,064.50 9.15 - -------------------------------------------------------------------------------- Class B Hypothetical 1,000.00 1,016.24 8.93 - -------------------------------------------------------------------------------- Class C Actual 1,000.00 1,065.10 8.58 - -------------------------------------------------------------------------------- Class C Hypothetical 1,000.00 1,016.80 8.38 - -------------------------------------------------------------------------------- Class N Actual 1,000.00 1,066.60 7.02 - -------------------------------------------------------------------------------- Class N Hypothetical 1,000.00 1,018.30 6.85 - -------------------------------------------------------------------------------- Class Y Actual 1,000.00 1,070.90 2.75 - -------------------------------------------------------------------------------- Class Y Hypothetical 1,000.00 1,022.41 2.69 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, excluding indirect expenses from affiliated fund, based on the 6-month period ended September 30, 2007 are as follows: CLASS EXPENSE RATIOS - ------------------------------- Class A 0.92% - ------------------------------- Class B 1.76 - ------------------------------- Class C 1.65 - ------------------------------- Class N 1.35 - ------------------------------- Class Y 0.53 The expense ratios reflect reduction to custodian expenses and voluntary waivers or reimbursements by the Fund's Manager and 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 and reduction to custodian expenses, if applicable. - -------------------------------------------------------------------------------- 20 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS September 30, 2007 - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------- ASSET-BACKED SECURITIES--0.0% - ------------------------------------------------------------------------------------------------------------------------- Taganka Car Loan Finance plc, Automobile Asset-Backed Certificates, Series 2006-1A, Cl. C, 8.62%, 11/14/13 1,2 (Cost $1,350,000) $ 1,350,000 $ 1,350,000 - ------------------------------------------------------------------------------------------------------------------------- U.S. GOVERNMENT OBLIGATIONS--3.8% - ------------------------------------------------------------------------------------------------------------------------- U.S. Treasury Nts., 4.125%, 8/31/12 3,4 (Cost $324,231,609) 325,350,000 324,028,428 - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- FOREIGN GOVERNMENT OBLIGATIONS--53.8% - ------------------------------------------------------------------------------------------------------------------------- ARGENTINA--0.6% Argentina (Republic of) Bonds: 2%, 9/30/14 [ARP] 21,270,000 6,847,039 5.374%, 8/3/12 2 5,648,125 5,067,368 7%, 10/3/15 2,450,000 2,014,513 Series GDP, 7.24%, 12/15/35 5 14,920,000 1,947,060 Series V, 7%, 3/28/11 18,993,000 17,838,651 Series VII, 7%, 9/12/13 4,700,000 4,093,504 - ------------------------------------------------------------------------------------------------------------------------- Central Bank of Argentina Bonds, 2%, 2/4/18 [ARP] 22,320,478 9,315,850 - ------------------------------------------------------------------------------------------------------------------------- Neuquen (Province Del) Sr. Sec. Nts., 8.656%, 10/18/14 6 3,375,000 3,425,625 --------------- 50,549,610 - ------------------------------------------------------------------------------------------------------------------------- AUSTRALIA--3.7% New South Wales Treasury Corp. Sr. Unsec. Nts.: 6%, 10/1/09 [AUD] 250,640,000 219,434,492 Series 17RG, 5.50%, 3/1/17 [AUD] 99,125,000 81,410,128 - ------------------------------------------------------------------------------------------------------------------------- Queensland Treasury Corp. Unsec. Nts., Series 09G, 6%, 7/14/09 [AUD] 15,660,000 13,737,334 --------------- 314,581,954 - ------------------------------------------------------------------------------------------------------------------------- AUSTRIA--0.6% Austria (Republic of) Unsec. Unsub. Nts., Series E, 4%, 9/15/16 [EUR] 39,996,000 55,402,921 - ------------------------------------------------------------------------------------------------------------------------- BELGIUM--2.2% Belgium (Kingdom of) Bonds, Series 44, 5%, 3/28/35 [EUR] 37,375,000 55,603,900 - ------------------------------------------------------------------------------------------------------------------------- Belgium (Kingdom of) Treasury Bills, 4.043%, 11/15/07 5 [EUR] 93,165,000 132,230,958 --------------- 187,834,858 - ------------------------------------------------------------------------------------------------------------------------- BRAZIL--1.1% Brazil (Federal Republic of) Bonds: 6%, 1/17/17 7 16,320,000 16,581,120 8%, 1/15/18 14,015,000 15,675,778 8.75%, 2/4/25 2,135,000 2,738,138 8.875%, 10/14/19 23,654,000 29,508,365 10.50%, 7/14/14 17,650,000 22,371,375 - ------------------------------------------------------------------------------------------------------------------------- Brazil (Federal Republic of) Nts., 7.875%, 3/7/15 8 4,000,000 4,528,000 --------------- 91,402,776
21 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------- BULGARIA--0.0% Bulgaria (Republic of) Bonds: 8.25%, 1/15/15 $ 1,500,000 $ 1,751,250 8.25%, 1/15/15 6 1,440,000 1,681,200 --------------- 3,432,450 - ------------------------------------------------------------------------------------------------------------------------- CANADA--3.2% Canada (Government of) Treasury Bills: 4.283%, 11/1/07 5 [CAD] 81,925,000 82,081,083 4.342%, 12/27/07 5 [CAD] 191,305,000 190,496,236 --------------- 272,577,319 - ------------------------------------------------------------------------------------------------------------------------- COLOMBIA--0.6% Bogota Distrio Capital Sr. Bonds, 9.75%, 7/26/28 6 [COP] 16,413,000,000 7,824,733 - ------------------------------------------------------------------------------------------------------------------------- Colombia (Republic of) Bonds: 7.375%, 9/18/37 3,390,000 3,737,475 10.75%, 1/15/13 12,180,000 14,920,500 12%, 10/22/15 [COP] 19,665,000,000 10,942,366 - ------------------------------------------------------------------------------------------------------------------------- Colombia (Republic of) Nts.: 8.25%, 12/22/14 6,655,000 7,520,150 11.75%, 3/1/10 [COP] 7,228,000,000 3,739,512 --------------- 48,684,736 - ------------------------------------------------------------------------------------------------------------------------- COSTA RICA--0.0% Costa Rica (Republic of) Unsec. Bonds, 9.995%, 8/1/20 2,730,000 3,552,413 - ------------------------------------------------------------------------------------------------------------------------- DENMARK--0.5% Denmark (Kingdom of) Bonds: 4%, 11/15/10 [DKK] 78,390,000 14,875,042 4%, 11/15/15 [DKK] 57,085,000 10,641,839 7%, 11/10/24 [DKK] 20,740,000 5,069,238 - ------------------------------------------------------------------------------------------------------------------------- Denmark (Kingdom of) Nts., 4%, 8/15/08 [DKK] 82,385,000 15,700,410 --------------- 46,286,529 - ------------------------------------------------------------------------------------------------------------------------- DOMINICAN REPUBLIC--0.0% Dominican Republic Unsec. Unsub. Bonds, Series REGS, 9.04%, 1/23/18 2,705,118 3,059,488 - ------------------------------------------------------------------------------------------------------------------------- EGYPT--0.1% Egypt (The Arab Republic of) Unsec. Unsub. Bonds, 8.75%, 7/15/12 6 [EGP] 54,260,000 9,953,736 - ------------------------------------------------------------------------------------------------------------------------- EL SALVADOR--0.1% El Salvador (Republic of) Bonds: 7.625%, 9/21/34 6 1,185,000 1,344,975 7.65%, 6/15/35 6 7,740,000 8,707,500 --------------- 10,052,475 - ------------------------------------------------------------------------------------------------------------------------- FRANCE--4.9% France (Government of) Obligations Assimilables du Tresor Bonds: 3.25%, 4/25/16 [EUR] 142,130,000 186,582,485
22 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------- FRANCE Continued France (Government of) Obligations Assimilables du Tresor Bonds: Continued 4%, 10/25/38 [EUR] 122,300,000 $ 155,709,321 - ------------------------------------------------------------------------------------------------------------------------- France (Government of) Treasury Bills, 3.99%, 10/18/07 5 [EUR] 50,550,000 71,955,307 --------------- 414,247,113 - ------------------------------------------------------------------------------------------------------------------------- GERMANY--8.0% Germany (Federal Republic of) Bonds: Series 03, 3.75%, 7/4/13 [EUR] 83,080,000 115,742,646 Series 05, 4%, 1/4/37 [EUR] 147,735,000 191,074,448 - ------------------------------------------------------------------------------------------------------------------------- Germany (Federal Republic of) Treasury Bills, Series 0707, 4.108%, 1/16/08 5 [EUR] 263,480,000 371,443,343 --------------- 678,260,437 - ------------------------------------------------------------------------------------------------------------------------- GHANA--0.1% Ghana (Republic of) Bonds, 8.50%, 10/4/17 1,9 6,100,000 6,222,000 - ------------------------------------------------------------------------------------------------------------------------- GREECE--1.5% Greece (Republic of) Bonds, 4.60%, 5/20/13 [EUR] 86,700,000 124,897,748 - ------------------------------------------------------------------------------------------------------------------------- GUATEMALA--0.0% Guatemala (Republic of) Nts.: 10.25%, 11/8/11 6 160,000 184,800 10.25%, 11/8/11 525,000 606,375 --------------- 791,175 - ------------------------------------------------------------------------------------------------------------------------- INDONESIA--0.2% Indonesia (Republic of) Nts.: 6.75%, 3/10/14 6 5,170,000 5,338,025 7.25%, 4/20/15 6 7,450,000 7,915,625 - ------------------------------------------------------------------------------------------------------------------------- Indonesia (Republic of) Unsec. Nts., 8.50%, 10/12/35 6 6,540,000 7,733,550 --------------- 20,987,200 - ------------------------------------------------------------------------------------------------------------------------- ISRAEL--0.3% Israel (State of) Bonds, Series 2682, 7.50%, 3/31/14 [ILS] 107,990,000 29,776,275 - ------------------------------------------------------------------------------------------------------------------------- ITALY--4.6% Italy (Republic of) Nts., Certificati di Credito del Tesoro, 4.40%, 7/1/09 2 [EUR] 271,860,000 389,261,932 - ------------------------------------------------------------------------------------------------------------------------- JAPAN--7.4% Japan (Government of) Bonds: 2 yr., Series 252, 0.80%, 1/15/09 9 [JPY] 27,807,000,000 242,130,182 10 yr., Series 245, 0.90%, 12/20/12 9 [JPY] 12,976,000,000 111,140,714 10 yr., Series 268, 1.50%, 3/20/15 9 [JPY] 13,780,000,000 120,776,694 30 yr., Series 25, 2.30%, 12/20/36 9 [JPY] 18,695,000,000 158,464,396 --------------- 632,511,986 - ------------------------------------------------------------------------------------------------------------------------- MALAYSIA--0.6% Johor Corp. Malaysia (Government of) Bonds, Series P3, 1%, 7/31/12 1 [MYR] 107,980,000 36,759,149 - ------------------------------------------------------------------------------------------------------------------------- Malaysia (Government of) Bonds, Series 2/05, 4.72%, 9/30/15 [MYR] 39,730,000 12,388,298 --------------- 49,147,447
23 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------- MEXICO--0.0% Mexican Williams Sr. Nts., 6.63%, 11/15/08 1,2 $ 500,000 $ 504,500 - ------------------------------------------------------------------------------------------------------------------------- NIGERIA--0.6% Nigeria (Federal Republic of) Bonds, Series 5Y, 13.50%, 9/11/11 [NGN] 437,980,000 3,568,208 - ------------------------------------------------------------------------------------------------------------------------- Nigeria (Federal Republic of) Nts.: Series 3Y2S, 12.50%, 2/24/09 [NGN] 356,000,000 3,004,390 Series 3Y7S, 17%, 12/16/08 [NGN] 570,000,000 5,030,751 Series 7Y, 9.20%, 6/29/14 [NGN] 650,000,000 5,178,714 - ------------------------------------------------------------------------------------------------------------------------- Nigeria (Federal Republic of) Promissory Nts., Series RC, 5.092%, 1/5/10 320,171 288,086 - ------------------------------------------------------------------------------------------------------------------------- Nigeria (Federal Republic of) Treasury Bonds: Series 5Y13, 12.99%, 9/29/11 [NGN] 866,700,000 7,839,758 Series 7Y16, 11.99%, 12/22/13 [NGN] 1,422,500,000 12,725,240 Series 7YR, 12.74%, 10/27/13 [NGN] 1,050,600,000 9,650,080 --------------- 47,285,227 - ------------------------------------------------------------------------------------------------------------------------- PANAMA--0.3% Panama (Republic of) Bonds: 6.70%, 1/26/36 4,650,000 4,801,125 7.25%, 3/15/15 15,905,000 17,097,875 8.875%, 9/30/27 3,255,000 4,143,062 9.375%, 4/1/29 1,650,000 2,219,250 --------------- 28,261,312 - ------------------------------------------------------------------------------------------------------------------------- PERU--1.3% Peru (Republic of) Bonds: 7.84%, 8/12/20 [PEN] 86,585,000 31,613,420 9.91%, 5/5/15 [PEN] 128,732,000 50,982,379 Series 7, 8.60%, 8/12/17 [PEN] 56,965,000 21,556,206 Series 8-1, 12.25%, 8/10/11 [PEN] 18,633,000 7,306,105 - ------------------------------------------------------------------------------------------------------------------------- Peru (Republic of) Sr. Nts., 4.533%, 2/28/16 5 2,350,699 1,428,449 --------------- 112,886,559 - ------------------------------------------------------------------------------------------------------------------------- PHILIPPINES--0.3% Philippines (Republic of the) Bonds, 8%, 1/15/16 2,910,000 3,266,475 - ------------------------------------------------------------------------------------------------------------------------- Philippines (Republic of the) Unsec. Bonds: 7.75%, 1/14/31 3,914,000 4,354,325 9%, 2/15/13 12,145,000 13,906,025 --------------- 21,526,825 - ------------------------------------------------------------------------------------------------------------------------- POLAND--0.4% Poland (Republic of) Bonds: Series DS1013, 5%, 10/24/13 [PLZ] 79,840,000 29,271,394 Series WS0922, 5.75%, 9/23/22 [PLZ] 10,000,000 3,780,532 --------------- 33,051,926
24 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------- SPAIN--2.2% Spain (Government of) Bonds, 3.80%, 1/31/17 [EUR] 30,885,000 $ 41,995,391 - ------------------------------------------------------------------------------------------------------------------------- Spain (Government of) Treasury Bills, 3.758%, 10/19/07 5 [EUR] 99,975,000 142,304,959 --------------- 184,300,350 - ------------------------------------------------------------------------------------------------------------------------- THE NETHERLANDS--0.9% Netherlands (Kingdom of the) Bonds, 5%, 7/15/11 [EUR] 54,140,000 79,408,524 - ------------------------------------------------------------------------------------------------------------------------- TURKEY--1.8% Turkey (Republic of) Bonds: 6.75%, 4/3/18 9 20,035,000 20,035,000 7%, 9/26/16 13,755,000 14,081,681 - ------------------------------------------------------------------------------------------------------------------------- Turkey (Republic of) Nts.: 7.25%, 3/15/15 8,615,000 9,024,213 16%, 3/7/12 [TRY] 106,080,000 88,616,613 17.864%, 8/13/08 5 [TRY] 28,615,000 20,595,403 --------------- 152,352,910 - ------------------------------------------------------------------------------------------------------------------------- UNITED KINGDOM--4.9% United Kingdom Treasury Bonds: 5%, 3/7/08 10 [GBP] 61,145,000 124,958,432 6%, 12/7/28 [GBP] 70,060,000 166,453,420 - ------------------------------------------------------------------------------------------------------------------------- United Kingdom Treasury Nts., 4%, 3/7/09 [GBP] 63,050,000 127,200,369 --------------- 418,612,221 - ------------------------------------------------------------------------------------------------------------------------- URUGUAY--0.8% Uruguay (Oriental Republic of) Bonds: 4.25%, 4/5/27 [UYU] 248,600,000 11,753,324 7.625%, 3/21/36 17,825,000 19,117,313 - ------------------------------------------------------------------------------------------------------------------------- Uruguay (Oriental Republic of) Unsec. Bonds: 5%, 9/14/18 [UYU] 403,060,000 21,546,538 8%, 11/18/22 12,685,000 14,143,775 --------------- 66,560,950 --------------- Total Foreign Government Obligations (Cost $4,343,827,546) 4,588,225,882 - ------------------------------------------------------------------------------------------------------------------------- LOAN PARTICIPATIONS--0.1% - ------------------------------------------------------------------------------------------------------------------------- Credit Suisse First Boston International, Export-Import Bank of Ukraine Loan Participation Nts., 8.40%, 2/9/16 5,890,000 5,713,300 - ------------------------------------------------------------------------------------------------------------------------- Dali Capital plc/Bank of Moscow Loan Participation Nts., Series 28, Tranche 1, 7.25%, 11/25/09 [RUR] 72,600,000 2,906,155 - ------------------------------------------------------------------------------------------------------------------------- Dali Capital SA (ROSBANK) Loan Participation Nts., Series 23, Tranche 1, 8%, 9/30/09 [RUR] 71,200,000 2,857,074 --------------- Total Loan Participations (Cost $11,140,331) 11,476,529
25 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------- CORPORATE BONDS AND NOTES--13.1% - ------------------------------------------------------------------------------------------------------------------------- AES Dominicana Energia Finance SA, 11% Sr. Nts., 12/13/15 6 $ 7,923,000 $ 8,140,883 - ------------------------------------------------------------------------------------------------------------------------- AES Panama SA, 6.35% Sr. Nts., 12/21/16 6 2,225,000 2,184,267 - ------------------------------------------------------------------------------------------------------------------------- African Development Bank, 9.25% Bonds, 1/18/08 [NGN] 1,289,400,000 10,982,557 - ------------------------------------------------------------------------------------------------------------------------- Alrosa Finance SA: 8.875% Nts., 11/17/14 7,010,000 7,724,319 8.875% Nts., 11/17/14 6 7,625,000 8,401,988 - ------------------------------------------------------------------------------------------------------------------------- AmBev International Finance Co. Ltd., 9.50% Bonds, 7/24/17 6 [BRR] 27,130,000 13,727,810 - ------------------------------------------------------------------------------------------------------------------------- America Movil SAB de CV, 8.46% Bonds, 12/18/36 6 [MXN] 140,800,000 12,655,702 - ------------------------------------------------------------------------------------------------------------------------- Autopistas del Nordeste Cayman Ltd., 9.39% Nts., 1/15/26 6 9,146,394 9,283,590 - ------------------------------------------------------------------------------------------------------------------------- BA Covered Bond Issuer, 4.25% Sec. Nts., 4/5/17 [EUR] 34,020,000 46,331,021 - ------------------------------------------------------------------------------------------------------------------------- Banco Bilbao Vizcaya Argentaria SA, 4.25% Sec. Bonds, 7/15/14 [EUR] 32,820,000 45,456,325 - ------------------------------------------------------------------------------------------------------------------------- Banco BMG SA, 9.15% Nts., 1/15/16 6 9,710,000 10,316,875 - ------------------------------------------------------------------------------------------------------------------------- Banco de Credito del Peru, 6.95% Sub. Nts., 11/7/21 2,6 2,750,000 2,695,000 - ------------------------------------------------------------------------------------------------------------------------- Banco Hipotecario SA, 9.75% Sr. Unsec. Nts., 4/27/16 6 4,325,000 4,292,563 - ------------------------------------------------------------------------------------------------------------------------- Banco Invex SA, 24.891% Mtg. Backed Certificates, Series 062U, 3/13/34 2,11 [MXN] 32,056,600 11,726,008 - ------------------------------------------------------------------------------------------------------------------------- C10 Capital SPV Ltd., 6.722% Unsec. Perpetual Debs. 6,12 6,700,000 6,446,432 - ------------------------------------------------------------------------------------------------------------------------- Cloverie plc, 9.838% Sec. Nts., Series 2005-93, 12/20/10 1,2 3,600,000 3,907,800 - ------------------------------------------------------------------------------------------------------------------------- Coriolanus Ltd., 10.62% Sec. Nts., 8/10/10 1 16,300,000 15,631,700 - ------------------------------------------------------------------------------------------------------------------------- Eirles Two Ltd., 6.793% Sec. Nts., Series 335, 4/30/12 1,2 10,800,000 10,766,520 - ------------------------------------------------------------------------------------------------------------------------- Eletropaulo Metropolitana SA, 19.125% Nts., 6/28/10 6 [BRR] 13,295,000 8,377,373 - ------------------------------------------------------------------------------------------------------------------------- Gaz Capital (Gazprom), 7.288% Sr. Unsec. Bonds, 8/16/37 6 27,890,000 29,667,988 - ------------------------------------------------------------------------------------------------------------------------- HBOS Treasury Services plc: 4.375% Sr. Sec. Nts., 7/13/16 [EUR] 129,560,000 178,834,331 4.50% Sr. Sec. Nts., 7/13/21 [EUR] 67,050,000 91,090,058 - ------------------------------------------------------------------------------------------------------------------------- HSBC Bank plc: 11.601% Sr. Unsec. Nts., 1/12/10 1,5 42,800,000 33,812,000 12.278% Sr. Unsec. Nts., 3/9/09 1,5 30,220,000 26,342,774 9.751% Sr. Unsec. Nts., 7/8/09 1,5 30,220,000 27,953,500 - ------------------------------------------------------------------------------------------------------------------------- ICICI Bank Ltd.: 6.375% Bonds, 4/30/22 2,6 12,125,000 11,356,275 6.625% Nts., 10/3/12 1,9 11,560,000 11,600,460 - ------------------------------------------------------------------------------------------------------------------------- IIRSA Norte Finance Ltd., 8.75% Sr. Nts., 5/30/24 6 9,305,127 11,026,576 - ------------------------------------------------------------------------------------------------------------------------- Inter-American Development Bank: 6.26% Nts., 12/8/09 2 [BRR] 11,200,000 6,140,753 9.891% Nts., 1/25/12 2 [COP] 10,865,571,549 6,342,639 - ------------------------------------------------------------------------------------------------------------------------- International Bank for Reconstruction & Development (The), 15% Nts., 1/7/10 1 [TRY] 3,000,000 2,451,052 - ------------------------------------------------------------------------------------------------------------------------- ISA Capital do Brasil SA: 7.875% Sr. Nts., 1/30/12 6 2,225,000 2,263,938 8.80% Sr. Nts., 1/30/17 6 2,780,000 2,919,000
26 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------- JP Morgan Hipotecaria su Casita: 6.47% Sec. Nts., 8/26/35 1 [MXN] 41,757,200 $ 3,777,546 20.077% Mtg.-Backed Certificates, Series 06U, 9/25/35 2 [MXN] 25,013,500 7,907,883 - ------------------------------------------------------------------------------------------------------------------------- JPMorgan, Red Square Capital Ltd., 9% CDO Nts., 11/20/08 1 [RUR] 365,000,000 14,653,858 - ------------------------------------------------------------------------------------------------------------------------- Kuznetski Capital SA/Bank of Moscow, 7.375% Nts., 11/26/10 6 2,780,000 2,800,850 - ------------------------------------------------------------------------------------------------------------------------- Majapahit Holding BV: 7.25% Nts., 10/17/11 6 2,860,000 2,895,750 7.75% Nts., 10/17/16 6 2,640,000 2,686,200 - ------------------------------------------------------------------------------------------------------------------------- MHP SA, 10.25% Sr. Sec. Sub. Bonds, 11/30/11 6 2,745,000 2,717,550 - ------------------------------------------------------------------------------------------------------------------------- Morgan Stanley: 6.25% Sr. Nts., 3/23/17 1 [PEN] 26,120,000 7,985,463 10.09% Sr. Unsec. Nts., 5/3/17 1 [BRR] 49,950,000 26,705,401 - ------------------------------------------------------------------------------------------------------------------------- National Gas Co., 6.05% Nts., 1/15/36 6 4,945,000 4,709,104 - ------------------------------------------------------------------------------------------------------------------------- National Power Corp.: 5.875% Unsec. Unsub. Bonds, 12/19/16 [PHP] 665,100,000 14,378,709 6.875% Nts., 11/2/16 6 2,739,000 2,718,458 9.625% Unsec. Bonds, 5/15/28 5,095,000 6,126,738 - ------------------------------------------------------------------------------------------------------------------------- Nordic Investment Bank, 12.50% Sr. Unsec. Nts., 2/15/09 1 [TRY] 5,000,000 3,939,519 - ------------------------------------------------------------------------------------------------------------------------- Ongko International Finance Co. BV, 10.50% Sec. Nts., 3/29/10 1,13,14 550,000 -- - ------------------------------------------------------------------------------------------------------------------------- Petroleum Export Ltd. Cayman SPV, 5.265% Sr. Nts., Cl. A3, 6/15/11 6 10,678,777 10,623,194 - ------------------------------------------------------------------------------------------------------------------------- Piazza Vittoria Finance SrL, 5.77% Asset-Backed Nts., 7/20/10 2 [EUR] 27,415,135 38,959,522 - ------------------------------------------------------------------------------------------------------------------------- RSHB Capital SA/OJSC Russian Agricultural Bank, 7.175% Nts., 5/16/13 6 3,820,000 3,900,602 - ------------------------------------------------------------------------------------------------------------------------- Salisbury International Investments Ltd., 9.51% Sec. Nts., Series 2006-003, Tranche E, 7/20/11 1,2 2,400,000 2,503,200 - ------------------------------------------------------------------------------------------------------------------------- Telefonica del Peru SA, 8% Sr. Unsec. Bonds, 4/11/16 6 [PEN] 26,033,700 9,037,564 - ------------------------------------------------------------------------------------------------------------------------- Tengizchevroil LLP, 6.124% Nts., 11/15/14 6 5,840,000 5,781,016 - ------------------------------------------------------------------------------------------------------------------------- TGI International Ltd., 9.50% Nts., 10/3/17 1,9 10,640,000 10,746,400 - ------------------------------------------------------------------------------------------------------------------------- Tiers-BSP, 0%/8.60% Collateralized Trust, Cl. A, 6/15/97 15 6,065,000 2,739,136 - ------------------------------------------------------------------------------------------------------------------------- Transshipment Megahub Bhd: 5.15% Nts., 11/2/12 1 [MYR] 21,000,000 6,085,224 6.70% Bonds, Series F, 11/2/12 1 [MYR] 14,000,000 4,319,354 6.85% Nts., 11/2/12 1 [MYR] 16,000,000 4,967,395 6.95% Nts., 11/2/12 1 [MYR] 11,000,000 3,429,288 - ------------------------------------------------------------------------------------------------------------------------- Vitro SAB de CV: 8.625% Sr. Unsec. Unsub. Nts., 2/1/12 2,775,000 2,747,250 9.125% Sr. Unsec. Unsub. Nts., 2/1/17 4,715,000 4,656,063 - ------------------------------------------------------------------------------------------------------------------------- VTB Capital SA, 6.25% Sr. Nts., 6/30/35 6 2,950,000 2,895,130 - ------------------------------------------------------------------------------------------------------------------------- WM Covered Bond Program: 3.875% Sec. Nts., Series 1, 9/27/11 [EUR] 81,560,000 112,480,089 4% Sec. Mtg. Nts., Series 2, 9/27/16 [EUR] 79,755,000 105,870,501 --------------- Total Corporate Bonds and Notes (Cost $1,077,234,417) 1,116,594,034
27 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS Continued - --------------------------------------------------------------------------------
VALUE UNITS SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------- RIGHTS, WARRANTS AND CERTIFICATES--0.0% - ------------------------------------------------------------------------------------------------------------------------- Venezuela (Republic of) Oil Linked Payment Obligation Wts., Exp. 4/15/20 1,13 (Cost $0) 500 $ 18,750 PRINCIPAL AMOUNT - ------------------------------------------------------------------------------------------------------------------------- STRUCTURED SECURITIES--18.6% - ------------------------------------------------------------------------------------------------------------------------- Citigroup Global Markets Holdings, Inc.: Argentina (Republic of) Credit Linked Nts., 11.44%, 5/22/08 1,11 [ARP] 11,655,000 10,594,523 Argentina (Republic of) Credit Linked Nts., 4%, 5/18/09 1 [ARP] 7,884,000 7,164,990 Argentina (Republic of) Unsec. Credit Linked Nts., 9.28%, 4/16/10 1,11 [ARP] 10,108,564 5,242,171 Brazil (Federal Republic of) Unsec. Credit Linked Nts., 10%, 1/5/10 [BRR] 38,356,000 20,873,716 Brazil (Federal Republic of) Unsec. Credit Linked Nts., 10%, 1/5/10 [BRR] 59,878,000 32,586,201 Brazil (Federal Republic of) Unsec. Credit Linked Nts., 10%, 1/5/10 [BRR] 100,000,000 54,420,992 Brazil (Federal Republic of) Unsec. Credit Linked Nts., 14.809%, 1/5/10 5 [BRR] 32,035,902 13,704,672 Brazil (Federal Republic of) Unsec. Credit Linked Nts., 15.427%, 1/2/09 5 [BRR] 28,074,132 13,401,301 Brazil (Federal Republic of) Unsec. Credit Linked Nts., 15.728%, 1/3/08 5 [BRR] 24,719,335 13,143,782 Colombia (Republic of) Credit Linked Bonds, 11%, 7/27/20 [COP] 12,570,000,000 6,590,939 Colombia (Republic of) Credit Linked Nts., Series II, 15%, 4/27/12 [COP] 6,942,469,928 3,954,591 Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12 [COP] 31,110,000,000 17,720,975 Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12 [COP] 12,430,000,000 7,080,415 Colombia (Republic of) Unsec. Credit Linked Nts., 15%, 4/27/12 [COP] 11,705,100,000 6,667,496 Dominican Republic Credit Linked Nts., 10.086%, 3/20/08 1,5 [DOP] 118,000,000 3,224,569 Dominican Republic Credit Linked Nts., 22%, 10/3/11 [DOP] 158,100,000 5,992,075 Dominican Republic Credit Linked Nts., 8.452%, 3/24/08 5 [DOP] 177,660,000 5,104,587 Dominican Republic Credit Linked Nts., 9.522%, 5/12/08 5 [DOP] 106,540,000 3,016,971 Dominican Republic Credit Linked Nts., 9.826%, 3/20/08 5 [DOP] 109,540,000 3,146,596 Dominican Republic Credit Linked Nts., 9.931%, 12/24/07 5 [DOP] 107,470,000 3,087,134 Dominican Republic Unsec. Credit Linked Nts., 15%, 3/12/12 [DOP] 289,700,000 8,980,908 Dominican Republic Unsec. Credit Linked Nts., 9.342%, 8/11/08 5,9 [DOP] 244,600,000 6,761,725 Dominican Republic Unsec. Credit Linked Nts., 9.696%, 3/10/08 5 [DOP] 196,300,000 5,657,819 Dominican Republic Unsec. Credit Linked Nts., Series 007, 9.302%, 5/12/08 5 [DOP] 211,900,000 6,000,526 Egypt (The Arab Republic of) Credit Linked Nts., 7.364%, 1/10/08 1,5 [EGP] 54,440,000 9,553,087 Egypt (The Arab Republic of) Unsec. Credit Linked Nts., 8.376%, 2/28/08 1,5 [EGP] 54,300,000 9,440,085 Egypt (The Arab Republic of) Unsec. Credit Linked Nts., 8.50%, 2/16/08 [EGP] 34,150,000 6,172,364 Ghana (Republic of) Credit Linked Nts., 13.50%, 4/2/10 [GHS] 15,350,000 16,782,235 Nigeria (Federal Republic of) Credit Linked Nts., 14.50%, 3/1/11 6 [NGN] 2,672,000,000 24,883,320 Nigeria (Federal Republic of) Credit Linked Nts., Series II, 14.50%, 4/4/11 6 [NGN] 2,032,000,000 18,994,818 Renins Nonlife Ltd. Credit Linked Nts., 12.50%, 5/30/12 1 4,925,000 4,925,000 Russian Federation Credit Linked Nts., 7.65%, 12/4/08 1,2 [RUR] 41,690,000 1,647,756 Ukraine Hryvnia Unsec. Credit Linked Nts., 11.94%, 1/4/10 [UAH] 13,799,000 2,954,782 Zambia (Republic of) Credit Linked Nts., 8.833%, 2/21/08 5 [ZMK] 38,315,000,000 9,364,442
28 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------- Credit Suisse First Boston International: Boryspil Airport Total Return Linked Nts., 10%, 4/19/10 2 [UAH] 49,215,000 $ 10,156,863 EES Total Return Linked Nts., 7.10%, 12/12/08 2 [RUR] 72,800,000 2,922,742 Gazprom Total Return Linked Nts., 6.79%, 10/29/09 [RUR] 144,790,000 5,970,404 Gazprom Total Return Linked Nts., Series 002, 6.95%, 8/6/09 [RUR] 141,750,000 5,742,351 Indonesia (Republic of) Total Return Linked Nts., 12%, 9/16/11 1 [IDR] 116,800,000,000 14,167,859 Lukoil Credit Linked Nts., Series Fbi 105, 7.25%, 11/19/09 1,2 [RUR] 321,528,000 12,999,105 Moitk Total Return Linked Nts., 8.966%, 3/26/11 1,2 [RUR] 352,714,000 12,770,085 Moscow (City of) Credit Linked Nts., Series Fbi 101, 10%, 12/31/10 1 [RUR] 277,800,000 12,276,113 Moscow (City of) Credit Linked Nts., Series Fbi 98, 11%, 4/23/09 6 [RUR] 280,840,000 12,200,203 Orenburgskaya IZHK Total Return Linked Nts., 9.24%, 2/21/12 1,2 [RUR] 64,940,000 2,481,787 Ukraine (Republic of) Credit Linked Nts., Series EMG 13, 11.94%, 12/30/09 [UAH] 30,400,000 6,868,439 Vietnam Shipping Industry Group Total Return Linked Nts., 10.50%, 1/19/17 1 [VND] 85,958,000,000 5,450,526 - ------------------------------------------------------------------------------------------------------------------------- Credit Suisse First Boston, Inc. (Nassau Branch): Russian Oreniz Credit Linked Nts., Series 009, 9.24%, 2/21/12 1,2 [RUR] 75,000,000 2,866,246 Russian Specialized Construction and Installation Administration Credit Linked Nts., 8.59%, 5/20/10 1,2 [RUR] 64,600,000 2,598,730 Ukraine (Republic of) Credit Linked Nts., Series EMG 11, 11.94%, 12/30/09 [UAH] 9,163,000 2,070,247 Ukraine (Republic of) Credit Linked Nts., Series NPC 12, 11.94%, 12/30/09 6 [UAH] 65,490,000 14,796,517 - ------------------------------------------------------------------------------------------------------------------------- Credit Suisse Group, Russian Moscoblgaz Finance Total Return Linked Nts., 9.25%, 6/24/12 1 [RUR] 64,500,000 2,568,760 - ------------------------------------------------------------------------------------------------------------------------- Deutsche Bank AG: Argentina (Republic of) Credit Linked Nts., 11.50%, 12/21/11 1 [ARP] 35,580,000 28,920,400 Arrendadora Capita Corp. SA de CV/Capita Corp. (The) de Mexico SA de CV Credit Linked Nts., 9.09%, 1/5/11 1 [MXN] 105,478,332 9,692,041 Arrendadora Capita Corp. SA de CV/Capita Corp. (The) de Mexico SA de CV Credit Linked Nts., 9.65%, 1/5/11 1 [MXN] 69,607,189 6,395,965 Brazil Real Credit Linked Nts., 13.882%, 3/3/10 5 [BRR] 61,128,560 26,029,240 Brazil Real Credit Linked Nts., 6%, 8/18/10 [BRR] 15,895,000 14,206,471 Colombia (Republic of) Credit Linked Nts., 13.50%, 9/15/14 1 [COP] 13,259,000,000 7,553,406 Colombia (Republic of) Total Return Linked Bonds, Series 002, 11%, 7/28/20 [COP] 24,620,000,000 12,901,756 Compania Total Return Linked Nts., 4.454%, 7/22/10 [EUR] 11,407,613 16,370,719 Egypt (The Arab Republic of) Credit Linked Nts., 9.381%, 2/5/08 1,5 [EGP] 36,510,000 6,328,400 Egypt (The Arab Republic of) Total Return Linked Nts., 7.725%, 9/16/08 5 [EGP] 74,375,000 12,439,893 European Investment Bank, Russian Federation Credit Linked Nts., 5.502%, 1/19/10 1,5 8,475,000 7,252,905 Grupo TMM SA Credit Linked Nts., 6%, 9/7/12 1 4,966,695 4,991,529 Halyk Bank of Kazakhstan Total Return Linked Nts., Series I, 7.25%, 3/20/09 [KZT] 2,003,690,000 15,984,791 Indonesia (Republic of) Credit Linked Nts., 9.50%, 6/22/15 10,300,162 10,822,792 Indonesia (Republic of) Credit Linked Nts., Series III, 14.25%, 6/15/13 12,412,800 15,781,013 Nigeria (Federal Republic of) Credit Linked Nts., 12.50%, 2/24/09 [NGN] 525,300,000 4,374,004 Nigeria (Federal Republic of) Credit Linked Nts., 15%, 1/27/09 [NGN] 704,900,000 6,108,758
29 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS Continued - --------------------------------------------------------------------------------
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------- STRUCTURED SECURITIES Continued - ------------------------------------------------------------------------------------------------------------------------- Deutsche Bank AG: Continued OAO Gazprom I Credit Nts., 9.35%, 10/20/07 $ 1,435,000 $ 1,498,305 Peru (Republic of) Credit Linked Nts., 6.659%, 2/20/11 2 3,255,000 3,319,591 Romania (Republic of) 3 yr. Linked Nts., 12.25%, 10/15/07 [RON] 22,740,000 10,797,766 Russian Federation Credit Linked Nts., 0%, 12/2/09 5 [RUR] 233,573,000 9,850,013 Russian Federation Credit Linked Nts., 6.942%, 2/22/08 5 [RUR] 161,200,000 6,288,203 Russian Federation Credit Linked Nts., 7.176%, 2/21/08 5 [RUR] 78,000,000 3,041,988 Russian Federation Total Return Linked Nts., Series II, 9%, 4/22/11 [RUR] 288,935,000 12,669,376 Russian Railways Total Return Linked Bonds, 6.67%, 1/26/09 2 [RUR] 146,720,000 5,872,152 Singapore, Vietnam Shipping Industry Group Total Return Linked Nts., 9%, 4/20/17 1 [VND] 216,800,000,000 12,853,547 Ukraine (Republic of) 5 yr. Credit Linked Nts., 4.05%, 8/25/10 2,505,000 2,552,119 Ukraine (Republic of) 5.5 yr. Credit Linked Nts., 4.05%, 2/25/11 2,505,000 2,546,708 Ukraine (Republic of) 6 yr. Credit Linked Nts., 4.05%, 8/25/11 2,505,000 2,543,477 Ukraine (Republic of) 6.5 yr. Credit Linked Nts., 4.05%, 2/27/12 2,505,000 2,538,216 Ukraine (Republic of) 7 yr. Credit Linked Nts., 4.05%, 8/28/12 2,505,000 2,533,532 Ukraine (Republic of) Credit Linked Nts., 10.208%, 7/1/09 1 [UAH] 18,508,800 3,853,176 Ukraine (Republic of) Credit Linked Nts., 11.94%, 12/30/09 [UAH] 3,228,000 716,084 Ukraine (Republic of) Credit Linked Nts., 11.94%, 12/30/09 [UAH] 11,438,000 2,537,351 Ukraine (Republic of) Credit Linked Nts., 9.60%, 7/1/09 1 [UAH] 5,302,400 1,103,858 United Mexican States Credit Linked Nts., 9.52%, 1/5/11 1 [MXN] 69,604,885 6,395,753 Videocon International Ltd. Credit Linked Nts., 6.26%, 12/29/09 1 7,300,000 7,290,583 - ------------------------------------------------------------------------------------------------------------------------- Dresdner Bank AG, Lukoil Credit Linked Nts., Series 3, 7.04%, 12/8/11 2,6 [RUR] 213,030,000 9,023,971 - ------------------------------------------------------------------------------------------------------------------------- Goldman Sachs & Co., Turkey (Republic of) Credit Linked Nts., 14.802%, 3/29/17 5,6 [TRY] 129,050,000 25,756,541 - ------------------------------------------------------------------------------------------------------------------------- Goldman Sachs Capital Markets LP, Colombia (Republic of) Credit Linked Nts., 10.476%, 2/8/37 5,6 [COP] 376,977,600,000 7,764,863 - ------------------------------------------------------------------------------------------------------------------------- Goldman Sachs International, Russian Federation Total Return Linked Nts., 8%, 5/13/09 2 [RUR] 573,900,000 23,076,940 - ------------------------------------------------------------------------------------------------------------------------- ING Bank NV, Ukraine (Republic of) Credit Linked Nts., Series 725, 11.89%, 12/30/09 1 [UAH] 64,285,000 14,597,327 - ------------------------------------------------------------------------------------------------------------------------- JPMorgan Chase Bank: Argentina (Republic of) Credit Linked Nts., 11.45%, 12/19/11 1 [ARP] 36,445,000 30,141,907 Brazil (Federal Republic of) Credit Linked Nts., 13.847%, 4/1/10 5,6 [BRR] 129,150,391 54,781,467 Brazil (Federal Republic of) Credit Linked Nts., 14.35%, 2/20/12 1 [BRR] 34,060,000 18,315,844 Brazil (Federal Republic of) Credit Linked Nts., 15.326%, 1/2/15 5 [BRR] 115,066,796 28,365,692 Brazil (Federal Republic of) Credit Linked Nts., 2.731%, 11/30/12 5,6 [ARP] 35,605,000 9,822,888 Brazil (Federal Republic of) Credit Linked Nts., 6%, 5/16/45 1 [BRR] 11,130,000 9,976,075 Colombia (Republic of) Credit Linked Bonds, 10.19%, 1/5/16 5,6 [COP] 153,800,000,000 29,377,357 Colombia (Republic of) Credit Linked Bonds, 10.218%, 10/31/16 1,5 [COP] 90,697,000,000 17,324,045 Colombia (Republic of) Credit Linked Bonds, 11.198%, 8/3/20 1,5 [COP] 132,560,000,000 18,916,564 Colombia (Republic of) Credit Linked Bonds, Series A, 10.218%, 10/31/16 1,5 [COP] 90,312,000,000 17,250,507 Peru (Republic of) Credit Linked Nts., 8.115%, 9/2/15 5,6 [PEN] 40,860,000 7,504,357 Swaziland (Kingdom of) Credit Linked Nts., 7.25%, 6/20/10 6 3,850,000 3,811,500 - ------------------------------------------------------------------------------------------------------------------------- JSC Astana Finance, 9.16% Nts., 3/14/12 1 14,000,000 12,770,456
30 | OPPENHEIMER INTERNATIONAL BOND FUND
PRINCIPAL VALUE AMOUNT SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------- STRUCTURED SECURITIES Continued - ------------------------------------------------------------------------------------------------------------------------- Lehman Brothers International, Romania (Republic of) Total Return Linked Nts., 7.90%, 2/9/10 [RON] 10,726,400 $ 4,861,362 - ------------------------------------------------------------------------------------------------------------------------- Lehman Brothers Special Financing, Inc.: Argentina (Republic of) Credit Linked Nts., 9.655%, 12/20/15 6 20,000,000 20,594,000 CMS 10 yr. Curve Credit Linked Nts., 6%, 2/5/17 130,660,000 125,930,239 Romania (Republic of) Total Return Linked Nts., 6.50%, 3/9/10 [RON] 30,904,100 13,428,671 Romania (Republic of) Total Return Linked Nts., 6.75%, 3/11/08 [RON] 36,650,000 16,151,182 Romania (Republic of) Total Return Linked Nts., 7.25%, 4/19/10 [RON] 3,105,000 1,364,868 Romania (Republic of) Total Return Linked Nts., 7.75%, 4/21/08 [RON] 3,101,000 1,369,785 Romania (Republic of) Total Return Linked Nts., 7.75%, 4/21/08 [RON] 7,453,000 3,292,166 Romania (Republic of) Total Return Linked Nts., 7.90%, 2/12/08 [RON] 24,895,500 11,151,391 - ------------------------------------------------------------------------------------------------------------------------- Merrill Lynch: Colombia (Republic of) Credit Linked Nts., 10%, 11/17/16 1 [COP] 13,289,000,000 6,130,860 Renaissance Capital International Services Ltd. Total Return Linked Nts., 10.50%, 10/7/08 1 [RUR] 414,000,000 16,362,945 - ------------------------------------------------------------------------------------------------------------------------- Morgan Stanley, Russian Federation Total Return Linked Securities, Series 007, Cl. VR, 5%, 8/22/34 [RUR] 543,300,000 18,067,695 - ------------------------------------------------------------------------------------------------------------------------- Morgan Stanley & Co. International Ltd./Red Arrow International Leasing plc: Total Return Linked Nts., Series A, 8.375%, 6/30/12 1 [RUR] 221,069,172 9,093,270 Total Return Linked Nts., Series B, 11%, 6/30/12 1 [RUR] 166,758,107 6,926,368 - ------------------------------------------------------------------------------------------------------------------------- Morgan Stanley Capital Services, Inc.: Bank Center Credit Total Return Linked Nts., 7.52%, 6/6/08 [KZT] 3,273,000,000 26,529,431 Brazil (Federal Republic of) Linked Nts., 12.551%, 1/5/22 5,6 [BRR] 173,500,000 19,593,290 Brazil (Federal Republic of) Sr. Linked Nts., 14.40%, 8/4/16 1 [BRR] 56,967,568 41,956,474 Brazil (Federal Republic of) Total Return Nts., 8/2/10 [BRR] 31,053,730 14,151,601 Philippines (Republic of the) Credit Linked Nts., 10.21%, 9/20/15 1 30,000,000 35,591,700 Philippines (Republic of the) Credit Linked Nts., 8.619%, 9/20/15 1 980,000 1,119,944 Philippines (Republic of the) Credit Linked Nts., 8.21%, 6/20/16 1,2 2,640,000 2,797,793 United Mexican States Credit Linked Nts., 5.64%, 11/20/15 6 11,760,000 12,440,316 WTI Trading Ltd. Total Return Linked Nts., Series A, 13.50%, 2/6/09 1 10,900,000 10,464,000 WTI Trading Ltd. Total Return Linked Nts., Series B, 13.50%, 2/6/09 1 14,550,000 13,968,000 - ------------------------------------------------------------------------------------------------------------------------- UBS AG, Ghana (Republic of) Credit Linked Nts., 14.47%, 12/28/11 1 [GHS] 7,369,232 7,924,741 --------------- Total Structured Securities (Cost $1,379,108,713) 1,584,540,814 EXPIRATION STRIKE DATES PRICE CONTRACTS - ------------------------------------------------------------------------------------------------------------------------- OPTIONS PURCHASED--0.1% - ------------------------------------------------------------------------------------------------------------------------- Brazilian Real (BRR) Call 13 12/21/07 $ 1.81 96,820,000 782,644 - ------------------------------------------------------------------------------------------------------------------------- Credit Suisse International Basket of Currencies Call 13 11/19/07 90.86 134,510,000 13,451 - ------------------------------------------------------------------------------------------------------------------------- Credit Suisse International Basket of Currencies Call 13 12/12/07 1.02 268,230,000 781,944 - ------------------------------------------------------------------------------------------------------------------------- Euro (EUR) Call 13 12/21/07 1.41 196,090,000 5,647,647 --------------- Total Options Purchased (Cost $7,942,538) 7,225,686
31 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS Continued - --------------------------------------------------------------------------------
VALUE SHARES SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------- INVESTMENTS IN AFFILIATED COMPANIES--13.7% - ------------------------------------------------------------------------------------------------------------------------- Oppenheimer Institutional Money Market Fund, Cl. E, 5.37% 16,17 (Cost $1,166,273,150) 1,166,273,150 $1,166,273,150 - ------------------------------------------------------------------------------------------------------------------------- Total Investments, at Value (excluding Investments Purchased with Cash Collateral from Securities Loaned) (Cost $8,311,108,304) 8,799,733,273 PRINCIPAL AMOUNT - ------------------------------------------------------------------------------------------------------------------------- INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--3.4% 18 - ------------------------------------------------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS--3.3% Undivided interest of 28.03% in joint repurchase agreement (Principal Amount/Value $1,000,000,000, with a maturity value of $1,000,425,000) with Bank of America NA, 5.10%, dated 9/28/07, to be repurchased at $280,413,484 on 10/1/07, collateralized by U.S. Agency Mortgages, 5%-5.50%, 5/1/33-6/1/35, with a value of $1,020,000,000 $ 280,294,359 280,294,359 - ------------------------------------------------------------------------------------------------------------------------- MEDIUM-TERM FLOATING NOTE--0.1% American Express Credit Corp., 5.76%, 10/15/07 1,250,000 1,250,000 - ------------------------------------------------------------------------------------------------------------------------- MBIA Global Funding LLC, 5.14%, 10/30/07 1,250,000 1,250,000 --------------- 2,500,000 - ------------------------------------------------------------------------------------------------------------------------- YANKEE CERTIFICATE OF DEPOSIT FLOATING NOTE--0.0% Natexis Banques Populaires NY, 4.87%, 10/1/07 2,000,000 2,000,000 --------------- Total Investments Purchased with Cash Collateral from Securities Loaned (Cost $284,794,359) 284,794,359 - ------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $8,595,902,663) 106.6% 9,084,527,632 - ------------------------------------------------------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (6.6) (559,564,871) ---------------------------------- NET ASSETS 100.0% $8,524,962,761 ==================================
32 | OPPENHEIMER INTERNATIONAL BOND FUND FOOTNOTES TO STATEMENT OF INVESTMENTS Principal amount is reported in U.S. Dollars (USD), 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 GHS Ghana Cedi 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 PHP Philippines Peso PLZ Polish Zloty RON New Romanian Leu RUR Russian Ruble TRY New Turkish Lira UAH Ukraine Hryvnia UYU Uruguay Peso VND Vietnam Dong ZMK Zambian Kwacha 1. Illiquid security. The aggregate value of illiquid securities as of September 30, 2007 was $780,664,628, which represents 9.16% of the Fund's net assets. See Note 13 of accompanying Notes. 2. Represents the current interest rate for a variable or increasing rate security. 3. Partial or fully-loaned security. See Note 14 of accompanying Notes. 4. All or a portion of the security is held in collateralized accounts to cover initial margin requirements on open futures contracts. The aggregate market value of such securities is $35,593,466. See Note 6 of accompanying Notes. 5. Zero coupon bond reflects effective yield on the date of purchase. 6. 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 $519,976,855 or 6.10% of the Fund's net assets as of September 30, 2007. 7. A sufficient amount of liquid assets has been designated to cover outstanding written put options, as follows:
CONTRACTS EXPIRATION EXERCISE PREMIUM VALUE SUBJECT TO PUT DATES PRICE RECEIVED SEE NOTE 1 - ---------------------------------------------------------------------------------------------- British Pound Sterling (GBP) 1,220,000 10/5/07 $2.03 $10,792 $ 5,711 British Pound Sterling (GBP) 1,225,000 10/1/07 2.02 9,176 -- British Pound Sterling (GBP) 1,220,000 10/2/07 2.01 9,089 -- Euro (EUR) 6,175,000 10/4/07 1.42 33,844 17,722 Euro (EUR) 5,480,000 10/5/07 1.42 34,016 17,990 -------------------- $96,917 $ 41,423 ====================
8. A sufficient amount of liquid assets has been designated to cover outstanding written call options, as follows:
CONTRACTS EXPIRATION EXERCISE PREMIUM VALUE SUBJECT TO CALL DATES PRICE RECEIVED SEE NOTE 1 - ---------------------------------------------------------------------------------------------- British Pound Sterling (GBP) 1,225,000 10/1/07 $2.02 $ 9,176 $ 26,040 British Pound Sterling (GBP) 1,220,000 10/2/07 2.01 8,966 39,303 British Pound Sterling (GBP) 1,220,000 10/5/07 2.03 10,792 22,149 Euro (EUR) 6,175,000 10/4/07 1.42 33,844 68,311 Euro (EUR) 5,480,000 10/5/07 1.42 34,016 62,976 -------------------- $96,794 $ 218,779 ====================
33 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- FOOTNOTES TO STATEMENT OF INVESTMENTS Continued 9. When-issued security or forward commitment to be delivered and settled after September 30, 2007. See Note 1 of accompanying Notes. 10. A sufficient amount of securities has been designated to cover outstanding foreign currency contracts. See Note 5 of accompanying Notes. 11. Denotes an inflation-indexed security: coupon and principal are indexed to the consumer price index. 12. This bond has no contractual maturity date, is not redeemable and contractually pays an indefinite stream of interest. Rate reported represents the current interest rate for this variable rate security. 13. Non-income producing security. 14. Issue is in default. See Note 1 of accompanying Notes. 15. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. 16. Rate shown is the 7-day yield as of September 30, 2007. 17. Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended September 30, 2007, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment advisor. Transactions during the period in which the issuer was an affiliate are as follows:
SHARES GROSS GROSS SHARES SEPTEMBER 30, 2006 ADDITIONS REDUCTIONS SEPTEMBER 30, 2007 - -------------------------------------------------------------------------------------------------------------- Oppenheimer Institutional Money Market Fund, Cl. E -- 4,694,209,317 3,527,936,167 1,166,273,150
VALUE DIVIDEND SEE NOTE 1 INCOME - -------------------------------------------------------------------------------------------------------------- Oppenheimer Institutional Money Market Fund, Cl. E $1,166,273,150 $28,944,943
18. 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 14 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 VALUE PERCENT - -------------------------------------------------------------------------------- United States $ 2,207,624,337 24.3% United Kingdom 688,536,610 7.6 Germany 678,260,437 7.5 Japan 632,511,986 7.0 Brazil 514,337,478 5.7 Italy 444,592,173 4.9 France 414,247,113 4.6 Australia 314,581,954 3.5 Russia 303,783,077 3.3 Canada 272,577,319 3.0 Turkey 266,217,725 2.9 Spain 229,756,675 2.5 Colombia 218,664,910 2.4 Belgium 187,834,858 2.1 Argentina 157,500,164 1.7 Peru 146,469,647 1.6 Greece 124,897,748 1.4 Nigeria 112,628,684 1.2 Ukraine 105,231,546 1.2 Mexico 90,336,988 1.0 Philippines 86,999,303 1.0 The Netherlands 79,408,524 0.9 Dominican Republic 71,456,871 0.8 Malaysia 67,948,708 0.8 Indonesia 67,340,814 0.7 Uruguay 66,560,950 0.7 Egypt 64,510,759 0.7 Romania 62,417,191 0.7 Kazakhstan 61,065,694 0.7 Austria 55,402,921 0.6 Denmark 46,286,529 0.5 Supranational 36,051,483 0.4 Poland 33,051,926 0.4 Ghana 30,928,976 0.3 Panama 30,445,579 0.3 India 30,247,318 0.3 Israel 29,776,275 0.3 Vietnam 18,304,073 0.2 El Salvador 10,052,475 0.1 Zambia 9,364,442 0.1 Trinidad & Tobago 4,709,104 0.1 Swaziland 3,811,500 0.0 Costa Rica 3,552,413 0.0 Bulgaria 3,432,450 0.0 Guatemala 791,175 0.0 Venezuela 18,750 0.0 -------------------------- Total $ 9,084,527,632 100.0% ========================== SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 35 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF ASSETS AND LIABILITIES September 30, 2007 - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------- ASSETS - ------------------------------------------------------------------------------------------------------------- Investments, at value--see accompanying statement of investments: Unaffiliated companies (cost $7,429,629,513) $ 7,918,254,482 Affiliated companies (cost $1,166,273,150) 1,166,273,150 ---------------- 9,084,527,632 - ------------------------------------------------------------------------------------------------------------- Cash 19,841,072 - ------------------------------------------------------------------------------------------------------------- Cash--foreign currencies (cost $7,082,550) 7,010,593 - ------------------------------------------------------------------------------------------------------------- Unrealized appreciation on foreign currency contracts 147,564,512 - ------------------------------------------------------------------------------------------------------------- Swaps, at value 47,914,116 - ------------------------------------------------------------------------------------------------------------- Receivables and other assets: Interest, dividends and principal paydowns 80,244,781 Closed foreign currency contracts 67,744,363 Shares of beneficial interest sold 66,353,189 Futures margins 6,523,452 Investments sold 6,017,846 Other 10,447,447 ---------------- Total assets 9,544,189,003 - ------------------------------------------------------------------------------------------------------------- LIABILITIES - ------------------------------------------------------------------------------------------------------------- Options written, at value (premiums received $193,711)-- see accompanying statement of investments 260,202 - ------------------------------------------------------------------------------------------------------------- Return of collateral for securities loaned 284,794,359 - ------------------------------------------------------------------------------------------------------------- Unrealized depreciation on foreign currency contracts 60,842,254 - ------------------------------------------------------------------------------------------------------------- Swaps, at value (premiums received $898,534) 15,651,845 - ------------------------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased (including $131,900,488 purchased on a when-issued basis or forward commitment) 559,876,012 Closed foreign currency contracts 70,687,291 Shares of beneficial interest redeemed 15,226,162 Dividends 5,630,722 Distribution and service plan fees 4,641,972 Transfer and shareholder servicing agent fees 965,224 Shareholder communications 308,659 Trustees' compensation 21,808 Other 319,732 ---------------- Total liabilities 1,019,226,242 - ------------------------------------------------------------------------------------------------------------- NET ASSETS $ 8,524,962,761 ================
36 | OPPENHEIMER INTERNATIONAL BOND FUND - ------------------------------------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS - ------------------------------------------------------------------------------------------------------------- Par value of shares of beneficial interest $ 1,329,909 - ------------------------------------------------------------------------------------------------------------- Additional paid-in capital 7,758,232,273 - ------------------------------------------------------------------------------------------------------------- Accumulated net investment income 135,476,136 - ------------------------------------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions 38,936,547 - ------------------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 590,987,896 ---------------- NET ASSETS $ 8,524,962,761 ================ - ------------------------------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE - ------------------------------------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net assets of $6,300,320,276 and 982,201,804 shares of beneficial interest outstanding) $ 6.41 Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $ 6.73 - ------------------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $259,284,802 and 40,558,005 shares of beneficial interest outstanding) $ 6.39 - ------------------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $1,357,937,338 and 212,390,529 shares of beneficial interest outstanding) $ 6.39 - ------------------------------------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $153,180,593 and 23,940,927 shares of beneficial interest outstanding) $ 6.40 - ------------------------------------------------------------------------------------------------------------- Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $454,239,752 and 70,817,237 shares of beneficial interest outstanding) $ 6.41
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 37 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENT OF OPERATIONS For the Year Ended September 30, 2007 - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------ INVESTMENT INCOME - ------------------------------------------------------------------------------------------------------ Interest (net of foreign withholding taxes of $734,906) $ 299,906,333 - ------------------------------------------------------------------------------------------------------ Dividends: Unaffiliated companies (net of foreign withholding taxes of $4,431) 112,481 Affiliated companies 28,944,943 - ------------------------------------------------------------------------------------------------------ Portfolio lending fees 451,752 - ------------------------------------------------------------------------------------------------------ Other income 17,233 -------------- Total investment income 329,432,742 - ------------------------------------------------------------------------------------------------------ EXPENSES - ------------------------------------------------------------------------------------------------------ Management fees 35,050,002 - ------------------------------------------------------------------------------------------------------ Distribution and service plan fees: Class A 12,357,040 Class B 2,400,150 Class C 10,769,939 Class N 560,094 - ------------------------------------------------------------------------------------------------------ Transfer and shareholder servicing agent fees: Class A 7,360,145 Class B 572,839 Class C 1,362,666 Class N 635,286 Class Y 23,826 - ------------------------------------------------------------------------------------------------------ Shareholder communications: Class A 230,862 Class B 29,468 Class C 45,060 Class N 3,931 Class Y 762 - ------------------------------------------------------------------------------------------------------ Custodian fees and expenses 873,692 - ------------------------------------------------------------------------------------------------------ Trustees' compensation 102,081 - ------------------------------------------------------------------------------------------------------ Administration service fees 1,500 - ------------------------------------------------------------------------------------------------------ Other 449,732 -------------- Total expenses 72,829,075 Less reduction to custodian expenses (146,378) Less waivers and reimbursements of expenses (806,297) -------------- Net expenses 71,876,400 - ------------------------------------------------------------------------------------------------------ NET INVESTMENT INCOME 257,556,342
38 | OPPENHEIMER INTERNATIONAL BOND FUND - ------------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) - ------------------------------------------------------------------------------------------------------ Net realized gain (loss) on: Investments from unaffiliated companies (including premiums on options exercised) $ 93,902,216 Closing and expiration of option contracts written 4,463,947 Closing and expiration of futures contracts (10,811,706) Foreign currency transactions 135,644,807 Swap contracts 28,953,246 -------------- Net realized gain 252,152,510 - ------------------------------------------------------------------------------------------------------ Net change in unrealized appreciation (depreciation) on: Investments (27,999,778) Translation of assets and liabilities denominated in foreign currencies 484,105,183 Futures contracts (29,535,123) Option contracts written (337,446) Swap contracts 11,068,942 -------------- Net change in unrealized appreciation 437,301,778 - ------------------------------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 947,010,630 ==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 39 | OPPENHEIMER INTERNATIONAL BOND FUND STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 2007 2006 - -------------------------------------------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------------------------------------------- Net investment income $ 257,556,342 $ 161,377,436 - -------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) 252,152,510 (25,734,684) - -------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation 437,301,778 (8,589,064) ---------------------------------- Net increase in net assets resulting from operations 947,010,630 127,053,688 - -------------------------------------------------------------------------------------------------------------------- DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS - -------------------------------------------------------------------------------------------------------------------- Dividends from net investment income: Class A (198,019,724) (200,784,108) Class B (7,485,081) (12,370,619) Class C (34,902,172) (36,714,329) Class N (3,994,007) (3,110,737) Class Y (13,121,592) (5,420,742) ---------------------------------- (257,522,576) (258,400,535) - -------------------------------------------------------------------------------------------------------------------- Distributions from net realized gain: Class A (9,318,202) (11,599,099) Class B (500,541) (891,798) Class C (2,033,412) (2,435,648) Class N (194,577) (203,177) Class Y (465,053) (253,487) ---------------------------------- (12,511,785) (15,383,209) - -------------------------------------------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS - -------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from beneficial interest transactions: Class A 1,722,287,255 1,502,920,202 Class B 283,956 18,514,548 Class C 374,437,685 338,152,983 Class N 78,446,426 18,829,709 Class Y 247,318,830 141,286,624 ---------------------------------- 2,422,774,152 2,019,704,066 - -------------------------------------------------------------------------------------------------------------------- NET ASSETS - -------------------------------------------------------------------------------------------------------------------- Total increase 3,099,750,421 1,872,974,010 - -------------------------------------------------------------------------------------------------------------------- Beginning of period 5,425,212,340 3,552,238,330 ---------------------------------- End of period (including accumulated net investment income of $135,476,136 and $36,828,546, respectively) $ 8,524,962,761 $ 5,425,212,340 ==================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 40 | OPPENHEIMER INTERNATIONAL BOND FUND FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
CLASS A YEAR ENDED SEPTEMBER 30, 2007 2006 2005 2004 2003 - ---------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 5.80 $ 6.01 $ 5.63 $ 5.33 $ 4.38 - ---------------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .24 1 .22 1 .23 1 .13 .20 Net realized and unrealized gain (loss) .62 (.04) .62 .47 .95 ----------------------------------------------------------------------- Total from investment operations .86 .18 .85 .60 1.15 - ---------------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.24) (.37) (.41) (.30) (.20) Distributions from net realized gain (.01) (.02) (.06) -- -- ----------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.25) (.39) (.47) (.30) (.20) - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 6.41 $ 5.80 $ 6.01 $ 5.63 $ 5.33 ======================================================================= - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 15.18% 3.23% 15.53% 11.56% 26.67% - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 6,300,320 $ 4,075,172 $ 2,683,900 $ 1,177,628 $ 429,283 - ---------------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 4,988,412 $ 3,430,374 $ 1,925,344 $ 811,608 $ 285,391 - ---------------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 3.97% 3.72% 3.85% 2.19% 3.94% Total expenses 0.94% 4 0.98% 1.03% 1.13% 1.22% Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses 0.93% 0.97% 1.02% 1.13% 1.22% - ---------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 68% 144% 90% 133% 341%
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 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 less than one full year. 4. Total expenses including indirect expenses from affiliated fund were as follows: Year Ended September 30, 2007 0.95% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 41 | OPPENHEIMER INTERNATIONAL BOND FUND FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
CLASS B YEAR ENDED SEPTEMBER 30, 2007 2006 2005 2004 2003 - --------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 5.78 $ 5.99 $ 5.61 $ 5.31 $ 4.37 - --------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .19 1 .17 1 .17 1 .08 .16 Net realized and unrealized gain (loss) .62 (.04) .63 .47 .94 -------------------------------------------------------------- Total from investment operations .81 .13 .80 .55 1.10 - --------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.19) (.32) (.36) (.25) (.16) Distributions from net realized gain (.01) (.02) (.06) -- -- -------------------------------------------------------------- Total dividends and/or distributions to shareholders (.20) (.34) (.42) (.25) (.16) - --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 6.39 $ 5.78 $ 5.99 $ 5.61 $ 5.31 ============================================================== - --------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 14.26% 2.35% 14.58% 10.66% 25.48% - --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 259,285 $ 234,848 $ 224,381 $ 167,621 $ 134,661 - --------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 240,238 $ 229,871 $ 201,541 $ 153,117 $ 119,232 - --------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 3.12% 2.88% 2.95% 1.40% 3.20% Total expenses 1.79% 4 1.83% 1.89% 1.98% 2.03% Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses 1.78% 1.83% 1.89% 1.98% 2.03% - --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 68% 144% 90% 133% 341%
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 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 less than one full year. 4. Total expenses including indirect expenses from affiliated fund were as follows: Year Ended September 30, 2007 1.80% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 42 | OPPENHEIMER INTERNATIONAL BOND FUND
CLASS C YEAR ENDED SEPTEMBER 30, 2007 2006 2005 2004 2003 - ----------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ----------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 5.78 $ 5.99 $ 5.61 $ 5.31 $ 4.37 - ----------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .20 1 .17 1 .18 1 .09 .16 Net realized and unrealized gain (loss) .62 (.03) .63 .46 .94 ---------------------------------------------------------------- Total from investment operations .82 .14 .81 .55 1.10 - ----------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.20) (.33) (.37) (.25) (.16) Distributions from net realized gain (.01) (.02) (.06) -- -- ---------------------------------------------------------------- Total dividends and/or distributions to shareholders (.21) (.35) (.43) (.25) (.16) - ----------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 6.39 $ 5.78 $ 5.99 $ 5.61 $ 5.31 ================================================================ - ----------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 14.39% 2.46% 14.70% 10.75% 25.48% - ----------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 1,357,937 $ 875,032 $ 560,138 $ 233,311 $ 90,248 - ----------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 1,078,601 $ 717,977 $ 401,401 $ 170,796 $ 63,198 - ----------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 3.24% 2.98% 3.10% 1.46% 3.15% Total expenses 1.67% 4 1.71% 1.77% 1.88% 2.02% Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses 1.66% 1.71% 1.77% 1.88% 2.02% - ----------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 68% 144% 90% 133% 341%
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 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 less than one full year. 4. Total expenses including indirect expenses from affiliated fund were as follows: Year Ended September 30, 2007 1.68% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 43 | OPPENHEIMER INTERNATIONAL BOND FUND FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
CLASS N YEAR ENDED SEPTEMBER 30, 2007 2006 2005 2004 2003 - ----------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ----------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 5.79 $ 6.00 $ 5.61 $ 5.32 $ 4.37 - ----------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .22 1 .19 1 .20 1 .12 .18 Net realized and unrealized gain (loss) .61 (.04) .64 .45 .95 ---------------------------------------------------------- Total from investment operations .83 .15 .84 .57 1.13 - ----------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.21) (.34) (.39) (.28) (.18) Distributions from net realized gain (.01) (.02) (.06) -- -- ---------------------------------------------------------- Total dividends and/or distributions to shareholders (.22) (.36) (.45) (.28) (.18) - ----------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 6.40 $ 5.79 $ 6.00 $ 5.61 $ 5.32 ========================================================== - ----------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 14.71% 2.78% 15.27% 11.00% 26.31% - ----------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 153,181 $ 63,432 $ 46,533 $ 18,641 $ 4,640 - ----------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 112,319 $ 55,216 $ 30,696 $ 10,769 $ 2,653 - ----------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income 3.56% 3.29% 3.45% 1.83% 3.56% Total expenses 1.61% 4 1.58% 1.47% 1.49% 1.57% Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses 1.37% 1.42% 1.46% 1.49% 1.57% - ----------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 68% 144% 90% 133% 341%
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 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 less than one full year. 4. Total expenses including indirect expenses from affiliated fund were as follows: Year Ended September 30, 2007 1.62% SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 44 | OPPENHEIMER INTERNATIONAL BOND FUND
CLASS Y YEAR ENDED SEPTEMBER 30, 2007 2006 2005 2004 1 - ------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 5.80 $ 6.01 $ 5.63 $ 5.58 - ------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) .27 2 .24 2 .25 2 -- 3 Net realized and unrealized gain (loss) .62 (.04) .63 .05 ------------------------------------------------ Total from investment operations .89 .20 .88 .05 - ------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.27) (.39) (.44) -- Distributions from net realized gain (.01) (.02) (.06) -- ------------------------------------------------ Total dividends and/or distributions to shareholders (.28) (.41) (.50) -- - ------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 6.41 $ 5.80 $ 6.01 $ 5.63 ================================================ - ------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 4 15.63% 3.64% 15.96% 0.92% - ------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 454,240 $ 176,728 $ 37,286 $ 14,268 - ------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 299,298 $ 97,992 $ 25,559 $ 7,086 - ------------------------------------------------------------------------------------------------------- Ratios to average net assets: 5 Net investment income 4.38% 4.11% 4.23% 4.84% Total expenses 0.55% 6 0.56% 0.67% 1.17% Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses 0.54% 0.56% 0.66% 1.17% - ------------------------------------------------------------------------------------------------------- Portfolio turnover rate 68% 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 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 less than one full year. 6. Total expenses including indirect expenses from affiliated fund were as follows: Year Ended September 30, 2007 0.56% 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 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 on a commodities or futures exchange will be valued at the final settlement price or 46 | OPPENHEIMER INTERNATIONAL BOND FUND 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. Options are valued daily based upon the last sale price on the principal exchange on which the option is traded. 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. Investments in open-end registered investment companies (including affiliated funds) are valued at that fund's net asset value. 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 SECURITIES. The Fund invests in structured securities 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 securities are often leveraged, increasing the volatility of each securities' 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 security is sold, matures or expires. - -------------------------------------------------------------------------------- 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 take place generally at least 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, 2007, the Fund had purchased $131,900,488 of securities issued on a when-issued basis or forward commitment. 47 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued SECURITY CREDIT RISK. The Fund invests in high-yield securities, which may be subject to a greater degree of credit risk, market fluctuations and loss of income and principal, and may be more sensitive to economic conditions than lower-yielding, higher-rated fixed-income securities. The Fund may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. As of September 30, 2007, securities that were in default had a market value of zero. - -------------------------------------------------------------------------------- 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. - -------------------------------------------------------------------------------- INVESTMENT IN OPPENHEIMER INSTITUTIONAL MONEY MARKET FUND. The Fund is permitted to invest daily available cash balances in an affiliated money market fund. The Fund may invest the available cash in Class E shares of Oppenheimer Institutional Money Market Fund ("IMMF") which seeks current income and stability of principal. IMMF is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, as amended. The Manager is also the investment advisor of IMMF. The Fund's investment in IMMF is included in the Statement of Investments, if applicable. As a shareholder, the Fund is subject to its proportional share of IMMF's Class E expenses, including its management fee. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund's investment in IMMF. 48 | OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- 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, options 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 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 TAX PURPOSES ------------------------------------------------------------------- $ 275,179,513 $ 38,517,325 $ -- $ 453,724,680 1. During the fiscal year ended September 30, 2007, the Fund did not utilize any capital loss carryforward. 2. During the fiscal year ended September 30, 2006, the Fund did not utilize any capital loss carryforward. 49 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued 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, 2007. Net assets of the Fund were unaffected by the reclassifications. REDUCTION TO INCREASE TO ACCUMULATED NET INCREASE TO ACCUMULATED NET REALIZED GAIN PAID-IN CAPITAL INVESTMENT INCOME ON INVESTMENTS 3 ------------------------------------------------------------------- $ 3,925,416 $ 98,613,824 $ 102,539,240 3. $3,925,416, all of which was long-term capital gain, was distributed in connection with Fund share redemptions. The tax character of distributions paid during the years ended September 30, 2007 and September 30, 2006 was as follows: YEAR ENDED YEAR ENDED SEPT. 30, 2007 SEPT. 30, 2006 ------------------------------------------------------------------- Distributions paid from: Ordinary income $ 257,522,576 $ 258,400,535 Long-term capital gain 12,511,785 15,383,209 ------------------------------------- Total $ 270,034,361 $ 273,783,744 ===================================== 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, 2007 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 $ 8,595,805,659 Federal tax cost of other investments 5,551,398,765 ---------------- Total federal tax cost $ 14,147,204,424 ================ Gross unrealized appreciation $ 518,726,350 Gross unrealized depreciation (65,001,670) ---------------- Net unrealized appreciation $ 453,724,680 ================ 50 | OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- TRUSTEES' COMPENSATION. The Board of Trustees has adopted a compensation deferral 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 compensation deferral plan. - -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. Income distributions, if any, are declared daily and paid monthly. Capital gain distributions, if any, are declared and paid annually. - -------------------------------------------------------------------------------- INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. - -------------------------------------------------------------------------------- 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. 51 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued 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, 2007 YEAR ENDED SEPTEMBER 30, 2006 SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------------------- CLASS A Sold 433,932,882 $ 2,659,913,820 401,071,813 $ 2,346,328,470 Dividends and/or distributions reinvested 25,787,295 158,485,899 28,014,878 162,673,081 Redeemed (179,871,991) (1,096,112,464) (173,146,915) (1,006,081,349) ----------------------------------------------------------------- Net increase 279,848,186 $ 1,722,287,255 255,939,776 $ 1,502,920,202 ================================================================= - -------------------------------------------------------------------------------------------------- CLASS B Sold 10,415,726 $ 63,664,138 13,953,510 $ 81,256,556 Dividends and/or distributions reinvested 1,057,950 6,467,460 1,823,352 10,550,724 Redeemed (11,528,127) (69,847,642) (12,609,581) (73,292,732) ----------------------------------------------------------------- Net increase (decrease) (54,451) $ 283,956 3,167,281 $ 18,514,548 ================================================================= - -------------------------------------------------------------------------------------------------- CLASS C Sold 88,253,662 $ 539,409,592 76,001,789 $ 443,443,673 Dividends and/or distributions reinvested 3,770,947 23,093,523 4,461,718 25,813,712 Redeemed (30,938,093) (188,065,430) (22,632,214) (131,104,402) ----------------------------------------------------------------- Net increase 61,086,516 $ 374,437,685 57,831,293 $ 338,152,983 =================================================================
52 | OPPENHEIMER INTERNATIONAL BOND FUND
YEAR ENDED SEPTEMBER 30, 2007 YEAR ENDED SEPTEMBER 30, 2006 SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------------------- CLASS N Sold 16,571,249 $ 100,240,959 7,063,532 $ 41,194,742 Dividends and/or distributions reinvested 633,640 3,890,963 531,451 3,078,829 Redeemed (4,223,784) (25,685,496) (4,393,527) (25,443,862) ----------------------------------------------------------------- Net increase 12,981,105 $ 78,446,426 3,201,456 $ 18,829,709 ================================================================= - -------------------------------------------------------------------------------------------------- CLASS Y Sold 42,411,954 $ 259,884,092 24,796,488 $ 144,435,008 Dividends and/or distributions reinvested 2,027,388 12,488,704 973,953 5,648,766 Redeemed (4,082,901) (25,053,966) (1,513,656) (8,797,150) ----------------------------------------------------------------- Net increase 40,356,441 $ 247,318,830 24,256,785 $ 141,286,624 =================================================================
- -------------------------------------------------------------------------------- 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in IMMF, for the year ended September 30, 2007, were as follows: PURCHASES SALES - --------------------------------------------------------------------- Investment securities $4,659,154,952 $2,894,866,573 U.S. government and government agency obligations 428,017,089 394,503,082 - -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for a fee at an annual rate of average net assets as shown in the following table: FEE SCHEDULE --------------------------------- Up to $200 million 0.75% Next $200 million 0.72 Next $200 million 0.69 Next $200 million 0.66 Next $200 million 0.60 Next $4 billion 0.50 Over $5 billion 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, 2007, the Fund paid $9,486,056 to OFS for services to the Fund. 53 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued 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 such termination. The Distributor determines its uncompensated expenses under the plan at calendar quarter ends. The Distributor's aggregate uncompensated expenses under the plan at September 30, 2007 for Class B, Class C and Class N shares were $7,707,885, $17,377,931 and $1,468,738, 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 54 | OPPENHEIMER INTERNATIONAL BOND FUND 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, 2007 $ 1,542,702 $ 182,991 $ 499,260 $ 193,765 $ 10,502
- -------------------------------------------------------------------------------- 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, 2007, OFS waived $259,987 for Class N shares. This undertaking may be amended or withdrawn at any time. The Manager will waive fees and/or reimburse Fund expenses in an amount equal to the indirect management fees incurred through the Fund's investment in IMMF. During the year ended September 30, 2007, the Manager waived $546,310 for IMMF management fees. - -------------------------------------------------------------------------------- 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. 55 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 5. FOREIGN CURRENCY CONTRACTS Continued As of September 30, 2007, the Fund had outstanding foreign currency contracts as follows:
CONTRACT VALUATION EXPIRATION AMOUNT AS OF UNREALIZED UNREALIZED CONTRACT DESCRIPTION DATES (000S) SEPT. 30, 2007 APPRECIATION DEPRECIATION - ------------------------------------------------------------------------------------------------------------------------------- CONTRACTS TO PURCHASE Argentine Peso (ARP) 10/24/07 241,100ARP $ 76,242,289 $ -- $ 504,488 Australian Dollar (AUD) 10/11/07-12/21/07 42,117AUD 37,247,033 2,561,596 -- Brazilian Real (BRR) 11/5/07-1/5/2010 365,464BRR 191,655,698 36,575,194 -- British Pound Sterling (GBP) 10/1/07-10/11/07 73,898GBP 151,176,075 2,605,621 -- Canadian Dollar (CAD) 10/1/07-12/21/07 76,657CAD 77,104,365 2,040,592 -- Chilean Peso (CLP) 10/22/07 14,308,000CLP 28,004,834 184,496 -- Danish Krone (DKK) 10/2/07 27,737DKK 5,305,539 44,780 -- Dominican Republic Peso (DOP) 10/9/07 226,564DOP 6,783,359 -- 61,481 Euro (EUR) 10/1/07-12/27/07 902,720EUR 1,287,775,139 34,466,137 -- Indian Rupee (INR) 10/4/07-10/15/07 3,273,721INR 82,135,884 1,243,127 4,581 Japanese Yen (JPY) 10/2/07-10/11/07 163,065,724JPY 1,421,061,577 35,701,004 279,387 Malaysian Ringgit (MYR) 11/15/07-12/17/07 255,310MYR 75,138,179 1,480,342 -- Mexican Nuveo Peso (MXN) 11/26/07 693,700MXN 63,183,561 831,867 -- New Turkish Lira (TRY) 10/24/07-11/2/07 125,180TRY 102,809,770 3,258,794 -- New Zealand Dollar (NZD) 12/21/07 47,595NZD 35,780,649 179,023 3,450 Norwegian Krone (NOK) 1/29/08 631,240NOK 116,925,927 7,820,254 -- Polish Zloty (PLZ) 10/10/07-11/7/07 329,040PLZ 124,546,819 5,537,340 -- Singapore Dollar (SGD) 2/5/08 137,460SGD 93,375,120 1,728,591 -- South African Rand (ZAR) 10/15/07 572,600ZAR 82,933,916 3,410,557 -- South Korean Won (KRW) 10/12/07-2/1/08 51,992,000KRW 56,948,721 240,020 -- Swedish Krone (SEK) 10/10/07 834,930SEK 129,608,568 3,890,965 -- Swiss Franc (CHF) 10/5/07-11/8/07 140,572CHF 120,992,466 2,454,539 -- ---------------------------------- 146,254,839 853,387 ---------------------------------- CONTRACTS TO SELL Australian Dollar (AUD) 10/9/07-10/10/07 159,540AUD 141,505,375 -- 6,048,586 British Pound Sterling (GBP) 10/1/07-2/6/08 71,510GBP 146,138,560 -- 1,158,940 Canadian Dollar (CAD) 10/9/07-1/16/08 246,231CAD 247,748,360 -- 11,903,279 Colombian Peso (CPO) 10/16/07 52,832,000CPO 26,059,965 -- 1,997,265 Czech Koruna (CZK) 10/15/07-1/25/08 1,782,210CZK 92,377,403 -- 2,989,470 Euro (EUR) 10/1/07-2/6/08 490,745EUR 700,231,255 -- 23,703,632 Hong Kong Dollar (HKD) 1/25/08 143,380HKD 18,457,802 82,686 3,134 Indian Rupee (INR) 11/16/07 1,071,000INR 26,852,540 -- 794,146 Japanese Yen (JPY) 10/2/07-2/6/08 32,665,000JPY 286,889,635 1,226,987 3,027,375 New Taiwan Dollar (TWD) 10/15/07 2,584,000TWD 79,337,131 -- 1,112,325 New Turkish Lira (TRY) 10/1/07-11/7/07 33,031TRY 27,050,080 -- 2,752,368 New Zealand Dollar(NZD) 10/9/07-10/10/07 70,265NZD 53,198,349 -- 287,130 Singapore Dollar (SGD) 10/15/07 119,375SGD 80,450,964 -- 1,605,623 Swiss Franc (CHF) 10/9/07-1/25/08 176,311CHF 151,909,877 -- 2,605,594 ---------------------------------- 1,309,673 59,988,867 ---------------------------------- Total unrealized appreciation and depreciation $ 147,564,512 $ 60,842,254 ==================================
56 | OPPENHEIMER INTERNATIONAL BOND FUND - -------------------------------------------------------------------------------- 6. FUTURES CONTRACTS A futures contract is a commitment to buy or sell a specific amount of a commodity or financial instrument at a negotiated price on a stipulated future date. Futures contracts are traded on a commodity exchange. The Fund may buy and sell futures contracts that relate to broadly based securities indices (financial futures) or debt securities (interest rate futures) in order to gain exposure to or protection from changes in market value of stocks and bonds or interest rates. The Fund may also buy or write put or call options on these futures contracts. The Fund generally sells futures contracts as a hedge against increases in interest rates and decreases in market value of portfolio securities. The Fund may also purchase futures 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, 2007, the Fund had outstanding futures contracts as follows:
VALUATION AS OF UNREALIZED EXPIRATION NUMBER OF SEPTEMBER 30, APPRECIATION CONTRACT DESCRIPTION DATES CONTRACTS 2007 (DEPRECIATION) - ----------------------------------------------------------------------------------------------------------- CONTRACTS TO PURCHASE Canada (Government of) Bonds, 10 yr. 12/18/07 580 $ 65,560,147 $ 174,834 DAX Index 12/21/07 122 34,595,139 620,775 Euro-Bundesobligation, 10 yr. 12/6/07 2,943 472,867,487 (3,951,488) Euro-Schatz 12/6/07 12,288 1,811,073,422 (1,728,976) FTSE 100 Index 12/21/07 61 8,136,703 213,465 Japan (Government of ) Bonds, 10 yr. 12/11/07 742 871,679,624 (2,821,890) OMXS30 Index 10/26/07 1,399 26,480,505 717,112 Standard & Poor's/MIB Index, 10 yr. 12/21/07 28 7,993,868 (41,436)
57 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6. FUTURES CONTRACTS Continued
VALUATION AS OF UNREALIZED EXPIRATION NUMBER OF SEPTEMBER 30, APPRECIATION CONTRACT DESCRIPTION DATES CONTRACTS 2007 (DEPRECIATION) - ----------------------------------------------------------------------------------------------------------- CONTRACTS TO PURCHASE U.S. Long Bonds 12/19/07 1,112 $ 123,814,250 $ 671,369 U.S. Treasury Nts., 5 yr. 12/31/07 4,537 485,600,781 686,922 United Kingdom Long Gilt 12/27/07 304 66,514,772 (692,305) --------------- (6,151,618) --------------- CONTRACTS TO SELL Australia (Commonwealth of) Bonds, 10 yr. 12/17/07 686 60,130,793 1,135,470 CAC 40 Index 10/19/07 382 31,195,568 (1,012,390) DAX Index 12/21/07 113 32,043,039 (574,996) Euro-Bundesobligation, 10 yr. 12/6/07 1,794 288,251,536 191,359 FTSE 100 Index 12/21/07 445 59,357,917 (1,558,000) Mexican Bolsa Index 12/21/07 277 7,799,125 (6,360) Nikkei 225 Index 12/13/07 590 86,446,698 (5,073,061) Standard & Poor's 500 E-Mini Index 12/21/07 432 33,222,960 (1,056,953) U.S. Treasury Nts., 10 yr. 12/19/07 1,698 185,559,563 (1,355,535) --------------- (9,310,466) --------------- $ (15,462,084) ===============
- -------------------------------------------------------------------------------- 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. 58 | OPPENHEIMER INTERNATIONAL BOND FUND The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Written option activity for the year ended September 30, 2007 was as follows:
CALL OPTIONS PUT OPTIONS ----------------------------------- --------------------------------- NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF CONTRACTS PREMIUMS CONTRACTS PREMIUMS - ---------------------------------------------------------------------------------------------------------- Options outstanding as of September 30, 2006 -- $ -- 32,820,000 $ 556,532 Options written 36,006,510,000 3,292,734 36,105,050,000 4,029,617 Options closed or expired (19,410,610,000) (1,433,649) (18,380,700,000) (3,248,250) Options exercised (16,580,580,000) (1,762,291) (17,741,850,000) (1,240,982) ------------------------------------------------------------------------ Options outstanding as of September 30, 2007 15,320,000 $ 96,794 15,320,000 $ 96,917 ========================================================================
- -------------------------------------------------------------------------------- 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 counter-party, and is referred to as notional. Total return swaps are marked to market daily using primarily quotations from counterparties and brokers. The value of the contracts is separately disclosed on the Statement of Assets and Liabilities. 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. The net change in this amount during the period 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). 59 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 8. TOTAL RETURN SWAP CONTRACTS Continued As of September 30, 2007, the Fund had entered into the following total return swap agreements:
SWAP NOTIONAL PAID BY RECEIVED BY TERMINATION COUNTERPARTY AMOUNT THE FUND THE FUND DATES VALUE - ------------------------------------------------------------------------------------------------------------------------------- Citibank NA, New York: Twelve-Month JPY BBA LIBOR plus 40 basis points and if negative, the If positive, the Total absolute value of the Total Return Return of a custom 5,456,801,421 JPY of a custom basket of securities basket of securities 4/8/08 $ 544,812 Twelve-Month GBP BBA LIBOR plus 35 basis points and if negative, the If positive, the Total absolute value of the Total Return Return of a custom 23,174,662 GBP of a custom basket of securities basket of securities 5/7/08 (155,084) - ------------------------------------------------------------------------------------------------------------------------------- Deutsche Bank AG: Six-Month USD 16,760,000 BBA LIBOR 5.460% 5/13/15 3,400,494 Six-Month USD 11,050,000 LIBOR 5.250 6/23/15 1,867,671 - ------------------------------------------------------------------------------------------------------------------------------- One-Month BBA EURIBOR plus 10 basis points and if negative, the If positive, the Total Deutsche Bank absolute value of the Total Return Return of a custom AG, London 12,062,370 EUR of a custom equity basket equity basket 10/7/08 (257,370) - ------------------------------------------------------------------------------------------------------------------------------- Goldman Sachs Group, Inc. (The): Six-Month BBA 11,580,000 LIBOR 5.100 1/14/15 2,443,455 Six-Month BBA 11,580,000 LIBOR 5.080 1/20/15 2,506,624
60 | OPPENHEIMER INTERNATIONAL BOND FUND
SWAP NOTIONAL PAID BY RECEIVED BY TERMINATION COUNTERPARTY AMOUNT THE FUND THE FUND DATES VALUE - ---------------------------------------------------------------------------------------------------------------------------------- Goldman Sachs International: One-Month USD BBA LIBOR and if negative, the absolute value of If positive, the Total the Total Return of the MSCI Daily Return of the MSCI Daily Total Return Net Belgium USD Total Return Net Belgium $ 5,395,703 Market Index USD Market Index 10/9/07 $ 93,325 One-Month USD BBA LIBOR and if negative, the absolute value of If positive, the Total the Total Return of the MSCI Daily Return of the MSCI Daily Total Return Net Belgium USD Total Return Net Belgium 1,853,825 Market Index USD Market Index 10/9/07 26,713 If positive, the absolute If negative, the Total Return of value of the Total Return 10,866,261 BRR the BOVESPA 10/07 Index of the BOVESPA 10/07 Index 10/18/07 704,436 If positive, the absolute If negative, the Total Return of value of the Total Return 1,591,260 BRR the BOVESPA 10/07 Index of the BOVESPA 10/07 Index 10/18/07 220,811 If positive, the absolute If negative, the Total Return of value of the Total Return 1,624,577 BRR the BOVESPA 10/07 Index of the BOVESPA 10/07 Index 10/18/07 214,120 If negative, the absolute If positive, the Total Return of value of the Total Return the INDF/NSE NIFTY Index 10/07 INDF/NSE NIFTY Index 10/07 (353,896,000)INR Future Future 10/25/07 (138,949) If negative, the absolute If positive, the Price Return of value of the Price Return (9,175,706)CHF the SMI 12/07 Future of the SMI 12/07 Future 2/28/07 (151,717)
61 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 8. TOTAL RETURN SWAP CONTRACTS Continued
SWAP NOTIONAL PAID BY RECEIVED BY TERMINATION COUNTERPARTY AMOUNT THE FUND THE FUND DATES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ Merrill Lynch Capital Services, Inc.: The Constant Maturity Option $ 134,690,000 5.330% Price divided by 10,000 8/13/17 $(3,068,544) The Constant Maturity Option 248,000,000 4.660 Price divided by 10,000 6/11/17 4,700,096 - ------------------------------------------------------------------------------------------------------------------------------------ One-Month EUR BBA LIBOR and if If positive, the Total Return negative, the absolute value of the of a custom basket of Morgan Stanley Total Return of a custom basket of securities plus the dividends International 22,759,800 EUR securities from the basket of securities 12/20/07 630,015 ------------ $13,580,908 ============
Notional amount is reported in U.S. Dollars (USD), except for those denoted in the following currencies: BRR Brazilian Real CHF Swiss Franc EUR Euro GBP British Pound Sterling INR Indian Rupee JPY Japanese Yen Abbreviations are as follows: BBA British Bankers Association BOVESPA Bovespa Index that trades on the Sao Paulo Stock Exchange EURIBOR Euro Interbank Offered Rate INDF/NSE NIFTY Index Indian National Stock Exchange Nifty Index LIBOR London-Interbank Offered Rate MSCI Morgan Stanley Capital International SMI Swiss Market Index - -------------------------------------------------------------------------------- 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 62 | OPPENHEIMER INTERNATIONAL BOND FUND market daily using primarily quotations from counterparties, and brokers. The value of the contracts is separately disclosed on the Statement of Assets and Liabilities. 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. The net change in this amount during the period 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. 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, 2007, the Fund had entered into the following interest rate swap agreements:
SWAP NOTIONAL PAID BY RECEIVED BY TERMINATION COUNTERPARTY AMOUNT THE FUND THE FUND DATES VALUE - --------------------------------------------------------------------------------------------------------- Banco Santander Central Hispano SA: Six-MonthTasa Nominal Annual 5,126,000,000CLP (TNA-Chile) 6.6000% 8/21/17 $ 178,207 88,500,000MXN MXN TIIE 8.1200 1/26/17 (101,362) 27,880,000BRR BZDI 14.0000 1/3/12 1,037,482 - --------------------------------------------------------------------------------------------------------- Barclays Bank plc: 114,700,000MXN MXN TIIE 9.2700 7/17/26 872,043 Six-Month 5.3850 1/29/10 (360,285) 406,840,000NOK NIBOR Six-Month 49,540,000EUR 4.2200% EURIBOR 1/29/10 304,739 - --------------------------------------------------------------------------------------------------------- Citibank NA, London: Six-Month 16,830,000PLZ WIBOR 5.5200 3/24/10 65,409 Six-Month 26,928,000PLZ WIBOR 5.5500 3/25/10 108,351 - --------------------------------------------------------------------------------------------------------- Citibank NA, New York: 489,400,000TWD 2.3200 TWD-Telerate 6/27/11 111,299 Six-Month Tasa Nominal Annual 4,101,000,000CLP (TNA-Chile) 6.5300 8/25/17 202 - --------------------------------------------------------------------------------------------------------- Credit Suisse First Boston, Six-Month Inc. 46,785,000PLZ WIBOR 4.4800 7/1/10 (469,602)
63 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 9. INTEREST RATE SWAP CONTRACTS Continued
SWAP NOTIONAL PAID BY RECEIVED BY TERMINATION COUNTERPARTY AMOUNT THE FUND THE FUND DATES VALUE - --------------------------------------------------------------------------------------------------------- Credit Suisse International: 133,400,000MXN MXN TIIE 8.3000% 12/17/26 $ (176,332) Six-Month Tasa Nominal Annual 4,101,000,000CLP (TNA-Chile) 6.5800 8/21/17 132,396 - --------------------------------------------------------------------------------------------------------- Deutsche Bank AG: 490,200,000INR 7.1750% INR MIBOR-OIS Compound 6/27/11 (2,134) 2,387,000,000HUF 8.4400 Six-Month BUBOR 7/4/11 (725,282) - --------------------------------------------------------------------------------------------------------- Goldman Sachs Capital Markets LP: Six-Month 416,230,000NOK NIBOR 5.4700 5/2/10 (42,100) EUR EURIBOR- 51,720,000EUR 4.4155 Telerate 5/2/10 949 - --------------------------------------------------------------------------------------------------------- Goldman Sachs Group, Inc. (The): 38,800,000MXN MXN TIIE 8.7000 2/5/16 84,333 289,270,000MXN MXN TIIE 9.8400 12/31/09 1,045,136 - --------------------------------------------------------------------------------------------------------- Goldman Sachs CNY- International 107,900,000CNY 4.0000 CFXSREPOFIX01 2/16/17 855,242 - --------------------------------------------------------------------------------------------------------- J Aron & Co.: 46,300,000BRR BZDI 10.6700 1/2/12 (434,965) 140,720,000MXN MXN TIIE 9.1500 8/27/26 881,921 60,800,000MXN MXN TIIE 9.3300 9/16/26 482,555 53,700,000BRR BZDI 12.9200 1/2/14 1,386,072 26,730,000BRR BZDI 12.8700 1/2/14 667,580 53,240,000BRR BZDI 12.7100 1/4/10 726,675 110,230,000BRR BZDI 12.6100 1/4/10 1,378,046 143,500,000MXN MXN TIIE 9.5100 8/26/25 1,343,861 96,930,000MXN MXN TIIE 9.5000 8/28/25 898,329 99,100,000BRR BZDI 12.2600 1/2/15 1,509,892 45,260,000BRR BZDI 12.2900 1/2/15 713,757 91,750,000MXN MXN TIIE 9.2900 7/17/26 694,803 27,880,000BRR BZDI 14.0500 1/2/12 1,105,202 - --------------------------------------------------------------------------------------------------------- JPMorgan Chase Bank NA: 264,090,000ZAR 8.2900 Three-Month JIBA 6/21/08 546,072 34,270,000BRR BZDI 13.9100 1/2/12 2,448,547 - --------------------------------------------------------------------------------------------------------- Lehman Brothers Special Financing, Inc.: Six-Month 55,540,000PLZ WIBOR 4.5300 7/5/10 (120,019)
64 | OPPENHEIMER INTERNATIONAL BOND FUND
SWAP NOTIONAL PAID BY RECEIVED BY TERMINATION COUNTERPARTY AMOUNT THE FUND THE FUND DATES VALUE - ---------------------------------------------------------------------------------------------------------- Lehman Brothers Special Financing, Inc.: Continued Fund pays the greater of 0 and 8* (-0.0031375-(10 yr. CMS Index + 2 yr. CMS Index)) 131,690,000PLZ quarterly $3,950,700 2/5/17 $ (3,328,117) - ---------------------------------------------------------------------------------------------------------- Morgan Stanley & Co. Three-Month International 7,609,000,000KZT 8.2500% KZT 6/29/12 (2,066,067) - ---------------------------------------------------------------------------------------------------------- Morgan Stanley Capital Services, Six-Month Inc. 122,500,000EUR 4.7130 EURIBOR 8/22/17 (449,043) - ---------------------------------------------------------------------------------------------------------- UBS AG 63,571,606BRR BZDI 10.6700% 1/2/12 (1,636,214) - ---------------------------------------------------------------------------------------------------------- Three-Month Westpac 268,710,000NZD 7.7750 NZD-BBR-FRA 9/17/09 477,333 ------------- $ 10,144,911 =============
Notional amount is reported in U.S. Dollars (USD), except for those denoted in the following currencies: BRR Brazilian Real CLP Chilean Peso CNY Chinese Renminbi (Yuan) EUR Euro KZT Kazakhstan Tenge HUF Hungarian Forint INR Indian Rupee MXN Mexian Nuevo Peso NOK Norwegian Krone NZD New Zealand Dollar PLZ Polish Zloty TWD New Taiwan Dollar ZAR South African Rand Index abbreviations are as follows: BUBOR Budapest Interbank Offered Rate BZDI Brazil Interbank Deposit Rate CMS Constant Maturity Swap CNY-CFXSREPOFIX01 Chinese Renminbi 7 Days Repurchase Fixing Rates EURIBOR Euro Interbank Offered Rate INR Indian Rupee JIBA South Africa Johannesburg Interbank Agreed Rate LIBOR London-Interbank Offered Rate MIBOR-OIS Mid Market Interest Rate for French Franc/Austrian Schilling and India Swap Composites--Overnight Indexed Swap MXN TIIE Mexican Peso-Interbank Equilibrium Interest Rate NIBOR Norwegian Interbank Offered Rate NZD-BBR-FRA New Zealand Dollar-Bank Bill Rate-Forward Rate Agreement WIBOR Poland Warsaw Interbank Offer Bid Rate 65 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 11. CREDIT DEFAULT SWAP CONTRACTS A credit default swap is a bilateral contract that enables an investor to buy or sell protection against a defined-issuer credit event. The Fund may enter into credit default swaps to hedge an existing position or to obtain exposure to a security or market by purchasing or selling credit protection. The Fund may enter into credit default swaps on a single security, or a basket of securities. In a credit default swap contract, the purchaser of the contract will pay a periodic interest fee, similar to an insurance premium, on the notional amount of the swap contract to the counterparty (the seller of the contract). If there is a credit event (for example, bankruptcy or a failure to timely pay interest or principal), the purchaser will exercise the contract and will receive a payment from the seller of the contract equal to the notional value of the credit default swap contract less the value of the underlying security. The periodic interest fees are accrued daily as a component of unrealized appreciation (depreciation) and are recorded as realized gain (loss) upon payment. In the event that the credit default swap is exercised due to a credit event, the difference between the value of the underlying security and the notional amount is recorded as realized gain (loss) and is included on the Statement of Operations. Credit default swaps are marked to market daily using primarily quotations from counterparties and brokers. The value of the contracts is separately disclosed on the Statement of Assets and Liabilities. The unrealized appreciation (depreciation) related to the change in the valuation of the notional amount of the swap is combined with the accrued interest due to (owed by) the Fund at termination or settlement. The net change in this amount during the period is included on the Statement of Operations. 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, adverse pricing when purchasing bonds to satisfy its delivery obligation, and the need to fund the delivery obligation (either cash or defaulted securities depending on whether the Fund is the purchaser or seller of the credit default swap contract, respectively). Information regarding such credit default swaps as of September 30, 2007 is as follows:
PAY/ BUY/SELL NOTIONAL RECEIVE REFERENCE CREDIT AMOUNT FIXED TERMINATION PREMIUM COUNTERPARTY ENTITY PROTECTION (000S) RATE DATES RECEIVED VALUE - ------------------------------------------------------------------------------------------------------------------ Barclays Bank plc: CDX.EM.8 5-Year Index Buy $ 49,370 1.75% 12/20/12 $454,204 $ (511,071) Republic of Turkey Sell 6,025 1.62 4/20/12 -- 55,279 - ------------------------------------------------------------------------------------------------------------------ Citibank NA, New York: Republic of Hungary Buy 7,535 0.40 12/20/15 -- 6,082 Republic of Indonesia Sell 2,990 2.10 9/20/12 -- 100,442
66 | OPPENHEIMER INTERNATIONAL BOND FUND
PAY/ BUY/SELL NOTIONAL RECEIVE REFERENCE CREDIT AMOUNT FIXED TERMINATION PREMIUM COUNTERPARTY ENTITY PROTECTION (000S) RATE DATES RECEIVED VALUE - ------------------------------------------------------------------------------------------------------------------ Citibank NA, New York: Continued Republic of Turkey Sell $ 4,520 2.47% 4/20/17 $ -- $ 76,574 Republic of Ukraine Sell 2,500 2.32 8/20/12 -- 69,858 - ------------------------------------------------------------------------------------------------------------------ Credit Suisse International NJSC Naftogaz Sell 5,000 3.25 4/20/11 -- (484,143) - ------------------------------------------------------------------------------------------------------------------ Deutsche Bank AG Republic of Peru Sell 1,200 1.32 4/20/17 -- 17,222 - ------------------------------------------------------------------------------------------------------------------ Merrill Lynch International: Republic of Indonesia Sell 5,000 1.67 9/20/12 -- 76,985 Republic of Turkey Sell 3,070 2.47 4/20/17 -- 47,003 - ------------------------------------------------------------------------------------------------------------------ Morgan Stanley Capital Services, Inc.: CDX.EM.8 Index Buy 49,370 1.75 12/20/12 444,330 (557,929) Istanbul Bond Co. SA for Finansbank Sell 17,390 1.30 3/24/13 -- (155,693) Republic of Indonesia Sell 6,000 2.23 9/20/12 -- 234,161 Republic of Peru Sell 4,960 1.04 6/20/17 -- (35,893) Republic of Turkey Sell 5,150 2.75 11/20/16 -- 164,091 Republic of Turkey Sell 6,150 1.60 4/20/12 -- 45,278 - ------------------------------------------------------------------------------------------------------------------ Republic of the UBS AG Philippines Sell 5,945 1.45 6/20/17 -- (223,930) ------------------------ $898,534 $ (1,075,684) ========================
- -------------------------------------------------------------------------------- 12. CURRENCY SWAPS A currency swap is an arrangement under which counterparties agree to exchange different currencies equivalent to the notional value at contract inception and reverse the exchange of the same notional values of those currencies at contract termination. The contract may also include periodic exchanges of cash flows based on a specified index or interest rate. Currency swaps are marked to market daily using primarily quotations from counterparties and brokers. The value of the contracts is separately disclosed on the Statement of Assets and Liabilities. 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. The net change in this amount during the period 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. Currency swap agreements entail exchange rate risk, interest rate risk and credit risk. Due to the exchange of currency at contract termination, changes in currency exchange rates may result in the Fund paying an amount greater than the amount received. There is a risk, based on movements of interest rates or indexes that the periodic payments made by the Fund will be greater than the payments received. Credit risk arises from the possibility that the counterparty will default on its payments to the Fund. If the 67 | OPPENHEIMER INTERNATIONAL BOND FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 12. CURRENCY SWAPS Continued counter-party defaults, the Fund's maximum loss will consist of the notional contract value to be received at contract termination as well as any outstanding interest payments due to the Fund. The Manager monitors the creditworthiness of counterparties on an ongoing basis. As of September 30, 2007, the Fund entered into the following currency swap arrangements:
SWAP NOTIONAL PAID BY RECEIVED BY TERMINATION COUNTERPARTY AMOUNT THE FUND THE FUND DATES VALUE - ---------------------------------------------------------------------------------------- Credit Suisse International: Three-Month USD BBA 18,590,000 TRY LIBOR 16.75% 2/26/12 $ 4,063,701 Three-Month USD BBA 7,370,000 TRY LIBOR 17.25 2/7/12 1,844,240 Three-Month USD BBA 11,105,000 TRY LIBOR 17.30 2/9/12 2,772,679 - ---------------------------------------------------------------------------------------- Three-Month Merrill Lynch BBA International 3,840,000 TRY LIBOR 17.10 2/6/12 931,516 ------------ $ 9,612,136 ============
Notional amount is reported in U.S. Dollars (USD), except for those denoted in the following currency: TRY New Turkish Lira Index abbreviation is as follows: BBA LIBOR British Bankers' Association London-Interbank Offered Rate - -------------------------------------------------------------------------------- 13. ILLIQUID SECURITIES As of September 30, 2007, investments in securities included issues that are illiquid. A security may 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 securities. Securities that are illiquid are marked with the applicable footnote on the Statement of Investments. - -------------------------------------------------------------------------------- 14. 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 the market value of the loaned securities during the period of the loan. The market value 68 | OPPENHEIMER INTERNATIONAL BOND FUND 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, 2007, the Fund had on loan securities valued at $280,011,205, which are included in the Statement of Assets and Liabilities as "Investments, at value" and, when applicable, as "Receivable for Investments sold." Collateral of $284,794,359 was received for the loans, all of which was received in cash and subsequently invested in approved investments. - -------------------------------------------------------------------------------- 15. RECENT ACCOUNTING PRONOUNCEMENT 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, 2007, the Manager has evaluated the implications of FIN 48 and does not currently anticipate a material impact to the Fund's financial statements. The Manager will continue to monitor the Fund's tax positions prospectively for potential future impacts. In September 2006, ("FASB") 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, 2007, 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. 69 | 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 (the "Fund"), including the statement of investments, as of September 30, 2007, 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 audits included 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, 2007, 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 the Fund as of September 30, 2007, 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 14, 2007 70 | OPPENHEIMER INTERNATIONAL BOND FUND FEDERAL INCOME TAX INFORMATION Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- In early 2008, if applicable, shareholders of record will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 2007. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. Capital gain distributions of $0.0126 per share were paid to Class A, Class B, Class C, Class N and Class Y shareholders, respectively, on December 28, 2006. 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, 2007 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, 2007 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. $136,863 of the Fund's fiscal year taxable income may be eligible for the lower individual income tax rates. In early 2008, 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, 2007, $54,031,502 or 20.98% 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. 71 | 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. 72 | OPPENHEIMER INTERNATIONAL BOND FUND BOARD APPROVAL OF THE FUND'S INVESTMENT ADVISORY AGREEMENT Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Each year, the Board of Trustees (the "Board"), including a majority of the independent Trustees, is required to determine whether to renew the Fund's investment advisory agreement (the "Agreement"). The Investment Company Act of 1940, as amended, requires that the Board request and evaluate, and that the Manager provide, such information as may be reasonably necessary to evaluate the terms of the Agreement. The Board employs an independent consultant to prepare a report that provides information, including comparative information, that the Board requests for that purpose. In addition, the Board receives information throughout the year regarding Fund services, fees, expenses and performance. The Manager and the independent consultant provided information to the Board on the following factors: (i) the nature, quality and extent of the Manager's services, (ii) the investment performance of the Fund and the Manager, (iii) the fees and expenses of the Fund, including comparative expense information, (iv) the profitability of the Manager and its affiliates, including an analysis of the cost of providing services, (v) whether economies of scale are realized as the Fund grows and whether fee levels reflect these economies of scale for Fund investors and (vi) other benefits to the Manager from its relationship with the Fund. Outlined below is a summary of the principal information considered by the Board as well as the Board's conclusions. The Board was aware that there are alternatives to retaining the Manager. NATURE, QUALITY AND EXTENT OF SERVICES. The Board considered information about the nature and extent of the services provided to the Fund and information regarding the Manager's key personnel who provide such services. The Manager's duties include providing the Fund with the services of the portfolio manager and the Manager's investment team, who provide research, analysis and other advisory services in regard to the Fund's investments; securities trading services; oversight of third party service providers; monitoring compliance with applicable Fund policies and procedures and adherence to the Fund's investment restrictions. The Manager is responsible for providing certain administrative services to the Fund as well. Those services include providing and supervising all administrative and clerical personnel who are necessary in order to provide effective corporate administration for the Fund; compiling and maintaining records with respect to the Fund's operations; preparing and filing reports required by the Securities and Exchange Commission; preparing periodic reports regarding the operations of the Fund for its shareholders; preparing proxy materials for shareholder meetings; and preparing the registration statements required by Federal and state securities laws for the sale of the Fund's shares. The Manager also provides the Fund with office space, facilities and equipment. 73 | OPPENHEIMER INTERNATIONAL BOND FUND BOARD APPROVAL OF THE FUND'S INVESTMENT ADVISORY AGREEMENT Unaudited / Continued - -------------------------------------------------------------------------------- The Board also considered the quality of the services provided and the quality of the Manager's resources that are available to the Fund. The Board took account of the fact that the Manager has had over forty years of experience as an investment adviser and that its assets under management rank it among the top mutual fund managers in the United States. The Board evaluated the Manager's administrative, accounting, legal and compliance services, and information the Board has received regarding the experience and professional qualifications of the Manager's key personnel and the size and functions of its staff providing investment management services to the Fund. In its evaluation of the quality of the portfolio management services provided, the Board considered the experience of Arthur P. Steinmetz and the Manager's international and quantitative fixed income investment team and analysts. Mr. Steinmetz has been a portfolio manager of the Fund since April 2004. The Board members also considered the totality of their experiences with the Manager as directors or trustees of the Fund and other funds advised by the Manager. In light of the foregoing, the Board concluded that the Fund benefits from the services provided under the Agreement as a result of the Manager's experience, reputation, personnel, operations, and resources. INVESTMENT PERFORMANCE OF THE MANAGER AND THE FUND. During the year, the Manager provided information on the investment performance of the Fund and the Manager at each Board meeting, including comparative performance information. The Board also reviewed information, prepared by the Manager and by the independent consultant, comparing the Fund's historical performance to relevant market indices and to the performance of other retail front-end load and no-load international income funds (including both funds advised by the Manager and funds advised by other investment advisers). The Board noted that the Fund's one-year, three-year, five-year and ten-year performance were better than its peer group median. COSTS OF SERVICES AND PROFITS REALIZED BY THE MANAGER. The Board considered information regarding the Manager's costs in serving as the Fund's investment adviser, including the costs associated with the personnel and systems necessary to manage the Fund, and information regarding the Manager's profitability from its relationship with the Fund. The Board reviewed the fees paid to the Manager and the other expenses borne by the Fund. The Board also considered the comparability of the fees charged and the services provided to the Fund to the fees and services for other clients or accounts advised by the Manager. The independent consultant provided comparative data in regard to the fees and expenses of the Fund, other international income funds and global income funds and other funds with comparable asset levels and distribution features. The Board noted that the Fund's contractual and actual management fees are lower than its peer group median. 74 | OPPENHEIMER INTERNATIONAL BOND FUND ECONOMIES OF SCALE. The Board reviewed whether the Manager may realize economies of scale in managing and supporting the Fund. The Board noted that the Fund currently has management fee breakpoints, which are intended to share with shareholders economies of scale that may exist as the Fund grows. OTHER BENEFITS TO THE MANAGER. In addition to considering the profits realized by the Manager, the Board considered information that was provided regarding the direct and indirect benefits the Manager receives as a result of its relationship with the Fund, including compensation paid to the Manager's affiliates. The Board also considered that the Manager must be able to pay and retain experienced professional personnel at competitive rates to provide quality services to the Fund and that maintaining the financial viability of the Manager is important in order for the Manager to continue to provide significant services to the Fund and its shareholders. CONCLUSIONS. These factors were also considered by the independent Trustees meeting separately from the full Board, assisted by experienced counsel to the Fund and to the independent Trustees. Fund counsel and the independent Trustees' counsel are both independent of the Manager within the meaning and intent of the Securities and Exchange Commission Rules. Based on its review of the information it received and its evaluations described above, the Board, including a majority of the independent Trustees, decided to continue the Agreement for another year. In arriving at this decision, the Board considered all of the above information, and considered the terms and conditions of the Agreement, including the management fee, in light of all of the surrounding circumstances. 75 | OPPENHEIMER INTERNATIONAL BOND FUND TRUSTEES AND OFFICERS Unaudited - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- NAME, POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS FUND, LENGTH OF SERVICE, AGE 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, CENTENNIAL, TRUSTEES 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, Cherry Creek Chairman of the Board of Mortgage Company (since 1991), Chairman, Centennial State Mortgage Trustees (since 2003), Trustee Company (since 1994), Chairman, The El Paso Mortgage Company (since 1993); (since 1999) Chairman, Ambassador Media Corporation (since 1984); Chairman, Broadway Age: 70 Ventures (since 1984); Director of Helmerich & Payne, Inc. (oil and gas drilling/production company) (since 1992), Campus Crusade for Christ (non- profit) (since 1991); Former Director, The Lynde and Harry Bradley Foundation, Inc. (non-profit organization) (2002-2006); former Chairman of: Transland Financial Services, Inc. (private mortgage banking company) (1997-2003), Great Frontier Insurance (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 38 portfolios in the OppenheimerFunds complex. GEORGE C. BOWEN, Assistant Secretary and Director of the Manager (December 1991-April 1999); Trustee (since 1998) President, Treasurer and Director of Centennial Capital Corporation (June 1989-April Age: 71 1999); Chief Executive Officer and Director of MultiSource Services, Inc. (March 1996-April 1999); Mr. Bowen held several positions with OppenheimerFunds, Inc. and with subsidiary or affiliated companies of OppenheimerFunds, Inc. (September 1987-April 1999). Oversees 38 portfolios in the OppenheimerFunds complex. EDWARD L. CAMERON, Member of The Life Guard of Mount Vernon (George Washington historical Trustee (since 1999) site) (June 2000-May 2006); Partner of PricewaterhouseCoopers LLP (account- Age: 69 ing firm) (July 1974-June 1999); Chairman of Price Waterhouse LLP Global Investment Management Industry Services Group (accounting firm) (July 1994- June 1998). Oversees 38 portfolios in the OppenheimerFunds complex. JON S. FOSSEL, Director of UNUMProvident (insurance company) (since June 2002); Director of Trustee (since 1995) Northwestern Energy Corp. (public utility corporation) (since November 2004); Age: 65 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 38 portfolios in the OppenheimerFunds complex. SAM FREEDMAN, Director of Colorado UpLIFT (charitable organization) (since September 1984). Trustee (since 1996) Mr. Freedman held several positions with the Manager and with subsidiary or Age: 67 affiliated companies of the Manager (until October 1994). Oversees 38 portfo- lios in the OppenheimerFunds complex.
76 | OPPENHEIMER INTERNATIONAL BOND FUND BEVERLY L. HAMILTON, Trustee of Monterey Institute for International Studies (educational organization) Trustee (since 2002) (since February 2000); Board Member of Middlebury College (educational orga- Age: 61 nization) (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 38 portfolios in the OppenheimerFunds complex. ROBERT J. MALONE, Director of Jones Knowledge, Inc. (since 2006); Director of Jones International Trustee (since 2002) University (educational organization) (since August 2005); Chairman, Chief Age: 63 Executive Officer and Director of 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 38 portfolios in the OppenheimerFunds complex. F. WILLIAM MARSHALL, JR., Trustee of MassMutual Select Funds (formerly MassMutual Institutional Funds) Trustee (since 2000) (investment company) (since 1996) and MML Series Investment Fund (invest- Age: 65 ment company) (since 1996); Trustee of Worcester Polytech Institute (since 1985); Chairman (since 1994) 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. (com- mercial bank) (January 1999-July 1999). Oversees 40 portfolios in the OppenheimerFunds complex. - ----------------------------------------------------------------------------------------------------------------------- INTERESTED TRUSTEE AND THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH OFFICER FLOOR, NEW YORK, NEW YORK 10281-1008. MR. MURPHY SERVES AS A TRUSTEE FOR AN INDEF- INITE 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 of the Manager (since June Trustee, President and 2001); President of the Manager (September 2000-March 2007); President and Principal Executive Officer director or trustee of other Oppenheimer funds; President and Director of (since 2001) Oppenheimer Acquisition Corp. ("OAC") (the Manager's parent holding com- Age: 58 pany) and of Oppenheimer Partnership Holdings, Inc. (holding company subsidiary of the Manager) (since July 2001); Director of OppenheimerFunds Distributor, Inc. (subsidiary of the Manager) (November 2001-December 2006); Chairman and Director of Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer agent subsidiaries of the Manager) (since July 2001);
77 | OPPENHEIMER INTERNATIONAL BOND FUND TRUSTEES AND OFFICERS Unaudited / Continued - -------------------------------------------------------------------------------- JOHN V. MURPHY, President and Director of OppenheimerFunds Legacy Program (charitable trust Continued program established by the Manager) (since July 2001); Director of the follow- ing 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); Chairman (since October 2007) and Member of the Investment Company Institute's Board of Governors (since October 2003); Chief Operating Officer of the Manager (September 2000- June 2001). Oversees 102 portfolios in the OppenheimerFunds complex. - ----------------------------------------------------------------------------------------------------------------------- OTHER OFFICERS OF THE THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR MESSRS. FUND 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 HarbourView Vice President and Portfolio Asset Management Corporation (since March 2000). An officer of 4 portfolios in Manager (since 1993) the OppenheimerFunds complex. Age: 48 MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since Vice President and Chief March 2004); Chief Compliance Officer of the Manager, OppenheimerFunds Compliance Officer Distributor, Inc., Centennial Asset Management and Shareholder Services, Inc. (since 2004) (since March 2004); Vice President of OppenheimerFunds Distributor, Inc., Age: 57 Centennial Asset Management Corporation and Shareholder Services, Inc. (since June 1983). Former Vice President and Director of Internal Audit of the Manager (1997-February 2004). An officer of 102 portfolios in the OppenheimerFunds complex. BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer of Treasurer and Principal the following: HarbourView Asset Management Corporation, Shareholder Financial Financial & Accounting Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management, Inc. Officer (since 1999) and Oppenheimer Partnership Holdings, Inc. (since March 1999), OFI Private Age: 48 Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. (since May 2000), OppenheimerFunds plc (since May 2000), OFI Institutional Asset Management, Inc. (since November 2000), and OppenheimerFunds Legacy Program (charitable trust program established by the Manager) (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 102 portfolios in the OppenheimerFunds complex.
78 | OPPENHEIMER INTERNATIONAL BOND FUND BRIAN PETERSEN, Vice President of the Manager (since February 2007); Assistant Vice President of Assistant Treasurer the Manager (August 2002-February 2007); Manager/Financial Product (since 2004) Accounting of the Manager (November 1998-July 2002). An officer of 102 port- Age: 37 folios in the OppenheimerFunds complex. BRIAN C. SZILAGYI, Assistant Vice President of the Manager (since July 2004); Director of Financial Assistant Treasurer Reporting and Compliance of First Data Corporation (April 2003-July 2004); (since 2005) Manager of Compliance of Berger Financial Group LLC (May 2001-March 2003); Age: 37 Director of Mutual Fund Operations at American Data Services, Inc. (September 2000-May 2001). An officer of 102 portfolios in the OppenheimerFunds complex. ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since March Vice President and Secretary 2002) of the Manager; General Counsel and Director of the Distributor (since (since 2001) December 2001); General Counsel of Centennial Asset Management Age: 59 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 102 portfolios in the OppenheimerFunds complex. LISA I. BLOOMBERG, Vice President and Associate Counsel of the Manager (since May 2004); First Assistant Secretary Vice President (April 2001-April 2004), Associate General Counsel (December (since 2004) 2000-April 2004), Corporate Vice President (May 1999-April 2001) and Assistant Age: 39 General Counsel (May 1999-December 2000) of UBS Financial Services Inc. (for- merly, PaineWebber Incorporated). An officer of 102 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 (2000- (since 2004) September 2004) and Vice President (1998-2000) of Merrill Lynch Investment Age: 43 Management. An officer of 102 portfolios in the OppenheimerFunds complex.
79 | OPPENHEIMER INTERNATIONAL BOND FUND TRUSTEES AND OFFICERS Unaudited / Continued - -------------------------------------------------------------------------------- KATHLEEN T. IVES, Vice President (since June 1998) and Senior Counsel and Assistant Secretary Assistant Secretary (since October 2003) of the Manager; Vice President (since 1999) and Assist- (since 2001) ant Secretary (since October 2003) of the Distributor; Assistant Secretary of Age: 42 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 102 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. 80 | 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 $61,875 in fiscal 2007 and $36,000 in fiscal 2006. (b) Audit-Related Fees The principal accountant for the audit of the registrant's annual financial statements billed no such fees during the last two fiscal years. The principal accountant for the audit of the registrant's annual financial statements billed not such fees for 2007 and $40,000 for 2006 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: Review of management's assessment of the financial statements disclosure impacts of an IRS private letter ruling. (c) Tax Fees The principal accountant for the audit of the registrant's annual financial statements billed no such fees to the registrant during the last two fiscal years. The principal accountant for the audit of the registrant's annual financial statements billed no such fees 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. (d) All Other Fees The principal accountant for the audit of the registrant's annual financial statements billed no such fees in fiscal 2007 and $9,757 in fiscal 2006. The principal accountant for the audit of the registrant's annual financial statements billed $32,732 in fiscal 2007 and no such fees in fiscal 2006 to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. Such fees would include compliance review and professional services for 22c-2 program. (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 $32,732 in fiscal 2007 and $49,757 in fiscal 2006 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 09/30/2007, 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: 11/14/2007 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: 11/14/2007 By: /s/ Brian W. Wixted --------------------------- Brian W. Wixted Principal Financial Officer Date: 11/14/2007 EX-99.CERT 2 ra880_42753cert302.txt RA880_42753CERT302 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: 11/14/2007 By: /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: 11/14/2007 By: /s/ Brian W. Wixted --------------------------- Brian W. Wixted Principal Financial Officer EX-99.906CERT 3 ra880_42753cert906.txt RA880_42753CERT906 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 09/30/2007 (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. Section 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 Oppenheimer International Bond Fund Bond Fund By: /s/ John V. Murphy By: /s/ Brian W. Wixted --------------------- --------------------- John V. Murphy Brian W. Wixted Date: 11/14/2007 Date: 11/14/2007 EX-99.CODE 4 ra880_42753codeeth.txt RA880_42753CODEETH 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. - ---------- 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. In general, the principles that govern honest and ethical conduct, including the avoidance of conflicts of interest between personal and professional relationships, reflect, 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. 2. 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, and 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 August 30, 2006. 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-----