[map of Europe]
Annual Report August 31, 2000
Oppenheimer
Europe Fund
[logo] OppenheimerFunds(R)
The Right Way to Invest
<PAGE>
REPORT HIGHLIGHTS
Europe's equity markets were greatly influenced by the movements of technology
stocks during the fiscal year ended August 31, 2000.
A weak currency favored European exporters of goods and services.
Contents
1 President's Letter
3 An Interview
with Your Fund's
Manager
7 Fund Performance
12 Financial
Statements
30 Independent
Auditors' Report
31 Federal
Income Tax
Information
32 Officers and
Trustees
Average Annual
Total Returns*
For the 1-Year Period
Ended 8/31/00
Class A
Without With
Sales Chg. Sales Chg.
------------------------
9.99% 3.67%
Class B
Without With
Sales Chg. Sales Chg.
------------------------
9.09% 4.09%
Class C
Without With
Sales Chg. Sales Chg.
------------------------
9.26% 8.26%
Class Y
------------------------
10.41%
* See Notes on page 10 for further details.
<PAGE>
PRESIDENT'S LETTER
[photo]
Bridget A. Macaskill
President
Oppenheimer
Europe Fund
Dear Shareholder,
Over the past several decades, our investment teams have learned the importance
of avoiding complacency when it comes to navigating the financial markets--
especially when times are good. Right now, times appear particularly good. The
U.S. economy is in its tenth year of expansion. In the bond market, U.S.
Treasury issues have been performing favorably over the past year. In addition,
despite volatility in the second quarter, the stock market has been providing
attractive returns from a wide spectrum of industry sectors, capitalization
ranges and investment styles.
We have arrived at this juncture after months of monitoring the rapid pace of
global economic growth and its implications for inflation, as well as the
Federal Reserve Board's evolving monetary policy. At this point, economic
indicators suggest a dampening of short-term inflationary pressures. While
recent increases in oil prices are certainly taking their toll, we don't believe
this signals a return to 1970's-style inflation. Accordingly, if the Fed
continues in its diligence, the economy could maintain its healthy rate of
growth.
In the bond market, the achievement of a federal budget surplus has prompted
the Treasury to buy back many of its long-term securities. The resulting supply
shortage boosted these securities' returns, causing an inversion of the yield
curve--an unusual situation in which shorter term Treasuries yield more than
their longer term counterparts. Other bond sectors are offering many
opportunities in the form of attractive valuations.
Perhaps most important is that we have begun to see encouraging signs in the
stock market. Formerly high-flying Internet stocks have generally come down to
earth, and investors have begun to refocus on companies with strong business
fundamentals and justifiable valuations. Investors have also returned to
long-neglected, value-oriented companies.
1 | OPPENHEIMER EUROPE FUND
<PAGE>
PRESIDENT'S LETTER
What else do these various trends tell us? They tell us that the ability to
discriminate between long-term potential and short-lived fads has become more
critical than ever. Trying to generate good long-term performance requires
tracking the best companies through intensive research, combined with
hard-earned experience.
At OppenheimerFunds, our seasoned portfolio management teams fight
complacency by remaining constantly aware of the risks that face the economy and
financial markets. Virtually anything could affect the overall markets--a surge
in inflation, a decline in productivity, deteriorating corporate earnings, or
even the new Administration's proposals regarding tax reform, healthcare and
Social Security. However, by remaining vigilant in our quest for fundamentally
sound businesses, we believe we can find good investments that can weather
market volatility.
In this environment, we encourage you to consult your financial
advisor and to stay on track with your long-term financial plan. For our part,
we will continue to monitor the opportunities and risks ever present in the
financial markets. Thank you for your confidence in OppenheimerFunds, The Right
Way to Invest.
Sincerely,
/s/ Bridget A. Macaskill
Bridget A. Macaskill
September 22, 2000
These general market views represent opinions of OppenheimerFunds, Inc. and are
not intended to predict or depict performance of the securities markets or any
particular fund. Specific discussion, as it applies to your Fund, is contained
in the pages that follow. Stocks and bonds have different types of investment
risks; stocks are subject to market volatility and bonds are subject to credit
and interest rate risks.
2 | OPPENHEIMER EUROPE FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGER
[photo]
Portfolio Management
Team (l to r)
Shanquan Li
(Portfolio Manager)
Bill Wilby
Q How did the Fund perform during the one-year ended August 31, 2000?
A. Oppenheimer Europe Fund performed well during the fiscal year ended August
31, 2000. Behaving similarly to the equity markets in Europe, the Fund's total
return rose substantially during the first six months of the period, declined
thereafter and, ultimately, posted a positive gain for the twelve-month period.
What happened in the European equity markets during the period?
As was the case in the United States, the performance of Europe's equity markets
was linked closely to the progress of technology stocks. Following exceptional
gains in late 1999 and early 2000, equities for technology and
telecommunications companies retreated this spring, and stocks in many other
sectors followed suit. As the period drew to a close, non- technology issues
were, in many cases, faring better than high-tech issues. The result: Markets in
Europe that are dominated by technology issues (e.g., Finland and Ireland)
generally have lagged larger and more-diversified markets, such as Germany and
France in recent months.
How did these events affect the Fund?
Throughout the period, the Fund maintained a sizable allocation of technology
issues. Despite the falloff in technology sector stock prices since March 2000,
several of the Fund's technology, telecommunications and biotechnology holdings,
proved to be major contributors to Fund performance over the 12-month period.
For example, an Irish biotechnology firm is poised to introduce several new
drugs, the most significant of which is a vaccine that may prevent the onset or
advance of Alzheimer's disease. Early-stage trials of the vaccine have shown
encouraging results.
3 | OPPENHEIMER EUROPE FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGER
In contrast, the Fund's investments in financial services firms and
basic-materials companies proved disappointing. To keep inflationary pressures
in check, the European Central Bank (ECB) boosted interest rates several times
during the 12-month period. Because rising interest rates can be detrimental to
the balance sheets of banks and insurance companies, investors tended to shun
these stocks. Poor results from the Fund's basic-materials holdings were due in
part to weakness in the euro, the currency used by the 11 members of the
European Monetary Union (EMU). Following its introduction in early 1999, the
euro has lost value against other major currencies such as the U.S. dollar.
However, larger European companies that can export their goods and receive
payment in a stronger currency benefited from this situation, as they were able
to use the declining euro to actually boost revenues. The Fund, however, was
invested in smaller basic-materials firms that operate primarily within Europe.
For these companies, the weak currency meant reduced revenues and earnings.
Did you make any significant changes to the portfolio during the period?
The most significant change was a shift in market-capitalization focus that we
made during the final weeks of the period. We employ a quantitative model that
analyzes thousands of stocks before selecting roughly 100 that meet our
criteria: strong earnings growth, relative strength and an attractive Odynamic
price-earnings (P/E) ratio.O The dynamic P/E ratio, indicates a stock price's
historical tendency to follow changes in analysts' projections for the company's
earnings. The results of our quantitative model combined with an overlay of
fundamental analysis, led us to focus our purchases on small-company stocks
during fiscal 2000.
[callout]
"Our positive outlook for Europe results from the major fiscal and monetary
reforms that have paved the way for robust economic growth."
4 | OPPENHEIMER EUROPE FUND
<PAGE>
As we reviewed the portfolio results and trends in European markets, it
became obvious to us that we could potentially improve performance by broadening
the market-capitalization range of the Fund's holdings, since smaller European
companies are less likely to benefit from a weak euro or low export prices.
Therefore, we added a market-capitalization factor to the model and consequently
purchased several attractively priced mid- and large-capitalization stocks.
These included companies like Alcatel SA, a French company that provides
telecommunications equipment and transportation services.
What is your outlook for Europe's economy and markets?
We continue to have a very positive outlook for Europe. Major fiscal and
monetary reforms have paved the way for robust economic growth. Under a unified
central bank, the ECB has made significant strides in controlling inflation and
reining in unbridled unemployment. Most recently, lower tax rates in Germany,
continued dissolution of trade barriers, and a new emphasis on building
shareholder value have helped greatly to accelerate Europe's transformation into
a business- and shareholder-friendly region. We continue to believe that
Europe's strong economic growth will fuel gains in its equity markets. This
trend will benefit two important groups: European companies that do not export
and investors whose European holdings are denominated in U.S. dollars. For these
reasons, we believe that Europe and Oppenheimer Europe Fund are, and will
continue to be, part of The Right Way to Invest.
Average Annual
Total Returns
For the Periods Ended 9/30/00(1)
Class A Since
1-Year Inception
------------------------
-3.11% 0.85%
Class B Since
1-Year Inception
------------------------
-2.90% 1.35%
Class C Since
1-Year Inception
------------------------
1.08% 4.09%
Class Y Since
1-Year Inception
------------------------
3.24% 5.05%
1. See page 10 for further details.
5 | OPPENHEIMER EUROPE FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGER
Regional Allocation(2)
[pie chart]
Europe 95.4%
United States 2.5
Emerging
Europe 2.1
Top Ten Common Stock Holdings(3)
-----------------------------------------------------------
ASM Lithography Holding NV 2.3%
-----------------------------------------------------------
Entertainment AG 2.1
-----------------------------------------------------------
Elcoteq Network Corp., CI. A 2.0
-----------------------------------------------------------
Alcatel SA 1.8
-----------------------------------------------------------
Societe Television Francaise 1 1.8
-----------------------------------------------------------
Fortis, B Shares 1.8
-----------------------------------------------------------
Mediaset SpA 1.8
-----------------------------------------------------------
Siemens AG 1.7
-----------------------------------------------------------
Unilever plc, Sponsored ADR 1.7
-----------------------------------------------------------
Deutsche Bank AG 1.6
Ten Largest Country Holdings(2)
-----------------------------------------------------------
Germany 19.0%
-----------------------------------------------------------
France 19.0
-----------------------------------------------------------
Great Britain 16.7
-----------------------------------------------------------
Switzerland 6.4
-----------------------------------------------------------
Italy 5.3
-----------------------------------------------------------
Sweden 5.3
-----------------------------------------------------------
Finland 5.2
-----------------------------------------------------------
Belgium 4.2
-----------------------------------------------------------
Denmark 3.7
-----------------------------------------------------------
The Netherlands 3.7
2. Portfolio is subject to change. Percentages are as of August 31, 2000, and
are based on total market value of investments.
3. Portfolio is subject to change. Percentages are as of August 31, 2000, and
are based on net assets.
6 | 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, 2000, followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index.
Management's discussion of performance. The fiscal year that ended August 31,
2000, began with strong increases in Europe's equity markets. The advances were
driven largely by a combination of economic growth and investor enthusiasm for
technology-related stocks. After March 2000, investor concerns about the
earnings potential of technology stocks, as well as rising interest rates and
fears of higher inflation, triggered a selloff in technology and
telecommunications stocks that affected markets throughout the region. In
addition, weakness in the euro reduced the total returns on European investments
denominated in U.S. dollars. Throughout the 12-month period, the Fund had a
large allocation in technology-related issues which, despite the downturn in
that sector, made strong contributions to the Fund's 12-month total returns.
Conversely, investments in financial services, energy and basic-materials
companies failed to meet investors' expectations. Many of these were smaller
companies that, unable to export their products and thus post revenues in other,
stronger currencies, were hurt by the weak euro. As the period drew to a close,
the quantitative model we employ to select stocks was enhanced to ensure that
more medium- and large-capitalization stocks are included in the portfolio in
the future. The Fund's portfolio holdings, allocations 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 commencement date of March 1, 1999 until August 31, 2000.
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 Europe (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.
7 | OPPENHEIMER EUROPE FUND
<PAGE>
FUND PERFORMANCE
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
[line chart]
<TABLE>
<CAPTION>
Oppenheimer Europe Fund (Class A) Morgan Stanley Capital International All Country Europe Index
<S> <C> <C>
3/1/99 9425 10000
5/31/99 9368 9709
8/31/99 10160 10088
11/30/99 10716 10669
2/29/00 12641 11533
5/31/00 10581 11197
8/31/00 11175 11091
</TABLE>
Average Annual Total Return of Class A Shares of the Fund at 8/31/00(1)
1-Year 3.67% Life 7.69%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
<TABLE>
<CAPTION>
Oppenheimer Europe Fund (Class B) Morgan Stanley Capital International All Country Europe Index
<S> <C> <C>
3/1/99 10000 10000
5/31/99 9910 9709
8/31/99 10730 10088
11/30/99 11290 10669
2/29/00 13291 11533
5/31/00 11107 11197
8/31/00 11306 11091
</TABLE>
Average Annual Total Return of Class B Shares of the Fund at 8/31/00(1)
1-Year 4.09% Life 8.52%
1. See page 10 for further details.
8 | OPPENHEIMER EUROPE FUND
<PAGE>
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
<TABLE>
<CAPTION>
Oppenheimer Europe Fund (Class C) Morgan Stanley Capital International All Country Europe Index
<S> <C> <C>
3/1/99 10000 10000
5/31/99 9940 9709
8/31/99 10760 10088
11/30/99 11320 10669
2/29/00 13342 11533
5/31/00 11148 11197
8/31/00 11757 11091
</TABLE>
Average Annual Total Return of Class C Shares of the Fund at 8/31/00(1)
1-Year 8.26% Life 11.39%
Class Y Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
<TABLE>
<CAPTION>
Oppenheimer Europe Fund (Class Y) Morgan Stanley Capital International All Country Europe Index
<S> <C> <C>
3/1/99 10000 10000
5/31/99 9940 9709
8/31/99 10780 10088
11/30/99 11380 10669
2/29/00 13427 11533
5/31/00 11251 11197
8/31/00 11902 11091
</TABLE>
Average Annual Total Return of Class Y Shares of the Fund at 8/31/00(1)
1-Year 10.41% Life 12.31%
The performance information in the graph for the Morgan Stanley Capital
International All Country Europe Index begins on 2/28/99.
Past performance is not predictive of future performance. Graphs are not drawn
to the same scale.
9 | OPPENHEIMER EUROPE FUND
<PAGE>
NOTES
Foreign investing offers special opportunities, but also has special risks, such
as the effect of currency rate fluctuations and foreign taxes. 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 and
current returns may be less than the results shown as of 9/30/00. For quarterly
updates on the Fund's performance, please contact your financial advisor, call
us at 1.800.525.7048 or visit our website at www.oppenheimerfunds.com.
Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not show the effects of income taxes on an individual's investment. Taxes may
reduce your actual investment returns on income or gains paid by the Fund or any
gains you may realize if you sell your shares.
Class A shares were first publicly offered on 3/1/99. Unless otherwise noted,
Class A returns include the current maximum initial sales charge of 5.75%.
Class B shares were first publicly offered on 3/1/99. Unless otherwise noted,
Class B returns include the applicable contingent deferred sales charge of 5%
(1-year) and 4% (since commencement). 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 4% contingent deferred sales charge.
Class C shares were first publicly offered on 3/1/99. Unless otherwise noted,
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. The ending
account value in the graph is net of the applicable 1% contingent deferred 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 agreement with the
Distributor.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
10 | OPPENHEIMER EUROPE FUND
<PAGE>
Financials
11 | OPPENHEIMER EUROPE FUND
<PAGE>
STATEMENT OF INVESTMENTS August 31, 2000
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
==================================================================================
<S> <C> <C>
Common Stocks--100.8%
----------------------------------------------------------------------------------
Basic Materials--3.6%
----------------------------------------------------------------------------------
Chemicals--1.1%
BOC Group plc 14,900 $ 217,012
----------------------------------------------------------------------------------
Paper--2.5%
AssiDoman AB 15,600 235,575
----------------------------------------------------------------------------------
Jefferson Smurfit Group plc 12,700 260,350
----------
495,925
----------------------------------------------------------------------------------
Capital Goods--12.5%
----------------------------------------------------------------------------------
Electrical Equipment--3.2%
Schneider Electric SA 4,000 295,181
----------------------------------------------------------------------------------
Siemens AG 2,100 337,013
----------
632,194
----------------------------------------------------------------------------------
Industrial Services--3.6%
Adecco SA 240 183,863
----------------------------------------------------------------------------------
Cookson Group plc 80,000 273,540
----------------------------------------------------------------------------------
Group 4 Falck AS 1,600 250,879
----------
708,282
----------------------------------------------------------------------------------
Manufacturing--5.7%
ESEC Holding AG 150 317,371
----------------------------------------------------------------------------------
Jenoptik AG 8,400 253,927
----------------------------------------------------------------------------------
JOT Automation Group Oyj 20,700 141,898
----------------------------------------------------------------------------------
Perlos Oyj 8,400 253,554
----------------------------------------------------------------------------------
Tate & Lyle plc 47,800 177,350
----------
1,144,100
----------------------------------------------------------------------------------
Communication Services--5.5%
----------------------------------------------------------------------------------
Telecommunications: Long Distance--2.7%
Altran Technologies SA 1,000 237,034
----------------------------------------------------------------------------------
Avenir Telecom(1) 8,000 108,115
----------------------------------------------------------------------------------
Tecnost SpA(1) 59,000 200,910
----------
546,059
----------------------------------------------------------------------------------
Telecommunications: Wireless--2.8%
Filtronic plc 13,900 247,750
----------------------------------------------------------------------------------
Vodafone Group plc, Sponsored ADR 7,700 315,219
----------
562,969
----------------------------------------------------------------------------------
Consumer Cyclicals--10.2%
----------------------------------------------------------------------------------
Autos & Housing--2.4%
Bayerische Motoren Werke (BMW) AG 9,200 299,051
----------------------------------------------------------------------------------
Cie de Saint Gobain 1,300 173,143
----------
472,194
12 | OPPENHEIMER EUROPE FUND
<PAGE>
Market Value
Shares See Note 1
----------------------------------------------------------------------------------
Leisure & Entertainment--0.9%
Kinowelt Medien AG(1) 4,020 $ 187,645
----------------------------------------------------------------------------------
Retail: General--1.0%
Marks & Spencer plc 65,600 198,055
----------------------------------------------------------------------------------
Retail: Specialty--3.1%
Fitness First plc(1) 10,700 177,637
----------------------------------------------------------------------------------
Rallye SA 4,000 224,942
----------------------------------------------------------------------------------
Sonae, S.G.P.S., SA 140,900 217,977
----------
620,556
----------------------------------------------------------------------------------
Textile/Apparel & Home Furnishings--2.8%
Adidas-Salomon AG 4,600 244,165
----------------------------------------------------------------------------------
Bulgari SpA 27,300 307,046
----------
551,211
----------------------------------------------------------------------------------
Consumer Staples--16.6%
----------------------------------------------------------------------------------
Beverages--1.3%
Carlsberg AS, Cl. B 7,200 260,132
----------------------------------------------------------------------------------
Broadcasting--8.0%
EM.TV & Merchandising AG 4,500 224,053
----------------------------------------------------------------------------------
Intertainment AG(1) 6,900 417,902
----------------------------------------------------------------------------------
Mediaset SpA 19,500 349,176
----------------------------------------------------------------------------------
Societe Television Francaise 1 5,000 364,976
----------------------------------------------------------------------------------
Sogecable SA(1) 6,800 244,858
----------
1,600,965
----------------------------------------------------------------------------------
Entertainment--1.4%
Infogrames Entertainment SA(1) 9,400 274,127
----------------------------------------------------------------------------------
Food--2.3%
CSM NV -B.R. Cert 10,600 223,360
----------------------------------------------------------------------------------
Kamps AG 11,000 237,754
----------
461,114
----------------------------------------------------------------------------------
Food & Drug Retailers--0.9%
Superdiplo SA(1) 10,600 180,007
----------------------------------------------------------------------------------
Household Goods--1.7%
Unilever plc, Sponsored ADR 12,900 328,950
----------------------------------------------------------------------------------
Tobacco--1.0%
Altadis SA 13,400 192,410
----------------------------------------------------------------------------------
Energy--2.2%
----------------------------------------------------------------------------------
Energy Services--1.1%
Petroleum Geo-Services ASA, Sponsored ADR(1) 11,900 224,612
----------------------------------------------------------------------------------
Oil: International--1.1%
Total Fina Elf SA, B Shares 1,500 222,853
13 | OPPENHEIMER EUROPE FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
Market Value
Shares See Note 1
----------------------------------------------------------------------------------
Financial--10.5%
----------------------------------------------------------------------------------
Banks--6.7%
Deutsche Bank AG 3,700 $ 322,388
----------------------------------------------------------------------------------
EFG Eurobank 8,800 198,920
----------------------------------------------------------------------------------
Fortis, B Shares 11,700 355,868
----------------------------------------------------------------------------------
UBS AG 1,700 247,303
----------------------------------------------------------------------------------
UniCredito Italiano SpA 39,000 201,808
----------
1,326,287
----------------------------------------------------------------------------------
Diversified Financial--1.4%
Gold-Zack AG 11,500 269,726
----------------------------------------------------------------------------------
Insurance--2.4%
Old Mutual plc 96,800 245,069
----------------------------------------------------------------------------------
Skandia Forsakrings AB 11,500 232,766
----------
477,835
----------------------------------------------------------------------------------
Healthcare--3.9%
----------------------------------------------------------------------------------
Healthcare/Drugs--3.9%
Bioglan Pharma plc 21,700 235,854
----------------------------------------------------------------------------------
Elan Corp. plc, ADR1 5,000 291,562
----------------------------------------------------------------------------------
Omega Pharma SA 6,800 253,927
----------
781,343
----------------------------------------------------------------------------------
Technology--32.6%
----------------------------------------------------------------------------------
Computer Services--6.3%
Cap Gemini SA 1,300 271,620
----------------------------------------------------------------------------------
CE Computer Equipment AG(1) 1,500 219,385
----------------------------------------------------------------------------------
Debitel AG 5,900 242,089
----------------------------------------------------------------------------------
Getronics NV 18,900 237,272
----------------------------------------------------------------------------------
WM-Data AB, B Shares 49,200 276,331
----------
1,246,697
----------------------------------------------------------------------------------
Computer Software--8.4%
IONA Technologies plc, ADR(1) 3,000 249,937
----------------------------------------------------------------------------------
Lernout & Hauspie Speech Products NV(1) 8,000 233,500
----------------------------------------------------------------------------------
Psion plc 22,000 281,688
----------------------------------------------------------------------------------
Sage Group plc (The) 27,100 250,581
----------------------------------------------------------------------------------
SAP AG 1,200 303,005
----------------------------------------------------------------------------------
Sopra SA 2,047 167,621
----------------------------------------------------------------------------------
Transiciel SA 2,800 188,454
----------
1,674,786
14 | OPPENHEIMER EUROPE FUND
<PAGE>
Market Value
Shares See Note 1
----------------------------------------------------------------------------------
Communications Equipment--4.7%
Alcatel SA 4,500 $ 368,287
----------------------------------------------------------------------------------
L.M. Ericsson Telephone Co. ADR, Cl. B 15,300 313,650
----------------------------------------------------------------------------------
Nokia Corp., A Shares, Sponsored ADR 5,500 247,156
-----------
929,093
----------------------------------------------------------------------------------
Electronics--13.2%
ASM Lithography Holding NV(1) 12,000 457,500
----------------------------------------------------------------------------------
Elcoteq Network Corp., Cl. A 12,000 397,428
----------------------------------------------------------------------------------
Infineon Technologies AG(1) 4,000 266,268
----------------------------------------------------------------------------------
Ingenico SA 5,500 262,351
----------------------------------------------------------------------------------
Koninklijke (Royal) Philips Electronics NV,
NY Registered Shares 5,820 286,999
----------------------------------------------------------------------------------
Micronas Semiconductor Holding AG(1) 500 294,101
----------------------------------------------------------------------------------
Sagem SA 700 192,997
----------------------------------------------------------------------------------
SEZ Holding AG 300 246,528
----------------------------------------------------------------------------------
STMicroelectronics NV 3,600 220,852
-----------
2,625,024
----------------------------------------------------------------------------------
Transportation--2.0%
----------------------------------------------------------------------------------
Air Transportation--0.8%
British Airways plc 35,400 167,527
----------------------------------------------------------------------------------
Shipping--1.2%
D/S 1912, B Shares 20 238,479
----------------------------------------------------------------------------------
Utilities--1.2%
----------------------------------------------------------------------------------
Electric Utilities--1.2%
Vivendi (Ex-Generale des Eaux) 3,000 245,392
-----------
Total Common Stocks (Cost $19,668,283) 20,063,561
Principal
Amount
==================================================================================
Repurchase Agreements--0.2%
Repurchase agreement with Banc One Capital Markets,
Inc., 6.57%, dated 8/31/00, to be repurchased at
$48,009 on 9/1/00, collateralized by U.S. Treasury
Bonds, 6.25%-12%, 11/15/03-8/15/23, with a value of
$20,546, U.S. Treasury Nts., 4.25%-7.50%,
12/31/00-2/15/07, with a value of $23,462 and U.S.
Treasury Bills, 11/30/00, with a value of $5,025 (Cost
$48,000) $48,000 48,000
----------------------------------------------------------------------------------
Total Investments, at Value (Cost $19,716,283) 101.0% 20,111,561
----------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (1.0) (202,513)
----------------------
Net Assets 100.0% $19,909,048
======================
</TABLE>
15 | OPPENHEIMER EUROPE FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
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>
Geographical Diversification Market Value Percent
------------------------------------------------------------------
<S> <C> <C>
Germany $ 3,824,372 19.0%
France 3,817,945 19.0
Great Britain 3,366,167 16.7
Switzerland 1,289,166 6.4
Italy 1,058,940 5.3
Sweden 1,058,322 5.3
Finland 1,040,035 5.2
Belgium 843,295 4.2
Denmark 749,490 3.7
The Netherlands 747,631 3.7
Spain 617,275 3.1
Ireland 551,913 2.7
United States 505,500 2.5
Norway 224,613 1.1
Portugal 217,977 1.1
Greece 198,920 1.0
-----------------------------
Total $20,111,561 100.0%
=============================
</TABLE>
See accompanying Notes to Financial Statements.
16 | OPPENHEIMER EUROPE FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES August 31, 2000
<TABLE>
==================================================================================
<S> <C>
Assets
Investments, at value (cost $19,716,283)--
see accompanying statement $20,111,561
----------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 345
----------------------------------------------------------------------------------
Receivables and other assets:
Investments sold 609,426
Shares of beneficial interest sold 108,770
Interest 12,263
Other 1,347
-----------
Total assets 20,843,712
==================================================================================
Liabilities
Bank overdraft 366,631
----------------------------------------------------------------------------------
Unrealized depreciation on foreign currency contracts 4,056
----------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 454,860
Shares of beneficial interest redeemed 58,171
Distribution and service plan fees 7,274
Transfer and shareholder servicing agent fees 5,028
Trustees' compensation 209
Other 38,435
-----------
Total liabilities 934,664
==================================================================================
Net Assets $19,909,048
===========
==================================================================================
Composition of Net Assets
Paid-in capital $ 19,903,738
----------------------------------------------------------------------------------
Overdistributed net investment income (2)
----------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (387,885)
----------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation
of assets and liabilities denominated in foreign currencies 393,197
-----------
Net Assets $19,909,048
===========
</TABLE>
17 | 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
$11,809,251 and 1,047,247 shares of beneficial interest outstanding) $11.28
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $11.97
---------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $6,685,360
and 599,551 shares of beneficial interest outstanding) $11.15
---------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $1,413,305
and 126,234 shares of beneficial interest outstanding) $11.20
---------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $1,132 and 100 shares of beneficial interest outstanding) $11.32
</TABLE>
See accompanying Notes to Financial Statements.
18 | OPPENHEIMER EUROPE FUND
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended August 31, 2000
<TABLE>
==================================================================================
<S> <C>
Investment Income
Dividends (net of foreign withholding taxes of $8,046) $ 126,797
----------------------------------------------------------------------------------
Interest 30,474
----------
Total income 157,271
==================================================================================
Expenses
Management fees 104,783
----------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 15,049
Class B 39,393
Class C 8,076
----------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 21,129
Class B 10,130
Class C 2,106
----------------------------------------------------------------------------------
Shareholder reports 54,983
----------------------------------------------------------------------------------
Legal, auditing and other professional fees 18,732
----------------------------------------------------------------------------------
Custodian fees and expenses 11,615
----------------------------------------------------------------------------------
Trustees' compensation 284
----------------------------------------------------------------------------------
Other 6,600
----------
Total expenses 292,880
Less expenses paid indirectly (2,536)
----------
Net expenses 290,344
==================================================================================
Net Investment Loss (133,073)
==================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 615,711
Foreign currency transactions (761,019)
----------
Net realized loss (145,308)
----------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments 1,239,218
Translation of assets and liabilities denominated in foreign currencies (954,481)
----------
Net change 284,737
----------
Net realized and unrealized gain 139,429
==================================================================================
Net Increase in Net Assets Resulting from Operations $ 6,356
==========
</TABLE>
See accompanying Notes to Financial Statements.
19 | OPPENHEIMER EUROPE FUND
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Period
Ended Ended
August 31, August 31,
2000 1999(1)
==================================================================================
<S> <C> <C>
Operations
Net investment income (loss) $ (133,073) $ 7,430
----------------------------------------------------------------------------------
Net realized gain (loss) (145,308) 188,990
----------------------------------------------------------------------------------
Net change in unrealized appreciation 284,737 108,460
--------------------------
Net increase in net assets resulting from operations 6,356 304,880
==================================================================================
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Class A (8,674) --
Class Y (2) --
----------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (211,896) --
Class B (79,596) --
Class C (6,956) --
Class Y (46) --
----------------------------------------------------------------------------------
Distributions in excess of net realized gain:
Class A (53,404) --
Class B (20,063) --
Class C (1,753) --
Class Y (8) --
==================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial
interest transactions:
Class A 7,717,305 4,078,125
Class B 5,971,636 819,920
Class C 1,263,514 128,710
Class Y -- 1,000
==================================================================================
Net Assets
Total increase 14,576,413 5,332,635
----------------------------------------------------------------------------------
Beginning of period 5,332,635 --
--------------------------
End of period [including undistributed
(overdistributed) net investment income of $(2)
and $8,674, respectively] $19,909,048 $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.
20 | OPPENHEIMER EUROPE FUND
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A Class B
Year Year
Ended Ended
August 31, August 31,
2000 1999(1) 2000 1999(1)
=======================================================================================================
<S> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $10.78 $10.00 $10.73 $10.00
-------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.06) .02 (.08) (.03)
Net realized and unrealized gain 1.12 .76 1.04 .76
---------------------------------------------
Total income from investment operations 1.06 .78 .96 .73
-------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.02) -- -- --
Distributions from net realized gain (.43) -- (.43) --
Distributions in excess of net realized gain (.11) -- (.11) --
---------------------------------------------
Total dividends and/or distributions
to shareholders (.56) -- (.54) --
-------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.28 $10.78 $11.15 $10.73
=============================================
=======================================================================================================
Total Return, at Net Asset Value(2) 9.99% 7.80% 9.09% 7.30%
=======================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $11,809 $4,347 $6,685 $851
-------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 8,366 $3,473 $3,954 $401
-------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income (loss) (0.73)% 0.54% (1.56)% (0.87)%
Expenses 1.94% 1.61% 2.77% 2.60%
Expenses, net of indirect expenses 1.92% N/A 2.75% N/A
-------------------------------------------------------------------------------------------------------
Portfolio turnover rate 210% 83% 210% 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.
See accompanying Notes to Financial Statements.
21 | OPPENHEIMER EUROPE FUND
<PAGE>
FINANCIAL HIGHLIGHTS Continued
<TABLE>
<CAPTION>
Class C Class Y
Year Year
Ended Ended
August 31, August 31,
2000 1999(1) 2000 1999(1)
=======================================================================================================
<S> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $10.76 $10.00 $10.78 $10.00
-------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.08) (.02) (.05) .04
Net realized and unrealized gain 1.06 .78 1.15 .74
---------------------------------------------
Total income from investment operations .98 .76 1.10 .78
-------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- -- (.02) --
Distributions from net realized gain (.43) -- (.43) --
Distributions in excess of net realized gain (.11) -- (.11) --
---------------------------------------------
Total dividends and/or distributions
to shareholders (.54) -- (.56) --
-------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.20 $10.76 $11.32 $10.78
=============================================
=======================================================================================================
Total Return, at Net Asset Value(2) 9.26% 7.60% 10.41% 7.80%
=======================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in thousands) $1,413 $133 $1 $1
-------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 811 $ 52 $1 $1
-------------------------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income (loss) (1.56)% (0.82) (0.30)% 0.65%
Expenses 2.77% 2.57% 1.51% 1.52%
Expenses, net of indirect expenses 2.75% N/A 1.49% N/A
-------------------------------------------------------------------------------------------------------
Portfolio turnover rate 210% 83% 210% 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.
See accompanying Notes to Financial Statements.
22 | 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 an 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 at their offering price, which is normally net asset value plus
a front-end sales charge. Class B and Class C shares are sold without a
front-end sales charge but may be subject to a contingent deferred sales charge
(CDSC). 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. Securities listed or traded on National Stock Exchanges or
other domestic or foreign exchanges are valued based on the last sale price of
the security traded on that exchange prior to the time when the Fund's assets
are valued. In the absence of a sale, the security is valued at the last sale
price on the prior trading day, if it is within the spread of the closing bid
and asked prices, and if not, at the closing bid price. Securities (including
restricted securities) for which quotations are not readily available are valued
primarily using dealer-supplied valuations, a portfolio pricing service
authorized by the Board of Trustees, or at their fair value. Fair value is
determined in good faith under consistently applied procedures under the
supervision of the Board of Trustees. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).
--------------------------------------------------------------------------------
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.
23 | OPPENHEIMER EUROPE FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
1. Significant Accounting Policies Continued
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters 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.
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.
24 | OPPENHEIMER EUROPE FUND
<PAGE>
--------------------------------------------------------------------------------
Classification of Dividends and Distributions to Shareholders. Net investment
income (loss) and net realized gain (loss) may differ for financial statement
and tax purposes primarily because of paydown gains and losses and the
recognition of certain foreign currency gains (losses) as ordinary income (loss)
for tax purposes. The character of dividends and distributions made during the
fiscal year from net investment income or net realized gains may differ from its
ultimate characterization for federal income tax purposes. Also, due to timing
of dividends and distributions, the fiscal year in which amounts are distributed
may differ from the fiscal year in which the income or realized gain was
recorded by the Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended August 31, 2000, amounts have been reclassified to reflect a decrease
in paid-in capital of $75,228, a decrease in overdistributed net investment
income of $133,073, and an increase in accumulated net realized loss on
investments of $57,845. Net assets of the Fund were unaffected by the
reclassifications.
--------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
--------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. 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.
25 | OPPENHEIMER EUROPE FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Year Ended August 31, 2000 Period Ended August 31, 1999(1)
Shares Amount Shares Amount
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Sold 1,305,642 $15,150,672 481,772 $4,876,962
Dividends and/or
distributions reinvested 13,787 150,971 -- --
Redeemed (675,447) (7,584,338) (78,507) (798,837)
--------------------------------------------------------
Net increase 643,982 $ 7,717,305 403,265 $4,078,125
========================================================
-------------------------------------------------------------------------------------
Class B
Sold 609,291 $ 7,023,625 81,470 $ 842,190
Dividends and/or
distributions reinvested 8,944 97,403 -- --
Redeemed (98,063) (1,149,392) (2,091) (22,270)
--------------------------------------------------------
Net increase 520,172 $ 5,971,636 79,379 $ 819,920
========================================================
-------------------------------------------------------------------------------------
Class C
Sold 589,533 $ 6,506,073 18,532 $ 190,808
Dividends and/or
distributions reinvested 792 8,654 -- --
Redeemed (476,470) (5,251,213) (6,153) (62,098)
--------------------------------------------------------
Net increase 113,855 $ 1,263,514 12,379 $ 128,710
========================================================
-------------------------------------------------------------------------------------
Class Y
Sold -- $ -- 100 $ 1,000
Dividends and/or
distributions reinvested -- -- -- --
Redeemed -- -- -- --
--------------------------------------------------------
Net increase -- $ -- 100 $ 1,000
========================================================
</TABLE>
1. For the period from March 1, 1999 (commencement of operations) to August 31,
1999.
================================================================================
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended August 31, 2000, were
$41,743,898 and $26,917,852, respectively.
As of August 31, 2000, unrealized appreciation (depreciation) based on cost of
securities for federal income tax purposes of $19,716,283 was:
Gross unrealized appreciation $1,393,316
Gross unrealized depreciation (998,038)
----------
Net unrealized appreciation $ 395,278
==========
26 | OPPENHEIMER EUROPE FUND
<PAGE>
================================================================================
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 over $2 billion. The Fund's management
fee for the year ended August 31, 2000 was an annualized rate of 0.80%, before
any waiver by the Manager if applicable.
--------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund on an
"at-cost" basis. OFS also acts as the transfer and shareholder servicing agent
for the other Oppenheimer funds.
--------------------------------------------------------------------------------
Distribution and Service Plan Fees. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the period
indicated.
<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
Year Ended Shares Distributor Distributor(1) Distributor(1) Distributor(1)
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
August 31, 2000 $81,976 $24,750 $5,233 $126,129 $8,653
</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
Year Ended Retained by Distributor Retained by Distributor Retained by Distributor
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
August 31, 2000 $-- $5,082 $--
</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.
27 | OPPENHEIMER EUROPE FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
4. Fees and Other Transactions with Affiliates Continued
Class A Service Plan Fees. Under the Class A service plan, the Distributor
currently uses the fees it receives from the Fund to pay brokers, dealers and
other financial institutions. The Class A service plan permits reimbursements to
the Distributor at a rate of up to 0.25% of average annual net assets of Class A
shares purchased. The Distributor makes payments to plan recipients quarterly at
an annual rate not to exceed 0.25% of the average annual net assets consisting
of Class A shares of the Fund. For the year ended August 31, 2000, payments
under the Class A plan totaled $15,049 prior to Manager waivers if applicable,
all of which were paid by the Distributor to recipients, and included $1,622
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.
The Distributor retains the asset-based sales charge on Class B shares. The
Distributor retains the asset-based sales charge on Class C shares during the
first year the shares are outstanding. The asset-based sales charges on Class B
and Class C shares allow investors to buy shares without a front-end sales
charge while allowing the Distributor to compensate dealers that sell those
shares.
The Distributor's actual expenses in selling Class B and Class C shares may
be more than the payments it receives from the contingent deferred sales charges
collected on redeemed shares and asset-based sales charges from the Fund under
the plans. If any plan is terminated by the Fund, the Board of Trustees may
allow the Fund to continue payments of the asset-based sales charge to the
Distributor for distributing shares before the plan was terminated. The plans
allow for the carry-forward of distribution expenses, to be recovered from
asset-based sales charges in subsequent fiscal periods.
Distribution fees paid to the Distributor for the year ended August 31, 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 $39,393 $34,398 $136,832 2.05%
Class C Plan 8,076 4,858 12,401 0.88
</TABLE>
28 | OPPENHEIMER EUROPE FUND
<PAGE>
================================================================================
5. Foreign Currency Contracts
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts for operational purposes and to seek to protect against
adverse exchange rate fluctuations. Risks to the Fund include the potential
inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates as provided by
a reliable bank, dealer or pricing service. Unrealized appreciation and
depreciation on foreign currency contracts are reported in the Statement of
Assets and Liabilities.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign currency transactions. Realized gains and losses are reported with all
other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on
outstanding foreign currency contracts are noted in the Statement of Investments
where applicable.
As of August 31, 2000, the Fund had outstanding foreign currency contracts as
follows:
<TABLE>
<CAPTION>
Expiration Contract Valuation as of Unrealized Unrealized
Contract Description Date Amount (000s) August 31, 2000 Appreciation Depreciation
------------------------------------------------------------------------------------------------------
Contracts to Purchase
<S> <C> <C> <C> <C> <C>
British Pound Sterling (GBP) 9/1/00 GBP11 $ 16,411 $ -- $ 311
Euro (EUR) 9/29/00 EUR247 219,590 -- 3,745
-----------------------------
-- 4,056
-----------------------------
Contracts to Sell
Danish Krone (DKK) 9/1/00 DKK1,672 199,424 345 --
-----------------------------
Total Unrealized Appreciation and Depreciation $345 $4,056
=============================
</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 period ended August 31,
2000.
29 | OPPENHEIMER EUROPE FUND
<PAGE>
INDEPENDENT AUDITORS' REPORT
================================================================================
The Board of Trustees and Shareholders of
Oppenheimer Europe Fund:
We have audited the Oppenheimer Europe Fund as of August 31, 2000, and the
related statement of operations for the year then ended, and the statement of
changes in net assets and financial highlights for the year then ended and 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 audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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, 2000, 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
audits provide 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, 2000, the results of its operations for
the year then ended, and the changes in its net assets and financial highlights
for the year then ended and the period from March 1, 1999 (commencement of
operations) to August 31, 1999, in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
Denver, Colorado
September 22, 2000
30 | OPPENHEIMER EUROPE FUND
<PAGE>
FEDERAL INCOME TAX INFORMATION Unaudited
================================================================================
In early 2001 shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 2000. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
Dividends and distributions of $0.5604, $0.5426, $0.5426 and $0.5640 per
share were paid to Class A, Class B, Class C and Class Y shareholders on
December 3, 1999, all of which was designated as ordinary income for federal
income tax purposes. Whether received in stock or in cash, the capital gain
distribution should be treated by shareholders as a gain from the sale of
capital assets held for more than one year (long-term capital gains).
None of the dividends paid by the Fund during the year ended August 31,
2000 are eligible for the corporate dividend-received deduction.
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.
31 | OPPENHEIMER EUROPE FUND
<PAGE>
OPPENHEIMER EUROPE FUND
<TABLE>
====================================================================================
<S> <C>
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
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 Shareholder OppenheimerFunds Services
Servicing Agent
====================================================================================
Custodian of The Bank of New York
Portfolio Securities
====================================================================================
Independent Auditors KPMG LLP
====================================================================================
Legal Counsel Mayer, Brown & Platt
For more complete information about Oppenheimer Europe
Fund, please refer to the Prospectus. To obtain a copy,
call your financial advisor, or call OppenheimerFunds
Distributor, Inc. at 1.800.525.7048, or visit the
OppenheimerFunds Internet website, at
www.oppenheimerfunds.com.
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.
Oppenheimer funds are distributed by OppenheimerFunds
Distributor, Inc., Two World Trade Center, New York,
NY 10048-0203.
(C)Copyright 2000 OppenheimerFunds, Inc. All rights
reserved.
</TABLE>
32 | 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(1)
www.oppenheimerfunds.com
--------------------------------------------------------------------------------
General Information
Mon-Fri 8am-9pm ET, Sat 10am-4pm ET
1.800.525.7048
--------------------------------------------------------------------------------
Telephone Transactions
Mon-Fri 8am-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 9am-6:30pm ET
1.800.843.4461
--------------------------------------------------------------------------------
OppenheimerFunds Market Hotline
24 hours a day, timely and insightful messages on the
economy and issues that may affect your investments
1.800.835.3104
--------------------------------------------------------------------------------
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270, Denver, CO 80217-5270
--------------------------------------------------------------------------------
Ticker Symbol Class A: OEFAX
1. At times this website may be inaccessible or its transaction feature may be
unavailable.
[logo] OppenheimerFunds(R)
RA0261.001.0800 October 30, 2000 Distributor, Inc.
