-----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, HndqmLNoywI1zHFqMCoe6kME2GX8HX8Mnra5zLE7xv0rvQumQgYUFVAICG9rZTJx YrIFFAXFLoQtqm+fWcY2Zg== 0000939800-96-000005.txt : 19960607 0000939800-96-000005.hdr.sgml : 19960607 ACCESSION NUMBER: 0000939800-96-000005 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960606 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER INTERNATIONAL BOND FUND CENTRAL INDEX KEY: 0000939800 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-07255 FILM NUMBER: 96577783 BUSINESS ADDRESS: STREET 1: 3410 SOUTH GALENA STREET CITY: DENVER STATE: CO ZIP: 80231 BUSINESS PHONE: 3036713200 MAIL ADDRESS: STREET 1: 3410 SOUTH GALENA STREET CITY: DENVER STATE: CO ZIP: 80231 N-30D 1 OPPENHEIMER INTERNATIONAL BOND FUND--S/A/R [FRONT COVER] OPPENHEIMER INTERNATIONAL BOND FUND SEMIANNUAL REPORT MARCH 31, 1996 [PHOTO]Couple at laptop computer. "We want our money to WORK as hard as it can." [LOGO]OppenheimerFunds/R/ - ---- NEWS - ---- - ------------------- STANDARDIZED YIELDS - ------------------- For the 30 Days Ended 3/31/96:(3) CLASS A - ----- 8.78% - ----- CLASS B - ----- 8.43% - ----- CLASS C - ----- 8.23% - ----- This Fund is for people who want to take advantage of INTERNATIONAL OPPORTUNITIES offering the potential for growth along with income. - -------------------------------------------------------------------------------- HOW YOUR FUND IS MANAGED - -------------------------------------------------------------------------------- Oppenheimer International Bond Fund seeks high total return by investing primarily in foreign debt securities. The Fund currently emphasizes investments in government debt securities issued by developed countries such as Great Britain and Japan and emerging market countries, such as Brazil. - -------------------------------------------------------------------------------- PERFORMANCE - -------------------------------------------------------------------------------- Total returns at net asset value for the 6 months ended 3/31/96 were 8.45% for Class A shares, 7.82% for Class B shares and 8.00% for Class C shares.(1) Your Fund's cumulative total returns at maximum offering price since inception of the Fund on 6/15/95 were 8.60% for Class A shares, 8.12% for Class B shares, and 12.11% for Class C shares.(2) - -------------------------------------------------------------------------------- OUTLOOK - -------------------------------------------------------------------------------- "We believe the worlds' bond markets--both emerging and developed--represent extremely good values at this time. Throughout 1995, while most of the world's markets were recovering from 1994's rising interest rates, the U.S. and Japan recouped their losses. As a result, we believe the potential for future outperformance by overseas markets remains intact." Ashwin Vasan, Portfolio Manager March 31, 1996 Total returns include change in share price and reinvestment of dividends and capital gains distributions. Past performance does not guarantee future results. Investment return and principal value of an investment in the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. 1. Based on the change in net asset value per share for the period shown, without deducting any sales charges. Such performance would have been lower if sales charges were taken into account. 2. Class A returns show results of hypothetical investments on 6/15/95 (inception of class), after deducting the current maximum initial sales charge of 4.75%. Class B returns show results of hypothetical investments on 6/15/95 (inception of class), with the 5% contingent deferred sales charge deducted. Class C returns show results of hypothetical investments on 6/15/95 (inception of class), with the 1% contingent deferred sales charge deducted. An explanation of the different returns is in the Fund's prospectus. 3. Standardized yield is net investment income calculated on a yield-to-maturity basis for the 30-day period ended 3/31/96, divided by the maximum offering price at the end of the period, compounded semiannually and then annualized. Falling net asset values will tend to artificially raise yields. 2 Oppenheimer International Bond Fund [PHOTO]James C. Swain James C. Swain Chairman Oppenheimer International Bond Fund [PHOTO]Bridget A. Macaskill Bridget A. Macaskill President Oppenheimer International Bond Fund Dear Shareholder, By offering higher yields and greater opportunities for capital appreciation, international bonds have become increasingly attractive in 1993, particularly in comparison to domestic fixed-income securities. As we ventured into the new year, bonds issued by developed countries overseas offered yields well above those of other fixed-income alternatives. Futhermore, falling interest rates and lower inflation worldwide continued to push bond prices higher. But in contrast to the U.S., where prospects for lower interest rates have become less certain, interest rates overseas, particularly in Europe, could fall even further. Throughout the new markets of Southeast Asia, Latin America and Eastern Europe, demand from an emerging middle class for products and services continues to fuel economic growth, while solidifying balance sheets. As stability comes to these regions, the creditworthiness of many companies and governments is generally improving. And as bond ratings improve, bond prices should rise. With that in mind, it is our opinion that foreign fixed-income securities are poised to provide significant opportunities for capital appreciation in the future. Of course, the benefits of foreign fixed-income investing could be offset by a strengthening U.S. dollar and the resulting currency rate fluctuations. However, we strive to mitigate some of this risk with investments in dollar-denominated foreign bonds. Because investing abroad involves greater risks and expenses, including political and economic uncertainties, currency rate fluctuations and liquidity restrictions, it should only be undertaken with a long time horizon in mind. That said, we believe foreign fixed-income markets will continue to offer the potential for higher yields, as well as capital appreciation. And we're confident that by being able to diversify investments throughout the world, we will be positioned to participate in any economic environment. Your portfolio manager discusses the outlook for your Fund in light of these broad issues on the following pages. Thank you for your confidence in OppenheimerFunds, and we look forward to helping you reach your investment goals in the future. /s/James C. Swain /s/Bridget A. Macaskill James C. Swain Bridget A. Macaskill April 19, 1996 3 Oppenheimer International Bond Fund Ashwin Vasan Portfolio Manager Q + A An interview with your Fund's manager. HOW HAS THE FUND PERFORMED OVER THE PAST SIX MONTHS? The Fund has performed well, meeting its primary objective of providing total return through a diversified portfolio of developed and emerging market debt. Over the period we benefited from our strategic allocation of assets-- currently approximately 50% is invested in emerging markets and 50% in developed nations--and the gradual rebound of many of the world's markets. WHAT INVESTMENTS MADE POSITIVE CONTRIBUTIONS TO PERFORMANCE? Our investments in long-term bonds of developed European markets did particularly well as the decline in worldwide interest rates led to significant price increases. Additionally, in emerging markets, our holdings in eastern Europe and Asia--especially Poland and Indonesia--benefited because of a rebound in emerging markets. WERE THERE ANY FACTORS IN THE MARKET THAT PRESENTED PROBLEMS? Over the period, a significant negative factor in the market was the rising value of the U.S. dollar compared to other foreign currencies. Generally it is our policy not to hedge currencies because we feel a blend of different currencies provides added diversification. However, during the period, we hedged a portion of our European currency exposure because a stronger dollar could have negatively impacted the Fund's returns when translated back into dollars. As it turned out, we were able to benefit from this strategy. However, because we believe further increases in the dollar are unlikely, we're no longer defensively hedged.(1) WHAT AREAS ARE YOU CURRENTLY TARGETING? At its inception, roughly 60% of this Fund was invested in developed market debt, while the remaining 40% was invested in emerging market debt. Our allocation has changed to approximately a 50/50 split as more and more outstanding investment opportunities have arisen in emerging markets. At this time, most of the major developed countries' markets have interest rates that are declining due to expansive monetary policies. This scenario makes emerging markets more attractive. First, because developing countries can borrow the capital necessary to support rapid growth more cheaply. And second, because emerging market debt offers higher yields, which translate into tremendous potential advantages both in terms of income and appreciation. In our emerging market holdings, we've maintained our focus on Asian positions, while at the same time, we've begun to shift away from eastern European markets in favor of Latin America, where we expect higher growth. WHAT IS YOUR OUTLOOK FOR THE FUND? We believe world markets--both emerging and developed--represent extremely good values at this time. Throughout 1995, while most of the world's markets were recovering from 1994's rising interest rates, the U.S. and Japan recouped their losses. As a result, we believe the potential for future outperformance by overseas markets remains intact.// 1. The Fund's portfolio is subject to change. 4 Oppenheimer International Bond Fund
=========================================================================================================================== STATEMENT OF INVESTMENTS March 31, 1996 (Unaudited) FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 ==================================================================================================================================== CERTIFICATES OF DEPOSIT - 1.4% - ------------------------------------------------------------------------------------------------------------------------------------ Bank Pacific CD, Zero Coupon, 17.90%, 3/5/96(2)(3)(4) IDR 100,000,000 $ 43,140 ------------------------------------------------------------------------------------------------------------------------- Indonesia (Republic of) Bank Negara CD, Zero Coupon: 15.724%, 6/17/96(2)(4)IDR 50,000,000 20,640 15.068%, 7/18/96(2)(4)IDR 50,000,000 20,341 15.50%, 7/8/96(2)(4)IDR 50,000,000 20,516 ------------------------------------------------------------------------------------------------------------------------- Krungthai Thanakit CD, Zero Coupon, 10.085%, 6/10/96(2)(4)THB 10,100,000 392,945 ----------- Total Certificates of Deposit (Cost $501,174) 497,582 ==================================================================================================================================== MORTGAGE-BACKED OBLIGATIONS - 1.6% - ------------------------------------------------------------------------------------------------------------------------------------ Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security, Trust 240, Cl.2, 16.24%-18.434%, 9/1/23 (Cost $474,323)(5) 1,710,406 558,822 ==================================================================================================================================== FOREIGN GOVERNMENT OBLIGATIONS - 75.5% - ------------------------------------------------------------------------------------------------------------------------------------ ALGERIA - 2.8% ------------------------------------------------------------------------------------------------------------------------- Algeria (Republic of) Reprofiled Debt Loan Participation, Tranche A, 6.812%, 9/4/06(6)(7) 1,800,000 981,000 - ------------------------------------------------------------------------------------------------------------------------------------ ARGENTINA - 5.0% ------------------------------------------------------------------------------------------------------------------------- Argentina (Republic of): Bonds, Bonos del Tesoro, Series 10, 5.742%, 4/1/00(6) 200,965 185,166 Past Due Interest Bonds, Series L, 6.312%, 3/31/05(6) 650,000 468,813 Sr. Unsec. Unsub. Bonds, 13.45%, 10/21/97 ITL 725,000,000 468,200 ------------------------------------------------------------------------------------------------------------------------- Banco Hipotecario Nacional (Argentina) Medium-Term Nts., 10.625%, 3/29/99(8) 400,000 400,200 ------------------------------------------------------------------------------------------------------------------------- Buenos Aires (Province of) Sr. Unsub. Unsec. Nts., 10%, 12/7/98 DEM 150,000 107,823 ------------------------------------------------------------------------------------------------------------------------- Province of Buenos Aires Sr. Unsub. Unsec. Nts.: 11.50%, 10/19/98(8) 50,000 52,000 9.50%, 7/14/97 50,000 50,375 ----------- 1,732,577 - ------------------------------------------------------------------------------------------------------------------------------------ AUSTRALIA - 3.0% ------------------------------------------------------------------------------------------------------------------------- Australia (Commonwealth of) Bonds: 12%, 7/15/99 AUD 615,000 528,964 12.50%, 1/15/98 AUD 355,000 297,040 ------------------------------------------------------------------------------------------------------------------------- New South Wales Treasury Corp. Gtd. Bonds, 12%, 12/1/01 AUD 230,000 204,761 ----------- 1,030,765 - ------------------------------------------------------------------------------------------------------------------------------------ BRAZIL - 2.0% ------------------------------------------------------------------------------------------------------------------------- Banco do Estado de Sao Paulo SA Nts., 9.25%, 10/4/96 60,000 59,100 ------------------------------------------------------------------------------------------------------------------------- Brazil (Federal Republic of): Bonds, Nacional de Desenvolvimento Economico e Social, 10.375%, 4/27/98 100,000 102,500 Interest Due and Unpaid Bonds, 6.375%, 1/1/01(6) 474,300 426,277 Nts., Banco Estado Minas Gerais, 7.875%, 2/10/99 100,000 89,500 ----------- 677,377 - ------------------------------------------------------------------------------------------------------------------------------------ BULGARIA - 1.3% ------------------------------------------------------------------------------------------------------------------------- Bulgaria (Republic of) Disc. Bonds, Tranche A, 6.25%, 7/28/24(6) 900,000 448,875 - ------------------------------------------------------------------------------------------------------------------------------------ CANADA - 3.3% ------------------------------------------------------------------------------------------------------------------------- Canada (Government of) Bonds, 7.75%, 9/1/99 CAD 1,500,000 1,139,040 - ------------------------------------------------------------------------------------------------------------------------------------ COLOMBIA - 0.3% ------------------------------------------------------------------------------------------------------------------------- Colombia (Republic of) Concorde Loan Participation, 6.188%, 1/31/98(6)(7) 111,000 109,335 - ------------------------------------------------------------------------------------------------------------------------------------ COSTA RICA - 1.7% ------------------------------------------------------------------------------------------------------------------------- Central Bank of Costa Rica Interest Claim Bonds: Series A, 6.094%, 5/21/05(6) 444,590 395,686 Series B, 6.094%, 5/21/05(6) 215,473 191,772 ----------- 587,458
5 Oppenheimer International Bond Fund
=========================================================================================================================== STATEMENT OF INVESTMENTS March 31, 1996 (Unaudited)(Continued) FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------------------ CZECH REPUBLIC - 0.5% ------------------------------------------------------------------------------------------------------------------------- CEZ AS, Zero Coupon Disc. Promissory Nts., 10.768%, 7/1/96(4)(9) CZK 5,500,000 $ 197,195 - ------------------------------------------------------------------------------------------------------------------------------------ DENMARK - 3.6% ------------------------------------------------------------------------------------------------------------------------- Denmark (Kingdom of) Bonds, 8%, 5/15/03 DKK 6,875,000 1,273,999 - ------------------------------------------------------------------------------------------------------------------------------------ ECUADOR - 2.3% ------------------------------------------------------------------------------------------------------------------------- Ecuador (Republic of) Disc. Bonds, 6.063%, 2/28/25(6) 1,440,000 781,200 - ------------------------------------------------------------------------------------------------------------------------------------ GREAT BRITAIN - 5.9% ------------------------------------------------------------------------------------------------------------------------- United Kingdom Treasury Nts.: 12.50%, 11/21/05(10)(11) GBP 180,000 342,175 13%, 7/14/00(10)(11) GBP 940,000 1,715,615 ----------- 2,057,790 - ------------------------------------------------------------------------------------------------------------------------------------ IRELAND - 0.7% ------------------------------------------------------------------------------------------------------------------------- National Treasury Management Agency (Irish Government) Bonds, 8%, 10/18/00 IEP 145,000 234,681 - ------------------------------------------------------------------------------------------------------------------------------------ ITALY - 3.1% ------------------------------------------------------------------------------------------------------------------------- Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali, 10.50%, 11/1/98 ITL 1,660,000,000 1,069,637 - ------------------------------------------------------------------------------------------------------------------------------------ JAMAICA - 1.2% ------------------------------------------------------------------------------------------------------------------------- Jamaica (Government of) 1990 Refinancing Agreement Nts.: Tranche A, 6.406%, 10/16/00(6)(7) 43,333 40,083 Tranche B, 6.063%, 11/15/04(6)(7) 550,000 391,875 ----------- 431,958 - ------------------------------------------------------------------------------------------------------------------------------------ JORDAN - 3.1% ------------------------------------------------------------------------------------------------------------------------- Hashemite Kingdom of Jordan: Disc. Bonds, 6.437%, 12/23/23(6) 500,000 333,750 Interest Arrears Bonds, 6.438%, 12/23/05(6) 960,000 746,400 ----------- 1,080,150 - ------------------------------------------------------------------------------------------------------------------------------------ MEXICO - 10.2% ------------------------------------------------------------------------------------------------------------------------- Banco Nacional de Comercio Exterior SNC International Finance BV: Gtd. Bonds, 7.50%, 7/1/00 200,000 181,250 Gtd. Bonds, 8.75%, 9/28/00 GBP 140,000 189,534 Medium-Term Nts., 8%, 4/14/00 200,000 185,000 ------------------------------------------------------------------------------------------------------------------------- Bonos de la Tesoreria de la Federacion, Zero Coupon, 37.86%, 3/6/97(4) MXP 2,100,000 201,723 ------------------------------------------------------------------------------------------------------------------------- United Mexican States: Bonds, 10.375%, 1/29/03 DEM 1,825,000 1,235,510 Nts., 9.75%, 2/6/01 750,000 730,313 Nacional Financiera SNC Nts., 10%, 8/17/98 DEM 1,050,000 743,912 Nacional Financiera SNC Nts., 13.60%, 4/2/98 ESP 10,000,000 82,481 ----------- 3,549,723 - ------------------------------------------------------------------------------------------------------------------------------------ MOROCCO - 2.0% ------------------------------------------------------------------------------------------------------------------------- Morocco (Kingdom of) Loan Participation Agreement, Tranche A, 6.594%, 6/1/09 1,000,000 690,000 - ------------------------------------------------------------------------------------------------------------------------------------ NEW ZEALAND - 3.3% ------------------------------------------------------------------------------------------------------------------------- New Zealand (Republic of) Bonds, 10%, 7/15/97 NZD 1,635,000 1,132,432 - ------------------------------------------------------------------------------------------------------------------------------------ NORWAY - 0.8% ------------------------------------------------------------------------------------------------------------------------- Norwegian Government Bonds, 9.50%, 10/31/02 NOK 1,600,000 291,456 - ------------------------------------------------------------------------------------------------------------------------------------ PANAMA - 1.8% ------------------------------------------------------------------------------------------------------------------------- Panama (Republic of) Debs., 6.75%, 5/10/02(6) 682,000 606,980 - ------------------------------------------------------------------------------------------------------------------------------------ POLAND - 3.8% ------------------------------------------------------------------------------------------------------------------------- Poland (Republic of) Treasury Bills, Zero Coupon: 20.376%, 3/19/97(4) PLZ 1,250,000 401,272 24.961%, 4/17/96(4) PLZ 750,000 287,380 25.026%, 5/8/96(4) PLZ 150,000 56,881 24.904%, 6/5/96(4) PLZ 150,000 55,963 22.037%, 7/17/96(4) PLZ 250,000 91,075 22.266%, 7/24/96(4) PLZ 1,000,000 362,868 21.436%, 8/12/96(4) PLZ 150,000 53,896 ----------- 1,309,335
6 Oppenheimer International Bond Fund
=========================================================================================================================== STATEMENT OF INVESTMENTS March 31, 1996 (Unaudited)(Continued) FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------------------ PORTUGAL - 1.9% ------------------------------------------------------------------------------------------------------------------------- Portugal (Republic of) Gtd. Bonds, Obrigicion do tes Medio Prazo, 11.875%, 2/23/00 PTE 94,000,000 $ 674,395 - ------------------------------------------------------------------------------------------------------------------------------------ SPAIN - 2.6% ------------------------------------------------------------------------------------------------------------------------- Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado, 12.25%, 3/25/00 ESP 100,300,000 889,383 - ------------------------------------------------------------------------------------------------------------------------------------ SUPRANATIONAL - 3.0% ------------------------------------------------------------------------------------------------------------------------- European Bank for Reconstruction & Development, 10% Sr. Unsec. Medium-Term Nts., 12/20/96 CZK 16,000,000 585,566 ------------------------------------------------------------------------------------------------------------------------- International Bank for Reconstruction & Development Bonds, 12.50%, 7/25/97 NZD 630,000 449,481 ------------ 1,035,047 - ------------------------------------------------------------------------------------------------------------------------------------ SWEDEN - 2.6% ------------------------------------------------------------------------------------------------------------------------- Sweden (Kingdom of) Bonds, Series 1028, 11%, 1/21/99 SEK 5,500,000 898,140 - ------------------------------------------------------------------------------------------------------------------------------------ THAILAND - 1.1% ------------------------------------------------------------------------------------------------------------------------- Thai Fuji Finance Zero Coupon Bonds, 10.347%, 6/3/96(4) THB 7,500,000 292,131 ------------------------------------------------------------------------------------------------------------------------- Thai Oil Co. Ltd., Zero Coupon Bonds, 11.791%, 4/1/96(4) THB 2,500,000 99,088 ------------ 391,219 - ------------------------------------------------------------------------------------------------------------------------------------ TRINIDAD & TOBAGO - 0.9% ------------------------------------------------------------------------------------------------------------------------- Trinidad & Tobago Loan Participation Agreement: Tranche A, 1.565%, 9/30/00(6)(7) JPY 24,000,000 192,135 Tranche B, 1.565%, 9/30/00(6)(7) JPY 14,062,500 112,579 ------------ 304,714 - ------------------------------------------------------------------------------------------------------------------------------------ VENEZULA - 1.7% ------------------------------------------------------------------------------------------------------------------------- Venezuela (Republic of) Disc. Bonds, Series DL, 6.563%, 12/18/07(6) 950,000 575,339 ------------ Total Foreign Government Obligations (Cost $26,059,818) 26,181,200 ==================================================================================================================================== CORPORATE BONDS AND NOTES - 11.4% - ------------------------------------------------------------------------------------------------------------------------------------ Banco Bamerindus do Brasil SA: 10.50% Debs., 6/23/97 80,000 78,600 11% Sr. Unsub. Unsec. Bonds, 10/6/97 20,000 19,650 11% Sr. Unsub. Unsec. Bonds, 10/6/97 100,000 98,250 9% Unsub. Unsec. Bonds, 10/29/98 20,000 16,500 ------------------------------------------------------------------------------------------------------------------------- Banco de Colombia, 5.20% Cv. Jr. Sub. Unsec. Nts., 2/1/99 500,000 438,750 ------------------------------------------------------------------------------------------------------------------------- Banco del Atlantico SA, 7.875% Eurobonds, 11/5/98 110,000 101,200 ------------------------------------------------------------------------------------------------------------------------- Banco Ganadero SA, Zero Coupon: Nts., 9.931%, 7/1/96(4)(8) 10,000 9,770 Sr. Unsub. Unsec. Nts., 9.25%, 5/24/96(4) 100,000 98,840 Sr. Unsub. Unsec. Nts., 9.931%, 6/15/96(4)(8) 10,000 9,811 ------------------------------------------------------------------------------------------------------------------------- Banco Itamarati SA: 10.50% Medium-Term Nts., 11/29/96 50,000 50,125 11.625% Sr. Unsec. Debs., 11/23/97 150,000 152,625 ------------------------------------------------------------------------------------------------------------------------- Banco Mexicano SA, 8% Sr. Unsub. Unsec. Exchangeable Medium-Term Nts., 11/4/98 60,000 56,100 ------------------------------------------------------------------------------------------------------------------------- Banco Nacional de Mexico SA, 7% Cv. Jr. Sub. Unsec. Gtd. Nts., 12/15/99 200,000 176,750 ------------------------------------------------------------------------------------------------------------------------- Bell Cablemedia PLC, 0%/11.875% Sr. Disc. Nts., 9/15/05(12) 100,000 63,875 ------------------------------------------------------------------------------------------------------------------------- Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04(8)(12) 150,000 110,250 ------------------------------------------------------------------------------------------------------------------------- Comunicacion Celular SA, Units (each unit consists of $1,000 principal 0%/13.125% sr. deferred bond, 11/15/03 and one warrant for 12,860 shares of common stock at $1.32 per 1,000 shares)(8)(12)(13) 400,000 234,000 ------------------------------------------------------------------------------------------------------------------------- Empresas La Moderna SA, 11.375% Gtd. Nts., 1/25/99(8) 200,000 204,625 ------------------------------------------------------------------------------------------------------------------------- Indah Kiat International Finance Co. BV: 11.875% Sr. Sec. Gtd. Nts., 6/15/02 150,000 152,625 12.50% Sr. Sec. Gtd. Nts., Series C, 6/15/06 100,000 100,875
7 Oppenheimer International Bond Fund
=========================================================================================================================== STATEMENT OF INVESTMENTS March 31, 1996 (Unaudited)(Continued) FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 ------------------------------------------------------------------------------------------------------------------------- CORPORATE BONDS AND NOTES (CONTINUED) Indorayon, Zero Coupon Promissory Nts., 17.234%, 2/12/97 (4) IDR 800,000,000 $ 298,174 ------------------------------------------------------------------------------------------------------------------------- Morgan Stanley Group, Inc., 14.25% Indian Rupee Index Nts., 6/26/96 INR 314,100 9,211 ------------------------------------------------------------------------------------------------------------------------- PT Polysindo Eka Perkasa: 13% Sr. Nts., 6/15/01 185,000 195,175 Zero Coupon Promissory Nts., 19.111%, 2/28/97(4) IDR 700,000,000 253,188 ------------------------------------------------------------------------------------------------------------------------- Pulsar Internacional SA de CV, 11.80% Nts., 9/19/96(7) 50,000 50,500 ------------------------------------------------------------------------------------------------------------------------- SCF Finance Co., Zero Coupon Bonds, 13.414%, 6/1/96(4) THB 10,500,000 407,153 ------------------------------------------------------------------------------------------------------------------------- Sociedad Comercial del Plata SA, 10.75% Medium-Term Nts., 3/6/98(8) 200,000 201,250 ------------------------------------------------------------------------------------------------------------------------- TeleWest PLC, 0%/11% Sr. Disc. Debs., 10/1/07(12) 100,000 60,500 ------------------------------------------------------------------------------------------------------------------------- Tjiwi Kimia International Finance Co. BV, 13.25% Sr. Gtd. Nts., 8/1/01 100,000 110,125 ------------------------------------------------------------------------------------------------------------------------- Unibanco Leasing SA, 8.863% Nts., 12/28/97(6) 50,000 48,875 ------------------------------------------------------------------------------------------------------------------------- United International Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts., 12.495%, 11/15/99(4) 100,000 65,000 ------------------------------------------------------------------------------------------------------------------------- Videotron Holdings PLC, 0%/11% Sr. Disc. Nts., 8/15/05(12) 100,000 64,000 ----------- Total Corporate Bonds and Notes (Cost $3,918,913) 3,936,372 ==================================================================================================================================== STRUCTURED INSTRUMENTS - 4.2% - ------------------------------------------------------------------------------------------------------------------------------------ Bayerische Landesbank Girozentrale, New York Branch, 560% CD Linked Nts., 1/30/97 (indexed to the closing Nikkei 225 Index on 1/23/97 10 yr. Japanese Yen swap rate & New Zealand Dollar on 1/28/97(2) NZD 150,852 104,510 ------------------------------------------------------------------------------------------------------------------------- Banque Paribas, Grand Cayman Branch, 31.81% Pass-Through Certificates of Deposit, 2/1/97 HUF 20,000,000 143,301 ------------------------------------------------------------------------------------------------------------------------- Canadian Imperial Bank of Commerce, New York Branch, 16% CD Linked Nts., 9/11/96 (indexed to the Russian Federation GKO, Zero Coupon, 9/4/96) 300,000 299,250 ------------------------------------------------------------------------------------------------------------------------- Salomon Brothers, Inc., Zero Coupon Brazilian Credit Linked Nts., 12.38%, 1/3/97 (indexed to the Brazilian National Treasury Nts., Zero Coupon, 1/2/97)(4) 200,000 183,320 ------------------------------------------------------------------------------------------------------------------------- Salomon Brothers, Inc., Zero Coupon Brazilian Credit Linked Nts., 12.384%, 1/3/97 (indexed to the Brazilian National Treasury Nts., Zero Coupon, 1/2/97)(4) 200,000 183,320 ------------------------------------------------------------------------------------------------------------------------- Salomon Brothers, Inc., Zero Coupon Brazilian Credit Linked Nts., 12.638%, 1/3/97 (indexed to the Brazilian National Treasury Nts., Zero Coupon, 1/2/97)(4) 120,000 109,992 ------------------------------------------------------------------------------------------------------------------------- Salomon Brothers, Inc., Zero Coupon Brazilian Credit Linked Nts., 12.886%, 1/3/97 (indexed to the Brazilian National Treasury Nts., Zero Coupon, 1/2/97)(4) 100,000 91,660 ------------------------------------------------------------------------------------------------------------------------- United Mexican States Linked Nts. (indexed to the greater of Cetes Option Amount or USD LIBOR Option Amount, 11/27/96) 310,000 340,225 ----------- Total Structured Instruments (Cost $1,429,126) 1,455,578 DATE STRIKE CONTRACTS ==================================================================================================================================== CALL OPTION PURCHASED - 0.1% - ------------------------------------------------------------------------------------------------------------------------------------ OTC Deutsche Mark/U.S. Dollar Call Opt. (Cost $7,212) May 96 1.495 DEM 1,471,867 16,632 ==================================================================================================================================== PUT OPTIONS PURCHASED - 0.1% - ------------------------------------------------------------------------------------------------------------------------------------ Bulgaria (Republic of) Disc. Bonds, Tranche A, 6.25%, 7/28/24, Put Opt. Apr. 96 $ 45.25 550 385 ------------------------------------------------------------------------------------------------------------------------- Bulgaria (Republic of) Disc. Bonds, Tranche A, 6.25%, 7/28/24, Put Opt. Apr. 96 50.438 450 8,256 ------------------------------------------------------------------------------------------------------------------------- OTC Deutsche Mark/U.S. Dollar Put Opt. May 96 1.495 DEM 1,471,867 7,948 ----------- Total Put Options Purchased (Cost $42,745) 16,589
8 Oppenheimer International Bond Fund
=========================================================================================================================== STATEMENT OF INVESTMENTS March 31, 1996 (Unaudited)(Continued) FACE MARKET VALUE AMOUNT(1) SEE NOTE 1 ==================================================================================================================================== REPURCHASE AGREEMENT - 9.5% - ------------------------------------------------------------------------------------------------------------------------------------ Repurchase agreement with Zion First National Bank, 5.375%, dated 3/29/96, to be repurchased at $3,301,478 on 4/1/96, collateralized by U.S. Treasury Nts., 6.75%-8.625%, 8/15/97-11/15/00, with a value of $3,372,933 (Cost $3,300,000) $3,300,000 $ 3,300,000 ------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $35,733,311) 103.8% 35,962,775 ------------------------------------------------------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (3.8) (1,306,958) ------ ------------ NET ASSETS 100.0% $34,655,817 ====== ============
1. Face amount is reported in U.S. Dollars, except for those denoted in the following currencies: AUD - Australian Dollar HUF - Hungarian Forint NOK - Norwegian Krone CAD - Canadian Dollar IDR - Indonesian Rupiah NZD - New Zealand Dollar CZK - Czech Koruna IEP - Irish Punt PLZ - Polish Zloty DEM - German Deutsche Mark INR - Indian Rupee PTE - Portuguese Escudo DKK - Danish Krone ITL - Italian Lira SEK - Swedish Krona ESP - Spanish Peseta JPY - Japanese Yen THB - Thai Baht GBP - British Pound Sterling MXP - Mexican Peso
2. Indexed instrument for which the principal amount and/or interest due at maturity is affected by the relative value of a foreign currency. 3. Issuer is in default. The security is being valued under procedures established by the Board of Trustees to determine fair value in good faith. 4. For zero coupon bonds, the interest rate shown is the effective yield on the date of purchase. 5. Interest-Only Strips represent the right to receive the monthly interest payments on an underlying pool of mortgage loans. These securities typically decline in price as interest rates decline. Most other fixed-income securities increase in price when interest rates decline. The principal amount of the underlying pool represents the notional amount on which current interest is calculated. The price of these securities is typically more sensitive to changes in prepayment rates than traditional mortgage-backed securities (for example, GNMA pass-throughs). Interest rates disclosed represent current yields based upon the current cost basis and estimated timing and amount of future cash flows. 6. Represents the current interest rate for a variable rate security. 7. Identifies issues considered to be illiquid - See Note 7 of Notes to Financial Statements. 8. Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security has been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $1,562,131 or 4.51% of the Fund's net assets, at March 31, 1996. 9. When-issued security to be delivered and settled after March 31, 1996. 10. A sufficient amount of liquid assets has been designated to cover outstanding written call options, as follows:
FACE/CONTRACTS EXPIRATION EXERCISE PREMIUM MARKET VALUE SUBJECT TO CALL DATE PRICE RECEIVED SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------------------------- Call Option on Argentina (Republic of) Past Due Interest Bonds, Series L, 6.312%, 3/31/05 170,000 4/96 $73.5625 $ 2,465 $ 1,802 - -------------------------------------------------------------------------------------------------------------------------- Call Option on German Deutsche Mark 1,471,867 5/96 1.4947 35,472 28,996 - -------------------------------------------------------------------------------------------------------------------------- Call Option on Morocco (Kingdom of) Loan Participation Agreement, Tranche A , 6.594%, 1/1/09 300,000 4/96 69.25 5,250 4,947 - -------------------------------------------------------------------------------------------------------------------------- Call Option on New Zealand Dollar 325,375 4/96 1.46 2,200 1,008 ------- ------- $45,387 $36,753 ======= =======
11. A sufficient amount of securities has been designated to cover outstanding forward foreign currency exchange contracts. See Note 5 of Notes to Financial Statements. 12. Denotes a step bond: a zero coupon bond that converts to a fixed rate of interest at a designated future date. 13. Units may be comprised of several components, such as debt and equity and/or warrants to purchase equity at some point in the future. For units which represent debt securities, face amount disclosed represents total underlying principal. See accompanying Notes to Financial Statements. 9 Oppenheimer International Bond Fund
============================================================= STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1996(UNAUDITED) ========================================================================================================= ASSETS Investments, at value (cost $35,733,311) - see accompanying statement $35,962,775 --------------------------------------------------------------------------------------------------------- Cash 41,742 --------------------------------------------------------------------------------------------------------- Unrealized appreciation on forward foreign currency exchange contracts - Note 5 38,170 --------------------------------------------------------------------------------------------------------- Receivables: Investments sold 966,216 Interest 661,351 Shares of beneficial interest sold 616,236 Closed forward foreign currency exchange contracts 7,874 --------------------------------------------------------------------------------------------------------- Deferred organization costs 12,870 --------------------------------------------------------------------------------------------------------- Other 2,759 ------------ Total assets 38,309,993 ==================================================================================================================================== LIABILITIES Options written, at value (premiums received $45,387) - see accompanying statement - Note 6 36,753 --------------------------------------------------------------------------------------------------------- Unrealized depreciation on forward foreign currency exchange contracts - Note 5 13,039 --------------------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased 3,434,170 Dividends 97,298 Shares of beneficial interest redeemed 35,888 Closed forward foreign currency exchange contracts 15,420 Distribution and service plan fees 12,704 Other 8,904 ------------ Total liabilities 3,654,176 ==================================================================================================================================== NET ASSETS $34,655,817 ============ ==================================================================================================================================== COMPOSITION OF Paid-in capital $34,108,844 NET ASSETS --------------------------------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions 286,776 --------------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 260,197 ------------ Net assets $34,655,817 ============ ==================================================================================================================================== NET ASSET VALUE Class A Shares: PER SHARE Net asset value and redemption price per share (based on net assets of $15,282,775 and 2,905,689 shares of beneficial interest outstanding) $5.26 Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $5.52 --------------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price and offering price per share (based on net assets of $15,288,637 and 2,910,641 shares of beneficial interest outstanding) $5.25 --------------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price and offering price per share (based on net assets of $4,084,405 and 778,054 shares of beneficial interest outstanding) $5.25 See accompanying Notes to Financial Statements.
10 Oppenheimer International Bond Fund
========================================================================== STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 1996(UNAUDITED) ==================================================================================================================================== INVESTMENT INCOME Interest (net of foreign withholding taxes of $1,981) $1,030,053 ==================================================================================================================================== EXPENSES Management fees - Note 4 67,971 --------------------------------------------------------------------------------------------------------- Distribution and service plan fees - Note 4: Class A 5,869 Class B 41,750 Class C 8,296 --------------------------------------------------------------------------------------------------------- Custodian fees and expenses 21,756 --------------------------------------------------------------------------------------------------------- Registration and filing fees: Class A 3,462 Class B 4,662 Class C 1,339 --------------------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees - Note 4 8,868 --------------------------------------------------------------------------------------------------------- Shareholder reports 7,628 --------------------------------------------------------------------------------------------------------- Legal and auditing fees 4,753 --------------------------------------------------------------------------------------------------------- Trustees' fees and expenses 796 --------------------------------------------------------------------------------------------------------- Other 7,068 ----------- Total expenses 184,218 ----------- Less reimbursement of expenses by OppenheimerFunds, Inc. - Note 4 (22,411) ----------- Net expenses 161,807 ==================================================================================================================================== NET INVESTMENT INCOME 868,246 ==================================================================================================================================== REALIZED AND Net realized gain (loss) on: UNREALIZED GAIN (LOSS) Investments 330,052 Closing of options written (12,439) Foreign currency transactions (30,648) ----------- Net realized gain 286,965 --------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation or depreciation on: Investments 168,749 Translation of assets and liabilities denominated in foreign currencies 3,397 ----------- Net change 172,146 ----------- Net realized and unrealized gain 459,111 ==================================================================================================================================== NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,327,357 ===========
See accompanying Notes to Financial Statements. 11 Oppenheimer International Bond Fund =================================== STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED PERIOD ENDED MARCH 31, 1996 SEPTEMBER 30, (UNAUDITED) 1995(1) =================================================================================================================================== OPERATIONS Net investment income $ 868,246 $ 108,803 --------------------------------------------------------------------------------------------------------- Net realized gain (loss) 286,965 (189) ------------ ----------- Net change in unrealized appreciation or depreciation 172,146 88,051 ------------ ----------- Net increase in net assets resulting from operations 1,327,357 196,665 ==================================================================================================================================== DIVIDENDS AND Dividends from net investment income: DISTRIBUTIONSTO Class A (409,238) (76,404) SHAREHOLDERS Class B (385,159) (29,790) Class C (73,849) (2,609) ==================================================================================================================================== BENEFICIAL INTEREST Net increase in net assets resulting from TRANSACTIONS beneficial interest transactions - Note 2: Class A 11,089,350 3,923,812 Class B 11,844,305 3,212,495 Class C 3,840,449 198,433 ==================================================================================================================================== NET ASSETS Total increase 27,233,215 7,422,602 --------------------------------------------------------------------------------------------------------- Beginning of period 7,422,602 -- ------------ ----------- End of period $34,655,817 $7,422,602 ============ ===========
1. For the period from June 15, 1995 (commencement of operations) to September 30, 1995. See accompanying Notes to Financial Statements. 12 Oppenheimer International Bond Fund
==================== FINANCIAL HIGHLIGHTS CLASS A CLASS B CLASS C -------------------------- -------------------------- -------------------------- SIX MONTHS PERIOD SIX MONTHS PERIOD SIX MONTHS PERIOD ENDED ENDED ENDED ENDED ENDED ENDED MARCH 31, 1996 SEPT. 30, MARCH 31, 1996 SEPT. 30, MARCH 31, 1996 SEPT. 30, (UNAUDITED) 1995(1) (UNAUDITED) 1995(1) (UNAUDITED) 1995(1) ============================================================================================================================= PER SHARE OPERATING DATA: Net asset value, beginning of period $5.10 $5.00 $5.10 $5.00 $5.09 $5.00 - -------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income .26 .15 .24 .14 .24 .14 Net realized and unrealized gain .16 .10 .15 .10 .16 .09 - -------------------------------------------------------------------------------------------------------------------------- Total income from investment operations .42 .25 .39 .24 .40 .23 - -------------------------------------------------------------------------------------------------------------------------- Dividends to shareholders from net investment income (.26) (.15) (.24) (.14) (.24) (.14) - -------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $5.26 $5.10 $5.25 $5.10 $5.25 $5.09 ====== ====== ====== ====== ====== ====== ========================================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(2) 8.45% 5.13% 7.82% 4.92% 8.00% 4.73% ========================================================================================================================== RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) $15,283 $3,984 $15,289 $3,238 $4,084 $201 - -------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 8,182 $2,566 $ 8,393 $1,125 $1,679 $ 97 - -------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets(3): Net investment income 10.07% 9.94% 9.12% 9.20% 8.76% 9.36% Expenses, before voluntary reimbursement by the Manager 1.53% 1.59% 2.41% 2.21% 2.42% 2.26% Expenses, net of voluntary reimbursement by the Manager 1.29% 0.41% 2.16% 0.89% 2.16% 0.85% - -------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(4) 167.2% 122.0% 167.2% 122.0% 167.2% 122.0%
1. For the period from June 15, 1995 (commencement of operations) to September 30, 1995. 2. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 3. Annualized. 4. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended March 31, 1996 were $45,424,842 and $24,600,592, respectively. See accompanying Notes to Financial Statements. 13 Oppenheimer International Bond Fund ========================================= NOTES TO FINANCIAL STATEMENTS (Unaudited) ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer International Bond Fund (the Fund), is a registered investment company organized as a Massachusetts Business Trust with a single series of the same name. The Fund is registered as a diversified, open-end management investment company under the Investment Company Act of 1940, as amended. The Fund's investment objective is to seek high total return (which includes current income and capital appreciation in the value of its shares) primarily from foreign debt securities. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B and Class C shares. Class B and Class C shares may be subject to a contingent deferred sales charge. All three classes of shares have identical rights to earnings, assets and voting privileges, except that each class has its own distribution and/or service plan, expenses directly attributable to a particular class and exclusive voting rights with respect to matters affecting a single class. 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. --------------------------------------------------------------------------- INVESTMENT VALUATION. Portfolio securities are valued at the close of the New York Stock Exchange on each trading day. Listed and unlisted securities for which such information is regularly reported are valued at the last sale price of the day or, in the absence of sales, at values based on the closing bid or asked price or the last sale price on the prior trading day. Long-term and short-term "non-money market" debt securities are valued by a portfolio pricing service approved by the Board of Trustees. Such securities which cannot be valued by the approved portfolio pricing service are valued using dealer-supplied valuations provided the Manager is satisfied that the firm rendering the quotes is reliable and that the quotes reflect current market value, or are valued under consistently applied procedures established by the Board of Trustees to determine fair value in good faith. Short- term "money market type" debt securities having a remaining maturity of 60 days or less are valued at cost (or last determined market value) adjusted for amortization to maturity of any premium or discount. Forward contracts are valued based on the closing prices of the forward currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. Options are valued based upon the last sale price on the principal exchange on which the option is traded or, in the absence of any transactions that day, the value is based upon the last sale price on the prior trading date if it is within the spread between the closing bid and asked prices. If the last sale price is outside the spread, the closing bid or asked price closest to the last reported sale price is used. --------------------------------------------------------------------------- SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Delivery and payment for securities that have been purchased by the Fund on a forward commitment or when-issued basis can take place a month or more after the transaction 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, in a segregated account with its custodian, assets with a market value equal to the amount of its purchase commitments. The purchase of securities on a when-issued or forward commitment basis may increase the volatility of the Fund's net asset value to the extent the Fund makes such purchases while remaining substantially fully invested. As of March 31, 1996, the Fund had entered into outstanding when-issued or forward commitments of $196,817. In connection with its ability to purchase securities on a when-issued or forward commitment basis, the Fund may enter into mortgage "dollar- rolls" in which the Fund sells securities for delivery in the current month and simultaneously contracts with the same counterparty to repurchase similar (same type, coupon and maturity) but not identical securities on a specified future date. The Fund records each dollar-roll as a sale and a new purchase transaction. --------------------------------------------------------------------------- FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are main- tained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on invest- ments 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. 14 Oppenheimer International Bond Fund ==================================================== NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters into an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited. --------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class) and gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. --------------------------------------------------------------------------- FEDERAL TAXES. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income, including any net realized gain on investments not offset by loss carryovers, to shareholders. Therefore, no federal income or excise tax provision is required. --------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends separately for Class A, Class B and Class C shares from net investment income each day the New York Stock Exchange is open for business and pay such dividends monthly. Distributions from net realized gains on investments, if any, will be declared at least once each year. --------------------------------------------------------------------------- ORGANIZATION COSTS. The Manager advanced $14,488 for organization and start-up costs of the Fund. Such expenses are being amortized over a five-year period from the date operations commenced. In the event that all or part of the Manager's initial investment in shares of the Fund is withdrawn during the amortization period, the redemption proceeds will be reduced to reimburse the Fund for any unamortized expenses, in the same ratio as the number of shares redeemed bears to the number of initial shares outstanding at the time of such redemption. --------------------------------------------------------------------------- CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes primarily because of paydown gains (losses), and the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes. The character of the distributions made during the 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 dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gain (loss) was recorded by the Fund. --------------------------------------------------------------------------- OTHER. Investment transactions are accounted for on the date the investments are purchased or sold (trade date) and dividend income is recorded on the ex-dividend date. Discount on securities purchased is amortized over the life of the respective securities, in accordance with federal income tax requirements. Realized gains and losses on investments and options written and unrealized appreciation and depreciation are determined on an identified cost basis, which is the same basis used for federal income tax purposes. Interest on payment-in-kind debt instruments is accrued as income at the coupon rate and a market adjustment is made on the ex-date. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 15 Oppenheimer International Bond Fund ===================================================== NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) ================================================================================ 2. SHARES OF BENEFICIAL INTEREST The Fund has authorized an unlimited number of no par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED MARCH 31, 1996 PERIOD ENDED SEPTEMBER 30,1995 (1) ------------------------------- ---------------------------------- SHARES AMOUNT SHARES AMOUNT --------------------------------------------------------------------------------------------------------- Class A: Sold 2,511,975 $13,108,044 909,822 $4,576,888 Dividends reinvested 53,735 280,451 6,117 30,991 Redeemed (441,320) (2,299,145) (134,640) (684,067) ---------- ------------ --------- ----------- Net increase 2,124,390 $11,089,350 781,299 $3,923,812 ========== ============ ========= =========== --------------------------------------------------------------------------------------------------------- Class B: Sold 2,403,213 $12,510,769 633,620 $3,203,816 Dividends reinvested 43,082 224,566 4,019 20,381 Redeemed (170,979) (891,030) (2,314) (11,702) ---------- ------------ --------- ----------- Net increase 2,275,316 $11,844,305 635,325 $3,212,495 ========== ============ ========= =========== --------------------------------------------------------------------------------------------------------- Class C: Sold 747,884 $ 3,888,815 39,665 $ 199,624 Dividends reinvested 5,712 29,815 392 1,981 Redeemed (14,973) (78,181) (626) (3,172) ---------- ------------ --------- ----------- Net increase 738,623 $ 3,840,449 39,431 $ 198,433 ========== ============ ========= ===========
1. For the period from June 15, 1995 (commencement of operations) to September 30, 1995. ================================================================================ 3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS At March 31, 1996, net unrealized appreciation on investments and options written of $238,098 was composed of gross appreciation of $452,896, and gross depreciation of $214,798. ================================================================================ 4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Management fees paid to the Manager were in accordance with the investment advisory agreement with the Fund which provides for an annual fee of .75% on the first $200 million of net assets with a reduction of .03% on each $200 million thereafter to $800 million, .60% on the next $200 million and .50% on net assets in excess of $1 billion. The Manager has agreed to reimburse the Fund if aggregate expenses (with specified exceptions) exceed the most stringent state regulatory limit on Fund expenses. In addition, the Manager has voluntarily undertaken to reimburse Fund expenses to the level needed to maintain a stable dividend. For the six months ended March 31, 1996, commissions (sales charges paid by investors) on sales of Class A shares totaled $168,238, of which $51,590 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the Manager, as general distributor, and by an affiliated broker/dealer. Sales charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and Class C shares totaled $362,061 and $36,621, of which $7,596 and $494, respectively, was paid to an affiliated broker/ dealer. During the period ended March 31, 1996, OFDI received contingent deferred sales charges of $4,971 and $753, respectively, upon redemption of Class B and Class C shares as reimbursement for sales commissions advanced by OFDI at the time of sale of such shares. OppenheimerFunds Services (OFS), a division of the Manager, is the transfer and shareholder servicing agent for the Fund, and for other registered investment companies. OFS's total costs of providing such services are allocated ratably to these companies. The Fund has adopted a Service Plan for Class A shares to reimburse OFDI for a portion of its costs incurred in connection with the personal service and maintenance of accounts that hold Class A shares. Reimbursement is made quarterly at an annual rate that may not exceed .25% of the average annual net assets of Class A shares of the Fund. OFDI uses the service fee to reimburse brokers, dealers, banks and other financial institutions quarterly for providing personal service and maintenance of accounts of their customers that hold Class A shares. During the six months ended March 31, 1996, OFDI paid $715 to an affiliated broker/dealer as reimbursement for Class A personal service and maintenance expenses. 16 Oppenheimer International Bond Fund ===================================================== NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) ================================================================================ 4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED) The Fund has adopted compensation type Distribution and Service Plans for Class B and Class C shares to compensate OFDI for its services and costs in distributing Class B and Class C shares and servicing accounts. Under the Plans, the Fund pays OFDI an annual asset-based sales charge of .75% per year on Class B shares that are outstanding for 6 years or less and on Class C shares, as compensation for sales commissions paid from its own resources at the time of sale and associated financing costs. If the Plans are terminated by the Fund, the Board of Trustees may allow the Fund to continue payments of the asset-based sales charge to OFDI for certain expenses it incurred before the Plans were terminated. OFDI also receives a service fee of .25% per year as compensation for costs incurred in connection with the personal service and maintenance of accounts that hold shares of the Fund, including amounts paid to brokers, dealers, banks and other financial institutions. Both fees are computed on the average annual net assets of Class B and Class C shares, determined as of the close of each regular business day. During the six months ended March 31, 1996, OFDI retained $41,750 and $8,296, respectively, as compensation for Class B and Class C sales commissions and service fee advances, as well as financing costs. At March 31, 1996, OFDI had incurred unreimbursed expenses of $555,786 for Class B and $78,493 for Class C. ================================================================================ 5. FORWARD CONTRACTS A forward foreign currency exchange contract (forward contract) is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Fund uses forward contracts to seek to manage foreign currency risks. They may also be used to tactically shift portfolio currency risk. The Fund generally enters into forward contracts as a hedge upon the purchase or sale of a security denominated in a foreign currency. In addition, the Fund may enter into such contracts as a hedge against changes in foreign currency exchange rates on portfolio positions. Forward contracts are valued based on the closing prices of the forward currency contract rates in the London foreign exchange markets on a daily basis as provided by a reliable bank or dealer. The Fund will realize a gain or loss upon the closing or settlement of the forward transaction. Securities held in segregated accounts to cover net exposure on out- standing forward contracts are noted in the Statement of Investments where applicable. Unrealized appreciation or depreciation on forward contracts is reported in the Statement of Assets and Liabilities. Realized gains and losses are reported with all other foreign currency gains and losses in the Fund's Statement of Operations. Risks include the potential inability of the counterparty to meet the terms of the contract and unanticipated movements in the value of a foreign currency relative to the U.S. dollar. At March 31, 1996, the Fund had outstanding forward contracts to purchase and sell foreign currencies as follows:
CONTRACT AMOUNT VALUATION AS OF UNREALIZED UNREALIZED CONTRACTS TO PURCHASE EXPIRATION DATE (000S) MARCH 31, 1996 APPRECIATION DEPRECIATION ------------------------------------------------------------------------------------------------------------------ Czech Koruna (CZK) 4/1/96 5,356 CZK $ 197,195 $ 362 $ -- New Zealand Dollar (NZD) 4/1/96-12/18/96 978 NZD 658,055 15,197 -- German Deutsche Mark (DEM) 4/1/96-4/22/96 935 DEM 633,324 1,499 9,028 ----------- ------- -------- $1,488,574 17,058 9,028 =========== ------- -------- CONTRACTS TO SELL ------------------------------------------------------------------------------------------------------------- German Deutsche Mark (DEM) 4/30/96-6/3/96 1,298 DEM $ 881,572 $ 2,649 $ 218 Italian Lira (ITL) 4/22/96 610,000 ITL 387,736 -- 3,793 Japanese Yen (JPY) 12/18/96 32,875 JPY 317,226 18,462 -- New Zealand Dollar (NZD) 4/2/96 3 NZD 2,002 1 -- ----------- ------- ------- $1,588,536 21,112 4,011 =========== ------- ------- $38,170 $13,039 ======= =======
================================================================================ 6. OPTION ACTIVITY The Fund may buy and sell put and call options, or write covered put and 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. 17 Oppenheimer International Bond Fund ===================================================== NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) ================================================================================ 6. OPTION ACTIVITY (CONTINUED) Options are valued daily based upon the last sale price on the principal exchange on which the option is traded and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss upon the expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. Securities designated to cover outstanding call options are noted in the Statement of Investments where applicable. Shares subject to call, expiration date, exercise price, premium received and market value are detailed in a footnote to the Statement of Investments. Options written are reported as a liability in the Statement of Assets and Liabilities. Gains and losses are reported in the Statement of Operations. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Written option activity for the six months ended March 31, 1996 was as follows:
CALL OPTIONS ------------------------ NUMBER OF AMOUNT OF OPTIONS PREMIUMS --------------------------------------------------------------------------------- Options outstanding at September 30, 1995 245 $ 1,350 Options written 1,798,268 51,326 Options cancelled in closing purchase transactions (801) (7,289) ---------- -------- Options outstanding at March 31, 1996 1,797,712 $45,387 ========== ========
================================================================================ 7. ILLIQUID AND RESTRICTED SECURITIES At March 31, 1996, investments in securities included issues that are illiquid or restricted. The securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Trustees as reflecting fair value. The Fund intends to invest no more than 10% of its net assets (determined at the time of purchase) in illiquid and restricted securities. The aggregate value of these securities subject to this limitation at March 31, 1996 was $1,877,507, which represents 5.42% of the Fund's net assets. Information concerning these securities is as follows:
VALUATION PER UNIT AS OF SECURITY ACQUISITION DATE COST PER UNIT MARCH 31, 1996 -------------------------------------------------------------------------------------------------------- Algeria (Republic of) Reprofiled Debt Loan Participation, Tranche A, 6.812%, 9/4/06 3/13/96-3/21/96 $ 55.06 $ 54.50 Colombia (Republic of) Concorde Loan Participation, 6.188%, 1/31/98 12/5/95 $ 99.00 $ 98.50 Jamaica (Government of) 1990 Refinancing Agreement Nts.: Tranche A, 6.406%, 10/16/00 7/12/95-8/15/95 $ 89.19 $ 92.50 Tranche B, 6.063%, 11/15/04 3/12/96 $ 71.75 $ 71.25 Pulsar Internacional SA de CV, 11.80% Nts., 9/19/96 9/14/95 $100.00 $101.00 Trinidad & Tobago Loan Participation Agreement: Tranche A, 1.565%, 9/30/00 12/13/95-12/18/95 $ .84 $ .80 Tranche B, 1.565%, 9/30/00 1/9/96 $ .80 $ .80
Pursuant to guidelines adopted by the Board of Trustees, certain unregistered securities are determined to be liquid and are not included within the 10% limitation specified above. 18 Oppenheimer International Bond Fund =================================== OPPENHEIMER INTERNATIONAL BOND FUND A Series of Oppenheimer International Bond Fund =========================================================================== OFFICERS AND TRUSTEES James C. Swain, Chairman and Chief Executive Officer Robert G. Avis, Trustee William A. Baker, Trustee Charles Conrad, Jr., Trustee Jon S. Fossel, Trustee Raymond J. Kalinowski, Trustee C. Howard Kast, Trustee Robert M. Kirchner, Trustee Bridget A. Macaskill, Trustee and President Ned M. Steel, Trustee Andrew J. Donohue, Vice President and Secretary Ashwin K. Vasan, Vice President George C. Bowen, Vice President and Treasurer Robert J. Bishop, Assistant Treasurer Scott T. Farrar, Assistant Treasurer Robert G. Zack, Assistant Secretary =========================================================================== INVESTMENT ADVISOR OppenheimerFunds, Inc. =========================================================================== DISTRIBUTOR OppenheimerFunds Distributor, Inc. =========================================================================== TRANSFER AND OppenheimerFunds Services SHAREHOLDER SERVICING AGENT =========================================================================== CUSTODIAN OF The Bank of New York PORTFOLIO SECURITIES =========================================================================== INDEPENDENT AUDITORS Deloitte & Touche LLP =========================================================================== LEGAL COUNSEL Myer, Swanson, Adams & Wolf, P.C. The financial statements included herein have been taken from the records of the Fund without examination by the independent auditors. This is a copy of a report to shareholders of Oppenheimer International Bond Fund. This report must be preceded or accompanied by a Prospectus of Oppenheimer International Bond Fund. For material information concerning the Fund, see the Prospectus. Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, and are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested. 19 Oppenheimer International Bond Fund [BACK COVER} INFORMATION GENERAL INFORMATION Monday-Friday 8:30 a.m.-9 p.m. ET Saturday 10 a.m.-2 p.m. ET - -------------- 1-800-525-7048 - -------------- TELEPHONE TRANSACTIONS Monday-Friday 8:30 a.m.-8 p.m. ET - -------------- 1-800-852-8457 - -------------- PHONELINK 24 hours a day, automated information and transactions - -------------- 1-800-533-3310 - -------------- TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD) Monday-Friday 8:30 a.m.-8 p.m. ET - -------------- 1-800-843-4461 - -------------- OPPENHEIMERFUNDS INFORMATION HOTLINE 24 hours a day, timely and insightful messages on the economy and issues that affect your investments - -------------- 1-800-835-3104 - -------------- RS0880.001.0396 May 31, 1996 - ------------------------------------------------------------------------------ "HOW MAY I HELP YOU?" [PHOTO]Jennifer Leonard Jennifer Leonard, Customer Service Representative OppenheimerFunds Services As an Oppenheimer funds shareholder, you have some special privileges. Whether it's automatic investment plans, informative newsletters and hotlines, or ready account access, you can benefit from services designed to make investing simple. And when you need help, our Customer Service Representatives are only a toll-free phone call away. They can provide information about your account and handle administrative requests. You can reach them at our General Information number. When you want to make a transaction, you can do it easily by calling our toll-free Telephone Transactions number. And, by enrolling in AccountLink, a convenient service that "links" your Oppenheimer funds accounts and your bank checking or savings account, you can use the Telephone Transactions number to make investments. For added convenience, you can get automated information with OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week. PhoneLink gives you access to a variety of fund, account, and market information. Of course, you can always speak with a Customer Service Representative during the General Information hours shown at the left. You can count on us whenever you need assistance. That's why the International Customer Service Association, an independent, nonprofit organization made up of over 3,200 customer service management professionals from around the country, honored the Oppenheimer fund's transfer agent, OppenheimerFunds Services, with their Award of Excellence in 1993. So call us today--we're here to help. - ------------------------------------------------------------------------------ [LOGO] OPPENHEIMERFUNDS-R- -------------- OppenheimerFunds Distributor, Inc. Bulk Rate P.O. Box 5270 U.S. Postage Denver, CO 80217-5270 PAID Permit No. 469 Denver, CO -------------- -----END PRIVACY-ENHANCED MESSAGE-----