<PAGE>
[PHOTO]
Semiannual Report February 29, 2000
Oppenheimer
INTERNATIONAL
SMALL COMPANY FUND
[LOGO]OPPENHEIMERFUNDS -Registered Trademark-
The Right Way to Invest
<PAGE>
REPORT HIGHLIGHTS
- --------------------------------------------------------------------------------
CONTENTS
1 President's Letter
3 An Interview with your Fund's Managers
8 Financial Statements
27 Officers and Trustees
28 OppenheimerFunds Family
THE FUND'S PERFORMANCE WAS ATTRIBUTED LARGELY TO STRONG MARKETS IN EUROPE AND
JAPAN, and a major commitment to technology stocks in several regions of the
world.
LATIN AMERICA PROVIDED MANY GOOD INVESTMENT OPPORTUNITIES. As in Europe,
achieving a greater measure of currency stability has helped these countries
move toward the U.S. equity-market model: more emphasis on shareholder value and
earnings growth.
[SIDENOTE:]
- -----------------------------
CUMULATIVE
TOTAL RETURNS
For the 6-Month Period
Ended 2/29/00*
<TABLE>
<CAPTION>
Class A
Without With
Sales Chg. Sales Chg.
- ----------------------
<S> <C>
25.60% 18.37%
Class B
Without With
Sales Chg. Sales Chg.
- ----------------------
25.15% 20.15%
Class C
Without With
Sales Chg. Sales Chg.
- ----------------------
25.11% 24.11%
- -----------------------------
</TABLE>
- ------------------
NOT FDIC INSURED.
NO BANK GUARANTEE.
MAY LOSE VALUE.
- ------------------
* See page 7 for further details.
<PAGE>
PRESIDENT'S LETTER
- --------------------------------------------------------------------------------
[PHOTO]
Bridget A. Macaskill
President
Oppenheimer
International
Small Company Fund
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 inflation. 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 SMALL COMPANY FUND
<PAGE>
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/ Bridget A. Macaskill
Bridget A. Macaskill
March 21, 2000
2 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGERS
- --------------------------------------------------------------------------------
[PHOTO]
Portfolio Management Team (l to r)
George Evans
Shanquan Li
HOW DID THE FUND PERFORM DURING THE SIX MONTHS THAT ENDED FEBRUARY 29, 2000?
A. Oppenheimer International Small Company Fund performed well during the six
months that ended February 29, 2000, as equity markets in many parts of the
world recovered from the problems of 1998 and early 1999. An above-average
allocation to European stocks and strong returns for technology, healthcare and
telecommunications holdings contributed to the Fund's performance.
WHY DID THE FUND INVEST HEAVILY IN EUROPEAN STOCKS DURING THE PERIOD?
Developed Europe has instituted sweeping changes in the 1990s, culminating in
the mid-1999 introduction of the euro, a single currency now utilized by 11
nations of the European Monetary Union (EMU). This--combined with the removal of
trade barriers, the formation of a strong central bank committed to controlling
inflation, and reduced capital-gain taxes--has produced a new economic and
business environment, as well as a fresh attitude toward investing.
Europe is adopting a U.S.-style emphasis on enhancing shareholder value,
either through operations or, increasingly, through cross-border mergers and
acquisitions. Hostile take-overs reached an all-time high in 1999. This signaled
Europe's acceptance of an idea that has long fueled growth in the U.S. stock
market; namely that business must respect and further SHAREHOLDERS' interests.
3 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGERS
- --------------------------------------------------------------------------------
As 1999 progressed, Europeans increasingly invested in their own markets,
contributing to strong performance during the second half of the calendar year.
The EMU nations and the United Kingdom showed the strongest growth, although the
best-performing stock in the portfolio was an Irish company, IONA Technologies
plc. IONA is a leading provider of custom software solutions for integrating
computer networks, programming languages, and Internet technology.
As always, please keep in mind that investing in foreign securities entails
additional expenses and risks, including foreign currency fluctuations.
DID YOU MAKE ANY SIGNIFICANT CHANGES TO THE PORTFOLIO DURING THE PERIOD?
The most notable alteration was an increase in Japanese stocks. We were quick to
curb our allocation to Japan when troubles arose several years ago and had
maintained a below-average allocation to the Japanese market until this most
recent period. However, the quantitative model that we use to screen
international stocks identified several areas of strength in Japan.
In particular, we see strong growth potential for consumer electronics
companies, particularly those that are focused on bringing liquid crystal
display (LCD) TVs to the world. As the price of this newer technology falls, we
look for booming demand by consumers in strong economies worldwide.
DID YOU INCREASE YOUR OTHER ASIAN INVESTMENTS AS WELL?
No. We have maintained a cautious approach to the developing countries in Asia.
In our opinion, the infrastructure problems there that contributed to the 1998
debacle have not been adequately resolved.
4 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
In contrast to Asia, Latin America's emerging markets--Argentina, Brazil,
Mexico, Peru and Chile--offered some good opportunities in recent months.
Although they suffered a setback in early 1999 due to monetary problems in
Brazil, Latin America is fundamentally stronger than Asia and bounced back
relatively quickly.
Following the devaluation of the Mexican peso in 1994, the International
Monetary Fund imposed stringent rules in that region of the world and lessons
were learned. Today, several Central and South American countries have pegged
their currencies to the U.S. dollar, resulting in less dramatic currency
fluctuations. As in Europe, achieving a greater measure of currency stability
has helped these countries move toward the U.S. equity-market model: more
emphasis on shareholder value and earnings growth. To capitalize on this, we
invested in several Latin America companies and in multinational corporations
with significant operations in the region.
WHAT IS YOUR OUTLOOK FOR INTERNATIONAL INVESTING?
It appears that Europe will lead the Western nations and could actually surpass
the United States in economic growth and market advances during 2000. In the
East, Japan's government seems committed to making the changes necessary to
shore up its infrastructure, though it remains to be seen if they will follow
through. We look for some progress in Japan but little or no real advancement in
the remainder of Asia.
As always, we will continue to rely upon our disciplined quantitative model
and the insights gleaned from fundamental research to identify companies in all
parts of the world that have strong records of profitability and participate in
industries
[SIDENOTE:]
- ------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
For the Periods Ended 3/31/00(1)
<TABLE>
<CAPTION>
CLASS A Since
1-Year Inception
- ----------------------
<S> <C>
58.96% 39.05%
CLASS B Since
1-Year Inception
- ----------------------
62.54% 40.70%
CLASS C Since
1-Year Inception
- ----------------------
66.48% 41.46%
</TABLE>
1. See page 7 for further details.
5 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGERS
- --------------------------------------------------------------------------------
that stand to benefit from long-term global trends, such as new technology. In
our opinion, this formula has served the Fund well since its inception and is
just one reason why Oppenheimer International Small Company Fund is part of
THE RIGHT WAY TO INVEST.
<TABLE>
<CAPTION>
TOP TEN COUNTRY HOLDINGS(2)
- -----------------------------------
<S> <C>
Germany 21.1%
- -----------------------------------
Great Britain 19.6
- -----------------------------------
Belgium 11.7
- -----------------------------------
United States 6.7
- -----------------------------------
Brazil 6.3
- -----------------------------------
France 4.6
- -----------------------------------
Canada 4.4
- -----------------------------------
The Netherlands 3.5
- -----------------------------------
Japan 2.8
- -----------------------------------
Italy 2.5
- -----------------------------------
</TABLE>
<TABLE>
<CAPTION>
TOP TEN STOCK HOLDINGS(3)
- -----------------------------------
<S> <C>
Ubizen 6.7%
- -----------------------------------
IONA Technologies plc, ADR 3.1
- -----------------------------------
IXOS Software AG 2.3
- -----------------------------------
Systematics AG 2.2
- -----------------------------------
ASM International NV 2.2
- -----------------------------------
Telegate AG 2.2
- -----------------------------------
ACG AG 2.2
- -----------------------------------
Titus Interactive 1.8
- -----------------------------------
Real Software Group NV 1.7
- -----------------------------------
Creyf's NV 1.7
</TABLE>
[SIDENOTE:]
- ---------------------------
REGIONAL ALLOCATION(2)
[CHART]
<TABLE>
<S> <C>
- - Europe 69.5%
- - United States/
Canada 11.1
- - Asia 7.6
- - Latin America 6.3
- - Middle East/
Africa 3.6
- - Emerging Europe 1.9
</TABLE>
- ---------------------------
2. Portfolio is subject to change. Percentages are as of February 29, 2000, and
are based on total market value of investments.
3. Portfolio is subject to change. Percentages are as of February 29, 2000, and
are based on net assets.
6 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
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 PERFORMANCE MAY BE SUBJECT TO SUBSTANTIAL
SHORT-TERM CHANGES. FOR 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. WHEN LOOKING AT FUND PERFORMANCE RESULTS, PLEASE NOTE
THAT THE RECENT GROWTH RATE IN THE STOCK MARKET HAS HELPED PRODUCE SHORT-TERM
RETURNS THAT ARE NOT TYPICAL AND MAY NOT CONTINUE IN THE FUTURE.
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 11/17/97. Class A returns include
the current maximum initial sales charge of 5.75%.
CLASS B shares were first publicly offered on 11/17/97. Class B returns include
the applicable contingent deferred sales charge 5% (1-year) and 3% (since
inception). Class B shares are subject to a 0.75% annual asset-based sales
charge.
CLASS C shares were first publicly offered on 11/17/97. Class C returns include
the contingent deferred sales charge of 1% for one-year period. Class C shares
are subject to a 0.75% annual asset-based sales charge.
An explanation of the different performance calculations is in the Fund's
prospectus.
7 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
STATEMENT OF INVESTMENTS February 29, 2000 / Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--94.6%
- --------------------------------------------------------------------------------------
BASIC MATERIALS--0.6%
- --------------------------------------------------------------------------------------
PAPER--0.6%
Grupo Empresarial ENCE SA 31,200 $ 645,546
- --------------------------------------------------------------------------------------
CAPITAL GOODS--10.0%
- --------------------------------------------------------------------------------------
AEROSPACE/DEFENSE--1.0%
Embraer--Empresa Brasileira de
Aeronautica SA, Preference 260,000 1,160,780
- --------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--1.5%
Kokusai Electric Co. 50,000 656,320
- --------------------------------------------------------------------------------------
Weg SA, Preference 1,699,000 988,963
------------
1,645,283
- --------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--5.8%
ACG AG(1) 8,600 2,397,332
- --------------------------------------------------------------------------------------
Danka Business Systems plc, Sponsored ADR(1) 140,000 1,356,250
- --------------------------------------------------------------------------------------
Prolion Holding NV(1) 44,000 1,226,415
- --------------------------------------------------------------------------------------
Waste Recycling Group plc(1) 264,600 1,462,034
------------
6,442,031
- --------------------------------------------------------------------------------------
MANUFACTURING--1.7%
ESEC Holding AG(1) 500 1,195,756
- --------------------------------------------------------------------------------------
Laird Group plc 236,300 727,441
------------
1,923,197
- --------------------------------------------------------------------------------------
COMMUNICATION SERVICES--5.2%
- --------------------------------------------------------------------------------------
TELECOMMUNICATIONS-LONG DISTANCE--3.4%
Telegate AG(1) 16,400 2,431,648
- --------------------------------------------------------------------------------------
Teles AG(1) 40,800 1,378,807
------------
3,810,455
- --------------------------------------------------------------------------------------
TELEPHONE UTILITIES--1.8%
Telecomunicacoes de Minas Gerais, Preference B(1) 23,000,000 857,869
- --------------------------------------------------------------------------------------
Telecomunicacoes do Rio de Janeiro SA, Preference(1) 40,000,000 1,152,868
------------
2,010,737
8 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS--13.1%
- --------------------------------------------------------------------------------------
AUTOS & HOUSING--4.2%
Ducati Motor Holding SpA(1) 345,500 $ 958,025
- --------------------------------------------------------------------------------------
Goldcrest Co., Ltd. 7,200 642,301
- --------------------------------------------------------------------------------------
Joint Corp. 26,000 754,995
- --------------------------------------------------------------------------------------
Mayflower Corp. plc (The) 190,300 519,738
- --------------------------------------------------------------------------------------
Murray & Roberts Holdings Ltd. 848,500 561,681
- --------------------------------------------------------------------------------------
Taylor Woodrow plc 572,100 1,223,801
-------------
4,660,541
- --------------------------------------------------------------------------------------
CONSUMER SERVICES--1.7%
Creyf's NV(1) 84,100 1,886,636
- --------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT--1.3%
Kinowelt Medien AG(1) 26,400 1,404,340
- --------------------------------------------------------------------------------------
MEDIA--2.0%
Informa Group plc 89,500 1,130,349
- --------------------------------------------------------------------------------------
Taylor & Francis Group plc 125,000 1,118,904
-------------
2,249,253
- --------------------------------------------------------------------------------------
RETAIL: GENERAL--0.4%
Big C Supercenter plc(1) 448,000 188,062
- --------------------------------------------------------------------------------------
Keumkang Development Ind. Co.(1) 44,270 308,413
-------------
496,475
- --------------------------------------------------------------------------------------
RETAIL: SPECIALTY--3.2%
JJB Sports plc 104,900 894,270
- --------------------------------------------------------------------------------------
Marionnaud Parfumeries SA(1) 19,800 1,499,340
- --------------------------------------------------------------------------------------
Shinsegae Department Store Co.(1) 29,500 1,212,752
-------------
3,606,362
- --------------------------------------------------------------------------------------
TEXTILE/APPAREL & HOME FURNISHINGS--0.3%
Profurn Ltd.(1) 364,300 298,574
- --------------------------------------------------------------------------------------
CONSUMER STAPLES--6.5%
- --------------------------------------------------------------------------------------
BROADCASTING--1.1%
SBS Broadcasting SA(1) 24,000 1,260,000
- --------------------------------------------------------------------------------------
ENTERTAINMENT--3.0%
Edel Music AG(1) 28,700 1,008,581
- --------------------------------------------------------------------------------------
Northern Leisure plc(1) 250,000 532,811
- --------------------------------------------------------------------------------------
Snai SpA(1) 83,800 1,856,508
-------------
3,397,900
9 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------------
<S> <C> <C>
FOOD & DRUG RETAILERS--1.9%
Cia Brasileira de Distribuicao Grupo
Pao de Acucar, Sponsored ADR(1) 29,700 $1,002,375
- --------------------------------------------------------------------------------------
Superdiplo SA(1) 70,000 1,131,579
-------------
2,133,954
- --------------------------------------------------------------------------------------
HOUSEHOLD GOODS--0.5%
Antofagasta plc 95,400 605,444
- --------------------------------------------------------------------------------------
ENERGY--3.1%
- --------------------------------------------------------------------------------------
ENERGY SERVICES--1.3%
Energy Developments Ltd. 183,300 1,396,028
- --------------------------------------------------------------------------------------
OIL: INTERNATIONAL--1.8%
Baytex Energy Ltd.(1) 86,000 563,060
- --------------------------------------------------------------------------------------
Bonavista Petroleum Ltd.(1) 83,500 1,093,384
- --------------------------------------------------------------------------------------
British-Borneo Oil & Gas plc(1) 363,000 343,841
-------------
2,000,285
- --------------------------------------------------------------------------------------
FINANCIAL--2.2%
- --------------------------------------------------------------------------------------
BANKS--0.7%
Cammell Laird Holdings plc 450,000 745,936
- --------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--1.5%
Gold-Zack AG(1) 12,000 1,259,342
- --------------------------------------------------------------------------------------
Guoco Group Ltd. 228,000 452,613
-------------
1,711,955
- --------------------------------------------------------------------------------------
HEALTHCARE--3.8%
- --------------------------------------------------------------------------------------
HEALTHCARE/DRUGS--3.8%
Bioglan Pharma plc(1) 67,000 951,956
- --------------------------------------------------------------------------------------
Canadian Medical Laboratories Ltd.(1) 45,400 480,283
- --------------------------------------------------------------------------------------
Celltech Chiroscience plc(1) 33,000 696,017
- --------------------------------------------------------------------------------------
Goldshield Group plc 89,000 1,043,947
- --------------------------------------------------------------------------------------
Ontex(1) 16,000 1,062,931
-------------
4,235,134
- --------------------------------------------------------------------------------------
TECHNOLOGY--46.7%
- --------------------------------------------------------------------------------------
COMPUTER HARDWARE--4.4%
JUMPtec Industrielle Computertechnik AG(1) 17,300 1,499,080
- --------------------------------------------------------------------------------------
Optimal Robotics Corp.(1) 34,800 1,283,250
- --------------------------------------------------------------------------------------
Systemat-Datarelay SA(1) 37,000 1,022,397
- --------------------------------------------------------------------------------------
Trigem Computer, Inc. 11,350 1,138,908
-------------
4,943,635
10 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SERVICES--13.0%
Computer Configurations Holdings Ltd. 603,800 $ 1,532,173
- --------------------------------------------------------------------------------------
Connecta AB(1) 33,600 1,766,807
- --------------------------------------------------------------------------------------
Dialog Corp. plc(1) 362,900 893,740
- --------------------------------------------------------------------------------------
Systematics AG(1) 49,400 2,473,241
- --------------------------------------------------------------------------------------
Ubizen(1) 44,500 7,497,805
- --------------------------------------------------------------------------------------
Unit 4(1) 5,000 312,910
-------------
14,476,676
- --------------------------------------------------------------------------------------
COMPUTER SOFTWARE--23.6%
Eidos plc, Sponsored ADR(1) 102,500 1,191,563
- --------------------------------------------------------------------------------------
Geac Computer Corp. Ltd.(1) 90,100 1,583,425
- --------------------------------------------------------------------------------------
IDS Scheer AG(1) 52,400 1,411,611
- --------------------------------------------------------------------------------------
Infomatec Integrated Information Systems AG(1) 36,000 1,521,609
- --------------------------------------------------------------------------------------
IONA Technologies plc, ADR(1) 40,400 3,423,900
- --------------------------------------------------------------------------------------
IXOS Software AG(1) 36,400 2,558,352
- --------------------------------------------------------------------------------------
Magic Software Enterprises Ltd.(1) 65,700 1,650,713
- --------------------------------------------------------------------------------------
MASTERNET Co. Ltd.(1) 10 568,932
- --------------------------------------------------------------------------------------
MERANT plc, Sponsored ADR(1) 37,000 1,084,563
- --------------------------------------------------------------------------------------
Nemetschek AG(1) 16,100 984,319
- --------------------------------------------------------------------------------------
NorCom Information Technology AG(1) 10,300 1,304,064
- --------------------------------------------------------------------------------------
PSI AG(1) 38,000 1,357,355
- --------------------------------------------------------------------------------------
Real Software Group NV(1) 23,000 1,893,346
- --------------------------------------------------------------------------------------
SER Systeme AG(1) 25,000 1,061,487
- --------------------------------------------------------------------------------------
Singular Software SA 20,000 960,099
- --------------------------------------------------------------------------------------
Sopra SA(1) 10,400 1,721,255
- --------------------------------------------------------------------------------------
Titus Interactive(1) 27,800 2,019,483
-------------
26,296,076
- --------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--1.2%
Datasave AG(1) 600 13,142
- --------------------------------------------------------------------------------------
Tandberg ASA(1) 80,300 1,282,732
-------------
1,295,874
- --------------------------------------------------------------------------------------
ELECTRONICS--4.5%
ASM International NV(1) 75,100 2,450,138
- --------------------------------------------------------------------------------------
Austria Technologie & Systemtechnik AG(1) 17,200 1,324,813
- --------------------------------------------------------------------------------------
Galileo Technology Ltd.(1) 62,100 1,191,544
-------------
4,966,495
11 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION--1.3%
- --------------------------------------------------------------------------------------
AIR TRANSPORTATION--0.6%
Airtours plc 158,400 $ 708,312
- --------------------------------------------------------------------------------------
SHIPPING--0.7%
Neptune Orient Lines Ltd.(1) 1,000,000 818,008
- --------------------------------------------------------------------------------------
UTILITIES--2.1%
- --------------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.1%
Cia Paranaense de Energia-Copel(1) 121,975,000 703,105
- --------------------------------------------------------------------------------------
Independent Energy Holdings plc(1) 34,500 1,661,187
-------------
2,364,292
-------------
Total Common Stocks (Cost $90,349,117) 105,596,214
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
PREFERRED STOCKS--1.1%
Sadia SA (Cost $1,077,070) 1,640,000 1,269,737
<CAPTION>
UNITS
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES--0.5%
MASTERNET Co. Ltd. Rts., Exp. 3/29/00 (Cost $717,027) 10 541,623
<CAPTION>
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS--5.7%
Repurchase agreement with Banc One Capital
Markets, Inc., 5.75%, dated 2/29/00, to be
repurchased at $6,401,022 on 3/1/00,
collateralized by U.S. Treasury Nts.,
5.25%--7.875%, 5/31/00--5/15/08, with a value of
$5,986,032 and U.S. Treasury Bonds,
6.125%--11.875%, 11/15/03--8/15/29, with a value
of $548,555 (Cost $6,400,000) $6,400,000 6,400,000
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $98,543,214) 101.9% 113,807,574
- --------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (1.9) (2,157,033)
--------------------------------
NET ASSETS 100.0% $111,650,541
--------------------------------
--------------------------------
</TABLE>
12 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income-producing security.
DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC DIVERSIFICATION, AS A
PERCENTAGE OF TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS:
<TABLE>
<CAPTION>
GEOGRAPHIC DIVERSIFICATION MARKET VALUE PERCENT
- --------------------------------------------------------------------------
<S> <C> <C>
Germany $ 24,064,311 21.1%
Great Britain 22,316,004 19.6
Belgium 13,363,115 11.7
United States 7,591,544 6.7
Brazil 7,135,698 6.3
France 5,240,078 4.6
Canada 5,003,402 4.4
The Netherlands 3,989,462 3.5
Japan 3,164,171 2.8
Italy 2,814,532 2.5
Korea, Republic of (South) 2,660,074 2.3
South Africa 2,392,428 2.1
Spain 1,777,125 1.6
Sweden 1,766,807 1.6
Israel 1,650,713 1.5
Australia 1,396,027 1.2
Austria 1,324,813 1.2
Norway 1,282,732 1.1
Luxembourg 1,260,000 1.1
Switzerland 1,195,756 1.1
Greece 960,099 0.7
Singapore 818,008 0.7
Hong Kong 452,613 0.4
Thailand 188,062 0.2
------------------------------
Total $113,807,574 100.0%
------------------------------
------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
13 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
February 29, 2000
- ----------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments, at value (cost $98,543,214)--see accompanying statement $113,807,574
- ----------------------------------------------------------------------------------------------
Unrealized appreciation on foreign currency exchange contracts 8,345
- ----------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 1,675,357
Shares of beneficial interest sold 1,973,350
Interest and dividends 41,801
Other 2,852
--------------
Total assets 117,509,279
- ----------------------------------------------------------------------------------------------
LIABILITIES
Bank overdraft 80,236
- ----------------------------------------------------------------------------------------------
Unrealized depreciation on foreign
currency exchange contracts 17,762
- ----------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 5,544,731
Shares of beneficial interest redeemed 76,238
Distribution and service plan fees 33,567
Trustees' compensation 29,084
Transfer and shareholder servicing agent fees 189
Other 76,931
--------------
Total liabilities 5,858,738
- ----------------------------------------------------------------------------------------------
NET ASSETS $111,650,541
--------------
--------------
- ----------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $ 94,839,285
- ----------------------------------------------------------------------------------------------
Overdistributed net investment income (517,865)
- ----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments
and foreign currency transactions 2,060,309
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 15,268,812
--------------
Net assets $111,650,541
--------------
--------------
- ----------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net
assets of $68,223,774 and 3,769,917 shares of beneficial
interest outstanding) $18.10
Maximum offering price per share (net asset value plus sales
charge of 5.75% of offering price) $19.20
- ----------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $30,911,025 and 1,730,076 shares of beneficial interest
outstanding) $17.87
- ----------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $12,515,742 and 701,438 shares of beneficial interest
outstanding) $17.84
</TABLE>
See accompanying Notes to Financial Statements.
14 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended February 29, 2000
- ----------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $18,049) $ 192,324
- ----------------------------------------------------------------------------------------------
Interest 84,093
-------------
Total income 276,417
- ----------------------------------------------------------------------------------------------
EXPENSES
Management fees 254,152
- ----------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 46,410
Class B 89,877
Class C 28,540
- ----------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees 91,948
- ----------------------------------------------------------------------------------------------
Shareholder reports 56,435
- ----------------------------------------------------------------------------------------------
Custodian fees and expenses 21,482
- ----------------------------------------------------------------------------------------------
Legal, auditing and other professional fees 7,693
- ----------------------------------------------------------------------------------------------
Trustees' compensation 6,791
- ----------------------------------------------------------------------------------------------
Other 24,680
-------------
Total expenses 628,008
Less expenses paid indirectly (4,804)
-------------
Net expenses 623,204
- ----------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (346,787)
- ----------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 5,608,866
Foreign currency transactions (723,669)
-------------
Net realized gain 4,885,197
- ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 14,663,080
Translation of assets and liabilities denominated in foreign currencies (2,162,552)
-------------
Net change 12,500,528
-------------
Net realized and unrealized gain 17,385,725
- ----------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $17,038,938
-------------
-------------
</TABLE>
See accompanying Notes to Financial Statements.
15 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 29, 2000 YEAR ENDED
(UNAUDITED) AUGUST 31, 1999
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income (loss) $ (346,787) $ 109,108
- -------------------------------------------------------------------------------------------------
Net realized gain 4,885,197 7,463,791
- -------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 12,500,528 3,727,838
--------------- ----------------
Net increase in net assets resulting from operations 17,038,938 11,300,737
- -------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A (382,497) (39,378)
Class B (95,048) --
Class C (36,304) --
- -------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (6,324,826) (653,225)
Class B (2,747,779) (222,502)
Class C (876,679) (49,271)
- -------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from
beneficial interest transactions:
Class A 37,486,852 10,428,211
Class B 17,143,998 6,385,658
Class C 8,900,879 1,548,125
- -------------------------------------------------------------------------------------------------
NET ASSETS
Total increase 70,107,534 28,698,355
- -------------------------------------------------------------------------------------------------
Beginning of period 41,543,007 12,844,652
--------------- ----------------
End of period [including undistributed
(overdistributed) net investment income
of $(517,865) and $342,771, respectively] $111,650,541 $41,543,007
--------------- ----------------
--------------- ----------------
</TABLE>
See accompanying Notes to Financial Statements.
16 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 29, 2000 AUGUST 31,
CLASS A (UNAUDITED) 1999 1998(1)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $17.42 $11.52 $10.00
- ------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.06) .06 .03
Net realized and unrealized gain 3.95 6.72 1.49
------------------------------------
Total income from investment operations 3.89 6.78 1.52
- ------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.18) (.04) --
Distributions from net realized gain (3.03) (.84) --
------------------------------------
Total dividends and/or distributions to shareholders (3.21) (.88) --
- ------------------------------------------------------------------------------------------------------
Net asset value, end of period $18.10 $17.42 $11.52
------------------------------------
------------------------------------
- ------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 25.60% 63.10% 15.20%
- ------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $68,224 $26,965 $9,605
- ------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $40,236 $14,208 $6,482
- ------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income (loss) (0.81)% 0.73% 0.44%
Expenses 1.68% 2.05% 1.77%(4)
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 116% 280% 239%
</TABLE>
1. For the period from November 17, 1997 (commencement of operations) to
August 31, 1998.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), 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 February 29, 2000, were $123,672,643 and $72,524,450, respectively.
See accompanying Notes to Financial Statements.
17 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 29, 2000 AUGUST 31,
CLASS B (UNAUDITED) 1999 1998(1)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $17.22 $11.45 $10.00
- ------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.10) .02 (.01)
Net realized and unrealized gain 3.89 6.59 1.46
------------------------------------
Total income from investment operations 3.79 6.61 1.45
- ------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.11) -- --
Distributions from net realized gain (3.03) (.84) --
------------------------------------
Total dividends and/or distributions to shareholders (3.14) (.84) --
- ------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.87 $17.22 $11.45
------------------------------------
------------------------------------
- ------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 25.15% 61.77% 14.50%
- ------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $30,911 $11,764 $2,631
- ------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $18,151 $5,367 $1,187
- ------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income (loss) (1.59)% 0.09% (0.38)%
Expenses 2.44% 2.84% 2.67%(4)
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 116% 280% 239%
</TABLE>
1. For the period from November 17, 1997 (commencement of operations) to
August 31, 1998.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), 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 February 29, 2000, were $123,672,643 and $72,524,450, respectively.
See accompanying Notes to Financial Statements.
18 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 29, 2000 AUGUST 31,
CLASS C (UNAUDITED) 1999 1998(1)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $17.22 $11.45 $10.00
- -------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.06) .04 (.04)
Net realized and unrealized gain 3.84 6.57 1.49
------------------------------------
Total income from investment operations 3.78 6.61 1.45
- -------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.13) -- --
Distributions from net realized gain (3.03) (.84) --
------------------------------------
Total dividends and/or distributions to shareholders (3.16) (.84) --
- -------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.84 $17.22 $11.45
------------------------------------
------------------------------------
- -------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 25.11% 61.77% 14.50%
- -------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $12,516 $2,815 $609
- -------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 5,781 $1,256 $454
- -------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income (loss) (1.43)% 0.09% (0.66)%
Expenses 2.46% 2.84% 2.58%(4)
- -------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 116% 280% 239%
</TABLE>
1. For the period from November 17, 1997 (commencement of operations) to
August 31, 1998.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), 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 February 29, 2000, were $123,672,643 and $72,524,450, respectively.
See accompanying Notes to Financial Statements.
19 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer International Small Company Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund's investment objective is to seek long-term capital
appreciation. 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.
- --------------------------------------------------------------------------------
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.
20 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
- --------------------------------------------------------------------------------
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, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the
Fund's independent Board of Trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service. During the six months
ended February 29, 2000, a provision of $1,082 was made for the Fund's projected
benefit obligations and payments of $460 were made to retired trustees,
resulting in an accumulated liability of $27,901 as of February 29, 2000.
The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of annual compensation they are entitled to receive from the Fund. Under
the plan, the compensation deferred is periodically adjusted as though an
equivalent amount had been invested for the Board of Trustees in shares of one
or more Oppenheimer funds selected by the trustee. The amount paid to the Board
of Trustees under the plan will be determined based upon the performance of the
selected funds. Deferral of trustees' fees under the plan will not affect the
net assets of the Fund, and will not materially affect the Fund's assets,
liabilities or net investment income per share.
- --------------------------------------------------------------------------------
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.
21 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of paydown gains and losses and 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. Certain dividends from foreign
securities will be recorded as soon as the Fund is informed of the dividend if
such information is obtained subsequent to the ex-dividend date. Realized gains
and losses on investments and unrealized appreciation and depreciation are
determined on an identified cost basis, which is the same basis used for federal
income tax purposes.
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.
22 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of beneficial
interest for each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
6 MOS. ENDED FEBRUARY 29, 2000 YEAR ENDED AUGUST 31, 1999
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Sold 2,486,935 $ 42,604,803 1,342,812 $18,716,106
Dividends and/or distributions reinvested 408,398 6,293,418 57,034 639,347
Redeemed (673,708) (11,411,369) (684,920) (8,927,242)
---------------------------------------------------------------
Net increase 2,221,625 $ 37,486,852 714,926 $10,428,211
---------------------------------------------------------------
---------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
CLASS B
Sold 1,250,990 $ 20,893,978 708,065 $10,033,460
Dividends and/or distributions reinvested 180,678 2,753,546 19,492 217,331
Redeemed (384,703) (6,503,526) (274,188) (3,865,133)
---------------------------------------------------------------
Net increase 1,046,965 $ 17,143,998 453,369 $ 6,385,658
---------------------------------------------------------------
---------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
CLASS C
Sold 721,345 $ 12,187,505 142,500 $ 1,990,985
Dividends and/or distributions reinvested 56,909 866,168 4,411 49,186
Redeemed (240,312) (4,152,794) (36,570) (492,046)
---------------------------------------------------------------
Net increase 537,942 $ 8,900,879 110,341 $ 1,548,125
---------------------------------------------------------------
---------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
3. UNREALIZED GAINS AND LOSSES ON SECURITIES
As of February 29, 2000, net unrealized appreciation on securities of
$15,264,360 was composed of gross appreciation of $22,448,505, and gross
depreciation of $7,184,145.
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of 0.80% of
the first $250 million of average annual net assets of the Fund, 0.77% of the
next $250 million, 0.75% of the next $500 million, 0.69% of the next $1 billion,
and 0.67% of average annual net assets in excess of $2 billion. The Fund's
management fee for the six months ended February 29, 2000, was 0.80% of average
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.
- --------------------------------------------------------------------------------
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.
23 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
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.
<TABLE>
<CAPTION>
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)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
February 29, 2000 $299,891 $84,925 $49,647 $322,415 $39,459
</TABLE>
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.
<TABLE>
<CAPTION>
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
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
February 29, 2000 $-- $15,838 $--
</TABLE>
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 February 29, 2000,
payments under the Class A plan totaled $46,410, all of which was paid by the
Distributor to recipients. That included $2,622 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.
24 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
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 six months ended February 29,
2000, were as follows:
<TABLE>
<CAPTION>
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
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Plan $89,877 $75,192 $412,884 1.34%
Class C Plan 28,540 18,254 53,358 0.43
</TABLE>
- --------------------------------------------------------------------------------
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.
25 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS Continued
Securities denominated in foreign currency to cover net exposure on outstanding
foreign currency contracts are noted in the Statement of Investments where
applicable.
As of February 29, 2000, outstanding foreign currency contracts were as follows:
<TABLE>
<CAPTION>
CONTRACT VALUATION AS OF UNREALIZED UNREALIZED
CONTRACT DESCRIPTION EXPIRATION DATE AMOUNT (000S) FEBRUARY 29, 2000 APPRECIATION DEPRECIATION
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CONTRACTS TO PURCHASE
British Pound Sterling (GBP) 3/1/00-3/6/00 GBP 835 $1,319,752 $ -- $11,337
Canadian Dollar (CAD) 3/1/00 CAD 147 101,306 -- 98
Euro (EUR) 3/1/00 EUR 758 729,728 -- 5,457
South African Rand (ZAR) 3/7/00 ZAR 2,476 389,984 -- 870
-----------------------------
-- 17,762
-----------------------------
CONTRACTS TO SELL
British Pound Sterling (GBP) 3/1/00-3/6/00 GBP 374 590,040 7,998 --
Thailand Baht (THB) 3/1/00-3/2/00 THB 4,015 105,347 347 --
-----------------------------
8,345 --
-----------------------------
TOTAL UNREALIZED APPRECIATION AND DEPRECIATION $8,345 $17,762
-----------------------------
-----------------------------
</TABLE>
- --------------------------------------------------------------------------------
6. 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 borrowings 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
February 29, 2000.
26 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES Leon Levy, Chairman of the Board of Trustees
Donald W. Spiro, Vice Chairman of the Board of Trustees
Bridget A. Macaskill, Trustee and President
Robert G. Galli, Trustee
Phillip A. Griffiths, Trustee
Benjamin Lipstein, Trustee
Elizabeth B. Moynihan, Trustee
Kenneth A. Randall, Trustee
Edward V. Regan, Trustee
Russell S. Reynolds, Jr., Trustee
Clayton K. Yeutter, Trustee
George Evans, Vice President
Shanquan Li, Vice President
Andrew J. Donohue, 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 OppenheimerFunds Services
SHAREHOLDER SERVICING
AGENT
- --------------------------------------------------------------------------------
CUSTODIAN OF The Bank of New York
PORTFOLIO SECURITIES
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS KPMG LLP
- --------------------------------------------------------------------------------
LEGAL COUNSEL Mayer, Brown & Platt
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 Small Company Fund. This
report must be preceded or accompanied by a Prospectus
of Oppenheimer International Small Company Fund. For
material information concerning the Fund, see the
Prospectus.
SHARES OF OPPENHEIMER FUNDS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT GUARANTEED BY ANY
BANK, ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY,
AND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
27 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
OPPENHEIMERFUNDS FAMILY
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
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-Registered Trademark- Growth & Income Fund
Discovery Fund Quest Opportunity Value Fund
Main Street-Registered Trademark- 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 Main Street-Registered Trademark- California Municipal Fund(3)
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
</TABLE>
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.
28 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
<PAGE>
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
- --------------------------------------------------------------------------------
[LOGO]OPPENHEIMERFUNDS-Registered Trademark-
Distributor, Inc.
RS0815.001.0200 April 28, 2000
