[photo of sattelite dishes]
Annual Report August 31, 1999
Oppenheimer
Europe Fund
[logo] OppenheimerFunds(R)
The Right Way to Invest
<PAGE>
REPORT HIGHLIGHTS
The Fund provided investors with attractive returns for the period, despite a
challenging environment for European markets.
Performance benefited the most from our investments in technology and
consumer-oriented companies, while our relatively small position in energy
stocks caused us to miss that sector's rally.
With European economic and demographic fundamentals improving, we see attractive
investment opportunities in the countries of the European Monetary Union as well
as Great Britain.
Contents
3 President's Letter
5 An Interview
with Your Fund's
Managers
9 Fund Performance
14 Financial
Statements
31 Independent
Auditors' Report
32 Federal
Income Tax
Information
33 Officers and Trustees
34 OppenheimerFunds
Family
36 Information and
Services
- -----------------------------
Cumulative
Total Returns
For the Period of
3/1/99 to 8/31/99*
<TABLE>
<CAPTION>
Class A
Without With
Sales Chg. Sales Chg.
- ----------------------
<S> <C>
7.80% 1.60%
<CAPTION>
Class B
Without With
Sales Chg. Sales Chg.
- ----------------------
<S> <C>
7.30% 2.30%
<CAPTION>
Class C
Without With
Sales Chg. Sales Chg.
- ----------------------
<S> <C>
7.60% 6.60%
<CAPTION>
Class Y
Without With
Sales Chg. Sales Chg.
- ----------------------
<S> <C>
7.80% 7.80%
</TABLE>
- -----------------------------
- ---------------------
Not FDIC Insured.
No Bank Guarantee.
May Lose Value.
- ---------------------
* See page 12 for further details.
2 OPPENHEIMER EUROPE FUND
<PAGE>
PRESIDENT'S LETTER
[photo]
Bridget A. Macaskill
President
Oppenheimer
Europe Fund
Dear shareholder,
In many ways, the 1999 investment environment has, so far, unfolded
as many expected it would, producing both attractive opportunities and
formidable challenges for investors.
On the economic front, early worries about the effects of global weakness
in the wake of last year's credit and currency crises have abated. Instead, as
many economies around the world begin to strengthen, concerns now center around
whether the U.S. economy may be growing too quickly. Throughout the year,
consumers in the United States have continued to spend and borrow heavily, more
than offsetting any temporary slowdown in the industrial and export sectors.
The economy's strength has not gone unnoticed by the nation's monetary
policymakers. In an effort to ward off emerging inflationary pressures, the
Federal Reserve Board increased short-term interest rates this past summer.
Market reaction to robust economic growth has been mixed. The U.S. bond
market has generally declined, as fixed income investors became increasingly
concerned about the effects of rising interest rates.
In the stock market, the performance of large-capitalization growth
stocks, which has driven the market's advance over the past few years, has begun
to moderate, and many previously out-of-favor value-oriented mid-cap and
small-cap stocks have rallied. At the same time, a healthy percentage of
actively managed, diversified portfolios have once again begun to outperform
unmanaged stock indices such as Standard & Poor's 500.
At OppenheimerFunds, we applaud the Fed's pre-emptive strike against
inflation. In our view, history has repeatedly demonstrated that most financial
assets do best in a low-inflation environment. What's more, we believe that the
move to higher interest rates should be temporary.
3 OPPENHEIMER EUROPE FUND
<PAGE>
PRESIDENT'S LETTER
One recent development is quite troublesome to us however: the increasing
popularity of "day trading" among individuals seeking to make fast money in a
volatile stock market. In our opinion, day trading is not investing, it is
gambling. Experience proves that without extensive research and analysis,
attempting to time short-term price swings is a fool's errand. Instead, we
continue to encourage investors to maintain a long-term perspective that is
measured in years, not days.
Finally, while we remain alert to the potential impact of the Y2K issue, we
are encouraged by the progress made in addressing the matter. At
OppenheimerFunds, our shareholder accounting systems are already Y2K compliant,
and we have successfully participated in all required industrywide tests. We
intend to continue retesting our systems in order to help further protect
against any potential problems. After all, whether in our computer accounting
systems or the financial markets, managing risk is an important part of what
makes OppenheimerFunds The Right Way to Invest.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
September 22, 1999
4 OPPENHEIMER EUROPE FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGERS
[photo]
Portfolio Management
Team (l to r)
Shanquan Li
Bill Wilby
Q How has Oppenheimer Europe Fund performed since its inception?
A. Oppenheimer Europe Fund performed reasonably well over the brief period that
began with its inception on March 1, 1999, and ended with the close of its first
fiscal year on August 31, 1999. It's important to note that this was a
challenging period for European markets. We believe our proprietary model
combined with in-depth fundamental research helped to identify those European
companies that generate strong revenue streams and healthy profit margins.
What made this such a challenging period for European markets?
On January 1, 1999, 11 European countries joined together to form the European
Monetary Union (EMU), tying their economies to a single interest rate and a
common currency. The formation of the EMU created the largest single market
outside of the United States. We believe the EMU could prove to be a positive
long-term development for the region's markets. However, weakness in the euro,
the EMU's new currency, caused European markets to lag behind the rest of the
developed world for much of the reporting period. For example, during the second
quarter of 1999, although the Morgan Stanley Capital International All Country
(MSCI AC) Europe Index(1) was up approximately 5% in local currency terms, all
these gains were negated by the euro's declining value relative to the U.S.
dollar. In fact, the Europe Index lost 0.3% in U.S. dollar terms by the end of
the second quarter.
1. The MSCI AC Europe Index is an unmanaged index of European stocks
representing 21 developed and emerging European countries. This index cannot be
purchased directly by investors.
5 OPPENHEIMER EUROPE FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGERS
How did you manage the Fund in light of these events?
We believe our proprietary stock selection model offers us an advantage in
selecting companies that, relative to the European equity market, are favorably
positioned. The model incorporates forward-looking analyses of a company's
growth potential, and factors in the degree and rate of improvements in
analysts' earning projections. We combine this information with fundamental
research to help identify the European companies that we believe offer the best
prospects for sustained growth.
Our strategy enabled us to identify attractive investment opportunities in
stocks of a diversified group of companies that offered high rates of growth and
were experiencing upward revisions in earnings expectations. These companies
were located in 17 countries, with the majority based in the UK, France, Germany
and Italy. The Fund's performance benefited most strongly from our investments
in technology companies, such as GFI Informatique, a French computer consulting
and software organization; and consumer-oriented companies, such as EM.TV &
Merchandising AG, a fast-growing German media conglomerate. The Fund also
benefited from substantial positions in financial institutions and
communications services companies.
[callout]
"The formation of the EMU [European Monetary Union] created the largest single
market outside of the United States."
6 OPPENHEIMER EUROPE FUND
<PAGE>
On the other hand, performance suffered because we held few positions in the
energy sector. When the reporting period began, earnings of most companies in
this sector had been hurt by years of declining oil prices, and by the Asian
economic crisis of mid-1998, which reduced global demand for energy. Then, in
March 1999, oil prices spiked upward in response to growing global industrial
activity and production limits instituted by the Organization of Petroleum
Exporting Countries. Due to the small size of our energy holdings, the Fund
enjoyed only limited participation in the ensuing rally in energy-related
stocks. During the last two months of the period, we began increasing our
exposure to the oil sector, because earnings appeared to have bottomed and
estimates were beginning to increase.
What is your outlook for the coming months?
We remain optimistic about Europe. Expanding economic links and shrinking trade
barriers among European nations are facilitating corporate growth in the region.
At the same time, the European central bank has demonstrated its independence
from national politics, thereby improving investor confidence and creating a
more favorable market environment. Several European companies have established
themselves as global leaders in important areas of technology. Others have
undergone U.S.-style corporate restructurings to sharpen their competitive
edge. In addition, the work force is very well educated, and the region's
relatively wealthy, aging population has created growing demand in the
healthcare and financial sectors.
We also see opportunities in Great Britain, although it is not currently
part of the EMU. We believe Britain's prolonged expansion is likely to continue
at a rate that will meet or exceed analysts' expectations.
- -----------------------------
Cumulative
Total Returns
For the Period of 3/1/99
to 9/30/99(2)
<TABLE>
<CAPTION>
Since
Inception
- -------------------------
<S> <C>
Class A -1.41%
- -------------------------
Class B -0.90
- -------------------------
Class C 3.40
- -------------------------
Class Y 4.70
- -------------------------
</TABLE>
2. See page 12 for further details.
7 OPPENHEIMER EUROPE FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGERS
Our disciplined stock-picking strategy is designed to enable the Fund to take
advantage of Europe's growing investment opportunities. We remain committed to
our strategy of seeking stocks of companies with strong revenue and sustainable
margins. That commitment, backed by in-depth fundamental research, is what makes
Oppenheimer Europe Fund an important part of The Right Way to Invest.
- ----------------------------
Regional Allocation(3)
[pie chart]
Europe 89.7%
Emerging
Europe 7.6
United States/
Canada 2.7
- ----------------------------
10 Largest Country Holdings(3)
- ---------------------------------------------------------
<TABLE>
<S> <C>
France 17.0%
- ---------------------------------------------------------
Germany 16.6
- ---------------------------------------------------------
Great Britain 16.1
- ---------------------------------------------------------
Italy 10.7
- ---------------------------------------------------------
Sweden 6.5
- ---------------------------------------------------------
Switzerland 6.4
- ---------------------------------------------------------
Belgium 4.9
- ---------------------------------------------------------
The Netherlands 4.4
- ---------------------------------------------------------
Greece 3.1
- ---------------------------------------------------------
Norway 3.0
</TABLE>
Top 10 Stock Holdings(3)
- ---------------------------------------------------------
<TABLE>
<S> <C>
EM.TV & Merchandising AG 2.8%
- ---------------------------------------------------------
Kinowelt Medien AG 2.5
- ---------------------------------------------------------
Teles AG 2.4
- ---------------------------------------------------------
WM-Data AB, B Shares 2.0
- ---------------------------------------------------------
Shire Pharmaceuticals Group plc, ADR 2.0
- ---------------------------------------------------------
Porsche AG, Preference 1.9
- ---------------------------------------------------------
GFI Informatique 1.7
- ---------------------------------------------------------
National Bank of Greece SA 1.7
- ---------------------------------------------------------
Infogrames Entertainment SA 1.7
- ---------------------------------------------------------
Oerlikon-Buehrle Holding AG 1.6
</TABLE>
3. Portfolio is subject to change. Percentages are as of August 31, 1999, and
are based on total market value of investments.
8 OPPENHEIMER EUROPE FUND
<PAGE>
FUND PERFORMANCE
How has the Fund performed? Below is a discussion, by the Manager, of the Fund's
performance during its fiscal year ended August 31, 1999, followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index.
Management's discussion of performance. The reporting period began with the
Fund's inception on March 1, 1999, and continued through August 31, 1999. During
that period, European markets lagged other markets of the developed world due to
weakness in the euro. However, the Fund benefited from its proprietary
investment model and fundamental research that helped identify European
companies with attractive prospects for growth. The Fund ended the period
invested in 17 countries, with the majority of investments concentrated in the
UK, France, Germany and Italy. The Fund focused on the technology, financial,
communications services, consumer cyclical and consumer staples sectors. Of
these sectors, the Fund's performance benefited most strongly from investments
in technology and consumer cyclicals. Performance suffered as a result of the
Fund's relatively small position in the energy sector, which rallied for much of
the period. The Fund's portfolio holdings, allocation and strategies are subject
to change.
Comparing the Fund's performance to the market. The graphs that follow show the
performance of a hypothetical $10,000 investment in each of the class of shares
of the Fund from the inception date of March 1, 1999, until August 31, 1999. The
Fund's performance reflects the deduction of the maximum initial sales charge on
Class A shares and the applicable contingent deferred sales charge for Class B
and Class C shares, and reinvestment of all dividends and capital gains
distributions.
The Fund's performance is compared to the performance of the Morgan Stanley
Capital International All Country (MSCI AC) Europe Index. The MSCI AC Europe
Index is an unmanaged index of European stocks representing 21 developed and
emerging European countries. 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 graph shows the effect of taxes. The Fund's
performance reflects the effects of Fund business and operating expenses. While
index comparisons may be useful to provide a benchmark for the Fund's
performance, it must be noted that the Fund's investments are not limited to the
securities in any one index.
9 OPPENHEIMER EUROPE FUND
<PAGE>
FUND PERFORMANCE
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Europe Fund (Class A)
and Morgan Stanley Capital International All Country (MSCI AC) Europe Index
[line chart]
<TABLE>
<CAPTION>
Oppenheimer Europe Fund Class A MSCI AC Europe Index
<S> <C> <C>
3.1.99 9425 10000
8.31.99 10160 10339
</TABLE>
Cumulative Total Return of Class A Shares of the Fund at 8/31/99(1)
Life 1.60%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Europe Fund (Class B)
and Morgan Stanley Capital International All Country (MSCI AC) Europe Index
[line chart]
<TABLE>
<CAPTION>
Oppenheimer Europe Fund Class B MSCI AC Europe Index
<S> <C> <C>
3.1.99 10000 10000
8.31.99 10230 10339
</TABLE>
Cumulative Total Return of Class B Shares of the Fund at 8/31/99(1)
Life 2.30%
1. See page 12 for further details.
Past performance is not predictive of future performance.
10 OPPENHEIMER EUROPE FUND
<PAGE>
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Europe Fund (Class C)
and Morgan Stanley Capital International All Country (MSCI AC) Europe Index
[line chart]
<TABLE>
<CAPTION>
Oppenheimer Europe Fund Class C MSCI AC Europe Index
<S> <C> <C>
3.1.99 10000 10000
8.31.99 10660 10339
</TABLE>
Cumulative Total Return of Class C Shares of the Fund at 8/31/99(1)
Life 6.60%
Class Y Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Europe Fund (Class Y)
and Morgan Stanley Capital International All Country (MSCI AC) Europe Index
[line chart]
<TABLE>
<CAPTION>
Oppenheimer Europe Fund Class Y MSCI AC Europe Index
<S> <C> <C>
3.1.99 10000 10000
8.31.99 10780 10339
</TABLE>
Cumulative Total Return of Class Y Shares of the Fund at 8/31/99(1)
Life 7.80%
The returns and the ending account values in the graphs show change in share
value and include reinvestment of all dividends and capital gains distributions,
and are not annualized. The performance information in the graph for the MSCI AC
Europe Index begins on 2/28/99. Graphs not drawn to same scale.
11 OPPENHEIMER EUROPE 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,
www.oppenheimerfunds.com.
Investing in foreign securities entails additional expenses and risks including
foreign currency fluctuations.
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.
Class A shares were first publicly offered on 3/1/99. Class A returns include
the current maximum initial sales charge of 5.75%.
Class B shares were first publicly offered on 3/1/99. Class B returns include
the applicable contingent deferred sales charge of 5%. Class B shares are
subject to a 0.75% annual asset-based sales charge. The ending account value in
the graph is net of the applicable 5% contingent deferred sales charge.
Class C shares were first publicly offered on 3/1/99. Class C returns include
the contingent deferred sales charge of 1%. Class C shares are subject to a
0.75% annual asset-based sales charge.
Class Y shares were first publicly offered on 3/1/99. Class Y shares are offered
only to certain institutional investors under special agreements with the
Distributor.
An explanation of the different performance calculations is in the Fund's
prospectus.
12 OPPENHEIMER EUROPE FUND
<PAGE>
Financials
13 OPPENHEIMER EUROPE FUND
<PAGE>
STATEMENT OF INVESTMENTS August 31, 1999
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
===================================================================================
<S> <C> <C>
Common Stocks--98.1%
- -----------------------------------------------------------------------------------
Basic Materials--3.9%
- -----------------------------------------------------------------------------------
Chemicals--1.0%
Rhone-Poulenc SA, Sponsored ADR 1,100 $ 53,419
- -----------------------------------------------------------------------------------
Metals--1.8%
Ispat International NV 4,300 44,613
- -----------------------------------------------------------------------------------
S.K.F. AB, B Shares 2,300 52,356
--------
96,969
- -----------------------------------------------------------------------------------
Paper--1.1%
Stora Enso Oyj, A Shares 4,200 57,226
- -----------------------------------------------------------------------------------
Capital Goods--7.6%
- -----------------------------------------------------------------------------------
Electrical Equipment--1.4%
Kudelski SA 20 74,783
- -----------------------------------------------------------------------------------
Industrial Services--5.3%
Adecco SA 20 11,023
- -----------------------------------------------------------------------------------
Autostrade Concessioni e Costruzioni Autostrade SpA 6,000 47,847
- -----------------------------------------------------------------------------------
Oerlikon-Buehrle Holding AG(1) 600 87,126
- -----------------------------------------------------------------------------------
Securitas AB, B Shares 4,000 57,151
- -----------------------------------------------------------------------------------
Societe Generale d'Enterprise 1,600 79,445
--------
282,592
- -----------------------------------------------------------------------------------
Manufacturing--0.9%
Metra Oyj, B Shares 2,500 44,890
- -----------------------------------------------------------------------------------
Communication Services--10.8%
- -----------------------------------------------------------------------------------
Telecommunications: Long Distance--7.8%
Altran Technologies SA 200 54,565
- -----------------------------------------------------------------------------------
Intracom SA 870 75,431
- -----------------------------------------------------------------------------------
Kinnevik Investments AB Free, Series B 4,200 76,283
- -----------------------------------------------------------------------------------
Telecom Italia SpA, Sponsored ADR 800 80,800
- -----------------------------------------------------------------------------------
Teles AG(1) 3,000 126,114
--------
413,193
- -----------------------------------------------------------------------------------
Telephone Utilities--3.0%
Ceske Radiokomunikace GDR(1) 1,200 43,800
- -----------------------------------------------------------------------------------
Energis plc(1) 2,200 56,389
- -----------------------------------------------------------------------------------
Matav RT, Sponsored ADR 2,000 60,750
--------
160,939
14 OPPENHEIMER EUROPE FUND
<PAGE>
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------
Consumer Cyclicals--10.9%
- -----------------------------------------------------------------------------------
Autos & Housing--7.3%
CIR-Conpagnie Industriali Riunite SpA 40,000 $ 59,487
- -----------------------------------------------------------------------------------
Countrywide Assured Group plc 30,000 79,596
- -----------------------------------------------------------------------------------
Groupe SEB SA 1,000 76,101
- -----------------------------------------------------------------------------------
Porsche AG, Preference 40 99,285
- -----------------------------------------------------------------------------------
Tarmac plc(1) 9,100 74,042
--------
388,511
- -----------------------------------------------------------------------------------
Leisure & Entertainment--2.5%
Kinowelt Medien AG(1) 1,600 133,507
- -----------------------------------------------------------------------------------
Retail: Specialty--1.1%
Karstadt AG 125 58,885
- -----------------------------------------------------------------------------------
Consumer Staples--11.0%
- -----------------------------------------------------------------------------------
Beverages--1.4%
Remy Cointreau(1) 4,000 76,682
- -----------------------------------------------------------------------------------
Broadcasting--3.8%
Canal Plus 800 55,093
- -----------------------------------------------------------------------------------
EM.TV & Merchandising AG 2,500 148,400
--------
203,493
- -----------------------------------------------------------------------------------
Entertainment--2.6%
Infogrames Entertainment SA(1) 1,200 88,089
- -----------------------------------------------------------------------------------
TelePizza SA(1) 10,000 52,178
--------
140,267
- -----------------------------------------------------------------------------------
Food--1.6%
Diageo plc, Sponsored ADR 800 33,150
- -----------------------------------------------------------------------------------
Jeronimo Martins & Filho SA 1,800 52,492
--------
85,642
- -----------------------------------------------------------------------------------
Food & Drug Retailers--1.6%
Etablissements Economiques du Casino Guichard-Perrachon SA 500 32,743
- -----------------------------------------------------------------------------------
Koninklijke Ahold NV, Sponsored ADR 1,428 51,051
--------
83,794
- -----------------------------------------------------------------------------------
Energy--5.5%
- -----------------------------------------------------------------------------------
Oil: Domestic--3.3%
Enterprise Oil plc 10,000 72,360
- -----------------------------------------------------------------------------------
MOL Magyar Olaj-es Gazipari Rt. 2,200 55,770
- -----------------------------------------------------------------------------------
Norsk Hydro AS 1,200 50,005
--------
178,135
15 OPPENHEIMER EUROPE FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------
Oil: International--2.2%
British-Borneo Oil & Gas plc 15,000 $ 52,823
- -----------------------------------------------------------------------------------
Royal Dutch Petroleum Co., NY Shares 1,000 61,875
--------
114,698
- -----------------------------------------------------------------------------------
Financial--17.8%
- -----------------------------------------------------------------------------------
Banks--12.2%
Banca Intesa SpA 10,913 46,106
- -----------------------------------------------------------------------------------
Banca Nazionale del Lavoro (BNL)(1) 15,000 48,798
- -----------------------------------------------------------------------------------
Banca Popolare di Lodi 5,000 58,726
- -----------------------------------------------------------------------------------
Banca Popolare di Novara 5,000 47,266
- -----------------------------------------------------------------------------------
Banco Mello SA 3,200 29,912
- -----------------------------------------------------------------------------------
Bank Austria AG 1,200 63,691
- -----------------------------------------------------------------------------------
Barclays plc 2,900 86,269
- -----------------------------------------------------------------------------------
Credito Italiano SpA 7,000 32,310
- -----------------------------------------------------------------------------------
Istituto Mobiliare Italiano 3,000 40,274
- -----------------------------------------------------------------------------------
National Bank of Greece SA 1,200 88,546
- -----------------------------------------------------------------------------------
Rolo Banca 1473 SpA 2,700 53,472
- -----------------------------------------------------------------------------------
UBS AG 200 56,434
--------
651,804
- -----------------------------------------------------------------------------------
Diversified Financial--1.6%
Gold-Zack AG 600 85,681
- -----------------------------------------------------------------------------------
Insurance--4.0%
Allianz AG 170 44,495
- -----------------------------------------------------------------------------------
Milano Assicurazioni 19,000 52,980
- -----------------------------------------------------------------------------------
Skandia Forsakrings AB 2,700 54,923
- -----------------------------------------------------------------------------------
Zurich Allied AG 100 58,678
--------
211,076
- -----------------------------------------------------------------------------------
Healthcare--10.0%
- -----------------------------------------------------------------------------------
Healthcare/Drugs--6.8%
Ares-Serono Group, Cl. B 35 52,903
- -----------------------------------------------------------------------------------
Ontex(1) 600 62,677
- -----------------------------------------------------------------------------------
QIAGEN NV(1) 1,500 58,541
- -----------------------------------------------------------------------------------
Sanofi-Synthelabo SA(1) 800 33,292
- -----------------------------------------------------------------------------------
Shire Pharmaceuticals Group plc, ADR(1) 4,200 105,000
- -----------------------------------------------------------------------------------
UCB SA 1,200 50,826
--------
363,239
16 OPPENHEIMER EUROPE FUND
<PAGE>
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------
Healthcare/Supplies & Services--3.2%
Fresenius Medical Care AG 700 $ 50,276
- -----------------------------------------------------------------------------------
Ion Beam Applications(1) 1,100 68,549
- -----------------------------------------------------------------------------------
SmithKline Beecham plc 4,013 52,301
--------
171,126
- -----------------------------------------------------------------------------------
Technology--19.6%
- -----------------------------------------------------------------------------------
Computer Services--7.1%
Cap Gemini SA 400 68,655
- -----------------------------------------------------------------------------------
CMG plc 2,000 59,721
- -----------------------------------------------------------------------------------
GFI Informatique 1,200 88,596
- -----------------------------------------------------------------------------------
Unilog SA 1,000 52,283
- -----------------------------------------------------------------------------------
WM-Data AB, B Shares 2,900 107,625
--------
376,880
- -----------------------------------------------------------------------------------
Computer Software--10.2%
Admiral plc 4,000 47,597
- -----------------------------------------------------------------------------------
Equant NV(1) 900 79,613
- -----------------------------------------------------------------------------------
F.I. Group plc 9,000 52,099
- -----------------------------------------------------------------------------------
Getronics NV 1,300 63,643
- -----------------------------------------------------------------------------------
Infomatec Integrated Information Systems AG(1) 2,400 76,809
- -----------------------------------------------------------------------------------
IONA Technologies plc, ADR(1) 2,100 26,775
- -----------------------------------------------------------------------------------
Merkantildata ASA 5,200 55,000
- -----------------------------------------------------------------------------------
Real Software Group NV 700 80,442
- -----------------------------------------------------------------------------------
SER Systeme AG 1,500 63,532
--------
545,510
- -----------------------------------------------------------------------------------
Communications Equipment--1.1%
Vodafone Group plc 3,000 60,493
- -----------------------------------------------------------------------------------
Electronics--1.2%
Rexel SA 700 65,064
- -----------------------------------------------------------------------------------
Transportation--1.0%
- -----------------------------------------------------------------------------------
Shipping--1.0%
Kvaerner AS, Series B(1) 2,500 55,433
---------
Total Common Stocks (Cost $5,124,914) 5,233,931
</TABLE>
17 OPPENHEIMER EUROPE FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
==============================================================================================
<S> <C> <C>
Repurchase Agreements--1.9%
Repurchase agreement with First Chicago Capital Markets, 5.41%,
dated 8/31/99, to be repurchased at $100,015 on 9/1/99,
collateralized by U.S. Treasury Nts., 4%-6.375%,
11/30/99-2/28/03, with a value of $99,116, and U.S. Treasury
Bills, 9/15/99, with a value of $2,961 (Cost $100,000) $100,000 $ 100,000
- ----------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $5,224,914) 100.0% 5,333,931
- ----------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets 0.0 (1,296)
--------------------------
Net Assets 100.0% $5,332,635
==========================
</TABLE>
FOOTNOTES TO STATEMENT OF INVESTMENTS
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>
France $ 903,640 17.0%
Germany 886,983 16.6
Great Britain 858,615 16.1
Italy 568,066 10.7
Sweden 348,339 6.5
Switzerland 340,946 6.4
Belgium 262,494 4.9
The Netherlands 235,110 4.4
Greece 163,977 3.1
Norway 160,438 3.0
United States 144,613 2.7
Hungary 116,520 2.2
Finland 102,116 1.9
Portugal 82,405 1.5
Austria 63,691 1.2
Spain 52,178 1.0
Czechoslovakia 43,800 0.8
----------------------------
Total $5,333,931 100.0%
============================
</TABLE>
1. Non-income-producing security.
See accompanying Notes to Financial Statements.
18 OPPENHEIMER EUROPE FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES August 31, 1999
<TABLE>
===================================================================================
<S> <C>
Assets
Investments, at value (cost $5,224,914)--see accompanying statement $5,333,931
- -----------------------------------------------------------------------------------
Cash 53,085
- -----------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 56,806
Shares of beneficial interest sold 9,897
Interest and dividends 4,695
Other 557
----------
Total assets 5,458,971
===================================================================================
Liabilities
Payables and other liabilities:
Investments purchased 117,298
Shareholder reports 3,520
Distribution and service plan fees 1,143
Transfer and shareholder servicing agent fees 832
Shares of beneficial interest redeemed 375
Other 3,168
----------
Total liabilities 126,336
===================================================================================
Net Assets $5,332,635
==========
===================================================================================
Composition of Net Assets
Paid-in capital $5,026,511
- -----------------------------------------------------------------------------------
Accumulated net investment income 8,674
- -----------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions 188,990
- -----------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation
of assets and liabilities denominated in foreign currencies 108,460
----------
Net assets $5,332,635
==========
</TABLE>
19 OPPENHEIMER EUROPE FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES Continued
<TABLE>
==============================================================================================
<S> <C>
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$4,346,966 and 403,265 shares of beneficial interest outstanding) $10.78
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering price) $11.44
- ----------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $851,437 and
79,379 shares of beneficial interest outstanding) $10.73
- ----------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $133,154 and
12,379 shares of beneficial interest outstanding) $10.76
- ----------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $1,078 and 100 shares of beneficial interest outstanding) $10.78
</TABLE>
See accompanying Notes to Financial Statements.
20 OPPENHEIMER EUROPE FUND
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
For the Period from March 1, 1999 (Commencement of Operations) to August 31, 1999
====================================================================================
<S> <C>
Investment Income
Dividends (net of foreign withholding taxes of $2,231) $ 32,849
- ------------------------------------------------------------------------------------
Interest 7,622
---------
Total income 40,471
====================================================================================
Expenses
Management fees--Note 4 15,927
- ------------------------------------------------------------------------------------
Legal, auditing and other professional fees 4,723
- ------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 1,730
Class B 2,026
Class C 257
- ------------------------------------------------------------------------------------
Shareholder reports 4,031
- ------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 3,200
- ------------------------------------------------------------------------------------
Custodian fees and expenses 1,137
- ------------------------------------------------------------------------------------
Registration and filing fees 890
- ------------------------------------------------------------------------------------
Other 241
---------
Total expenses 34,162
Less expenses paid indirectly--Note 1 (1,121)
---------
Net expenses 33,041
====================================================================================
Net Investment Income 7,430
====================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 238,385
Foreign currency transactions (49,395)
---------
Net realized gain 188,990
- ------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 112,275
Translation of assets and liabilities denominated in foreign currencies (3,815)
---------
Net change 108,460
---------
Net realized and unrealized gain 297,450
====================================================================================
Net Increase in Net Assets Resulting from Operations $304,880
=========
</TABLE>
See accompanying Notes to Financial Statements.
21 OPPENHEIMER EUROPE FUND
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Period Ended
August 31,
1999(1)
===================================================================================
<S> <C>
Operations
Net investment income $ 7,430
- -----------------------------------------------------------------------------------
Net realized gain 188,990
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 108,460
----------
Net increase in net assets resulting from operations 304,880
===================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial
interest transactions--Note 2:
Class A 4,078,125
Class B 819,920
Class C 128,710
Class Y 1,000
===================================================================================
Net Assets
Total increase 5,332,635
- -----------------------------------------------------------------------------------
Beginning of period --
----------
End of period (including accumulated net investment income of
$8,674 for the period ended August 31, 1999) $5,332,635
==========
</TABLE>
1. For the period from March 1, 1999 (commencement of operations) to August 31,
1999.
See accompanying Notes to Financial Statements.
22 OPPENHEIMER EUROPE FUND
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
Period Period Period Period
Ended Ended Ended Ended
August 31, August 31, August 31, August 31,
1999(1) 1999(1) 1999(1) 1999(1)
===========================================================================================
<S> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00
- -------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .02 (.03) (.02) .04
Net realized and unrealized gain .76 .76 .78 .74
-------------------------------------------------
Total income from
investment operations .78 .73 .76 .78
- -------------------------------------------------------------------------------------------
Net asset value, end of period $10.78 $10.73 $10.76 $10.78
=================================================
===========================================================================================
Total Return, at Net Asset Value(2) 7.80% 7.30% 7.60% 7.80%
===========================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $4,347 $851 $133 $1
- -------------------------------------------------------------------------------------------
Average net assets (in thousands) $3,473 $401 $ 52 $1
- -------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income (loss) 0.54% (0.87)% (0.82)% 0.65%
Expenses 1.61% 2.60% 2.57% 1.52%
- -------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 83% 83% 83% 83%
</TABLE>
1. For the period from March 1, 1999 (commencement of operations) to August 31,
1999.
2. Assumes a $1,000 hypothetical initial investment on the business day before
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. Total returns
are not annualized for periods of less than one full year.
3. Annualized for periods of less than one full year.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended August 31, 1999, were $8,270,988 and $3,335,149, respectively.
See accompanying Notes to Financial Statements.
23 OPPENHEIMER EUROPE FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. Significant Accounting Policies
Oppenheimer Europe Fund (the Fund) is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end management investment
company. The Fund's investment objective is to seek capital appreciation. The
Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund
offers Class A, Class B, Class C and Class Y shares. Class A shares are sold
with a front-end sales charge on investments up to $1 million. Class B and Class
C shares may be subject to a contingent deferred sales charge (CDSC). Class Y
shares are sold to certain institutional investors without either a front-end
sales charge or a 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. No such plan has been adopted for Class Y shares. Class B
shares will automatically convert to Class A shares six years after the date of
purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market-type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. Foreign currency exchange contracts are valued based on the
closing prices of the foreign currency contract rates in the London foreign
exchange markets on a daily basis as provided by a reliable bank or dealer.
Options are valued based upon the last sale price on the principal exchange on
which the option is traded or, in the absence of any transactions that day, the
value is based upon the last sale price on the prior trading date if it is
within the spread between the closing bid and asked prices. If the last sale
price is outside the spread, the closing bid is used.
24 OPPENHEIMER EUROPE FUND
<PAGE>
- --------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book-Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, 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 a nonfunded retirement plan for the
Fund's independent Trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service.
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 Trustees in shares of one or more
Oppenheimer funds selected by the Trustee. The amount paid to the Trustee 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
income per share.
25 OPPENHEIMER EUROPE FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
1. Significant Accounting Policies Continued
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 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.
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
period ended August 31, 1999, amounts have been reclassified to reflect a
decrease in paid-in capital of $1,244. Accumulated net investment income was
increased by the same amount.
- --------------------------------------------------------------------------------
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. Foreign dividend income is often
recorded on the payable 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.
26 OPPENHEIMER EUROPE 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>
Period Ended August 31, 1999(1)
Shares Amount
- ---------------------------------------------------
<S> <C> <C>
Class A
Sold 481,772 $4,876,962
Redeemed (78,507) (798,837)
-----------------------
Net increase 403,265 $4,078,125
=======================
- ---------------------------------------------------
Class B
Sold 81,470 $ 842,190
Redeemed (2,091) (22,270)
-----------------------
Net increase 79,379 $ 819,920
=======================
- ---------------------------------------------------
Class C
Sold 18,532 $ 190,808
Redeemed (6,153) (62,098)
-----------------------
Net increase 12,379 $ 128,710
=======================
- ---------------------------------------------------
Class Y
Sold 100 $ 1,000
-----------------------
Net increase 100 $ 1,000
=======================
</TABLE>
1. For the period from March 1, 1999 (commencement of operations) to August 31,
1999.
================================================================================
3. Unrealized Gains and Losses on Securities
As of August 31, 1999, net unrealized appreciation on securities of $109,017 was
composed of gross appreciation of $357,604, and gross depreciation of $248,587.
27 OPPENHEIMER EUROPE FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
4. Management 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
annualized management fee for the period ended August 31, 1999, was 0.80% of
average net assets for each class of shares.
- --------------------------------------------------------------------------------
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.
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
Period Ended Shares Distributor Distributor(1) Distributor(1) Distributor(1)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
August 31, 1999 $11,508 $3,737 $-- $17,004 $--
</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
Period Ended Retained by Distributor Retained by Distributor Retained by Distributor
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
August 31, 1999 $-- $-- $--
</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.
28 OPPENHEIMER EUROPE FUND
<PAGE>
- --------------------------------------------------------------------------------
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. 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 period ended August 31, 1999, payments under the
Class A Plan totaled $1,730, all of which was paid by the Distributor to
recipients. 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 allow the
Distributor to be reimbursed for its services and costs in distributing Class B
and Class C and servicing accounts.
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 from the Fund under the plans. If either the
Class B or the Class C plan is terminated by the Fund, the Board of Trustees may
allow the Fund to continue payments of the asset-based sales charge to the
Distributor for distributing shares before the plan was terminated. The plans
allow for the carryforward of distribution expenses, to be recovered from
asset-based sales charges in subsequent fiscal periods.
Distribution fees paid to the Distributor for the period ended August 31, 1999,
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 $2,026 $1,004 $15,134 1.78%
Class C Plan -- -- -- 0.00
</TABLE>
29 OPPENHEIMER EUROPE FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
5. Foreign Currency Contracts
A foreign currency exchange 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 exchange contracts for operational purposes and to seek to
protect against adverse exchange rate fluctuation. Risks to the Fund include the
potential inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using 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
forward transaction. Realized gains and losses are reported with all other
foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.
================================================================================
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 0.35%. 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
0.0575% per annum.
The Fund had no borrowings outstanding during the period ended August 31,
1999.
30 OPPENHEIMER EUROPE FUND
<PAGE>
INDEPENDENT AUDITORS' REPORT
================================================================================
The Board of Trustees and Shareholders of
Oppenheimer Europe Fund:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Europe Fund as of August 31, 1999,
and the related statement of operations and statement of changes in net assets
and the financial highlights for the period from March 1, 1999 (commencement of
operations), to August 31, 1999. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1999, by correspondence with the custodian and brokers; and where
confirmations were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Europe Fund as of August 31, 1999, and the results of its
operations, the changes in net assets and the financial highlights for the
period from March 1, 1999 (commencement of operations), to August 31, 1999, in
conformity with generally accepted accounting principles.
KPMG LLP
Denver, Colorado
September 22, 1999
31 OPPENHEIMER EUROPE FUND
<PAGE>
FEDERAL INCOME TAX INFORMATION Unaudited
================================================================================
In early 2000, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1999. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
32 OPPENHEIMER EUROPE FUND
<PAGE>
OPPENHEIMER EUROPE 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
Pauline Trigere, Trustee
Clayton K. Yeutter, Trustee
Shanquan Li, Vice President
William L. Wilby, Vice President
Andrew J. Donohue, Secretary
Brian W. Wixted, Treasurer
Robert G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
================================================================================
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
This is a copy of a report to shareholders of
Oppenheimer Europe Fund. This report must be preceded
or accompanied by a Prospectus of Oppenheimer Europe
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.
33 OPPENHEIMER EUROPE FUND
<PAGE>
OPPENHEIMERFUNDS FAMILY
<TABLE>
===========================================================================================
<S> <C> <C>
Global Equity
Developing Markets Fund Global Fund
International Small Company Quest Global Value Fund
Fund Global Growth & Income Fund
Europe Fund
International Growth Fund
===========================================================================================
Equity
Stock Stock & Bond
Enterprise Fund(1) Main Street(R) Growth & Income Fund
Discovery Fund Quest Opportunity Value Fund
Main Street(R) Small Cap Fund Total Return Fund
Quest Small Cap Value Fund Quest Balanced Value Fund
MidCap Fund Capital Income Fund(2)
Capital Appreciation Fund Multiple Strategies Fund
Growth Fund Disciplined Allocation Fund
Disciplined Value Fund Convertible Securities Fund
Quest Value Fund
Specialty
Real Asset Fund
Gold & Special Minerals Fund
===========================================================================================
Fixed Income
Taxable Municipal
International Bond Fund California Municipal Fund(3)
World Bond Fund Florida Municipal Fund(3)
High Yield Fund New Jersey Municipal Fund(3)
Champion Income Fund New York Municipal Fund(3)
Strategic Income Fund Pennsylvania Municipal Fund(3)
Bond 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, NY 10048-0203.
(C) Copyright 1999 OppenheimerFunds, Inc. All rights reserved.
34 OPPENHEIMER EUROPE 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(R)
RA0261.001.0899 October 29, 1999 Distributor, Inc.
