-----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, QR8NOGH8vtFxIakgKCqYlaHlfDNL8EXViwRSistfk3G+duHD1HRHyHvJBvgKUY+J 3SIf6hh9MEPoxt6Zmn6VFw== /in/edgar/work/20000605/0000950133-00-002422/0000950133-00-002422.txt : 20000919 0000950133-00-002422.hdr.sgml : 20000919 ACCESSION NUMBER: 0000950133-00-002422 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000605 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER INTERNATIONAL BOND FUND CENTRAL INDEX KEY: 0000939800 STANDARD INDUSTRIAL CLASSIFICATION: [ ] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07255 FILM NUMBER: 649371 BUSINESS ADDRESS: STREET 1: 6803 S TUCSON WAY CITY: ENGLEWOOD STATE: CO ZIP: 80112 BUSINESS PHONE: 3036713200 MAIL ADDRESS: STREET 1: 3410 SOUTH GALENA STREET CITY: DENVER STATE: CO ZIP: 80231 N-30D 1 0001.txt OPPENHEIMER INTERNATIONAL BOND FUND - SAR 1 [PHOTO] SEMIANNUAL REPORT MARCH 31, 2000 Oppenheimer INTERNATIONAL BOND FUND [OPPENHEIMERFUNDS LOGO] THE RIGHT WAY TO INVEST 2 CONTENTS 1 President's Letter 2 An Interview with Your Fund's Managers 9 Financial Statements 34 Officers and Trustees REPORT HIGHLIGHTS Of the various international markets we invest, EMERGING MARKET BONDS CONTRIBUTED THE MOST TO PERFORMANCE. WE GENERALLY FOCUSED ON HIGHER YIELDING LOWER-RATED BONDS FROM GOVERNMENTS AND COMPANIES IN COUNTRIES WITH FAST-GROWING ECONOMIES such as Brazil and Argentina. We believe that the FUND'S HOLDINGS MAY BENEFIT AS THE GLOBAL FIXED INCOME INVESTMENT ENVIRONMENT AND DEMAND FOR HIGHER-YIELDING SECURITIES IMPROVES. CUMULATIVE TOTAL RETURNS For the 6-Month Period Ended 3/31/00* CLASS A Without With Sales Chg. Sales Chg. - ---------------------------------- 10.39% 5.15% CLASS B Without With Sales Chg. Sales Chg. - ---------------------------------- 10.03% 5.03% CLASS C Without With Sales Chg. Sales Chg. - ---------------------------------- 10.02% 9.02% * See Notes, page 7, for further details. 3 [PHOTO] JAMES C. SWAIN Chariman Oppenhiemer International Bond Fund BRIDGET A. MACASKILL President Oppenhiemer International Bond Fund PRESIDENT'S LETTER - ------------------------------------------------------------------------------ DEAR SHAREHOLDER, For many years, we have encouraged investors to consider whether they could tolerate more risk in their long-term investments by participating in the stock market, which has historically provided higher long-term returns than any other asset class. Today, however, we have a very different concern: some investors may be assuming too much risk by concentrating their investments in just a handful of stocks or sectors or by "chasing performance." Alan Greenspan, the Chairman of the Federal Reserve Board, has stated his view that the recent spectacular returns of some sectors of the market are partly responsible for pushing our economy to growth rates that could lead to higher infla- tion. The dramatic rise in the prices of a narrow segment of the market has created enormous wealth for some investors. In turn, those investors are spending at a rate that the Fed believes may threaten the healthy growth of our economy. That's why the Fed has been raising interest rates steadily and decisively over the past year. By making borrowing more expensive, the Fed is attempting to slow economic growth. It is a precarious balancing act: too much tightening creates the risk of recession, while too little opens the door to inflation. The implications are clear: investors must be prepared for near-term market volatility. In the bond market, higher interest rates usually lead to lower bond prices. In the stock market, slower economic growth could reduce corporate earnings and put downward pressure on stock prices. Highly valued stocks may be particularly vulnerable to a correction. The Securities and Exchange Commission Chairman, Arthur Levitt, has cautioned investors against the expectation that the types of returns seen in the recent bull market will last forever. We agree. 1 OPPENHEIMER INTERNATIONAL BOND FUND 4 PRESIDENT'S LETTER - ------------------------------------------------------------------------------ Because of the prospect of continued market volatility, we encourage you to consider diversifying your investments. Indeed, diversification may help you mitigate the effects of sharp declines in any one area. It may also help you better position your portfolio to seek greater returns over the long run. While "new economy" stocks have risen since our last report to you, many "old economy" stocks are selling at unusually low prices. In the bond market, higher interest rates over the short term may reduce inflation concerns, which should be beneficial over the long term. By buying out-of-favor investments, you may be able to profit when and if they return to favor in the future. Of course, there is no assurance that value investing will return to favor in the market, but it may be a diversification strategy to consider for part of your portfolio. What specific investments should you consider today so that you are prepared for tomorrow? The answer depends on your individual investing goals, risk tolerance and financial circumstances. We urge you to talk with your financial advisor about ways to diversify your portfolio. This may include considering global diversification as part of your strategy. While investing abroad has special risks, such as the effects of foreign currency fluctuation, it also offers opportunities to participate in global economic growth and to hedge against the volatility in U.S. markets. We thank you for your continued confidence in OppenheimerFunds, The Right Way to Invest. Sincerely, /s/JAMES C. SWAIN /s/BRIDGET A. MACASKILL James C. Swain Bridget A. Macaskill April 24, 2000 2 OPPENHEIMER INTERNATIONAL BOND FUND 5 AN INTERVIEW WITH YOUR FUND'S MANAGERS - ------------------------------------------------------------------------------ [PHOTO] PORTFOLIO MANAGEMENT TEAM(l to r) Art Steinmetz Ruggero de'Rossi HOW DID OPPENHEIMER INTERNATIONAL BOND FUND PERFORM OVER THE SIX-MONTH PERIOD THAT ENDED MARCH 31, 2000? We are generally pleased with the Fund's positive returns in a very challenging investment environment. During the six-month reporting period, stronger-than-expected economic growth throughout the world fueled global investors' concerns that inflationary pressures might reemerge. As a result, interest rates in many nations and most bond yields on new issues rose. Because bond yields and prices move in opposite directions, higher interest rates eroded the value of many fixed income securities. However, we focused the portfolio on high-yielding sectors of the international bond market and were able to provide positive returns in a declining market.(1) WHY WERE THE PAST SIX MONTHS A DIFFICULT TIME FOR MOST BONDS? When the reporting period began on October 1, 1999, it had become apparent that many of the world's economies were growing robustly and simultaneously. In the emerging markets of Asia, Latin America and Eastern Europe, the recessions caused by the 1998 global financial crisis had quickly yielded to renewed economic growth. In the developed markets, most European economies continued to grow moderately, while Japan's economy began to show signs of recovery after many years of recession. 1. Investing in foreign bonds entails higher expenses and risks, such as foreign currency fluctuations. Investing in junk bonds carries greater risk of volatility and default. 3 OPPENHEIMER INTERNATIONAL BOND FUND 6 AN INTERVIEW WITH YOUR FUND'S MANAGERS - ------------------------------------------------------------------------------ "Although the past six months have been difficult for many bonds, our focus on high-yielding securities enabled us to enhance the Fund's performance." In the United States, the Fed had already implemented two interest rate hikes because of concerns that unsustainable economic growth might reignite inflationary pressures. While inflation had not yet accelerated, early warning signs included very low unemployment, high levels of consumer spending and borrowing, and rising commodities prices. When the economy subsequently gained momentum, the Fed raised short-term interest rates again in November, February and March. These increases were quickly reflected in lower bond prices. HOW DID YOU MANAGE THE FUND IN THIS ENVIRONMENT? We have focused on maximizing income in a rising interest rate environment. That means we generally avoided lower-yielding securities from countries with relatively low rates of economic growth. On the other hand, we emphasized higher-yielding lower-rated bonds from governments and companies in countries with strong economies. By focusing on bonds providing above-average income streams, we helped offset the effects of declining bond prices on the portfolio. WHERE HAVE YOU FOUND THE MOST ATTRACTIVE OPPORTUNITIES FOR INVESTMENT? Of the various international markets in which we invest, emerging market bonds contributed the most to performance. Consistent with our contrarian investment approach, we purchased many of our emerging market holdings in 1998, when they were out-of-favor because of the global financial crisis. We bought many of these bonds when they were inexpensive, and their prices have risen as market conditions and investor interest improved. As of March 31, 2000, emerging market bonds comprised about 60% of the Fund's assets, with the bulk of that investment in Latin American bonds.(2) 2. The Fund's portfolio is subject to change. 4 OPPENHEIMER INTERNATIONAL BOND FUND 7 AVERAGE ANNUAL TOTAL RETURNS For the Periods Ended 3/31/00(3) Class A Since 1-Year Inception - ---------------------------------- 10.32% 7.51% Class B Since 1-Year Inception - ---------------------------------- 10.03% 7.50% Class C Since 1-Year Inception - ---------------------------------- 14.03% 7.78% Because of ongoing market volatility, the Fund's returns may fluctuate and may be less than the results shown. On the other hand, our holdings of foreign bonds from developed markets were negatively influenced by the strength of the U.S. dollar relative to most European currencies, including the euro. European economies are generally growing at slower rates than the U.S. economy, making U.S. investments relatively more attractive to domestic and foreign investors alike. How-ever, there are investment opportunities in the European markets of the United Kingdom and Scandinavia. In Japan, the relationship between the Japanese yen and the U.S. dollar has been relatively stable. However, poor economic conditions in Japan have led to unattractive bond yields. WHAT IS YOUR OUTLOOK OVER THE FORESEEABLE FUTURE? We remain optimistic. We expect the Fed and other central banks to continue to tighten monetary policy by raising short-term interest rates until they see evidence that inflation is under control. In our view, U.S. investors currently expect to see several more modest interest rate increases, which we believe have already been priced into the market. Because the U.S. bond market influences other markets--particularly Latin America--we believe that any further price erosion among longer-term bonds should be limited. 3. See notes on page 7 for further details. 5 OPPENHEIMER INTERNATIONAL BOND FUND 8 REGIONAL ALLOCATION Percentage of invested assets(4) [PIE CHART] - - Latin America 34.3% - - Europe 21.0 - - Emerging Europe 13.6 - - Asia 11.8 - - Middle East/ Africa 11.2 - - United States/ Canada 8.1 STANDARDIZED YIELDS(5) For the 30 Days Ended 3/31/00 - --------------------------------- Class A 10.48% - --------------------------------- Class B 10.26 - --------------------------------- Class C 10.25 Regardless of future economic events, however, we intend to continue to manage the Fund in a way that takes advantage of the changing relationships among the various sectors of the international bond market. In fact, adhering to our long-term investment approach is an important part of what it means at OppenheimerFunds to be The Right Way to Invest. TOP TEN COUNTRY HOLDINGS(4) - ----------------------------------------------------------------------- Mexico 11.8% - ----------------------------------------------------------------------- Brazil 8.7 - ----------------------------------------------------------------------- Russia 7.7 - ----------------------------------------------------------------------- Argentina 6.9 - ----------------------------------------------------------------------- Japan 5.5 - ----------------------------------------------------------------------- France 4.7 - ----------------------------------------------------------------------- Canada 4.3 - ----------------------------------------------------------------------- Indonesia 4.0 - ----------------------------------------------------------------------- United States 3.8 - ----------------------------------------------------------------------- Poland 3.7 4. Portfolio is subject to change. Percentages are as of March 31, 2000, and are based on total market value of investments. 5. Standardized yield is based on net investment income for the 30-day period ended March 31, 2000. Falling share prices will tend to artificially raise yields. 6 OPPENHEIMER INTERNATIONAL BOND FUND 9 NOTES - ----------------------------------------------------------------------------- IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. FOR QUARTERLY UPDATES ON THE FUND'S PERFORMANCE, PLEASE CONTACT YOUR FINANCIAL ADVISOR, CALL US AT 1.800.525.7048 OR VISIT OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM. Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Cumulative total returns are not annualized. The Fund's total returns shown do not show the effects 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. CLASS A shares 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% (since inception). 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. An explanation of the calculation of performance is in the Fund's Statement of Additional Information. 7 OPPENHEIMER INTERNATIONAL BOND FUND 10 FINANCIALS 8 OPPENHEIMER INTERNATIONAL BOND FUND 11 STATEMENT OF INVESTMENTS MARCH 31, 2000 / UNAUDITED - -------------------------------------------------------------------------------
PRINCIPAL MARKET VALUE AMOUNT(1) SEE NOTE 1 - -------------------------------------------------------------------------------------------------- FOREIGN GOVERNMENT OBLIGATIONS--68.6% - -------------------------------------------------------------------------------------------------- ARGENTINA--6.3% Argentina (Republic of) Bonds, 12%, 2/1/20 $ 645,000 $ 662,737 - -------------------------------------------------------------------------------------------------- Argentina (Republic of) Bonds, Bonos de Consolidacion de Deudas, Series I, 3.013%, 4/1/07(2) [ARP] 1,412,433 1,044,791 - -------------------------------------------------------------------------------------------------- Argentina (Republic of) Bonds: Series PRE3, 3.013%, 9/1/02(2) [ARP] 3,852,835 3,510,100 Series PRO4, 5.873%, 12/28/10(2) 1,875,473 1,423,948 - -------------------------------------------------------------------------------------------------- Argentina (Republic of) Disc. Bonds, 6.875%, 3/31/23(2) 1,452,000 1,234,200 - -------------------------------------------------------------------------------------------------- Argentina (Republic of) Nts., Series REGS, 11.75%, 2/12/07 [ARP] 2,985,000 2,814,488 - -------------------------------------------------------------------------------------------------- Argentina (Republic of) Par Bonds, 6%, 3/31/23(2) 1,755,600 1,231,114 - -------------------------------------------------------------------------------------------------- Buenos Aires (Province of) Bonds, Series PBA1, 3.013%, 4/1/07(2) [ARP] 2,503,093 1,794,865 - -------------------------------------------------------------------------------------------------- City of Buenos Aires Bonds, Series 3, 10.50%, 5/28/04 [ARP] 4,410,000 3,926,471 ------------- 17,642,714 - -------------------------------------------------------------------------------------------------- BRAZIL--6.9% Brazil (Federal Republic of) Bonds: 12.25%, 3/6/30 315,000 304,447 Series 15 yr., 7%, 4/15/09(2) 1,334,000 1,130,565 - -------------------------------------------------------------------------------------------------- Brazil (Federal Republic of) Debt Conversion Bonds: Series 18 yr., 7%, 4/15/12(2) 7,127,000 5,407,611 Series 20 yr., 6.916%, 4/15/14 4,767,915 3,587,856 - -------------------------------------------------------------------------------------------------- Brazil (Federal Republic of) Eligible Interest Bonds, 6.937%, 4/15/06(2) 1,410,000 1,283,100 - -------------------------------------------------------------------------------------------------- Brazil (Federal Republic of) Unsub. Bonds, 14.50%, 10/15/09 6,922,000 7,544,980 ------------- 19,258,559 - -------------------------------------------------------------------------------------------------- BULGARIA--0.6% Bulgaria (Republic of) Front-Loaded Interest Reduction Bearer Bonds, Tranche A, 2.75%, 7/28/12(2) 2,170,000 1,562,400 - -------------------------------------------------------------------------------------------------- CANADA--3.9% Canada (Government of) Bonds: 1.90%, 3/23/09 [JPY] 316,000,000 3,115,172 7%, 12/1/06 [CAD] 10,920,000 7,937,722 ------------- 11,052,894 - -------------------------------------------------------------------------------------------------- COLOMBIA--0.5% Colombia (Republic of) Bonds, 9.75%, 4/23/09 1,625,000 1,523,437 - -------------------------------------------------------------------------------------------------- DENMARK--0.9% Nykredit AS, 7% Cv. Bonds, 10/1/29 [DKK] 19,247,000 2,478,201 - -------------------------------------------------------------------------------------------------- FRANCE--4.3% France (Government of) Obligations Assimilables du Tresor Bonds, 5.50%, 4/25/10 [EUR] 6,905,000 6,673,468 - -------------------------------------------------------------------------------------------------- France (Government of) Treasury Nts., 3.50%, 7/12/04 [EUR] 5,865,000 5,327,427 ------------- 12,000,895
9 OPPENHEIMER INTERNATIONAL BOND FUND 12 STATEMENT OF INVESTMENTS UNAUDITED / CONTINUED - --------------------------------------------------------------------------------
PRINCIPAL MARKET VALUE AMOUNT(1) SEE NOTE 1 ==================================================================================== GERMANY--2.1% Germany (Republic of) Bonds: 6.25%, 4/26/06 [EUR] 952,484 $ 966,939 Series 95, 7.375%, 1/3/05 [DEM] 840,000 883,774 Series 97, 6%, 1/4/07 [EUR] 200,000 200,413 Series 125, 5%, 11/12/02 [EUR] 4,045,000 3,905,109 ------------ 5,956,235 - ------------------------------------------------------------------------------------ GREAT BRITAIN--2.1% United Kingdom Treasury Bonds, 5.75%, 12/7/09 [GBP] 910,000 1,509,792 - ------------------------------------------------------------------------------------ United Kingdom Treasury Nts., 10%, 9/8/03 [GBP] 2,485,000 4,410,307 ------------ 5,920,099 - ------------------------------------------------------------------------------------ GREECE--0.4% Hellenic (Republic of) Bonds, 8.60%, 3/26/08 [GRD] 362,000,000 1,188,005 - ------------------------------------------------------------------------------------ INDONESIA--0.2% Perusahaan Listr, 17% Nts., 8/21/01 [IDR] 2,000,000,000 263,210 - ------------------------------------------------------------------------------------ PT Hutama Karya Promissory Nts., Zero Coupon, 4/9/1999 (3,4,5) [IDR] 5,000,000,000 181,638 ------------ 444,848 - ------------------------------------------------------------------------------------ ITALY--2.1% Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali: 9.50%, 2/1/06 [EUR] 4,700,000 5,450,885 10.50%, 9/1/05 [EUR] 324,254 387,260 ------------ 5,838,145 - ------------------------------------------------------------------------------------ IVORY COAST--0.4% Ivory Coast (Government of) Past Due Interest Bonds, Series F, 1.90%, 3/29/18(2) [FRF] 41,994,750 1,240,541 - ------------------------------------------------------------------------------------ JAPAN--5.1% Japan (Government of) 10 yr. Bonds: Series 135, 7.20%, 12/20/00 [JPY] 159,900,000 1,632,753 Series 136, 6.90%, 12/20/00 [JPY] 820,500,000 8,368,596 Series 218, 1.90%, 12/21/09 [JPY] 425,500,000 4,208,951 ------------ 14,210,300 - ------------------------------------------------------------------------------------ JORDAN--2.0% Hashemite (Kingdom of Jordan) Disc. Bonds, 7%, 12/23/23(2) 6,815,000 5,537,188 - ------------------------------------------------------------------------------------ MEXICO--6.0% Mexican Williams Sr. Nts., 6.773%, 11/15/08(2) 500,000 470,000 - ------------------------------------------------------------------------------------ Petroleos Mexicanos Debs., 14.50%, 3/31/06 [GBP] 1,280,000 2,566,774 - ------------------------------------------------------------------------------------ United Mexican States Bonds: 11.375%, 9/15/16 5,420,000 6,436,250 Series A, 6.932%, 12/31/19(2) 640,000 632,000
10 OPPENHEIMER INTERNATIONAL BOND FUND 13
PRINCIPAL MARKET VALUE AMOUNT(1) SEE NOTE 1 - ------------------------------------------------------------------------------------ MEXICO Continued United Mexican States Collateralized Fixed Rate Par Bonds: Series W-A, 6.25%, 12/31/19 $ 1,340,000 $ 1,144,025 Series W-B, 6.25%, 12/31/19 4,938,000 4,215,818 - ------------------------------------------------------------------------------------ United Mexican States Disc. Bonds: Series B, 6.942%, 12/31/19(2) 670,000 659,531 Series C, 6.836%, 12/31/19(2) 670,000 661,625 ------------ 16,786,023 - ------------------------------------------------------------------------------------ NIGERIA--0.1% Nigeria (Federal Republic of) Promissory Nts., Series RC, 5.092%, 1/5/10 547,137 323,872 - ------------------------------------------------------------------------------------ NORWAY--1.4% Norway (Government of) Bonds, 9.50%, 10/31/02 [NOK] 30,475,000 3,863,181 - ------------------------------------------------------------------------------------ PANAMA--0.8% Panama (Republic of) Interest Reduction Bonds, 4.25%, 7/17/14(2) 985,000 792,925 - ------------------------------------------------------------------------------------ Panama (Republic of) Past Due Interest Debs., 6.381%, 7/17/16(2) 1,847,930 1,568,431 ------------ 2,361,356 - ------------------------------------------------------------------------------------ PERU--1.8% Peru (Republic of) Sr. Nts., Zero Coupon, 4.53%, 2/28/16(6) 10,864,808 5,068,433 - ------------------------------------------------------------------------------------ POLAND--2.3% Poland (Republic of) Bonds: 13%, 2/12/01 [PLZ] 10,840,000 2,530,515 Series 0602, 12%, 6/12/02 [PLZ] 2,887,000 649,129 Series 1000, 13%, 10/12/00 [PLZ] 10,614,000 2,500,247 Series 5 yr., 12%, 2/12/02 [PLZ] 3,157,000 713,278 ------------ 6,393,169 - ------------------------------------------------------------------------------------ RUSSIA--6.9% Russia (Government of) Principal Loan Debs., Series 24 yr., 12/15/20(3,5) 16,821,000 4,878,090 - ------------------------------------------------------------------------------------ Russia (Government of) Sr. Unsec. Unsub. Nts., 11.75%, 6/10/03 525,000 473,156 - ------------------------------------------------------------------------------------ Russia (Government of) Unsec. Bonds, 11%, 7/24/18 2,565,000 1,901,306 - ------------------------------------------------------------------------------------ Russian Federation Unsec. Unsub. Nts.: 8.75%, 7/24/05 1,775,000 1,315,719 10%, 6/26/07 4,430,000 3,289,275 12.75%, 6/24/28 4,107,000 3,529,556 - ------------------------------------------------------------------------------------ Russian Ministry of Finance Debs., Series V, 3%, 5/14/08 10,540,000 3,899,800 ------------ 19,286,902 - ------------------------------------------------------------------------------------ SLOVAKIA--1.0% Slovenska Sporitelna AS Bank Sub. Nts., 7.369%, 12/20/06(2) 1,800,000 1,512,000 - ------------------------------------------------------------------------------------ Vseobenona Uverova Banka Unsec. Sub. Nts., 7.75%, 12/28/06(2) 1,640,000 1,312,000 ------------ 2,824,000
11 OPPENHEIMER INTERNATIONAL BOND FUND 14 STATEMENT OF INVESTMENTS UNAUDITED / CONTINUED - --------------------------------------------------------------------------------
PRINCIPAL MARKET VALUE AMOUNT(1) SEE NOTE 1 - -------------------------------------------------------------------------------------------------- SOUTH AFRICA--1.9% South Africa (Republic of) Bonds, Series 150, 12%, 2/28/05 [ZAR] 36,648,000 $ 5,289,049 - -------------------------------------------------------------------------------------------------- SPAIN--1.4% Spain (Kingdom of) Gtd. Bonds: Bonos y Obligacion del Estado, 8.80%, 4/30/06 [EUR] 1,700,000 1,923,934 Bonos y Obligacion del Estado, 10%, 2/28/05 [EUR] 1,760,000 2,032,172 ------------ 3,956,106 - -------------------------------------------------------------------------------------------------- SWEDEN--1.1% Sweden (Kingdom of) Bonds, Series 1034, 9%, 4/20/09 [SEK] 21,500,000 3,123,093 - -------------------------------------------------------------------------------------------------- THE NETHERLANDS--2.7% The Netherlands (Government of) Bonds: 5.75%, 1/15/04 [EUR] 2,280,000 2,246,093 6%, 1/15/06 [EUR] 1,070,000 1,069,446 7.75%, 3/1/05 [EUR] 3,950,000 4,218,207 ------------ 7,533,746 - -------------------------------------------------------------------------------------------------- TURKEY--1.0% Turkey (Republic of) Sr. Unsec. Unsub. Nts., 11.875%, 1/15/30 2,500,000 2,657,500 - -------------------------------------------------------------------------------------------------- VENEZUELA--1.6% Venezuela (Republic of) Bonds, 9.25%, 9/15/27 992,000 659,234 - -------------------------------------------------------------------------------------------------- Venezuela (Republic of) Disc. Bonds, Series DL, 7%, 12/18/07(2) 3,159,619 2,551,392 - -------------------------------------------------------------------------------------------------- Venezuela (Republic of) New Money Bonds, Series A, 7.125%, 12/18/05(2) 1,545,882 1,268,590 ------------ 4,479,216 - -------------------------------------------------------------------------------------------------- VIETNAM--0.8% Vietnam (Government of) Bonds, 3.25%, 3/12/28(2) 7,095,000 2,367,956 ------------ Total Foreign Government Obligations (Cost $189,348,792) 192,168,063 ================================================================================================== LOAN PARTICIPATIONS--4.2% Algeria (Republic of) Reprofiled Debt Loan Participation Nts.: Tranche 1, 1%, 9/4/06(2,4) [JPY] 56,945,454 396,978 Tranche 1, 7.188%, 9/4/06 (2,4) 4,727,363 3,852,801 - -------------------------------------------------------------------------------------------------- Algeria (Republic of) Trust III Nts., Tranche 3, 1%, 3/4/10(2,4) [JPY] 206,500,000 1,202,981 - -------------------------------------------------------------------------------------------------- Algeria (Republic of) Unrestructured Nts., 6.615%, 1/22/01(4) [JPY] 190,733,333 1,808,494 - -------------------------------------------------------------------------------------------------- Deutsche Bank AG, Bank Mandiri Loans: Series 3C, 7.382%, 6/1/03(2,4) 250,000 212,500 Series 4C, 7.382%, 6/1/04(2,4) 250,000 205,000 - -------------------------------------------------------------------------------------------------- Series 5 yr., 7.382%, 6/1/05(2,4) 250,000 198,750 - -------------------------------------------------------------------------------------------------- ING Barings LLC, Bank Mandiri Loans, Series 5C, 7.313%, 6/1/05(2,4) 250,000 207,500 - -------------------------------------------------------------------------------------------------- PT Bank Negara Indonesia Gtd. Nts.: Series 3 yr., 9.625%, 8/25/01(2,4) 1,670,000 1,519,700 Series 4 yr., 9.875%, 8/25/02(2,4) 890,000 778,750 - -------------------------------------------------------------------------------------------------- Salomon Smith Barney, Inc., Bank Umum Loan, Series C, 9.156%, 8/25/01(2,4) 500,000 455,000
12 OPPENHEIMER INTERNATIONAL BOND FUND 15
PRINCIPAL MARKET VALUE AMOUNT(1) SEE NOTE (1) - ------------------------------------------------------------------------------------------------------- LOAN PARTICIPATIONS Continued Trinidad & Tobago Loan Participation Agreement: Tranche A, 1.058%, 9/30/00(2,4) [JPY] 23,381,818 $ 207,453 Tranche B, 1.058%, 9/30/00(2,4) [JPY] 77,931,713 691,443 ------------ Total Loan Participations (Cost $9,930,541) 11,737,350 ======================================================================================================= CORPORATE BONDS AND NOTES--8.8% AB Spintab, 5.50% Bonds, Series 169, 9/17/03 [SEK] 14,300,000 1,635,120 - ------------------------------------------------------------------------------------------------------- Bakrie Investindo: Zero Coupon Promissory Nts., 3/16/1999(3,4,5) [IDR] 5,990,000,000 118,692 Zero Coupon Promissory Nts., 7/10/1998(3,4,5) [IDR] 2,000,000,000 39,630 - ------------------------------------------------------------------------------------------------------- Empresa Electrica del Norte Grande SA, 7.75% Bonds, 3/15/06(7,8) 2,310,000 744,975 - ------------------------------------------------------------------------------------------------------- Federal National Mortgage Assn., 6.875% Sr. Unsec. Nts., 6/7/02(9) [GBP] 2,370,000 3,782,373 - ------------------------------------------------------------------------------------------------------- General Motors Acceptance Corp., 6.875% Nts., Series EC, 9/9/04 [GBP] 430,000 682,789 - ------------------------------------------------------------------------------------------------------- Hanvit Bank, 0%/12.75% Unsec. Sub. Nts., 3/1/10(8,10) 3,400,000 3,531,750 - ------------------------------------------------------------------------------------------------------- Netia Holdings BV: 0%/11% Sr. Disc. Nts., 11/1/07(1/0) [DEM] 1,300,000 448,403 13.50% Sr. Nts., 6/15/09 [EUR] 2,650,000 2,637,217 - ------------------------------------------------------------------------------------------------------- NTL, Inc., 9.50% Sr. Unsec. Unsub. Nts., Series B, 4/1/08 [GBP] 580,000 874,384 - ------------------------------------------------------------------------------------------------------- Ongko International Finance Co. BV, 10.50% Gtd. Nts., 3/29/04(3,4,5) 365,000 12,775 - ------------------------------------------------------------------------------------------------------- PT Polysindo Eka Perkasa: 11% Nts., 6/18/03(3,4,5) 500,000 65,000 11% Nts., 7/2/03(3,4,5) 1,000,000 130,000 20% Nts., 3/6/00(3,5) [IDR] 3,000,000,000 51,519 24% Nts., 6/16/03(3,5) [IDR] 2,000,000,000 34,346 24% Nts., 6/19/03(3,5) [IDR] 4,107,500,000 70,538 - ------------------------------------------------------------------------------------------------------- Reliance Industries Ltd.: 10.25% Unsec. Debs., Series B, 1/15/97 3,900,000 3,649,378 10.25% Unsec. Nts., Series B, 1/15/97(8) 250,000 233,935 - ------------------------------------------------------------------------------------------------------- SanLuis Corp., SA de CV, 8.875% Sr. Unsec. Nts., 3/18/08 1,770,000 1,632,825 - ------------------------------------------------------------------------------------------------------- TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(4) 70,000 75,972 - ------------------------------------------------------------------------------------------------------- Telewest Communications plc, 0%/9.875% Sr. Nts., 4/15/09(8,10) [GBP] 1,555,000 1,463,608 - ------------------------------------------------------------------------------------------------------- Transportacion Maritima Mexicana SA de CV, 10% Sr. Unsec. Nts., 11/15/06 1,580,000 1,362,750 - ------------------------------------------------------------------------------------------------------- TV Azteca SA de CV, 10.125% Sr. Nts., Series A, 2/15/04 1,320,000 1,267,200 ------------ Total Corporate Bonds and Notes (Cost $27,902,371) 24,545,179 UNITS - ------------------------------------------------------------------------------------------------------- RIGHTS, WARRANTS AND CERTIFICATES--0.0% Mexico Value Rts., Exp. 6/30/03 (Cost $0) 984,000 --
13 OPPENHEIMER INTERNATIONAL BOND FUND 16 STATEMENT OF INVESTMENTS UNAUDITED / CONTINUED - --------------------------------------------------------------------------------
PRINCIPAL MARKET VALUE AMOUNT(1) SEE NOTE 1 =================================================================================================== STRUCTURED INSTRUMENTS--8.6% Citibank NA (Nassau Branch), Chiliean Peso Linked Nts., 10.17%, 10/6/00(4) [CLP] 1,420,235,500 $ 2,943,671 - --------------------------------------------------------------------------------------------------- Citibank NA (Nassau Branch), Mexican Peso Linked Nts.: 18.85%, 3/3/03 [MXN] 29,450,165 3,180,466 26.10%, 10/29/01 [MXN] 12,368,125 1,444,170 27.40%, 9/20/01 [MXN] 222,140 26,632 27.40%, 9/20/01 2,775,000 3,045,840 - --------------------------------------------------------------------------------------------------- Citibank NA (New York), Mexican Peso Linked Nts., 23.95%, 11/5/01 [MXN] 12,231,200 1,397,607 - --------------------------------------------------------------------------------------------------- Citibank NA, Brazilian Real Linked Nts., 23.75%, 10/25/00 [BRR] 2,534,020 1,484,834 - --------------------------------------------------------------------------------------------------- Deutsche Bank AG: Indonesia Rupiah Linked Nts., 13.667%, 6/30/00 2,725,000 2,408,083 Indonesia Rupiah Linked Nts., 13.86%, 8/3/00 2,220,000 2,006,658 Indian Rupee/Japanese Yen Linked Nts., Zero Coupon, 12.73%, 8/17/01(6) 3,525,000 2,655,383 - --------------------------------------------------------------------------------------------------- Deutsche Morgan Grenfell, Brazilian Real Linked Nts., 20%, 11/9/00 [BRR] 2,467,200 1,556,103 - --------------------------------------------------------------------------------------------------- Standard Chartered Bank, Indonesia Rupiah Linked Nts., 18.19%, 8/18/00 1,300,000 1,395,160 - --------------------------------------------------------------------------------------------------- Credit Suisse First Boston Corp. (New York Branch): Russian OFZ Linked Nts., Series 25030, Zero Coupon, 146.53%, 12/15/01(4,6) [RUR] 2,143,000 31,710 Russian OFZ Linked Nts., Series 27001, 25%, 2/6/02(2,4) [RUR] 1,378,970 28,372 Russian OFZ Linked Nts., Series 27002, 25%, 5/22/02(2,4) [RUR] 625,200 12,406 Russian OFZ Linked Nts., Series 27003, 25%, 6/5/02(2,4) [RUR] 625,200 12,384 Russian OFZ Linked Nts., Series 27004, 24.868%, 9/18/02(2,4) [RUR] 686,610 13,232 Russian OFZ Linked Nts., Series 27005, 24.868%, 10/9/02(2,4) [RUR] 690,150 12,870 Russian OFZ Linked Nts., Series 27006, 24.868%, 1/22/03(2,4) [RUR] 687,290 12,354 Russian OFZ Linked Nts., Series 27007, 25%, 2/5/03(2,4) [RUR] 688,370 12,330 Russian OFZ Linked Nts., Series 27008, 25%, 5/21/03(2,4) [RUR] 625,200 10,856 Russian OFZ Linked Nts., Series 27009, 25%, 6/4/03(2,4) [RUR] 2,949,470 51,386 Russian OFZ Linked Nts., Series 27009, 25%, 6/4/03(2,4) [RUR] 6,363,674 110,869 Russian OFZ Linked Nts., Series 27010, 24.868%, 9/17/03(2,4) [RUR] 625,200 10,649 Russian OFZ Linked Nts., Series 27011, 24.868%, 10/8/03(2,4) [RUR] 3,466,720 57,080 Russian OFZ Linked Nts., Series 28001, 24.868%, 1/21/04(2,4) [RUR] 625,200 10,030 Russian OFZ Linked Nts., Series L, 24.868%, 1/21/04(2,4) [RUR] 566,080 9,082 Russian OFZ Linked Nts., Series L, 24.868%, 1/22/03(2,4) [RUR] 566,080 10,175 Russian OFZ Linked Nts., Series L, 24.868%, 10/8/03(2,4) [RUR] 566,080 9,321 Russian OFZ Linked Nts., Series L, 24.868%, 10/9/02(24) [RUR] 566,080 10,556 Russian OFZ Linked Nts., Series L, 24.868%, 9/17/03(2,4) [RUR] 566,080 9,642 Russian OFZ Linked Nts., Series L, 24.868%, 9/18/02(2,4) [RUR] 566,080 10,909 Russian OFZ Linked Nts., Series L, 25%, 2/5/03(2,4) [RUR] 566,080 10,140 Russian OFZ Linked Nts., Series L, 25%, 2/6/02(2,4) [RUR] 566,080 11,647 Russian OFZ Linked Nts., Series L, 25%, 5/21/03(2,4) [RUR] 566,080 9,830 Russian OFZ Linked Nts., Series L, 25%, 5/22/02(2,4) [RUR] 566,080 11,233 Russian OFZ Linked Nts., Series L, 25%, 6/4/03(2,4) [RUR] 566,080 9,862 Russian OFZ Linked Nts., Series L, 25%, 6/5/02(2,4) [RUR] 566,080 11,213 Russian OFZ Linked Nts., Series L, Zero Coupon, 53.77%, 12/15/01(4,6) [RUR] 1,940,000 28,706 ---------- 538,844 ---------- Total Structured Instruments (Cost $24,021,685) 24,083,451
14 OPPENHEIMER INTERNATIONAL BOND FUND 17
MARKET VALUE DATE STRIKE CONTRACTS SEE NOTE 1 ========================================================================================================= OPTIONS PURCHASED--0.9% European Monetary Unit Call 4/25/00 EUR 1.040 2,370,000 $ 277 - -------------------------------------------------------------------------------------------------------- South Korean Won Call 6/1/00 KRW 1100.0 4,697,000,000 40,488 - -------------------------------------------------------------------------------------------------------- Thailand Baht Call 12/6/00(4) THB 38.00 649,040,000 553,196 - -------------------------------------------------------------------------------------------------------- Argentina (Republic of) Global Unsec. Unsub. Bonds, Series BGL5, 11.375%, 1/30/17 Put 6/28/00 96.75% 26,920 823,483 - -------------------------------------------------------------------------------------------------------- Brazil (Federal Republic of) Capitalization Bonds, 6.916%, 4/15/14 Put 6/29/00 74.50% 26,920 1,191,870 ========= Total Options Purchased (Cost $2,518,548) 2,609,314
PRINCIPAL AMOUNT(1) ======================================================================================================== REPURCHASE AGREEMENTS--0.6% Repurchase agreement with Banc One Capital Markets, Inc., 6.05%, dated 3/31/00, to be repurchased at $1,700,857 on 4/3/00, collateralized by U.S. Treasury Nts., 5%-7.50%, 5/31/00-2/15/07, with a value of $1,137,269 and U.S. Treasury Bonds, 5.25%-12% 11/15/09-2/15/29, with a value of $598,219 (Cost $1,700,000) $1,700,000 1,700,000 - ---------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $255,421,937) 91.7% 256,843,357 - ---------------------------------------------------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 8.3 23,205,987 ---------------------------- NET ASSETS 100.0% $280,049,344 ============================
15 OPPENHEIMER INTERNATIONAL BOND FUND 18 STATEMENT OF INVESTMENTS UNAUDITED / CONTINUED FOOTNOTES TO STATEMENT OF INVESTMENTS DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC DIVERSIFICATION, AS A PERCENTAGE OF TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS:
GEOGRAPHIC DIVERSIFICATION MARKET VALUE PERCENT - ---------------------------------------------------------------------------------------- Mexico $ 30,143,511 11.8% Brazil 22,299,497 8.7 Russia 19,825,747 7.7 Argentina 17,642,716 6.9 Japan 14,210,299 5.5 France 12,000,895 4.7 Canada 11,052,894 4.3 Indonesia 10,354,449 4.0 United States 9,648,861 3.8 Poland 9,478,787 3.7 The Netherlands 7,533,746 2.9 Great Britain 7,383,707 2.9 Algeria 7,261,254 2.8 India 6,538,695 2.5 Germany 5,956,235 2.3 Italy 5,838,145 2.3 Jordan 5,537,188 2.2 South Africa 5,289,049 2.1 Peru 5,068,433 2.0 Sweden 4,758,213 1.9 Venezuela 4,479,216 1.7 Spain 3,956,106 1.5 Norway 3,863,181 1.5 Chile 3,688,646 1.4 Korea, Republic of (South) 3,531,750 1.4 Slovakia 2,824,000 1.1 Turkey 2,657,500 1.0 Denmark 2,478,201 1.0 Vietnam 2,367,956 0.9 Panama 2,361,356 0.9 Bulgaria 1,562,400 0.6 Colombia 1,523,438 0.6 Ivory Coast 1,240,541 0.5 Greece 1,188,005 0.5 Trinidad & Tobago 898,896 0.3 Nigeria 323,872 0.1 Switzerland 75,972 0.0 ------------------------------- Total $256,843,357 100.0% ===============================
16 OPPENHEIMER INTERNATIONAL BOND FUND 19 FOOTNOTES TO STATEMENT OF INVESTMENTS Continued 1. Principal amount is reported in U.S. Dollars, except for those denoted in the following currencies: ARP Argentine Peso IDR Indonesian Rupiah BRR Brazilian Real JPY Japanese Yen CAD Canadian Dollar KRW South Korean Won CLP Chilean Peso MXN Mexican Nuevo Peso DEM German Mark NOK Norwegian Krone DKK Danish Krone PLZ Polish Zloty EUR Euro RUR Russian Ruble FRF French Franc SEK Swedish Krona GBP British Pound Sterling THB Thai Baht GRD Greek Drachma ZAR South African Rand 2. Represents the current interest rate for a variable or increasing rate security. 3. Non-income-producing security. 4. Identifies issues considered to be illiquid or restricted. See Note 8 of Notes to Financial Statements. 5. Issuer is in default. 6. For zero coupon bonds, the interest rate shown is the effective yield on the date of purchase. 7. Securities with an aggregate market value of $276,750 are held in collateralized accounts to cover initial margin requirements on open futures sales contracts. See Note 6 of Notes to Financial Statements. 8. 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 $5,974,268 or 2.13% of the Fund's net assets as of March 31, 2000. 9. A sufficient amount of securities has been designated to cover outstanding foreign currency contracts. See Note 5 of Notes to Financial Statements. 10. Denotes a step bond: a zero coupon bond that converts to a fixed or variable interest rate at a designated future date. See accompanying Notes to Financial Statements. 17 OPPENHEIMER INTERNATIONAL BOND FUND 20 STATEMENT OF ASSETS AND LIABILITIES UNAUDITED
MARCH 31, 2000 ============================================================================================= ASSETS Investments, at value (cost $255,421,937)--see accompanying statement $ 256,843,357 - --------------------------------------------------------------------------------------------- Cash 107,445 - --------------------------------------------------------------------------------------------- Cash--collateral for futures 300,000 - --------------------------------------------------------------------------------------------- Unrealized appreciation on foreign currency contracts 1,034,576 - --------------------------------------------------------------------------------------------- Receivables and other assets: Investments sold 39,268,911 Interest, dividends and principal paydowns 7,960,521 Shares of beneficial interest sold 474,202 Daily variation on futures contracts 4,122 Other 4,013 ------------- Total assets 305,997,147 ============================================================================================= LIABILITIES Unrealized depreciation on foreign currency contracts 710,308 - --------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased 23,543,272 Dividends 735,208 Shares of beneficial interest redeemed 694,770 Distribution and service plan fees 169,228 Transfer and shareholder servicing agent fees 59,152 Trustees' compensation 341 Other 35,524 ------------- Total liabilities 25,947,803 ============================================================================================= NET ASSETS $280,049,344 ============= ============================================================================================= COMPOSITION OF NET ASSETS Paid-in capital $335,587,392 - --------------------------------------------------------------------------------------------- Undistributed net investment income 2,355,987 - --------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (59,710,294) - --------------------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 1,816,259 ------------- Net assets $280,049,344 =============
18 OPPENHEIMER INTERNATIONAL BOND FUND 21 Net Asset Value Per Share Class A Shares: Net asset value and redemption price per share (based on net assets of $124,080,235 and 28,065,503 shares of beneficial interest outstanding) $4.42 Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $4.64 - ---------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $122,764,914 and 27,858,896 shares of beneficial interest outstanding) $4.41 - ---------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $33,204,195 and 7,536,971 shares of beneficial interest outstanding) $4.41
See accompanying Notes to Financial Statements. 19 OPPENHEIMER INTERNATIONAL BOND FUND 22 STATEMENT OF OPERATIONS UNAUDITED
FOR THE SIX MONTHS ENDED MARCH 31, 2000 - ------------------------------------------------------------------------------------ INVESTMENT INCOME Interest (net of foreign withholding taxes of $166,433) $ 17,689,748 ==================================================================================== EXPENSES Management fees 990,427 - ------------------------------------------------------------------------------------ Distribution and service plan fees: Class A 149,849 Class B 611,644 Class C 159,133 - ------------------------------------------------------------------------------------ Transfer and shareholder servicing agent fees 251,352 - ------------------------------------------------------------------------------------ Custodian fees and expenses 54,226 - ------------------------------------------------------------------------------------ Trustees' compensation 1,391 - ------------------------------------------------------------------------------------ Other 79,466 -------------- Total expenses 2,297,488 Less expenses paid indirectly (18,402) -------------- Net expenses 2,279,086 ==================================================================================== NET INVESTMENT INCOME 15,410,662 ==================================================================================== REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investments (including premiums on options exercised) 2,238,829 Closing of futures contracts 108,174 Closing and expiration of option contracts written (1,220,194) Foreign currency transactions (7,500,059) -------------- Net realized loss (6,373,250) - ------------------------------------------------------------------------------------ Net change in unrealized appreciation or depreciation on: Investments 18,535,882 Translation of assets and liabilities denominated in foreign currencies (2,129,884) -------------- Net change 16,405,998 -------------- Net realized and unrealized gain 10,032,748 ==================================================================================== NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $25,443,410 ==============
See accompanying Notes to Financial Statements. 20 OPPENHEIMER INTERNATIONAL BOND FUND 23 STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS YEAR ENDED ENDED MARCH 31, 2000 SEPT. 30, (UNAUDITED) 1999 ==================================================================================== OPERATIONS Net investment income $ 15,410,662 $ 33,032,068 - ------------------------------------------------------------------------------------ Net realized loss (6,373,250) (26,122,910) - ------------------------------------------------------------------------------------ Net change in unrealized appreciation or depreciation 16,405,998 17,536,670 ---------------------------- Net increase in net assets resulting from operations 25,443,410 24,445,828 ==================================================================================== DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income: Class A (6,025,082) (12,490,131) Class B (6,177,197) (14,069,900) Class C (1,597,355) (3,315,800) ==================================================================================== BENEFICIAL INTEREST TRANSACTIONS Net increase (decrease) in net assets resulting from beneficial interest transactions: Class A 16,807,804 7,013,720 Class B (1,123,196) 1,272,305 Class C 2,396,669 2,430,203 ==================================================================================== Net Assets Total increase 29,725,053 5,286,225 - ------------------------------------------------------------------------------------ Beginning of period 250,324,291 245,038,066 ---------------------------- End of period (including undistributed net investment income of $2,355,987 and $744,959, respectively) $280,049,344 $250,324,291 ============================
See accompanying Notes to Financial Statements. 21 OPPENHEIMER INTERNATIONAL BOND FUND 24 FINANCIAL HIGHLIGHTS
SIX MONTHS YEAR ENDED ENDED MARCH 31, 2000 SEPT. 30, CLASS A (UNAUDITED) 1999 1998 1997 1996 1995(1) ========================================================================================================================= PER SHARE OPERATING DATA Net asset value, beginning of period $4.23 $4.32 $5.51 $5.49 $5.10 $5.00 - ------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .26 .58 .56 .52 .52 .15 Net realized and unrealized gain (loss) .17 (.14) (1.20) .08 .40 .10 ------------------------------------------------------------------------ Total income (loss) from investment operations .43 .44 (.64) .60 .92 .25 - ------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.24) (.53) (.53) (.53) (.53) (.15) Distributions from net realized gain -- -- (.02) (.05) -- -- ------------------------------------------------------------------------ Total dividends and/or distributions to shareholders (.24) (.53) (.55) (.58) (.53) (.15) - ------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.42 $4.23 $4.32 $5.51 $5.49 $5.10 ======================================================================== ========================================================================================================================= TOTAL RETURN, AT NET ASSET VALUE(2) 10.39% 10.58% (12.50)% 11.33% 18.82% 5.13% ========================================================================================================================= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $124,080 $102,236 $97,404 $114,847 $52,128 $3,984 - ------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $112,599 $101,948 $108,264 $ 89,112 $19,817 $2,566 - ------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(3) Net investment income 11.93% 13.47% 11.09% 9.24% 9.60% 9.94% Expenses 1.31% 1.26% 1.24%(4) 1.28%(4) 1.59%(4) 1.59%(4) Expenses, net of indirect expenses and voluntary assumption of expenses N/A 1.25% N/A N/A 1.49% 0.41% - ------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(5) 92% 285% 446% 280% 273% 122%
1. For the period from June 15, 1995 (commencement of operations) to September 30, 1995. 2. Assumes a $1,000 hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 3. Annualized for periods of less than one full year. 4. Expense ratio has not been grossed up to reflect the effect of expenses paid indirectly. 5. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended March 31, 2000, were $222,643,785 and $224,892,663, respectively. See accompanying Notes to Financial Statements. 22 OPPENHEIMER INTERNATIONAL BOND FUND 25
SIX MONTHS YEAR ENDED ENDED MARCH 31, 2000 SEPT. 30, CLASS B (UNAUDITED) 1999 1998 1997 1996 1995(1) ========================================================================================================================= PER SHARE OPERATING DATA Net asset value, beginning of period $4.22 $4.31 $5.50 $5.48 $5.10 $5.00 - -------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .25 .55 .52 .48 .48 .14 Net realized and unrealized gain (loss) .16 (.14) (1.20) .07 .39 .10 -------------------------------------------------------------------- Total income (loss) from investment operations .41 .41 (.68) .55 .87 .24 - -------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.22) (.50) (.49) (.48) (.49) (.14) Distributions from net realized gain -- -- (.02) (.05) -- -- - -------------------------------------------------------------------------------------------------------------------------- Total dividends and/or distributions to shareholders (.22) (.50) (.51) (.53) (.49) (.14) -------------------------------------------------------------------- Net asset value, end of period $4.41 $4.22 $4.31 $5.50 $5.48 $5.10 ==================================================================== ========================================================================================================================= TOTAL RETURN, AT NET ASSET VALUE(2) 10.03% 9.79% (13.16)% 10.52% 17.71% 4.92% ========================================================================================================================= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $122,765 $118,632 $119,998 $122,874 $45,207 $3,238 - ------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $122,186 $122,878 $128,789 $ 87,557 $17,891 $1,125 - ------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(3) Net investment income 11.28% 12.70% 10.33% 8.57% 8.81% 9.20% Expenses 2.05% 2.02% 2.00%(4) 2.04%(4) 2.36%(4) 2.21%(4) Expenses, net of indirect expenses and voluntary assumption of expenses N/A 2.01% N/A N/A 2.26% 0.89% - ------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(5) 92% 285% 446% 280% 273% 122%
1. For the period from June 15, 1995 (commencement of operations) to September 30, 1995. 2. Assumes a $1,000 hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 3. Annualized for periods of less than one full year. 4. Expense ratio has not been grossed up to reflect the effect of expenses paid indirectly. 5. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended March 31, 2000, were $222,643,785 and $224,892,663, respectively. See accompanying Notes to Financial Statements. 23 OPPENHEIMER INTERNATIONAL BOND FUND 26 FINANCIAL HIGHLIGHTS CONTINUED
SIX MONTHS YEAR ENDED ENDED MARCH 31, 2000 SEPT. 30, CLASS C (UNAUDITED) 1999 1998 1997 1996 1995(1) ============================================================================================================================ PER SHARE OPERATING DATA Net asset value, beginning of period $4.22 $4.31 $5.50 $5.48 $5.09 $5.00 - ---------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .25 .55 .52 .48 .48 .14 Net realized and unrealized gain (loss) .16 (.14) (1.20) .07 .39 .09 -------------------------------------------------------------------- Total income (loss) from investment operations .41 .41 (.68) .55 .87 .23 - ---------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.22) (.50) (.49) (.48) (.48) (.14) Distributions from net realized gain -- -- (.02) (.05) -- -- -------- --------- --------- --------- ------------------------ Total dividends and/or distributions to shareholders (.22) (.50) (.51) (.53) (.48) (.14) - ---------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.41 $4.22 $4.31 $5.50 $5.48 $5.09 ==================================================================== ============================================================================================================================ TOTAL RETURN, AT NET ASSET VALUE(2) 10.02% 9.80% (13.16)% 10.52% 17.92% 4.73% ============================================================================================================================ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in thousands) $33,204 $29,456 $27,636 $28,684 $10,282 $201 - ---------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $31,805 $28,918 $29,336 $19,883 $ 4,039 $ 97 - ---------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(3) Net investment income 11.22% 12.76% 10.33% 8.62% 8.76% 9.36% Expenses 2.05% 2.02% 2.00%(4) 2.04%(4) 2.36%(4) 2.26%(4) Expenses, net of indirect expenses and voluntary assumption of expenses N/A 2.01% N/A N/A 2.25% 0.85% - ---------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(5) 92% 285% 446% 280% 273% 122%
1. For the period from June 15, 1995 (commencement of operations) to September 30, 1995. 2. Assumes a $1,000 hypothetical initial investment on the business day before the first day of the fiscal period (or inception of offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods of less than one full year. 3. Annualized for periods of less than one full year. 4. Expense ratio has not been grossed up to reflect the effect of expenses paid indirectly. 5. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the period ended March 31, 2000, were $222,643,785 and $224,892,663, respectively. See accompanying Notes to Financial Statements. 24 OPPENHEIMER INTERNATIONAL BOND FUND 27 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 an open-end management investment company under the Investment Company Act of 1940, as amended. The Fund's investment objective is to seek total return. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B and Class C shares. Class A shares are sold at their offering price, which is normally net asset value plus an initial sales charge. Class B and Class C shares are sold without an initial sales charge but may be subject to a contingent deferred sales charge (CDSC). All classes of shares have identical rights to earnings, assets and voting privileges, except that each class has its own expenses directly attributable to that class and exclusive voting rights with respect to matters affecting that class. Classes A, B and C shares have separate distribution and/or service plans. Class B shares will automatically convert to Class A shares six years after the date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. - -------------------------------------------------------------------------------- SECURITIES VALUATION. Securities for which quotations are readily available are valued at the last sale price, or if in the absence of a sale, 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 (including restricted securities) for which quotations are not readily available are valued primarily using dealer-supplied valuations, a portfolio pricing service authorized by the Board of Trustees, or at their fair value. Fair value is determined in good faith under consistently applied procedures under the supervision of the Board of Trustees. Foreign currency 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, dealer or pricing service. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at cost (or last determined market value) and adjusted for amortization or accretion to maturity of any premium or discount. - -------------------------------------------------------------------------------- STRUCTURED NOTES. The Fund invests in foreign currency-linked structured notes whose market value and redemption price are linked to foreign currency exchange rates. The structured notes may be leveraged, which increases the notes' volatility relative to the face of the security. Fluctuations in value of these securities are recorded as unrealized gains and losses in the accompanying financial statements. As of March 31, 2000, the market value of these securities comprised 8.60% of the Fund's net assets and resulted in realized and unrealized losses of $1,231,489. The Fund also hedges a portion of the foreign currency exposure generated by these securities, as discussed in Note 5. 25 OPPENHEIMER INTERNATIONAL BOND FUND 28 NOTES TO FINANCIAL STATEMENTS UNAUDITED / CONTINUED - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued SECURITY CREDIT RISK. The Fund invests in high yield securities, which may be subject to a greater degree of credit risk, greater market fluctuations and risk of loss of income and principal, and may be more sensitive to economic conditions than lower yielding, higher rated fixed income securities. The Fund may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. As of March 31, 2000, securities with an aggregate market value of $5,582,228, representing 1.99% of the Fund's net assets, were in default. - -------------------------------------------------------------------------------- FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange. Amounts related to the purchase and sale of foreign securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian's vault, all securities held as collateral for repurchase agreements. The market value of the underlying securities is required to be at least 102% of the resale price at the time of purchase. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited. - -------------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. - -------------------------------------------------------------------------------- FEDERAL TAXES. The Fund intends to continue to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to shareholders. Therefore, no federal income or excise tax provision is required. As of September 30, 1999, the Fund had available for federal tax purposes an unused capital loss carryover of approximately $27,469,000, which expires between 2006 and 2007. The Manager believes that for the Fund's fiscal year ending September 30, 2000, a tax return of capital is likely to occur. The dollar and per share amounts for the fiscal year are not estimable as of March 31, 2000. 26 OPPENHEIMER INTERNATIONAL BOND FUND 29 - -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to share- holders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. - -------------------------------------------------------------------------------- CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes primarily because of the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Also, due to timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Fund. - -------------------------------------------------------------------------------- EXPENSE OFFSET ARRANGEMENTS. Expenses paid indirectly represent a reduction of custodian fees for earnings on cash balances maintained by the Fund. - -------------------------------------------------------------------------------- OTHER. Investment transactions are accounted for as of trade date and dividend income is recorded on the ex-dividend date. Discount on securities purchased is amortized over the life of the respective securities, in accordance with federal income tax requirements. Realized gains and losses on investments and options written and unrealized appreciation and depreciation are determined on an identified cost basis, which is the same basis used for federal income tax purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at the current market value of the underlying security. Interest on payment-in-kind debt instruments is accrued as income at the coupon rate and a market adjustment is made periodically. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and lia-bilities 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. 27 OPPENHEIMER INTERNATIONAL BOND FUND 30 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 of each class. Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED MARCH 31, 2000 YEAR ENDED SEPTEMBER 30, 1999 SHARES AMOUNT SHARES AMOUNT - ---------------------------------------------------------------------------------------------- CLASS A Sold 12,615,647 $ 54,732,852 11,247,933 $ 48,852,991 Dividends and/or distributions reinvested 877,724 3,800,442 1,806,309 7,837,034 Redeemed (9,579,499) (41,725,490) (11,446,723) (49,676,305) ------------------------------------------------------------------- Net increase 3,913,872 $16,807,804 1,607,519 $ 7,013,720 =================================================================== - ---------------------------------------------------------------------------------------------- CLASS B Sold 4,172,683 $ 18,020,033 7,369,029 $ 32,003,600 Dividends and/or distributions reinvested 671,195 2,893,992 1,549,542 6,704,118 Redeemed (5,087,959) (22,037,221) (8,655,920) (37,435,413) ------------------------------------------------------------------- Net increase (decrease) (244,081) $ (1,123,196) 262,651 $ 1,272,305 =================================================================== - ---------------------------------------------------------------------------------------------- CLASS C Sold 2,016,738 $ 8,734,838 2,727,759 $ 11,829,225 Dividends and/or distributions reinvested 209,591 903,273 450,539 1,948,375 Redeemed (1,669,460) (7,241,442) (2,613,007) (11,347,397) ------------------------------------------------------------------- Net increase 556,869 $ 2,396,669 565,291 $ 2,430,203 ===================================================================
- ------------------------------------------------------------------------------- 3. UNREALIZED GAINS AND LOSSES ON SECURITIES As of March 31, 2000, net unrealized appreciation on securities of $1,421,420 was composed of gross appreciation of $17,057,892, and gross depreciation of $15,636,472. - ------------------------------------------------------------------------------- 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 an annual fee of 0.75% of the first $200 million of average annual net assets of the Fund, 0.72% of the next $200 million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60% of the next $200 million and 0.50% of average annual net assets in excess of $1 billion. The Fund's management fee for the six months ended March 31, 2000, was 0.74% of average annual net assets for each class of shares, annualized for periods of less than one full year. - ------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, is the transfer and shareholder servicing agent for the Fund and for other Oppenheimer funds. OFS's total costs of providing such services are allocated ratably to these funds. 28 OPPENHEIMER INTERNATIONAL BOND FUND 31 - ------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN FEES. Under its General Distributor's Agreement with the Manager, the Distributor acts as the Fund's principal underwriter in the continuous public offering of the different classes of shares of the Fund. The compensation paid to (or retained by) the Distributor from the sale of shares or on the redemption of shares is shown in the table below for the period indicated.
AGGREGATE CLASS A COMMISSIONS COMMISSIONS COMMISSIONS FRONT-END FRONT-END ON CLASS A ON CLASS B ON CLASS C SALES CHARGES SALES CHARGES SHARES SHARES SHARES ON CLASS A RETAINED BY ADVANCED BY ADVANCED BY ADVANCED BY SIX MONTHS ENDED SHARES DISTRIBUTOR DISTRIBUTOR(1) DISTRIBUTOR(1) DISTRIBUTOR(1) - -------------------------------------------------------------------------------------------------------- March 31, 2000 $152,187 $43,774 $10,232 $342,085 $59,519
1. The Distributor advances commission payments to dealers for certain sales of Class A shares and for sales of Class B and Class C shares from its own resources at the time of sale.
CLASS A CLASS B CLASS C CONTINGENT DEFERRED CONTINGENT DEFERRED CONTINGENT DEFERRED SALES CHARGES SALES CHARGES SALES CHARGES SIX MONTHS ENDED RETAINED BY DISTRIBUTOR RETAINED BY DISTRIBUTOR RETAINED BY DISTRIBUTOR - -------------------------------------------------------------------------------------------------------- March 31, 2000 $-- $254,630 $8,877
The Fund has adopted a Service Plan for Class A shares and Distribution and Service Plans for Class B and Class C shares under Rule 12b-1 of the Investment Company Act. Under those plans the Fund pays the Distributor for all or a portion of its costs incurred in connection with the distribution and/or servicing of the shares of the particular class. - ------------------------------------------------------------------------------- CLASS A SERVICE PLAN FEES. Under the Class A service plan, the Distributor currently uses the fees it receives from the Fund to pay brokers, dealers and other financial institutions. The Class A service plan permits reimbursements to the Distributor at a rate of up to 0.25% of average annual net assets of Class A shares purchased. The Distributor makes payments to plan recipients quarterly at an annual rate not to exceed 0.25% of the average annual net assets consisting of Class A shares of the Fund. For the six months ended March 31, 2000, payments under the Class A plan totaled $149,849, all of which was paid by the Distributor to recipients. That included $7,945 paid to an affiliate of the Manager. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent years. - ------------------------------------------------------------------------------- CLASS B AND CLASS C DISTRIBUTION AND SERVICE PLAN FEES. Under each plan, service fees and distribution fees are computed on the average of the net asset value of shares in the respective class, determined as of the close of each regular business day during the period. The Class B and Class C plans provide for the Distributor to be compensated at a flat rate, whether the Distributor's distribution expenses are more or less than the amounts paid by the Fund under the plan during the period for which the fee is paid. 29 OPPENHEIMER INTERNATIONAL BOND FUND 32 NOTES TO FINANCIAL STATEMENTS UNAUDITED/CONTINUED - ------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued The Distributor retains the asset-based sales charge on Class B shares. The Distributor retains the asset-based sales charge on Class C shares during the first year the shares are outstanding. The asset-based sales charges on Class B and Class C shares allow investors to buy shares without a front-end sales charge while allowing the Distributor to compensate dealers that sell those shares. The Distributor's actual expenses in selling Class B and Class C shares may be more than the payments it receives from the contingent deferred sales charges collected on redeemed shares and asset-based sales charges from the Fund under the plans. If any plan is terminated by the Fund, the Board of Trustees may allow the Fund to continue payments of the asset-based sales charge to the Distributor for distributing shares before the plan was terminated. The plans allow for the carryforward of distribution expenses, to be recovered from asset-based sales charges in subsequent fiscal periods. Distribution fees paid to the distributor for the six months ended March 31, 2000, were as follows:
DISTRIBUTOR'S DISTRIBUTOR'S AGGREGATE UNREIMBURSED UNREIMBURSED EXPENSES AS % TOTAL PAYMENTS AMOUNT RETAINED EXPENSES OF NET ASSETS UNDER PLAN BY DISTRIBUTOR UNDER PLAN OF CLASS - ------------------------------------------------------------------------------------------ Class B Plan $611,644 $489,674 $5,417,592 4.41% Class C Plan 159,133 42,263 642,824 1.94 - ------------------------------------------------------------------------------------------
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 for operational purposes and to seek to protect against adverse exchange rate fluctuations. 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 foreign currency exchange rates as provided by a reliable bank, dealer or pricing service. Unrealized appreciation and depreciation on foreign currency contracts are reported in the Statement of Assets and Liabilities. The Fund may realize a gain or loss upon the closing or settlement of the foreign currency transactions. Realized gains and losses are reported with all other foreign currency gains and losses in the Statement of Operations. Securities denominated in foreign currency to cover net exposure on outstanding foreign currency contracts are noted in the Statement of Investments where applicable. 30 OPPENHEIMER INTERNATIONAL BOND FUND 33 As of March 31, 2000, the Fund had outstanding foreign currency contracts as follows:
CONTRACT EXPIRATION AMOUNT VALUATION AS OF UNREALIZED UNREALIZED CONTRACT DESCRIPTION DATE (000S) MARCH 31, 2000 APPRECIATION DEPRECIATION - ------------------------------------------------------------------------------------------------------------------------- CONTRACTS TO PURCHASE British Pound Sterling (GBP) 4/26/00 GBP 2,420 $ 3,861,172 $ -- $ 30,841 Euro (EUR) 4/25/00-5/15/00 EUR 5,320 5,103,304 -- 130,502 Japanese Yen (JPY) 4/10/00-6/5/00 JPY 2,977,200 29,243,862 972,037 -- -------------- ----------------- 972,037 161,343 -------------- ----------------- CONTRACTS TO SELL British Pound Sterling (GBP) 5/15/00 GBP1,550 2,473,227 -- 21,127 Euro (EUR) 5/30/00-6/28/00 EUR4,635 4,461,133 62,539 -- Japanese Yen (JPY) 4/25/00-6/5/00 JPY1,426,660 14,027,895 -- 527,838 -------------- ----------------- 62,539 548,965 -------------- ----------------- Total Unrealized Appreciation and Depreciation $1,034,576 $710,308 ============== ================
================================================================================ 6. FUTURES CONTRACTS The Fund may buy and sell futures contracts in order to gain exposure to or to seek to protect against changes in interest rates. The Fund may also buy or write put or call options on these futures contracts. The Fund generally sells futures contracts to hedge against increases in interest rates and the resulting negative effect on the value of fixed rate portfolio securities. The Fund may also purchase futures contracts to gain exposure to changes in interest rates as it may be more efficient or cost effective than actually buying fixed income securities. Upon entering into a futures contract, the Fund is required to deposit either cash or securities (initial margin) in an amount equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund may recognize a realized gain or loss when the contract is closed or expires. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are noted in the Statement of Investments. The Statement of Assets and Liabilities reflects a receivable and/or payable for the daily mark to market for variation margin. Risks of entering into futures contracts (and related options) include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. 31 OPPENHEIMER INTERNATIONAL BOND FUND 34 NOTES TO FINANCIAL STATEMENTS UNAUDITED/CONTINUED ================================================================================ 6. FUTURES CONTRACTS Continued As of March 31, 2000, the Fund had outstanding futures contracts as follows:
UNREALIZED EXPIRATION NUMBER OF VALUATION AS OF APPRECIATION CONTRACT DESCRIPTION DATE CONTRACTS MARCH 31, 2000 (DEPRECIATION) - ------------------------------------------------------------------------------------------------- CONTRACTS TO PURCHASE Euro-Bobl 6/8/00 101 $10,022,284 $ 91,815 Euro-Bund 6/8/00 7 706,068 17,148 ---------------- 108,963 ---------------- CONTRACTS TO SELL Euro-Schatz 6/8/00 64 6,277,264 (22,659) United Kingdom Long Gilt 6/28/00 5 905,413 (7,721) ---------------- (30,380) ---------------- $78,583 ================
================================================================================ 7. OPTION ACTIVITY The Fund may buy and sell put and call options, or write put and covered call options on portfolio securities in order to produce incremental earnings or protect against changes in the value of portfolio securities. The Fund generally purchases put options or writes covered call options to hedge against adverse movements in the value of portfolio holdings. When an option is written, the Fund receives a premium and becomes obligated to sell or purchase the underlying security at a fixed price, upon exercise of the option. Options are valued daily based upon the last sale price on the principal exchange on which the option is traded and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss upon the expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. Securities designated to cover outstanding call options are noted in the Statement of Investments where applicable. Shares subject to call, expiration date, exercise price, premium received and market value are detailed in a note to the Statement of Investments. Options written are reported as a liability in the Statement of Assets and Liabilities. Gains and losses are reported in the Statement of Operations. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. 32 OPPENHEIMER INTERNATIONAL BOND FUND 35 Written option activity for the six months ended March 31, 2000 was as follows:
CALL OPTIONS PUT OPTIONS ---------------------------------------------------------- NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF OPTIONS PREMIUMS OPTIONS PREMIUMS - ---------------------------------------------------------------------------------------- Options outstanding as of September 30, 1999 -- $ -- 52,083,537 $ 188,727 Options written 537,000,000 55,602 -- -- Options closed or expired (537,000,000) (55,602) (29,810,000) (66,937) Options exercised -- -- (22,273,537) (121,790) ------------------------------------------------------------ Options outstanding as of March 31, 2000 -- $ -- -- $ -- ===========================================================
================================================================================ 8. ILLIQUID OR RESTRICTED SECURITIES As of March 31, 2000, investments in securities included issues that are illiquid or restricted. Restricted securities are often purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are valued under methods approved by the Board of Trustees as reflecting fair value. A security may also be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Fund intends to invest no more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid or restricted securities. Certain restricted securities, eligible for resale to qualified institutional investors, are not subject to that limitation. The aggregate value of illiquid or restricted securities subject to this limitation as of March 31, 2000 was $16,396,768, which represents 5.85% of the Fund's net assets, of which $75,972 is considered restricted. Information concerning restricted securities is as follows:
VALUATION ACQUISITION COST PER UNIT AS OF SECURITY DATE PER UNIT MARCH 31, 2000 - ------------------------------------------------------------------------------------------------------------------------- BONDS Tag Heuer International SA, 12% Sr. Sub. Nts., 12/15/05 5/14/96 105.25% 108.53% - -------------------------------------------------------------------------------------------------------------------------
9. BANK BORROWINGS The Fund may borrow from a bank for temporary or emergency purposes including, without limitation, funding of shareholder redemptions provided asset coverage for borrowings exceeds 300%. The Fund has entered into an agreement which enables it to participate with other Oppenheimer funds in an unsecured line of credit with a bank, which permits bor-rowings up to $400 million, collectively. Interest is charged to each fund, based on its borrowings, at a rate equal to the Federal Funds Rate plus 0.45%. Borrowings are payable 30 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the average unutilized amount of the credit facility at a rate of 0.08% per annum. The Fund had no borrowings outstanding during the six months ended March 31, 2000. 33 OPPENHEIMER INTERNATIONAL BOND FUND 36 OPPENHEIMER INTERNATIONAL BOND FUND A Series of Oppenheimer International Bond Fund ================================================================================ OFFICERS AND TRUSTEES James C. Swain, Trustee and Chairman of the Board Bridget A. Macaskill, Trustee and President William H. Armstrong, Trustee Robert G. Avis, Trustee William A. Baker, Trustee George C. Bowen, Trustee Edward L. Cameron, Trustee Jon S. Fossel, Trustee Sam Freedman, Trustee Raymond J. Kalinowski, Trustee C. Howard Kast, Trustee Robert M. Kirchner, Trustee Ned M. Steel, Trustee Ruggero de'Rossi, Vice President Arthur P. Steinmetz, Vice President Andrew J. Donohue, Vice President and Secretary Brian W. Wixted, 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 SHAREHOLDER OppenheimerFunds Services 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 of those records 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 more complete information concerning the Fund, see the Prospectus. SHARES OF OPPENHEIMER FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT GUARANTEED BY ANY BANK, ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. 34 OPPENHEIMER INTERNATIONAL BOND FUND 37 OPPENHEIMERFUNDS FAMILY
============================================================================================== GLOBAL EQUITY Developing Markets Fund Global Fund International Small Company Fund Quest Global Value Fund Europe Fund Global Growth & Income Fund International Growth Fund ============================================================================================== EQUITY Stock Stock & Bond Enterprise Fund(1) Main Street(R) Growth & Income Fund Discovery Fund Quest Opportunity Value Fund Main Street(R) Small Cap Fund Total Return Fund Quest Small Cap Value Fund Quest Balanced Value Fund MidCap Fund Capital Income Fund(2) Capital Appreciation Fund Multiple Strategies Fund Growth Fund Disciplined Allocation Fund Disciplined Value Fund Convertible Securities Fund Quest Value Fund Trinity Growth Fund Specialty Trinity Core Fund Real Asset Fund Trinity Value Fund Gold & Special Minerals Fund =============================================== =============================================== FIXED INCOME Taxable Municipal International Bond Fund California Municipal Fund(3) World Bond Fund MainStreet(R) California Municipal Fund(1) High Yield Fund Florida Municipal Fund(3) Champion Income Fund New Jersey Municipal Fund(3) Strategic Income Fund New York Municipal Fund(3) Bond Fund Pennsylvania Municipal Fund(3) Senior Floating Rate Fund Municipal Bond Fund U.S. Government Trust Insured Municipal Fund Limited-Term Government Fund Intermediate Municipal Fund Rochester Division Rochester Fund Municipals Limited Term New York Municipal Fund ============================================================================================== MONEY MARKET(4) Money Market Fund Cash Reserves
1. Effective July 1, 1999, this fund is closed to new investors. See prospectus for details. 2. On 4/1/99, the Fund's name was changed from "Oppenheimer Equity Income Fund." 3. Available to investors only in certain states. 4. An investment in money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although these funds may seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds. Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two World Trade Center, New York, NY10048-0203. (C) Copyright 2000 OppenheimerFunds, Inc. All rights reserved. 35 OPPENHEIMER INTERNATIONAL BOND FUND 38 This page intentionally left blank 39 [GRAPHIC] 40 INFORMATION AND SERVICES - ------------------------------------------------------------------------------- As an Oppenheimer fund shareholder, you can benefit from special services designed to make investing simple. Whether it's automatic investment plans, timely market updates, or immediate account access, you can count on us whenever you need assistance. So call us today, or visit our website-- we're here to help. INTERNET 24-hr access to account information and transactions WWW.OPPENHEIMERFUNDS.COM GENERAL INFORMATION Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET 1.800.525.7048 TELEPHONE TRANSACTIONS Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET 1.800.852.8457 PHONELINK 24-hr automated information and automated transactions 1.800.533.3310 TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD) Mon-Fri 8:30am-7pm ET 1.800.843.4461 OPPENHEIMERFUNDS INFORMATION HOTLINE 24 hours a day, timely and insightful messages on the economy and issues that may affect your investments 1.800.835.3104 TRANSFER AND SHAREHOLDER SERVICING AGENT OppenheimerFunds Services P.O. Box 5270, Denver, CO 80217-5270 TICKER SYMBOLS Class A: OIBAX Class B: OIBBX Class C: OIBCX [OPPENHEIMERFUNDS LOGO] RS0880.001.0300 MAY 30, 2000 -----END PRIVACY-ENHANCED MESSAGE-----