N-30D 1 q63466n-30d.txt FORM N-30D 1 [PHOTO] ANNUAL REPORT SEPTEMBER 30, 2000 Oppenheimer INTERNATIONAL BOND FUND [OPPENHEIMERFUNDS LOGO] THE RIGHT WAY TO INVEST 2 Contents 1 President's Letter 3 An Interview with Your Fund's Managers 7 Fund Performance 14 FINANCIAL STATEMENTS 38 INDEPENDENT AUDITORS' REPORT 39 Federal Income Tax Information 40 Officers and Trustees REPORT HIGHLIGHTS -------------------------------------------------------------------------------- THE EMERGING MARKETS OF RUSSIA, BRAZIL AND MEXICO benefited from rising oil prices and strong economic growth. WEAKNESS IN THE EURO, HEIGHTENED BY A STRONG U.S. DOLLAR, held back European debt securities. OUR SUCCESSFUL NAVIGATION OF CHANGING ECONOMIC AND MARKET CONDITIONS offset a difficult investment environment. AVERAGE ANNUAL TOTAL RETURNS* For the 1-Year Period Ended 9/30/00 Class A Without With Sales Chg. Sales Chg. ------------------------ 8.93% 3.75% Class B Without With Sales Chg. Sales Chg. ------------------------ 7.94% 3.00% Class C Without With Sales Chg. Sales Chg. ------------------------ 7.95% 6.96% *SEE NOTES ON PAGE 12 FOR FURTHER DETAILS. 3 [PHOTO][PHOTO] JAMES C. SWAIN Chairman Oppenheimer International Bond Fund BRIDGET A. MACASKILL President Oppenheimer International Bond Fund PRESIDENT'S LETTER DEAR SHAREHOLDER, Over the past several decades, our investment teams have learned the importance of avoiding complacency when it comes to navigating the financial markets--especially when times are good. Right now, times appear particularly good. The U.S. economy is in its tenth year of expansion. In the bond market, U.S. Treasury issues have been performing favorably over the past year. In addition, despite volatility in the second quarter, the stock market has been providing attractive returns from a wide spectrum of industry sectors, capitalization ranges and investment styles. We have arrived at this juncture after months of monitoring the rapid pace of global economic growth and its implications for inflation, as well as the Federal Reserve Board's evolving monetary policy. At this point, economic indicators suggest a dampening of short-term inflationary pressures. While recent increases in oil prices are certainly taking their toll, we don't believe this signals a return to 1970's-style inflation. Accordingly, if the Fed continues in its diligence, the economy could maintain its healthy rate of growth. In the bond market, the achievement of a federal budget surplus has prompted the Treasury to buy back many of its long-term securities. The resulting supply shortage boosted these securities' returns, causing an inversion of the yield curve-- an unusual situation in which shorter term Treasuries yield more than their longer term counterparts. Other bond sectors are offering many opportunities in the form of attractive valuations. Perhaps most important is that we have begun to see encouraging signs in the stock market. Formerly high-flying Internet stocks have generally come down to earth, and investors have 1 OPPENHEIMER INTERNATIONAL BOND FUND 4 PRESIDENT'S LETTER begun to refocus on companies with strong business fundamentals and justifiable valuations. Investors have also returned to long-neglected, value-oriented companies. What else do these various trends tell us? They tell us that the ability to discriminate between long-term potential and short-lived fads has become more critical than ever. Trying to generate good long-term performance requires tracking the best companies through intensive research, combined with hard-earned experience. At OppenheimerFunds, our seasoned portfolio management teams fight complacency by remaining constantly aware of the risks that face the economy and financial markets. Virtually anything could affect the overall markets--a surge in inflation, a decline in productivity, deteriorating corporate earnings, or even the new Administration's proposals regarding tax reform, healthcare and Social Security. However, by remaining vigilant in our quest for fundamentally sound businesses, we believe we can find good investments that can weather market volatility. In this environment, we encourage you to consult your financial advisor and to stay on track with your long-term financial plan. For our part, we will continue to monitor the opportunities and risks ever present in the financial markets. Thank you for your confidence in OppenheimerFunds, The Right Way to Invest. Sincerely, /S/JAMES C. SWAIN /S/BRIDGET A. MACASKILL James C. Swain Bridget A. Macaskill October 20, 2000 THESE GENERAL MARKET VIEWS REPRESENT OPINIONS OF OPPENHEIMERFUNDS, INC. AND ARE NOT INTENDED TO PREDICT OR DEPICT PERFORMANCE OF THE SECURITIES MARKETS OR ANY PARTICULAR FUND. SPECIFIC DISCUSSION, AS IT APPLIES TO YOUR FUND, IS CONTAINED IN THE PAGES THAT FOLLOW. STOCKS AND BONDS HAVE DIFFERENT TYPES OF INVESTMENT RISKS; STOCKS ARE SUBJECT TO MARKET VOLATILITY AND BONDS ARE SUBJECT TO CREDIT AND INTEREST RATE RISKS. 2 OPPENHEIMER INTERNATIONAL BOND FUND 5 [PHOTO] PORTFOLIO MANAGEMENT TEAM (L TO R) Art Steinmetz Ruggero de'Rossi AN INTERVIEW WITH YOUR FUND'S MANAGERS Q. HOW DID OPPENHEIMER INTERNATIONAL BOND FUND PERFORM DURING THE 12 MONTHS THAT ENDED SEPTEMBER 30, 2000?(1) A. In what has been a challenging environment for fixed income markets, the Fund performed exceptionally well. Stronger-than-expected growth in the developed markets of Europe fueled inflation fears during the period, prompting the European Central Bank to raise interest rates. As a result, bond yields on new issues reflected those increases, eroding the value of existing lower yielding securities. Furthermore, a strong U.S. dollar, combined with weakness in the euro, the currency of the European Monetary Union, contributed to massive capital flows into U.S. markets--mostly at the expense of European markets. However, by maintaining a higher-than-usual exposure to emerging markets and emerging market currencies, which were largely unaffected by these developments, the Fund enjoyed positive returns during its fiscal year ended September 30, 2000. The Fund's Class A shares generated an 8.93% average annual total return, without sales charge, for the period ended September 30, 2000, outperforming its benchmarks for the same one-year period. The Salomon Brothers Non-US Dollar World Government Bond Index produced a -7.86% return and the Lipper International Income Index produced a -3.24% return.(2) 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. 2. The Salomon Brothers Non-US Dollar World Government Bond Index is a market capitalization weighted benchmark that tracks the performance of 13 government bond markets including Australia, Canada, Japan and 10 European countries. Thus, the Index does not reflect the performance of the fixed income markets in either the United States or in any emerging market countries. In addition, it is comprised of only government bonds and does not reflect the performance of corporate bonds. Lipper International Income Index includes funds that state in their prospectuses that they invest primarily in U.S. dollar and non-U.S. dollar debt securities of issuers located in at least three countries, excluding the United States, except in periods of market weakness. Additionally, the Index's returns do not consider sales charge. It is an unmanaged index and cannot be purchased directly by investors. 3 OPPENHEIMER INTERNATIONAL BOND FUND 6 "By maintaining a higher-than-usual exposure to the core emerging markets and their currencies, the Fund enjoyed strong returns." AN INTERVIEW WITH YOUR FUND'S MANAGERS WHY DID EMERGING MARKETS PERFORM SO POSITIVELY? Throughout the fiscal year, the core emerging-market economies of Russia, Brazil and Mexico all benefited from rising oil prices, reduced budget deficits, and increased treasury reserves. Russia, in particular, rebounded dramatically from default with a successful restructuring of its debt. As a major component of the Fund, Russian bonds exhibited impressive returns during the period, which contributed notably to overall performance. Robust growth in Brazil and, to a greater extent, Mexico, also boosted the performance of the Fund. In fact, the recent election of Vicente Fox Quesada as Mexico's president, in our view, bodes extremely well for the Mexican economy and the Mexican government's efforts to contain inflation. In addition, as capital flows into the United States showed few signs of waning, the value of dollar-denominated assets in general moved higher. Because the currencies of emerging markets are closely tied to movements in the U.S. dollar, their higher yielding securities reaped the rewards. WHAT OTHER STRATEGIES DID YOU EMPLOY IN THIS ENVIRONMENT? Apart from emerging markets, the international fixed income landscape proved increasingly difficult. Thus, we created opportunities through our navigation of changing economic and market conditions. For example, in response to the sagging euro, we maintained a lower-than-usual exposure to Europe. Similarly, we reduced our exposure in Japan, but for different reasons. While the relationship between the Japanese yen and the U.S. dollar has remained relatively stable, a stagnant Japanese economy has kept bond yields unattractively low. 4 OPPENHEIMER INTERNATIONAL BOND FUND 7 AVERAGE ANNUAL TOTAL RETURNS For the Periods Ended 9/30/00(3) Class A Since 1-Year 5-Year Inception ------------------------------ 3.75% 5.84% 6.51% Class B Since 1-Year 5-Year Inception ------------------------------ 3.00% 5.75% 6.51% Class C Since 1-Year 5-Year Inception ------------------------------ 6.96% 6.05% 6.64% Another strategy that worked to our advantage throughout the period was the Fund's emphasis on sovereign or government debt versus corporate securities. This was done for several reasons. First, we believed that, as the U.S. Federal Reserve's policy of monetary tightening produced visible signs of economic slowdown, sovereign debt would become more attractive to international fixed income investors. Second, with spreads, or differences in yield, between corporate and sovereign bonds nearing all-time highs this spring, we anticipated that improving economic conditions in emerging markets would bring interest rates down, pushing government bond prices higher. Finally, because sovereign debt is more liquid, or more easily traded, than corporate debt, it typically performs better during a rally. Concerned over the run-up in the Nasdaq--and the likelihood of a consequent decline in most markets--we began to reposition the Fund for greater liquidity in early March. What resulted was a more flexible and more agile portfolio, which helped to cushion the Fund from volatility when the Nasdaq experienced major setbacks shortly thereafter. WHAT IS YOUR OUTLOOK FOR THE INTERNATIONAL BOND MARKETS? We remain optimistic, particularly with respect to the attractiveness of emerging-market debt. However, because there appear to be fewer opportunities for price appreciation on the horizon, we've begun to reduce our exposure in terms of risk. In other words, while we continue to have a substantial allocation in emerging-market debt, we are investing this portion of the portfolio in higher quality, less-aggressive securities. 3. See page 12 for further details. 5 OPPENHEIMER INTERNATIONAL BOND FUND 8 REGIONAL ALLOCATION Percentage of invested assets(4) [PIE CHART] - Latin America 33.2% - Europe 20.6 - United States/ Canada 14.6 - Asia 11.8 - Middle East/ Africa 10.6 - Emerging Europe 9.2
STANDARDIZED YIELDS(5) For the 30 days Ended 9/30/00 Class A 11.14% Class B 10.94 Class C 10.93
As for the developed markets, the jury is still out on the euro. This has convinced us to maintain a cautious view. Although we've positioned a portion of the Fund to take advantage of a rebound in the euro, capital flows still favor the U.S. dollar. We will continue to monitor the situation closely, and are prepared to adjust our asset allocation, should we see a bottoming out of the euro. Of course, no one can truly predict what the economy or the markets will serve up. So our focus is on in-depth, painstaking research. By analyzing the overall risks of each economy, as well as the changing relationships among them, we are confident in our ability to capitalize on this wealth of investment opportunity. In fact, uncovering fixed income opportunities the world over is an important reason why Oppenheimer International Bond Fund is part of The Right Way to Invest.
TOP TEN COUNTRY HOLDINGS(4) ------------------------------------------------------------- United States 12.7% ------------------------------------------------------------- Brazil 9.7 ------------------------------------------------------------- Mexico 9.0 ------------------------------------------------------------- Russia 7.7 ------------------------------------------------------------- Argentina 6.4 ------------------------------------------------------------- Japan 6.3 ------------------------------------------------------------- Turkey 5.2 ------------------------------------------------------------- Great Britain 5.0 ------------------------------------------------------------- Venezuela 3.8 ------------------------------------------------------------- The Netherlands 3.5
4. Portfolio is subject to change. Percentages are as of September 30, 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 September 30, 2000. Falling share prices will tend to artificially raise yields. 6 OPPENHEIMER INTERNATIONAL BOND FUND 9 FUND PERFORMANCE HOW HAS THE FUND PERFORMED? Below is a discussion by OppenheimerFunds, Inc. of the Fund's performance during its fiscal year ended September 30, 2000, followed by a graphical comparison of the Fund's performance to two appropriate broad-based market indices. MANAGEMENT'S DISCUSSION OF PERFORMANCE. During the fiscal year that ended September 30, 2000, Oppenheimer International Bond Fund delivered strong performance, which, to a great extent, reflected the ongoing recovery of emerging markets. Reduction of budget deficits, growth in treasury reserves and rising oil prices proved advantageous for the core markets of Russia, Brazil and Mexico. European markets were stymied by weakness in the euro, as many currencies fell against a strong U.S. dollar. The Manager emphasized emerging-market debt throughout the period, maintaining a smaller position in European bonds. A widening of yield spreads between corporate securities and sovereign debt also worked to the benefit of the Fund, which was primarily invested in typically more-liquid sovereign issues. Investments in Japanese markets were reduced, as economic stagnation continued to depress bond yields. The Fund's portfolio holdings, allocations and strategies are subject to change. 7 OPPENHEIMER INTERNATIONAL BOND FUND 10 FUND PERFORMANCE Continued COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the performance of a hypothetical $10,000 investment in each class of shares of the Fund held from the inception date of June 15, 1995 until September 30, 2000. The Fund's performance reflects the deduction of the maximum initial sales charge on Class A shares, the applicable contingent deferred sales charge on Class B and Class C shares, and reinvestments of all dividends and capital gains distributions. The performance of each class of the Fund's shares is compared to two indices because the Fund invests in debt securities issued by governments in both developed countries and emerging market countries and in debt securities issued by companies located in those countries. In the Manager's view, no single index adequately combines both types of investments. Performance is compared to the Salomon Brothers Non-US Dollar World Government Bond Index, a subset of the Salomon Brothers World Government Bond Index. The Salomon Brothers Non-US Dollar World Government Bond Index is a market capitalization weighted benchmark that tracks the performance of 13 government bond markets including Australia, Canada, Japan and 10 European countries. Thus, the Index does not reflect the performance of the fixed income markets in either the United States or in any emerging market countries. In addition, it is composed of only government bonds and does not reflect the performance of corporate bonds. 8 OPPENHEIMER INTERNATIONAL BOND FUND 11 Performance is also compared to the Salomon Brothers Brady Bond Index, which provides a total return benchmark for emerging market country bonds. It is designed to allow direct comparison of the developing country debt market with other markets. A Brady Bond is a bond that is exchanged for debt or new money under the debt-restructuring program initiated in 1990 by the U.S. Department of the Treasury. Index performance reflects the reinvestment of dividends but does not consider the effect of capital gains or transaction costs, and none of the data in the graphs that follow shows the effect of taxes. The Fund's performance reflects the effects of Fund business and operating expenses. While index comparisons may be useful to provide a benchmark for the Fund's performance, it must be noted that the Fund's investments are not limited to the securities or countries in the indices. 9 OPPENHEIMER INTERNATIONAL BOND FUND 12 FUND PERFORMANCE [THE FOLLOWING TABLE WAS ORIGINALLY A LINE GRAPH IN THE PRINTED MATERIALS] CLASS A SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer International Salomon Brothers Non-US Dollar Salomon Brothers Bond Fund (Class A) World Government Bond Index Brady Bond Index 06/15/95 $9525 $10000 $10000 06/30/95 9570 10050 10225 09/30/95 10014 9806 10898 12/31/95 10473 10009 11913 03/31/96 10860 9840 12444 06/30/96 11362 9879 13584 09/30/96 11898 10201 14997 12/31/96 12492 10418 16032 03/31/97 12584 9815 16227 06/30/97 12934 10092 17889 09/30/97 13246 10114 19130 12/31/97 12799 9974 18734 03/31/98 12978 10015 19758 06/30/98 12850 10182 18892 09/30/98 11591 11160 16045 12/31/98 12242 11748 17430 03/31/99 12216 11179 18382 06/30/99 12635 10678 18564 09/30/99 12818 11331 18865 12/31/99 13589 11152 21079 03/31/00 14150 11023 22267 06/30/00 13986 10935 22275 09/30/00 13962 10441 23610
AVERAGE ANNUAL RETURN OF CLASS A SHARES OF THE FUND AT 9/30/00(1) 1-Year 3.75% 5-Year 5.84% Life 6.51% [THE FOLLOWING TABLE WAS ORIGINALLY A LINE GRAPH IN THE PRINTED MATERIALS] CLASS B SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer International Salomon Brothers Non-US Dollar Salomon Brothers Brady Bond Fund (Class B) World Government Bond Index Bond Index 06/15/95 $10000 $10000 $10000 06/30/95 10045 10050 10225 09/30/95 10492 9806 10898 12/31/95 10929 10009 11913 03/31/96 11312 9840 12444 06/30/96 11837 9879 13584 09/30/96 12350 10201 14997 12/31/96 12943 10418 16032 03/31/97 13014 9815 16227 06/30/97 13352 10092 17889 09/30/97 13649 10114 19130 12/31/97 13165 9974 18734 03/31/98 13324 10015 19758 06/30/98 13168 10182 18892 09/30/98 11852 11160 16045 12/31/98 12496 11748 17430 03/31/99 12447 11179 18382 06/30/99 12851 10678 18564 09/30/99 13013 11331 18865 12/31/99 13773 11152 21079 03/31/00 14318 11023 22267 06/30/00 14094 10935 22275 09/30/00 13963 10441 23610
AVERAGE ANNUAL RETURN OF CLASS B SHARES OF THE FUND AT 9/30/00(1) 1-Year 3.00% 5-Year 5.75% Life 6.51% 10 OPPENHEIMER INTERNATIONAL BOND FUND 13 [THE FOLLOWING TABLE WAS ORIGINALLY A LINE GRAPH IN THE PRINTED MATERIALS] CLASS C SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer International Salomon Brothers Non-US Dollar Salomon Brothers Brady Bond Fund (Class C) World Government Bond Index Bond Index 06/15/95 $10000 $10000 $10000 06/30/95 10045 10050 10225 09/30/95 10473 9806 10898 12/31/95 10929 10009 11913 03/31/96 11311 9840 12444 06/30/96 11814 9879 13584 09/30/96 12350 10201 14997 12/31/96 12943 10418 16032 03/31/97 12990 9815 16227 06/30/97 13352 10092 17889 09/30/97 13649 10114 19130 12/31/97 13165 9974 18734 03/31/98 13324 10015 19758 06/30/98 13169 10182 18892 09/30/98 11853 11160 16045 12/31/98 12497 11748 17430 03/31/99 12448 11179 18382 06/30/99 12852 10678 18564 09/30/99 13014 11331 18865 12/31/99 13774 11152 21079 03/31/00 14319 11023 22267 06/30/00 14097 10935 22275 09/30/00 14048 10441 23610
AVERAGE ANNUAL RETURN OF CLASS C SHARES OF THE FUND AT 9/30/00(1) 1-Year 6.96% 5-Year 6.05% Life 6.64% THE PERFORMANCE INFORMATION FOR BOTH INDICES IN THE GRAPHS BEGINS ON 5/31/95. 1. See page 12 for further details. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. 11 OPPENHEIMER INTERNATIONAL BOND FUND 14 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. BECAUSE OF ONGOING MARKET VOLATILITY, THE FUND'S RETURNS MAY HAVE CHANGED SUBSTANTIALLY FROM THE RETURNS SHOWN IN THIS REPORT. FOR QUARTERLY UPDATES ON THE FUND'S PERFORMANCE, PLEASE CONTACT YOUR FINANCIAL ADVISOR, CALL US AT 1.800.525.7048 OR VISIT OUR WEBSITE, WWW.OPPENHEIMERFUNDS.COM. Total returns and the ending account values in the graphs include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. 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 1% (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. 12 OPPENHEIMER INTERNATIONAL BOND FUND 15 FINANCIALS 13 OPPENHEIMER INTERNATIONAL BOND FUND 16 STATEMENT OF INVESTMENTS September 30, 2000
PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ================================================================================================================================== FOREIGN GOVERNMENT OBLIGATIONS--62.6% ---------------------------------------------------------------------------------------------------------------------------------- ARGENTINA--6.3% Argentina (Republic of) Bonds: 9.75%, Series WW, 12/4/05 $ 285,000 $ 259,350 11.75%, 6/15/15 3,945,000 3,619,537 Bonos de Consolidacion de Deudas, Series PRE3, 2.696%, 9/1/02(1) [ARP] 3,084,239 2,828,868 ---------------------------------------------------------------------------------------------------------------------------------- Argentina (Republic of) Par Bonds, 6%, 3/31/23(1) 705,000 479,400 ---------------------------------------------------------------------------------------------------------------------------------- Argentina (Republic of) Unsec. Unsub. Nts., 11.75%, 4/7/09 510,000 481,950 ---------------------------------------------------------------------------------------------------------------------------------- Buenos Aires (Province of) Bonds, Bonos de Consolidacion de Deudas, Series BPR01, 2.693%, 4/1/07(1) [ARP] 3,913,350 2,765,835 ---------------------------------------------------------------------------------------------------------------------------------- City of Buenos Aires Bonds, Series 3, 10.50%, 5/28/04 [ARP] 4,410,000 3,872,098 -------------- 14,307,038 ---------------------------------------------------------------------------------------------------------------------------------- BELGIUM--2.2% Belgium (Kingdom of) Bonds, Series 35, 5.75%, 9/28/10 [EUR] 5,620,000 5,018,670 ---------------------------------------------------------------------------------------------------------------------------------- BRAZIL--6.6% Brazil (Federal Republic of) Bonds: 10.125%, 5/15/27 3,310,000 2,573,525 12.25%, 3/6/30 315,000 286,650 12.75%, 1/15/20 10,510,000 10,089,600 ---------------------------------------------------------------------------------------------------------------------------------- Brazil (Federal Republic of) Gtd. Disc. Bonds, 7.375%, 4/15/24(1) 460,000 366,275 ---------------------------------------------------------------------------------------------------------------------------------- Brazil (Federal Republic of) Unsec. Unsub. Bonds, 11%, 8/17/40 1,979,000 1,581,221 -------------- 14,897,271 ---------------------------------------------------------------------------------------------------------------------------------- BULGARIA--1.0% Bulgaria (Republic of) Front-Loaded Interest Reduction Bearer Bonds, Tranche A, 3%, 7/28/12(1) 1,885,000 1,373,694 ---------------------------------------------------------------------------------------------------------------------------------- Bulgaria (Republic of) Interest Arrears Bonds, 7.75%, 7/28/11(1) 1,165,000 891,225 -------------- 2,264,919 ---------------------------------------------------------------------------------------------------------------------------------- CANADA--1.9% Canada (Government of) Bonds, 7%, 12/1/06 [CAD] 5,990,000 4,235,479 ---------------------------------------------------------------------------------------------------------------------------------- COLOMBIA--0.6% Colombia (Republic of) Bonds, 9.75%, 4/23/09 1,780,000 1,432,900 ---------------------------------------------------------------------------------------------------------------------------------- ECUADOR--0.6% Ecuador (Republic of) Bonds, 4%, 8/15/30(1,2) 1,847,000 729,565 ---------------------------------------------------------------------------------------------------------------------------------- Ecuador (Republic of) Unsec. Bonds: 4%, 8/15/30(1) 806,000 318,370 12%, 11/15/12(2) 114,000 80,085 12%, 11/15/12 435,000 305,587 -------------- 1,433,607 ---------------------------------------------------------------------------------------------------------------------------------- FRANCE--3.3% France (Government of) Bonds, Obligations Assimilables du Tresor, 5.50%, 4/25/07 [EUR] 8,470,000 7,580,095
14 OPPENHEIMER INTERNATIONAL BOND FUND 17
PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------------------------------------------------------------- GERMANY--1.5% Germany (Republic of) Bonds, 7.50%, 9/9/04 [EUR] 3,690,000 $ 3,516,613 ---------------------------------------------------------------------------------------------------------------------------------- GREAT BRITAIN--5.0% United Kingdom Treasury Bonds, 8.50%, 12/7/05 [GBP] 6,750,000 11,259,295 ---------------------------------------------------------------------------------------------------------------------------------- GREECE--0.5% Hellenic (Republic of) Bonds, 8.60%, 3/26/08 [GRD] 362,000,000 1,085,110 ---------------------------------------------------------------------------------------------------------------------------------- INDONESIA--0.1% Perusahaan Listr Nts., 17%, 8/21/01 [IDR] 2,000,000,000 229,345 ---------------------------------------------------------------------------------------------------------------------------------- IVORY COAST--0.5% Ivory Coast (Government of) Past Due Interest Bonds, Series F, 1.90%, 3/29/18(3) [FRF] 41,994,750 1,031,092 ---------------------------------------------------------------------------------------------------------------------------------- JAPAN--2.4% Japan (Government of) Bonds, Series 187, 3.30%, 6/20/06 [JPY] 537,400,000 5,476,944 ---------------------------------------------------------------------------------------------------------------------------------- MEXICO--3.9% United Mexican States Bonds: 10.375%, 2/17/09 215,000 234,458 11.375%, 9/15/16 2,335,000 2,720,275 11.50%, 5/15/26(4) 4,780,000 5,814,870 -------------- 8,769,603 ---------------------------------------------------------------------------------------------------------------------------------- NORWAY--1.6% Norway (Government of) Bonds: 5.50%, 5/15/09 [NOK] 21,270,000 2,220,752 9.50%, 10/31/02 [NOK] 12,255,000 1,408,358 -------------- 3,629,110 ---------------------------------------------------------------------------------------------------------------------------------- PANAMA--0.8% Panama (Republic of) Bonds, 8.875%, 9/30/27 222,000 185,925 ---------------------------------------------------------------------------------------------------------------------------------- Panama (Republic of) Interest Reduction Bonds, 4.50%, 7/17/14(1) 2,140,000 1,712,000 -------------- 1,897,925 ---------------------------------------------------------------------------------------------------------------------------------- PERU--2.1% Peru (Republic of) Sr. Nts., Zero Coupon, 6.12%, 2/28/16(5) 10,538,933 4,710,903 ---------------------------------------------------------------------------------------------------------------------------------- PHILIPPINES--0.6% Philippines (Republic of) Nts., 10.625%, 3/16/25 1,520,000 1,295,800 ---------------------------------------------------------------------------------------------------------------------------------- RUSSIA--7.1% Russian Federation Bonds, 8.25%, 3/31/30(6) 2,444,160 1,619,256 ---------------------------------------------------------------------------------------------------------------------------------- Russian Federation Unsec. Unsub. Nts.: 8.75%, 7/24/05 1,511,000 1,201,245 12.75%, 6/24/28 350,000 304,938 ---------------------------------------------------------------------------------------------------------------------------------- Russian Federation Unsub. Bonds, 2.50%, 3/31/30(1,7) 33,336,000 12,907,283 -------------- 16,032,722 ---------------------------------------------------------------------------------------------------------------------------------- SOUTH AFRICA--3.4% South Africa (Republic of) Bonds, Series 153, 13%, 8/31/10 [ZAR] 58,005,000 7,770,809 ---------------------------------------------------------------------------------------------------------------------------------- SPAIN--2.7% Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion del Estado, 4.95%, 7/30/05 [EUR] 7,130,000 6,180,538
15 OPPENHEIMER INTERNATIONAL BOND FUND 18 STATEMENT OF INVESTMENTS Continued
PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ---------------------------------------------------------------------------------------------------------------------------------- SWEDEN--0.4% Sweden (Kingdom of) Debs., Series 1038, 6.50%, 10/25/06 [SEK] 9,300,000 $ 1,029,710 ---------------------------------------------------------------------------------------------------------------------------------- THE NETHERLANDS--3.5% Netherlands (Government of) Bonds, 6.75%, 11/15/05 [EUR] 8,350,000 7,844,167 ---------------------------------------------------------------------------------------------------------------------------------- TURKEY--0.3% Turkey (Republic of) Bonds, 11.75%, 6/15/10 718,000 719,616 ---------------------------------------------------------------------------------------------------------------------------------- VENEZUELA--3.7% Venezuela (Republic of) Bonds, 9.25%, 9/15/27(4) 1,810,000 1,229,895 ---------------------------------------------------------------------------------------------------------------------------------- Venezuela (Republic of) Collateralized Par Bonds: Series W-A, 6.75%, 3/31/20 3,250,000 2,413,125 Series W-B, 6.75%, 3/31/20 375,000 278,438 ---------------------------------------------------------------------------------------------------------------------------------- Venezuela (Republic of) Disc. Bonds, Series DL, 7.875%, 12/18/07(1) 5,215,714 4,482,228 -------------- 8,403,686 -------------- Total Foreign Government Obligations (Cost $145,898,454) 142,052,967 ================================================================================================================================== LOAN PARTICIPATIONS--3.0% Algeria (Republic of) Reprofiled Debt Loan Participation Nts., Tranche 1, 1.312%, 9/4/06(1,6) [JPY] 52,565,039 383,074 ---------------------------------------------------------------------------------------------------------------------------------- Algeria (Republic of) Trust III Nts., Tranche 3, 2.387%, 3/4/10(1,6,7) [JPY] 314,532,000 1,993,841 ---------------------------------------------------------------------------------------------------------------------------------- Algeria (Republic of) Unrestructured Nts., 6.615%, 1/22/01(6) [JPY] 95,366,666 858,265 ---------------------------------------------------------------------------------------------------------------------------------- ING Barings LLC, Bank Mandiri Linked Nts., Series 5C, 8.344%, 6/1/05(1,6) 250,000 189,062 ---------------------------------------------------------------------------------------------------------------------------------- Deutsche Bank AG, Bank Mandiri Loan: Series 3C, 8.344%, 6/1/03(1,6) 250,000 182,500 Series 4C, 8.344%, 6/1/04(1,6) 250,000 175,000 Series 5 yr., 8.344%, 6/1/05(1,6) 250,000 170,000 ---------------------------------------------------------------------------------------------------------------------------------- PT Bank Negara Indonesia Gtd. Nts.: Series 3 yr., 10.094%, 8/25/01(1,6) 1,670,000 1,544,750 Series 4 yr., 10.344%, 8/25/02(1,6) 890,000 764,287 ---------------------------------------------------------------------------------------------------------------------------------- Salomon Smith Barney, Inc., Bank Umum Loan, Series C, 10.094%, 8/25/01(1,6) 500,000 462,500 -------------- Total Loan Participations (Cost $6,539,357) 6,723,279 ================================================================================================================================== CORPORATE BONDS AND NOTES--11.4% Bakrie Investindo: Zero Coupon Promissory Nts., 3/16/1999(3,6,8) [IDR] 5,990,000,000 102,393 Zero Coupon Promissory Nts., 7/10/1998(3,6,8) [IDR] 2,000,000,000 34,188 ---------------------------------------------------------------------------------------------------------------------------------- Development Bank of Japan Gtd. Unsec. Bonds, 2.875%, 12/20/06 [JPY] 860,000,000 8,607,561 ---------------------------------------------------------------------------------------------------------------------------------- Empresa Electrica del Norte Grande SA, 7.75% Bonds, 3/15/06(6,9) 1,420,000 315,950 ---------------------------------------------------------------------------------------------------------------------------------- Hanvit Bank: 0%/12.75% Unsec. Sub. Nts., 3/1/10(2,10) 3,400,000 3,459,500 0%/12.75% Unsec. Sub. Nts., 3/1/10(10) 765,000 778,387 ---------------------------------------------------------------------------------------------------------------------------------- Mexican Williams Sr. Nts., 7.671%, 11/15/08(1) 500,000 470,000 ---------------------------------------------------------------------------------------------------------------------------------- Ongko International Finance Co. BV, 10.50% Sec. Nts., 3/29/04(3,6,8) 365,000 10,038 ---------------------------------------------------------------------------------------------------------------------------------- Petroleos Mexicanos Bonds, 9.50%, 9/15/27 855,000 884,925 ---------------------------------------------------------------------------------------------------------------------------------- Procter & Gamble Co., 1.50% Sr. Unsec. Unsub. Bonds, 12/7/05 [JPY] 895,000,000 8,281,193
16 OPPENHEIMER INTERNATIONAL BOND FUND 19
PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ================================================================================================================================== CORPORATE BONDS AND NOTES Continued PT Polysindo Eka Perkasa: 11% Nts., 6/18/03(3,6,8) $ 500,000 $ 65,000 11% Nts., 7/2/03(3,6,8) 1,000,000 130,000 20% Nts., 3/6/01(3,8) [IDR] 3,000,000,000 44,444 24% Nts., 6/16/03(3,8) [IDR] 2,000,000,000 29,630 24% Nts., 6/19/03(3,8) [IDR] 4,107,500,000 60,852 ---------------------------------------------------------------------------------------------------------------------------------- Reliance Industries Ltd.: 10.25% Unsec. Nts., Series B, 1/15/97(4,11) 2,605,000 2,240,975 10.25% Unsec. Nts., Series B, 1/15/97(2) 250,000 215,065 ---------------------------------------------------------------------------------------------------------------------------------- TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(6) 70,000 74,683 -------------- Total Corporate Bonds and Notes (Cost $29,465,687) 25,804,784
UNITS ================================================================================================================================== RIGHTS, WARRANTS AND CERTIFICATES--0.0% Mexico Value Rts., Exp. 6/30/03 (Cost $0) 984,000 --
PRINCIPAL AMOUNT ================================================================================================================================== STRUCTURED INSTRUMENTS--12.6% Citibank NA (Nassau Branch), Mexican Nuevo Peso Linked Nts.: 18.70%, 3/3/03 [MXN] 29,160,361 3,151,011 27.40%, 9/20/01 [MXN] 32,103,244 3,518,643 ---------------------------------------------------------------------------------------------------------------------------------- Citibank NA, Brazilian Real Linked Nts.: 24.10%, 5/26/03 [BRR] 2,400,000 1,332,033 24.25%, 5/23/03 [BRR] 4,794,118 2,663,659 ---------------------------------------------------------------------------------------------------------------------------------- Credit Suisse First Boston Corp. (New York Branch), Russian Obligatzii Federal'nogo Zaima Linked Nts.: Series 25030, Zero Coupon, 146.53%, 12/15/01(5,6) [RUR] 2,143,000 53,085 Series 27001, 20.11%, 2/6/02(1,6) [RUR] 1,378,970 41,699 Series 27002, 20.11%, 5/22/02(1,6) [RUR] 625,200 18,453 Series 27003, 20.11%, 6/5/02(1,6) [RUR] 1,185,010 34,921 Series 27004, 20.11%, 9/18/02(1,6) [RUR] 686,610 19,937 Series 27005, 20.11%, 10/9/02(1,6) [RUR] 1,395,980 39,665 Series 27006, 20.11%, 1/22/03(1,6) [RUR] 1,973,290 54,911 Series 27007, 20.11%, 2/5/03(1,6) [RUR] 2,144,860 59,555 Series 27008, 20.11%, 5/21/03(1,6) [RUR] 625,200 17,051 Series 27009, 20.11%, 6/4/03(1,6) [RUR] 2,949,470 80,345 Series 27009, 20.11%, 6/4/03(1,6) [RUR] 6,363,674 173,351 Series 27010, 20.11%, 9/17/03(1,6) [RUR] 625,200 16,788 Series 27011, 20.11%, 10/8/03(1,6) [RUR] 3,635,620 95,229 Series 28001, 20.11%, 1/21/04(1,6) [RUR] 625,200 16,007 Series L, 20.11%, 2/6/02(1,6) [RUR] 566,080 17,118 Series L, 20.11%, 5/22/02(1,6) [RUR] 566,080 16,708 Series L, 20.11%, 6/5/02(1,6) [RUR] 566,080 16,682 Series L, 20.11%, 9/18/02(1,6) [RUR] 566,080 16,437 Series L, 20.11%, 10/9/02(1,6) [RUR] 566,080 16,085 Series L, 20.11%, 1/22/03(1,6) [RUR] 566,080 15,752 Series L, 20.11%, 2/5/03(1,6) [RUR] 566,080 15,718 Series L, 20.11%, 5/21/03(1,6) [RUR] 566,080 15,439 Series L, 20.11%, 6/4/03(1,6) [RUR] 566,080 15,420 Series L, 20.11%, 9/17/03(1,6) [RUR] 566,080 15,200
17 OPPENHEIMER INTERNATIONAL BOND FUND 20 STATEMENT OF INVESTMENTS Continued
PRINCIPAL MARKET VALUE AMOUNT SEE NOTE 1 ================================================================================================================================== STRUCTURED INSTRUMENTS Continued Credit Suisse First Boston Corp. (New York Branch), Russian Obligatzii Federal'nogo Zaima Linked Nts.: Continued Series L, 20.11%, 10/8/03(1,6) [RUR] 566,080 $ 14,827 Series L, 20.11%, 1/21/04(1,6) [RUR] 566,080 14,493 Series L, Zero Coupon, 53.77%, 12/15/01(5,6) [RUR] 1,940,000 48,057 ---------------------------------------------------------------------------------------------------------------------------------- Deutsche Bank AG, Turkish Lira Linked Nts., 11%, 12/11/00 8,500,000 8,573,950 ---------------------------------------------------------------------------------------------------------------------------------- ING Barings LLC, Zero Coupon USD Russian Equity Linked Nts., 4/19/01 3,500 264,495 ---------------------------------------------------------------------------------------------------------------------------------- Salomon Smith Barney, Inc. Brazilian Real Linked Nts., 23.30%, 5/30/03 [BRR] 4,760,000 2,689,258 ---------------------------------------------------------------------------------------------------------------------------------- Salomon Smith Barney, Inc. Mexican Nuevo Peso Linked Nts., 18.65%, 8/25/03 [MXN] 31,390,088 3,273,291 ---------------------------------------------------------------------------------------------------------------------------------- Salomon Smith Barney, Inc. Turkish Lira Linked Nts., 11%, 1/16/01 2,209,261 2,230,735 -------------- Total Structured Instruments (Cost $28,684,723) 28,656,008
DATE STRIKE CONTRACTS ================================================================================================================================== OPTIONS PURCHASED--0.1% European Monetary Unit Call 12/5/00 EUR0.937 5,029,005 22,766 ---------------------------------------------------------------------------------------------------------------------------------- European Monetary Unit/ Japanese Yen Call(6) 10/24/00 $97.86 6,435,000 28,333 ---------------------------------------------------------------------------------------------------------------------------------- South Korean Won Call 11/28/00 KRW1,100.00 8,700,000 52,200 ---------------------------------------------------------------------------------------------------------------------------------- Thailand Baht Call(6) 12/6/00 THB38.00 649,040,000 64,904 -------------- Total Options Purchased (Cost $543,758) 168,203
PRINCIPAL AMOUNT ================================================================================================================================== REPURCHASE AGREEMENTS--8.7% Repurchase agreement with PaineWebber, Inc., 6.50%, dated 9/29/00, to be repurchased at $19,837,740 on 10/2/00, collateralized by U.S. Treasury Nts., 4.25%-5.50%, 7/31/01-11/15/03, with a value of $20,241,415 (Cost $19,827,000) 19,827,000 19,827,000 ---------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $230,958,979) 98.4% 223,232,241 ---------------------------------------------------------------------------------------------------------------------------------- OTHER ASSETS NET OF LIABILITIES 1.6 3,630,364 -------------------------------------- NET ASSETS 100.0% $226,862,605 ======================================
18 OPPENHEIMER INTERNATIONAL BOND FUND 21 FOOTNOTES TO STATEMENT OF INVESTMENTS Principal amount is reported in U.S. Dollars, except for those denoted in the following currencies: ARP Argentine Peso JPY Japanese Yen BRR Brazilian Real KRW South Korean Won CAD Canadian Dollar MXN Mexican Nuevo Peso EUR Euro NOK Norwegian Krone FRF French Franc RUR Russian Ruble GBP British Pound Sterling SEK Swedish Krona GRD Greek Drachma THB Thai Baht IDR Indonesian Rupiah ZAR South African Rand
1. Represents the current interest rate for a variable or increasing rate security. 2. 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 $4,484,215 or 1.98% of the Fund's net assets as of September 30, 2000. 3. Issuer is in default. 4. A sufficient amount of liquid assets has been designated to cover outstanding written options, as follows:
PRINCIPAL/CONTRACTS EXPIRATION EXERCISE PREMIUM MARKET VALUE SUBJECT TO CALL/PUT DATE PRICE RECEIVED SEE NOTE 1 ---------------------------------------------------------------------------------------------------------------------------------- European Monetary Unit Put 4,594,035 12/5/00 EUR0.856 $ 47,778 $ 37,359 European Monetary Unit/Japanese Yen Put $6,435,000 10/24/00 $ 91.00 44,897 19,157 United Mexican States Bonds Call 4,780 10/10/00 128.00% 35,850 110 United Mexican States Bonds Put 4,780 10/10/00 124.50 169,690 157,023 Venezuela (Republic of) Bonds Call 840 11/13/00 68.80 9,912 6,888 ------------------------- $308,127 $220,537 =========================
5. For zero coupon bonds, the interest rate shown is the effective yield on the date of purchase. 6. Identifies issues considered to be illiquid or restricted--See Note 8 of Notes to Financial Statements. 7. When-issued security to be delivered and settled after September 30, 2000. 8. Non-income-producing security. 9. Securities with an aggregate market value of $315,950 are held in collateralized accounts to cover initial margin requirements on open futures sales contracts. See Note 6 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. 11. A sufficient amount of securities has been designated to cover outstanding foreign currency contracts. See Note 5 of Notes to Financial Statements. 19 OPPENHEIMER INTERNATIONAL BOND FUND 22 STATEMENT OF INVESTMENTS Continued FOOTNOTES TO STATEMENT OF INVESTMENTS Continued DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC DIVERSIFICATION, AS A PERCENTAGE OF TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS:
GEOGRAPHICAL DIVERSIFICATION MARKET VALUE PERCENT -------------------------------------------------------------------------------------------------- United States $28,276,396 12.7% Brazil 21,582,220 9.7 Mexico 20,067,473 9.0 Russia 17,256,149 7.7 Argentina 14,307,039 6.4 Japan 14,084,505 6.3 Turkey 11,524,301 5.2 Great Britain 11,259,295 5.0 Venezuela 8,403,686 3.8 The Netherlands 7,844,167 3.5 South Africa 7,770,809 3.5 France 7,580,095 3.4 Spain 6,180,538 2.8 Belgium 5,018,670 2.2 Peru 4,710,903 2.1 Korea, Republic of (South) 4,237,888 1.9 Canada 4,235,479 1.9 Indonesia 4,193,989 1.9 Norway 3,629,111 1.6 Germany 3,516,613 1.6 Algeria 3,235,179 1.4 India 2,456,039 1.1 Bulgaria 2,264,919 1.0 Panama 1,897,925 0.9 Ecuador 1,433,608 0.6 Colombia 1,432,900 0.6 Philippines 1,295,800 0.6 Greece 1,085,110 0.5 Ivory Coast 1,031,092 0.5 Sweden 1,029,710 0.5 Chile 315,950 0.1 Switzerland 74,683 0.0 --------------------------------- Total $223,232,241 100.0% =================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 20 OPPENHEIMER INTERNATIONAL BOND FUND 23 STATEMENT OF ASSETS AND LIABILITIES September 30, 2000 ========================================================================================================== ASSETS Investments, at value (cost $230,958,979)--see accompanying statement $223,232,241 ---------------------------------------------------------------------------------------------------------- Cash 351,989 ---------------------------------------------------------------------------------------------------------- Cash--foreign currencies (cost $937,567) 937,567 ---------------------------------------------------------------------------------------------------------- Cash--collateral for futures 410,000 ---------------------------------------------------------------------------------------------------------- Unrealized appreciation on foreign currency contracts 103,418 ---------------------------------------------------------------------------------------------------------- Receivables and other assets: Interest, dividends and principal paydowns 4,747,027 Shares of beneficial interest sold 277,576 Other 3,425 -------------- Total assets 230,063,243 ========================================================================================================== LIABILITIES Unrealized depreciation on foreign currency contracts 254,961 ---------------------------------------------------------------------------------------------------------- Options written, at value (premiums received $308,127)--see accompanying statement 220,537 ---------------------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased on a when-issued basis 795,117 Shares of beneficial interest redeemed 717,385 Dividends 687,702 Closed foreign currency contracts 249,618 Distribution and service plan fees 146,250 Daily variation on futures contracts 26,248 Trustees' compensation 1,571 Other 101,249 -------------- Total liabilities 3,200,638 ========================================================================================================== NET ASSETS $226,862,605 ============== ========================================================================================================== COMPOSITION OF NET ASSETS Paid-in capital $286,287,868 ---------------------------------------------------------------------------------------------------------- Overdistributed net investment income (565,330) ---------------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (50,944,836) ---------------------------------------------------------------------------------------------------------- Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies (7,915,097) -------------- NET ASSETS $226,862,605 ==============
21 OPPENHEIMER INTERNATIONAL BOND FUND 24 STATEMENT OF ASSETS AND LIABILITIES Continued ========================================================================================================== NET ASSET VALUE PER SHARE ---------------------------------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net assets of $100,928,119 and 24,106,571 shares of beneficial interest outstanding) $4.19 Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $4.40 ---------------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $98,271,661 and 23,551,443 shares of beneficial interest outstanding) $4.17 ---------------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $27,662,825 and 6,631,791 shares of beneficial interest outstanding) $4.17
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 22 OPPENHEIMER INTERNATIONAL BOND FUND 25 STATEMENT OF OPERATIONS For the Year Ended September 30, 2000 ========================================================================================================== INVESTMENT INCOME Interest (net of foreign withholding taxes of $151,591) $29,787,397 ---------------------------------------------------------------------------------------------------------- Dividends (net of foreign withholding taxes of $72) 410 ------------- Total income 29,787,807 ========================================================================================================== EXPENSES Management fees 1,910,655 ---------------------------------------------------------------------------------------------------------- Distribution and service plan fees: Class A 277,421 Class B 1,152,536 Class C 307,355 ---------------------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees 388,411 ---------------------------------------------------------------------------------------------------------- Shareholder reports 185,088 ---------------------------------------------------------------------------------------------------------- Custodian fees and expenses 145,027 ---------------------------------------------------------------------------------------------------------- Trustees' compensation 2,773 ---------------------------------------------------------------------------------------------------------- Other 90,651 ------------- Total expenses 4,459,917 Less expenses paid indirectly (39,430) ------------- Net expenses 4,420,487 ========================================================================================================== NET INVESTMENT INCOME 25,367,320 ========================================================================================================== REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on: Investments (including premiums on options exercised) 7,287,599 Closing of futures contracts 329,009 Closing and expiration of option contracts written 118,557 Foreign currency transactions (19,029,644) ------------- Net realized loss (11,294,479) ---------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) on: Investments 8,460,132 Translation of assets and liabilities denominated in foreign currencies (1,785,490) ------------- Net change 6,674,642 ------------- Net realized and unrealized loss (4,619,837) ========================================================================================================== NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $20,747,483 =============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 23 OPPENHEIMER INTERNATIONAL BOND FUND 26 STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30, 2000 1999 ================================================================================================ OPERATIONS ------------------------------------------------------------------------------------------------ Net investment income $ 25,367,320 $ 33,032,068 ------------------------------------------------------------------------------------------------ Net realized loss (11,294,479) (26,122,910) ------------------------------------------------------------------------------------------------ Net change in unrealized appreciation 6,674,642 17,536,670 ------------------------------- Net increase in net assets resulting from operations 20,747,483 24,445,828 ================================================================================================ DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS ------------------------------------------------------------------------------------------------ Dividends from net investment income: Class A (5,798,494) (12,490,131) Class B (5,737,841) (14,069,900) Class C (1,454,587) (3,315,800) ------------------------------------------------------------------------------------------------ Return of capital distribution: Class A (4,694,873) -- Class B (4,486,212) -- Class C (1,251,966) -- ================================================================================================ BENEFICIAL INTEREST TRANSACTIONS ------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from beneficial interest transactions: Class A 16,710 7,013,720 Class B (19,365,519) 1,272,305 Class C (1,436,387) 2,430,203 ================================================================================================ NET ASSETS ------------------------------------------------------------------------------------------------ Total increase (decrease) (23,461,686) 5,286,225 ------------------------------------------------------------------------------------------------ Beginning of period 250,324,291 245,038,066 ------------------------------- End of period [including undistributed (overdistributed) net investment income of $(565,330) and $744,959, respectively] $226,862,605 $250,324,291 ===============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 24 OPPENHEIMER INTERNATIONAL BOND FUND 27 FINANCIAL HIGHLIGHTS
CLASS A YEAR ENDED SEPTEMBER 30, 2000 1999 1998 1997 1996 =================================================================================================================== PER SHARE OPERATING DATA ------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 4.23 $ 4.32 $ 5.51 $ 5.49 $ 5.10 ------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .45 .58 .56 .52 .52 Net realized and unrealized gain (loss) (.08) (.14) (1.20) .08 .40 ---------------------------------------------------------------- Total income (loss) from investment operations .37 .44 (.64) .60 .92 ------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.21) (.53) (.53) (.53) (.53) Return of capital distribution (.20) -- -- -- -- Distributions from net realized gain -- -- (.02) (.05) -- ---------------------------------------------------------------- Total dividends and/or distributions to shareholders (.41) (.53) (.55) (.58) (.53) ------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 4.19 $ 4.23 $ 4.32 $ 5.51 $ 5.49 ================================================================ =================================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(1) 8.93% 10.58% (12.50)% 11.33% 18.82% ------------------------------------------------------------------------------------------------------------------- =================================================================================================================== RATIOS/SUPPLEMENTAL DATA ------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $100,928 $102,236 $ 97,404 $114,847 $52,128 ------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $110,968 $101,948 $108,264 $ 89,112 $19,817 ------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(2) Net investment income 10.23% 13.47% 11.09% 9.24% 9.60% Expenses 1.31% 1.26% 1.24%(3) 1.28%(3) 1.59%(3) Expenses, net of indirect and waiver of expenses 1.29% 1.25% N/A N/A 1.49% ------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 288% 285% 446% 280% 273%
1. 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. 2. Annualized for periods of less than one full year. 3. Expense ratio has not been grossed up to reflect the effect of expenses paid indirectly. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 25 OPPENHEIMER INTERNATIONAL BOND FUND 28 FINANCIAL HIGHLIGHTS CONTINUED
CLASS B YEAR ENDED SEPTEMBER 30, 2000 1999 1998 1997 1996 ============================================================================================================================ PER SHARE OPERATING DATA ---------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 4.22 $ 4.31 $ 5.50 $ 5.48 $ 5.10 ---------------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .42 .55 .52 .48 .48 Net realized and unrealized gain (loss) (.09) (.14) (1.20) .07 .39 ------------------------------------------------------------------ Total income (loss) from investment operations .33 .41 (.68) .55 .87 ---------------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.20) (.50) (.49) (.48) (.49) Return of capital distribution (.18) -- -- -- -- Distributions from net realized gain -- -- (.02) (.05) -- ------------------------------------------------------------------ Total dividends and/or distributions to shareholders (.38) (.50) (.51) (.53) (.49) ---------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.17 $ 4.22 $ 4.31 $ 5.50 $ 5.48 ================================================================== ---------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE(1) 7.94% 9.79% (13.16)% 10.52% 17.71% ---------------------------------------------------------------------------------------------------------------------------- ============================================================================================================================ RATIOS/SUPPLEMENTAL DATA ---------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 98,272 $118,632 $119,998 $122,874 $45,207 ---------------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $115,116 $122,878 $128,789 $ 87,557 $17,891 ---------------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(2) Net investment income 9.63% 12.70% 10.33% 8.57% 8.81% Expenses 2.05% 2.02% 2.00%(3) 2.04%(3) 2.36%(3) Expenses, net of indirect and waiver of expenses 2.03% 2.01% N/A N/A 2.26% ---------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 288% 285% 446% 280% 273%
1. 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. 2. Annualized for periods of less than one full year. 3. Expense ratio has not been grossed up to reflect the effect of expenses paid indirectly. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 26 OPPENHEIMER INTERNATIONAL BOND FUND 29
CLASS C YEAR ENDED SEPTEMBER 30, 2000 1999 1998 1997 1996 ====================================================================================================================== PER SHARE OPERATING DATA ---------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 4.22 $ 4.31 $ 5.50 $ 5.48 $ 5.09 ---------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .41 .55 .52 .48 .48 Net realized and unrealized gain (loss) (.08) (.14) (1.20) .07 .39 ----------------------------------------------------------- Total income (loss) from investment operations .33 .41 (.68) .55 .87 ---------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income (.19) (.50) (.49) (.48) (.48) Return of capital distribution (.19) -- -- -- -- Distributions from net realized gain -- -- (.02) (.05) -- ----------------------------------------------------------- Total dividends and/or distributions to shareholders (.38) (.50) (.51) (.53) (.48) ---------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $4.17 $4.22 $ 4.31 $ 5.50 $ 5.48 =========================================================== ====================================================================================================================== TOTAL RETURN, AT NET ASSET VALUE(1) 7.95% 9.80% (13.16)% 10.52% 17.92% ---------------------------------------------------------------------------------------------------------------------- ====================================================================================================================== RATIOS/SUPPLEMENTAL DATA ---------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $27,663 $29,456 $27,636 $28,684 $10,282 ---------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $30,710 $28,918 $29,336 $19,883 $ 4,039 ---------------------------------------------------------------------------------------------------------------------- Ratios to average net assets:(2) Net investment income 9.55% 12.76% 10.33% 8.62% 8.76% Expenses 2.05% 2.02% 2.00%(3) 2.04%(3) 2.36%(3) Expenses, net of indirect and waiver of expenses 2.03% 2.01% N/A N/A 2.25% ---------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 288% 285% 446% 280% 273%
1. 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. 2. Annualized for periods of less than one full year. 3. Expense ratio has not been grossed up to reflect the effect of expenses paid indirectly. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 27 OPPENHEIMER INTERNATIONAL BOND FUND 30 NOTES TO FINANCIAL STATEMENTS ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer International Bond Fund (the Fund) is a registered investment company organized as a Massachusetts Business Trust with a single series of the same name. The Fund is registered as 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 a front-end sales charge. Class B and Class C shares are sold without a front-end 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 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 listed or traded on National Stock Exchanges or other domestic or foreign exchanges are valued based on the last sale price of the security traded on that exchange prior to the time when the Fund's assets are valued. In the absence of a sale, the security is valued at the last sale price on the prior trading day, if it is within the spread of the closing bid and asked prices, and if not, at the closing bid price. Securities (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. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). -------------------------------------------------------------------------------- STRUCTURED NOTES. The Fund invests in foreign-currency-linked structured notes whose market value and redemption price are linked to foreign currency exchange rates. The structured notes are leveraged, which increases the notes' volatility relative to the principal of the security. Fluctuations in value of these securities are recorded as unrealized gains and losses in the accompanying financial statements. As of September 30, 2000, the market value of these securities comprised 12.6% of the Fund's net assets and resulted in unrealized losses at September 30, 2000, of $28,715. The Fund also hedges a portion of the foreign currency exposure generated by these securities, as discussed in Note 5. -------------------------------------------------------------------------------- SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Delivery and payment for securities that have been purchased by the Fund on a when-issued basis can take place a month or more after the trade date. Normally the settlement date occurs within six months after the trade date; however, the Fund may, from time to time, purchase securities whose settlement date extends beyond six months and possibly as long as two years or more beyond trade date. During this period, such securities do not earn interest, are subject to 28 OPPENHEIMER INTERNATIONAL BOND FUND 31 market fluctuation and may increase or decrease in value prior to their delivery. The Fund maintains segregated assets with a market value equal to or greater than the amount of its purchase commitments. The purchase of securities on a when-issued or forward commitment basis may increase the volatility of the Fund's net asset value to the extent the Fund makes such purchases while remaining substantially fully invested. As of September 30, 2000, the Fund had entered into outstanding net when-issued or forward commitments of $795,117. In connection with its ability to purchase securities on a when-issued basis, the Fund may enter into mortgage dollar-rolls in which the Fund sells securities for delivery in the current month and simultaneously contracts with the same counterparty to repurchase similar (same type, coupon and maturity) but not identical securities on a specified future date. The Fund records each dollar-roll as a sale and a new purchase transaction. -------------------------------------------------------------------------------- SECURITY CREDIT RISK. The Fund invests in high yield securities, which may be subject to a greater degree of credit risk, greater market fluctuations and risk of loss of income and principal, and may be more sensitive to economic conditions than lower yielding, higher rated fixed income securities. The Fund may acquire securities in default, and is not obligated to dispose of securities whose issuers subsequently default. As of September 30, 2000, securities with an aggregate market value of $1,507,637, representing 0.66% 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. 29 OPPENHEIMER INTERNATIONAL BOND FUND 32 NOTES TO FINANCIAL STATEMENTS Continued ================================================================================ 1. SIGNIFICANT ACCOUNTING POLICIES Continued 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, 2000, the Fund had available for federal tax purposes unused capital loss carryovers as follows:
EXPIRING ------------------------------- 2006 $ 3,413,515 2007 24,055,190 2008 4,438,059
-------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. -------------------------------------------------------------------------------- CLASSIFICATION OF DIVIDENDS AND 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 dividends and distributions made during the fiscal 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 dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Fund. The Fund adjusts the classification of distributions to shareholders to reflect the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, during the year ended September 30, 2000, amounts have been reclassified to reflect a decrease in paid-in capital of $10,433,051, a decrease in undistributed net investment income of $3,253,636, and a decrease in accumulated net realized loss on investments of $13,686,687. Net assets of the Fund were unaffected by the reclassifications. -------------------------------------------------------------------------------- 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 accreted 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. 30 OPPENHEIMER INTERNATIONAL BOND FUND 33 The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. ================================================================================ 2. SHARES OF BENEFICIAL INTEREST The Fund has authorized an unlimited number of no par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows:
YEAR ENDED SEPTEMBER 30, 2000 YEAR ENDED SEPTEMBER 30, 1999 SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------------------------------------------------ CLASS A Sold 17,212,754 $ 74,398,275 11,247,933 $ 48,852,991 Dividends and/or distributions reinvested 1,563,403 6,713,788 1,806,309 7,837,034 Redeemed (18,821,217) (81,095,353) (11,446,723) (49,676,305) --------------------------------------------------------------- Net increase (decrease) (45,060) $ 16,710 1,607,519 $ 7,013,720 =============================================================== ------------------------------------------------------------------------------------------------ CLASS B Sold 6,037,848 $ 25,959,092 7,369,029 $ 32,003,600 Dividends and/or distributions reinvested 1,114,634 4,770,337 1,549,542 6,704,118 Redeemed (11,704,016) (50,094,948) (8,655,920) (37,435,413) --------------------------------------------------------------- Net increase (decrease) (4,551,534) $(19,365,519) 262,651 $ 1,272,305 =============================================================== ------------------------------------------------------------------------------------------------ CLASS C Sold 3,016,468 $ 12,968,071 2,727,759 $ 11,829,225 Dividends and/or distributions reinvested 343,343 1,468,887 450,539 1,948,375 Redeemed (3,708,122) (15,873,345) (2,613,007) (11,347,397) --------------------------------------------------------------- Net increase (decrease) (348,311) $ (1,436,387) 565,291 $ 2,430,203 ===============================================================
================================================================================ 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the year ended September 30, 2000, were $651,136,495 and $676,300,522, respectively. As of September 30, 2000, unrealized appreciation (depreciation) based on cost of securities for federal income tax purposes of $231,514,255 was:
Gross unrealized appreciation $ 2,930,214 Gross unrealized depreciation $(11,212,228) ------------ Net unrealized depreciation $ (8,282,014) ============
31 OPPENHEIMER INTERNATIONAL BOND FUND 34 NOTES TO FINANCIAL STATEMENTS Continued ================================================================================ 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 year ended September 30, 2000, was an annualized rate of 0.74%, before any waiver by the Manager if applicable. -------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund on an "at-cost" basis. OFS also acts as the transfer and shareholder servicing agent for the other Oppenheimer funds. -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN FEES. Under its General Distributor's Agreement with the Manager, the Distributor acts as the Fund's principal underwriter in the continuous public offering of the different classes of shares of the Fund. The compensation paid to (or retained by) the Distributor from the sale of shares or on the redemption of shares is shown in the table below for the period indicated.
AGGREGATE CLASS A COMMISSIONS COMMISSIONS COMMISSIONS FRONT-END FRONT-END ON CLASS A ON CLASS B ON CLASS C SALES CHARGES SALES CHARGES SHARES SHARES SHARES ON CLASS A RETAINED BY ADVANCED BY ADVANCED BY ADVANCED BY YEAR ENDED SHARES DISTRIBUTOR DISTRIBUTOR(1) DISTRIBUTOR(1) DISTRIBUTOR(1) ------------------------------------------------------------------------------------------------------ September 30, 2000 $255,294 $70,759 $32,659 $551,662 $95,774
1. The Distributor advances commission payments to dealers for certain sales of Class A shares and for sales of Class B and Class C shares from its own resources at the time of sale.
CLASS A CLASS B CLASS C CONTINGENT DEFERRED CONTINGENT DEFERRED CONTINGENT DEFERRED SALES CHARGES SALES CHARGES SALES CHARGES YEAR ENDED RETAINED BY DISTRIBUTOR RETAINED BY DISTRIBUTOR RETAINED BY DISTRIBUTOR ---------------------------------------------------------------------------------------------- September 30, 2000 $-- $482,771 $18,769
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 year ended September 30, 2000, payments under the Class A plan totaled $277,421 prior to Manager waiver if applicable, all of which were paid by the Distributor to recipients, and included $14,953 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. 32 OPPENHEIMER INTERNATIONAL BOND FUND 35 -------------------------------------------------------------------------------- CLASS B AND CLASS C DISTRIBUTION AND SERVICE PLAN FEES. Under each plan, service fees and distribution fees are computed on the average of the net asset value of shares in the respective class, determined as of the close of each regular business day during the period. The Class B and Class C plans provide for the Distributor to be compensated at a flat rate, whether the Distributor's distribution expenses are more or less than the amounts paid by the Fund under the plan during the period for which the fee is paid. The Distributor retains the asset-based sales charge on Class B shares. The Distributor retains the asset-based sales charge on Class C shares during the first year the shares are outstanding. The asset-based sales charges on Class B and Class C shares allow investors to buy shares without a front-end sales charge while allowing the Distributor to compensate dealers that sell those shares. The Distributor's actual expenses in selling Class B and Class C shares may be more than the payments it receives from the contingent deferred sales charges collected on redeemed shares and 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 carry-forward of distribution expenses, to be recovered from asset-based sales charges in subsequent fiscal periods. Distribution fees paid to the Distributor for the year ended September 30, 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 $1,152,536 $919,820 $5,139,502 5.23% Class C Plan 307,355 82,214 701,203 2.53
================================================================================ 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. 33 OPPENHEIMER INTERNATIONAL BOND FUND