<PAGE> 1
ANNUAL REPORT NOVEMBER 30, 1997
OPPENHEIMER
INTERNATIONAL
GROWTH FUND
[PHOTO]
[OPPENHEIMERFUNDS LOGO]
THE RIGHT WAY TO INVEST
<PAGE> 2
CONTENTS
3 President's Letter
4 Fund Performance
6 An Interview with the Fund's Managers
11 Statement of Investments
16 Statement of Assets & Liabilities
18 Statement of Operations
19 Statements of Changes in Net Assets
20 Financial Highlights
22 Notes to Financial Statements
28 Independent Auditors' Report
29 Federal Income Tax Information
30 Officers & Trustees
32 Information & Services
REPORT HIGHLIGHTS
- -------------------------------------------------------------------------------
- - OUR STRONG PERFORMANCE over the past 12 months can be attributed to being
invested in the right companies, themes and markets, and by avoiding those areas
that have not performed well.
- - THROUGHOUT EUROPE, stock markets have responded favorably to a combination of
factors--the early stages of an economic recovery, the increasing likelihood of
a successful European Monetary Union (EMU), and the positive effects of a strong
U.S. dollar on European competitiveness.
- - WE EVALUATE COMPANIES on a stock-by-stock basis, rather than attempting to
identify broad markets, industries or economies for investment.
AVG ANNUAL TOTAL RETURNS
For the 1-year period ended 11/30/97 (without sales charges)(1)
CLASS A
22.40%
CLASS B
21.46%
CLASS C
21.53%
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
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.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
2 Oppenheimer International Growth Fund
<PAGE> 3
[PHOTO]
BRIDGET A. MACASKILL
President
Oppenheimer
International
Growth Fund
DEAR SHAREHOLDER,
- --------------------------------------------------------------------------------
As you are no doubt aware, during the end of October and early November many
stock markets around the world recorded their all-time largest point declines,
followed by subsequent gains and continued volatility, leaving investors
uncertain about what would occur next.
To put those events in focus, let's look at a "snapshot" of the two-week
time period. Sharp declines in the overseas stock markets, particularly in Asia,
triggered a series of sell-offs throughout Europe, Latin America and the United
States. In response, the U.S. stock market, as measured by the Dow Jones
Industrial Average, dropped 554 points on October 27, its largest point decline
in history. However, almost as quickly, the U.S. stock market bounced back over
the succeeding few days, regaining nearly all of its losses.
While no one could have predicted the timing or extent of these
fluctuations, many analysts, including our fund managers here at
OppenheimerFunds, had warned of a correction for several months. We believed
that U.S. valuations were too high, stocks were expensive relative to bonds,
recent corporate earnings were somewhat disappointing and that Federal Reserve
Chairman Alan Greenspan could possibly seek a short-term interest rate hike.
While only one short-term interest rate hike occurred in March of 1997, the
other factors have held true.
We'd like to take this opportunity to remind shareholders that stock
market volatility is a normal and expected part of the business cycle. As Alan
Greenspan suggested, in years to come this period will likely be remembered as a
positive change for a market that was growing too quickly.
For frequent market updates, please visit our website at
WWW.OPPENHEIMERFUNDS.COM or call 1-800-835-3104 to listen to our recorded
messages. In the meantime, thank you for your confidence in OppenheimerFunds,
The Right Way to Invest. We look forward to helping you reach your investment
goals in the future.
Sincerely,
/s/ BRIDGET A. MACASKILL
Bridget A. Macaskill
December 19, 1997
3 Oppenheimer International Growth Fund
<PAGE> 4
PERFORMANCE UPDATE
- --------------------------------------------------------------------------------
Oppenheimer International Growth Fund's Class A shares provided an average
annual total return, without sales charges, of 22.40% for the one-year period
ended November 30, 1997.(2) The Fund's Class A shares also performed well
relative to its peers, ranking 4 of 421 funds in the international category, as
measured by Lipper Analytical Services for the one-year period ended December
31, 1997.(3)
AVG ANNUAL TOTAL RETURNS
For the Period Ended 12/31/97(1)
<TABLE>
<CAPTION>
CLASS A
<S> <C>
1 year Since inception
15.80% 19.96%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
<S> <C>
1 year Since inception
16.95% 20.99%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
<S> <C>
1 year Since inception
21.02% 23.03%
</TABLE>
<TABLE>
<CAPTION>
10 LARGEST COUNTRY HOLDINGS(4)
.........................................................................
<S> <C> <C> <C>
Great Britain 16.4% Switzerland 8.3%
.........................................................................
United States 12.9 Sweden 5.8
.........................................................................
France 10.9 Germany 5.3
.........................................................................
Japan 10.1 Italy 4.6
.........................................................................
The Netherlands 9.7 Norway 4.2
.........................................................................
</TABLE>
1. Total returns include changes in share price and reinvestment of dividends
and capital gains distributions in a hypothetical investment for the periods
shown. Class A, B and C shares were first publicly offered on 3/25/96. Class A
returns include the current maximum initial sales charge of 5.75%. Class B
returns include the applicable contingent deferred sales charge of 5% (1-year)
and 4% (since inception). Class C returns include the applicable contingent
deferred sales charge of 1% for the 1-year result. An explanation of the
different performance calculations is in the Fund's prospectus. Class B and C
shares are subject to an annual 0.75% asset-based sales charge.
2. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
4 Oppenheimer International Growth Fund
<PAGE> 5
SECTOR ALLOCATION(5)
[GRAPH]
Financial 27.6%
Industrial 17.3
Technology 15.3
Consumer
Non-Cyclical 14.3
Energy 12.2
Consumer
Cyclical 11.2
Utilities 2.0
Other 0.1
PORTFOLIO REVIEW
- --------------------------------------------------------------------------------
Oppenheimer International Growth Fund is for people looking for long-term growth
from foreign equity securities.
WHAT WE LOOK FOR
- - Businesses with strong competitive positions and high DEMAND for their
products or services.
- - Companies with ACCELERATING EARNINGS AND CASH FLOW.
- - DIVERSIFICATION that may help reduce the risks of foreign investing, such as
currency fluctuations.
TOP 10 STOCK HOLDINGS(5)
<TABLE>
<S> <C> <C> <C>
............................................................................
Nintendo Co. Ltd. 5.0% JBA Holdings plc 2.8%
............................................................................
Skandia Forsakrings AB 4.6 Wella AG, Preference 2.8
............................................................................
Credit Suisse Group 3.6 Cap Gemini SA 2.7
............................................................................
Smit Internationale Credito Italiano 2.7
NV, CVA 3.1
............................................................................
Expro International Cie Financiere de Paribas,
Group plc 2.9 Series A 2.6
............................................................................
</TABLE>
3. Source: Lipper Analytical Services, Inc., 12/31/97. Based on the comparisons
between changes in net asset value without considering sales charges, with
dividends and capital gains distributions of the Fund's Class A shares
reinvested. Past performance does not guarantee future results.
4. Portfolio is subject to change. Percentages are as of November 30, 1997 and
are based on total investments at value.
5. Portfolio is subject to change. Percentages are as of November 30, 1997 and
are based on total market value of stock holdings.
5 Oppenheimer International Growth Fund
<PAGE> 6
"THE PERFORMANCE OF INTERNATIONAL STOCK MARKETS HAS BEEN MIXED."
AN INTERVIEW WITH YOUR FUND'S MANAGERS
- --------------------------------------------------------------------------------
HOW HAS THE FUND PERFORMED DURING THE ONE-YEAR PERIOD ENDED NOVEMBER 30, 1997?
Oppenheimer International Growth Fund's Class A shares provided an average
annual total return, without sales charges, of 22.40% for the one-year period
ended November 30, 1997.(1)
HOW HAVE INTERNATIONAL MARKETS PERFORMED SINCE THE BEGINNING OF 1997?
The performance of international stock markets has been mixed. Throughout
Europe, we've seen strong stock markets over the past year. Stock prices there
have responded favorably to a combination of factors, including the early stages
of an economic recovery, the increasing likelihood of a successful European
Monetary Union (EMU), and the positive effects of a strong U.S. dollar on
European competitiveness. These influences have more than offset the eroding
effects of a strong U.S. dollar on overseas stock market returns for U.S.
shareholders. In addition, European companies were just beginning to
restructure, similar to the way U.S. companies have been doing for years, a
process viewed positively by investors throughout the European continent.
In Asia, on the other hand, Japan's stock market continues to perform
poorly in the face of a persistent banking crisis and economic slowdown. Asia,
excluding Japan, saw mixed results early in the year but their markets have
declined sharply since July. The emerging "Tiger" markets of Thailand,
Indonesia, Malaysia, the Philippines and others led the decline because these
countries were forced to devalue their currencies. Hong Kong and Korea followed
with very sharp declines in October, and the repercussions were felt in markets
around the world.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
6 Oppenheimer International Growth Fund
<PAGE> 7
[PHOTO]
PORTFOLIO MANAGEMENT TEAM
(L TO R) Frank Jennings
William Wilby
George Evans (Fund
Manager)
Latin American markets did well throughout most of the year, but
experienced a sharp sell-off after Hong Kong's October market decline. Investors
in Latin America were apparently concerned that the problems affecting Southeast
Asia could spread to their region, so they took profits and shifted their assets
to cash or other investments.
WHICH INVESTMENTS AND MARKETS HAVE DONE PARTICULARLY WELL, AND WHICH ONES
DISAPPOINTED YOU?
We've found Europe to be a very good market for the kinds of companies we seek
because businesses there have recognized that market expansion is essential to
growth. Wella, the German shampoo manufacturer, prospered after expanding into
new markets. We have also done well with a number of French banks and financial
institutions. These banks are restructuring after several difficult years
resolving impaired property loans in a sluggish economic environment.
In Asia, we've avoided Japanese stocks with the exception of
internationally recognized exporters that derive most of their revenues from
international markets. In this area, Nintendo has been one of the Fund's top
performers. Nintendo's new 64-bit gaming system has been a huge success
worldwide, enabling the company to prosper despite Japan's poor domestic market
conditions.
Fortunately, we have held few disappointing stocks in the Fund over the
past 12 months. In addition to being invested in the right companies, themes and
markets, we have avoided those that have not done well.
7 Oppenheimer International Growth Fund
<PAGE> 8
"WE EVALUATE OPPORTUNITIES ON A COMPANY-BY-COMPANY BASIS..."
AN INTERVIEW WITH YOUR FUND'S MANAGERS
- --------------------------------------------------------------------------------
For example, the Fund has limited its investments in the telecommunications
industry. That's because we have found few companies that have been able to
increase earnings as the pace of deregulation gains momentum.
HOW DO YOU FIND SUITABLE CANDIDATES FOR THE FUND?
We evaluate opportunities on a company-by-company basis, rather than attempting
to identify broad markets, industries or economies for investment. We like to
say that we buy "good companies in good businesses at good prices." We
particularly like businesses that enjoy strong demand for their products and
participate in markets with substantial barriers against potential competitors.
We've identified eight long-term global investment themes that help us
focus on areas with the highest potential. These themes are capital market
development, corporate restructuring, efficiency-enhancing technologies and
services, emerging consumer markets, healthcare and biotechnology,
infrastructure spending, natural resources and telecommunications and media.
Within each theme, we look for areas of high potential growth and market demand.
We then conduct exhaustive fundamental analysis of the companies that fit these
broad criteria. Most important, we personally visit with the management teams of
many of the companies we consider.
Once we've narrowed down the list to those companies we like from a
growth standpoint, we use a variety of assessment tools to determine which are
selling at attractive prices and which are fairly valued or overpriced. Finally,
we attempt to time our purchases to coincide with a positive catalyst within the
company or its market, such as a change in management or an advantageous
economic event.
8 Oppenheimer International Growth Fund
<PAGE> 9
"... AND SEEK OUT GOOD COMPANIES IN GOOD BUSINESSES AT GOOD PRICES."
WHAT IS YOUR OUTLOOK FOR THE INTERNATIONAL MARKETS OVER THE FORESEEABLE FUTURE?
Our outlook is mixed for international markets. However, we are optimistic that
the individual companies we hold in the Fund should continue to do well.
We believe the European markets should continue to rise because the
region is still quite a way behind the United States in the business cycle.
Moderate economic growth and the trend toward restructuring should help these
companies grow earnings--much as U.S. companies have done over the past several
years--and their stocks should follow suit. On the other hand, we don't see an
immediate end to Japan's current economic and structural problems. Yet, we
continue to find individual stocks there that should do well. We also expect the
emerging markets of Asia to continue to struggle with their currency crisis, and
we are concerned that new problems in their banking system may soon come to
light. In Latin America, the recent sell-off could provide opportunities to buy
quality companies at attractive prices. This may be especially true of companies
that have established dominant positions in their industries.
In short, we believe some international markets should do well, and some
will do poorly over the next year. Rather than trying to predict how entire
markets will behave, we intend to adhere to the investment approach that helped
the Fund perform well in 1997--seek out "good companies in good businesses at
good prices."
9 Oppenheimer International Growth Fund
<PAGE> 10
FINANCIALS
10 Oppenheimer International Growth Fund
<PAGE> 11
STATEMENT OF INVESTMENTS November 30, 1997
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
=======================================================================================================================
<S> <C> <C>
COMMON STOCKS--87.4%
- -----------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--9.8%
- -----------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING--1.7%
IRSA Inversiones y Representaciones SA 400,000 $ 1,300,000
- -----------------------------------------------------------------------------------------------------------------------
Porsche AG, Preference 1,700 2,640,846
-----------
3,940,846
- -----------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT--5.2%
EMI Group plc 250,000 1,902,462
- -----------------------------------------------------------------------------------------------------------------------
Nintendo Co. Ltd. 100,000 10,342,801
-----------
12,245,263
- -----------------------------------------------------------------------------------------------------------------------
MEDIA--2.9%
Grupo Televisa SA, Sponsored GDR(1)(2) 60,000 2,220,000
- -----------------------------------------------------------------------------------------------------------------------
Lusomundo SGPS SA(3) 441,000 3,597,302
- -----------------------------------------------------------------------------------------------------------------------
Roto Smeets de Boer 30,000 1,110,691
-----------
6,927,993
- -----------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS--12.5%
- -----------------------------------------------------------------------------------------------------------------------
BEVERAGES--1.8%
Cadbury Schweppes plc 400,000 4,155,433
- -----------------------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS--4.7%
Biocompatibles International plc(1) 350,818 3,360,053
- -----------------------------------------------------------------------------------------------------------------------
Glaxo Wellcome plc 126,188 2,771,039
- -----------------------------------------------------------------------------------------------------------------------
Novartis AG 1,500 2,396,738
- -----------------------------------------------------------------------------------------------------------------------
Oxford Molecular Group plc(1) 214,285 742,039
- -----------------------------------------------------------------------------------------------------------------------
Torii Pharmaceutical Co. Ltd. 101,000 1,867,659
-----------
11,137,528
- -----------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES--3.6%
Nichii Gakkan Co. 75,000 2,438,785
- -----------------------------------------------------------------------------------------------------------------------
Novogen Ltd.(1) 1,348,175 2,001,767
- -----------------------------------------------------------------------------------------------------------------------
Ortivus AB, A Shares(1) 13,700 470,213
- -----------------------------------------------------------------------------------------------------------------------
Ortivus AB, B Shares(1) 96,750 3,471,032
-----------
8,381,797
- -----------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS--2.4%
Wella AG, Preference 8,000 5,737,518
- -----------------------------------------------------------------------------------------------------------------------
ENERGY--10.7%
- -----------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS--8.5%
Cie Generale de Geophysique SA(1) 35,000 3,794,366
- -----------------------------------------------------------------------------------------------------------------------
Cie Generale de Geophysique SA, Sponsored ADR(1) 10,200 220,575
- -----------------------------------------------------------------------------------------------------------------------
Coflexip SA, Sponsored ADR 100,000 4,975,000
</TABLE>
11 Oppenheimer International Growth Fund
<PAGE> 12
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY SERVICES & PRODUCERS (CONTINUED)
Expro International Group plc 600,000 $ 5,964,567
- ---------------------------------------------------------------------------------------------------
Fred. Olsen Energy ASA(1) 30,000 638,229
- ---------------------------------------------------------------------------------------------------
Smedvig AS, Series B 90,000 2,290,117
- ---------------------------------------------------------------------------------------------------
Transocean Offshore, Inc. 44,600 2,115,712
------------
19,998,566
- ---------------------------------------------------------------------------------------------------
OIL-INTEGRATED--2.2%
Novus Petroleum Ltd. 1,005,333 3,061,099
- ---------------------------------------------------------------------------------------------------
Petroleo Brasileiro SA, Preference 10,295,000 2,110,830
------------
5,171,929
- ---------------------------------------------------------------------------------------------------
FINANCIAL--24.1%
- ---------------------------------------------------------------------------------------------------
BANKS--13.7%
Banco de Galicia y Buenos Aires SA de CV, Sponsored ADR 61,700 1,449,950
- ---------------------------------------------------------------------------------------------------
Cie Financiere de Paribas, Series A 75,000 5,418,405
- ---------------------------------------------------------------------------------------------------
Commerzbank AG 60,000 2,092,040
- ---------------------------------------------------------------------------------------------------
Credit Suisse Group 50,000 7,312,259
- ---------------------------------------------------------------------------------------------------
Credito Italiano 2,000,000 5,474,378
- ---------------------------------------------------------------------------------------------------
Liechtenstein Global Trust AG 5,000 3,121,300
- ---------------------------------------------------------------------------------------------------
Societe Generale 40,785 5,361,093
- ---------------------------------------------------------------------------------------------------
Unibanco-Uniao de Bancos Brasileiros SA, Sponsored GDR
Representing 500 Units of one Preferred Share of Unibanco
and one Preferred Share of Unibanco Holdings SA(1) 40,000 1,150,000
- ---------------------------------------------------------------------------------------------------
Unibanco-Uniao de Bancos Brasileiros SA, Units (each unit
consists of one preferred share of Unibanco and one preferred
b share of Unibanco Holdings)(1)(4) 15,000,000 946,517
------------
32,325,942
- ---------------------------------------------------------------------------------------------------
INSURANCE--10.4%
Istituto Nazionale delle Assicurazioni 3,000,000 5,225,543
- ---------------------------------------------------------------------------------------------------
Ockham Holdings plc(3) 2,700,000 3,899,520
- ---------------------------------------------------------------------------------------------------
Reinsurance Australia Corp. Ltd. 356,188 862,760
- ---------------------------------------------------------------------------------------------------
Schweizerische Lebensversicherungs & Rentenanstalt 7,500 4,987,066
- ---------------------------------------------------------------------------------------------------
Skandia Forsakrings AB 180,000 9,488,439
------------
24,463,328
- ---------------------------------------------------------------------------------------------------
INDUSTRIAL--15.1%
- ---------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.8%
Murata Manufacturing. Co. Ltd. 60,000 1,800,588
- ---------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--6.6%
BAU Holding AG 300 17,158
- ---------------------------------------------------------------------------------------------------
BAU Holdings AF, Preference 51,000 2,341,689
- ---------------------------------------------------------------------------------------------------
Boskalis Westminster 251,287 4,398,895
</TABLE>
12 Oppenheimer International Growth Fund
<PAGE> 13
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL SERVICES (CONTINUED)
Cia de Saneamento Basico do Estado de San Paulo 6,050,000 $ 1,407,066
- ----------------------------------------------------------------------------------------
Fugro NV 77,419 2,648,200
- ----------------------------------------------------------------------------------------
ICTS International NV(1) 285,000 2,778,750
- ----------------------------------------------------------------------------------------
MRC Allied Industries, Inc.(1) 10,000,000 459,374
- ----------------------------------------------------------------------------------------
Swisslog Holding AG, Registered(1) 20,000 1,536,100
-------------
15,587,232
- ----------------------------------------------------------------------------------------
MANUFACTURING--2.2%
Powerscreen International plc 300,449 3,342,010
- ----------------------------------------------------------------------------------------
Stork NV 50,394 1,845,460
-------------
5,187,470
- ----------------------------------------------------------------------------------------
TRANSPORTATION--5.5%
Frontline Ltd.(1) 750,000 3,629,147
- ----------------------------------------------------------------------------------------
Internatio-Muller NV 50,100 1,539,832
- ----------------------------------------------------------------------------------------
MIF Ltd.(1)(5) 85,000 1,359,192
- ----------------------------------------------------------------------------------------
Smit Internationale NV, CVA 225,000 6,394,775
-------------
12,922,946
- ----------------------------------------------------------------------------------------
TECHNOLOGY--13.5%
- ----------------------------------------------------------------------------------------
COMPUTER HARDWARE--2.0%
Canon, Inc. 120,000 2,895,984
- ----------------------------------------------------------------------------------------
Eidos plc(1) 100,000 1,106,426
- ----------------------------------------------------------------------------------------
Imagineer Co. Ltd. 75,000 705,191
-------------
4,707,601
- ----------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES--8.4%
Cap Gemini SA 65,000 5,538,249
- ----------------------------------------------------------------------------------------
JBA Holdings plc 350,000 5,811,695
- ----------------------------------------------------------------------------------------
Misys plc 178,841 5,045,042
- ----------------------------------------------------------------------------------------
SAP AG, Preference 6,000 1,847,118
- ----------------------------------------------------------------------------------------
Versant Object Technology Corp.(1) 95,000 1,419,062
-------------
19,661,166
- ----------------------------------------------------------------------------------------
ELECTRONICS--1.5%
Sony Corp. 40,000 3,416,259
- ----------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY--1.6%
Ordina Beheer NV(1) 130,000 1,961,819
- ----------------------------------------------------------------------------------------
Tandberg Television ASA(1) 177,000 1,772,025
-------------
3,733,844
</TABLE>
13 Oppenheimer International Growth Fund
<PAGE> 14
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES--1.7%
- -------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--0.4%
Cia Paranaense Energia, Sponsored ADR, Preference B Shares 60,000 $ 903,750
- -------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES--1.3%
Telecomunicacoes Brasileiras SA, Sponsored ADR 30,000 3,131,250
------------
Total Common Stocks (Cost $193,702,546) 205,538,249
<CAPTION>
UNITS
=========================================================================================================================
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES--0.3%
- -------------------------------------------------------------------------------------------------------------------------
Cia de Saneamento Basico do Estado de San Paulo Rts., Exp. 12/97 763 --
- -------------------------------------------------------------------------------------------------------------------------
Novogen Ltd. Wts., Exp. 12/98 654,300 738,700
------------
Total Rights, Warrants and Certificates (Cost $753,619) 738,700
<CAPTION>
FACE
AMOUNT
=========================================================================================================================
<S> <C> <C>
REPURCHASE AGREEMENTS--11.2%
- -------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets,
5.70%, dated 11/29/97, to be repurchased at $26,412,540
on 12/1/97, collateralized by U.S. Treasury Bonds, 11.25%,
2/15/15, with a value of $5,945,260, U.S. Treasury Nts.,
6.125%-7.50%, 11/15/01-8/15/07, with a value of
$15,150,076, and U.S. Treasury Bills maturing 5/28/99,
with a value of $5,866,582 (Cost $26,400,000) $ 26,400,000 26,400,000
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $220,856,165) 98.9% 232,676,949
- -------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.1 2,515,556
------------ ------------
NET ASSETS 100.0% $235,192,505
============ ============
</TABLE>
14 Oppenheimer International Growth Fund
<PAGE> 15
- --------------------------------------------------------------------------------
Distribution of investments by country of issue, as a percentage of total
investments at value, is as follows:
<TABLE>
<CAPTION>
COUNTRY MARKET VALUE PERCENT
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Great Britain $ 38,100,287 16.4%
- ---------------------------------------------------------------------------------------------
United States 29,934,775 12.9
- ---------------------------------------------------------------------------------------------
France 25,307,688 10.9
- ---------------------------------------------------------------------------------------------
Japan 23,467,267 10.1
- ---------------------------------------------------------------------------------------------
The Netherlands 22,678,422 9.7
- ---------------------------------------------------------------------------------------------
Switzerland 19,353,463 8.3
- ---------------------------------------------------------------------------------------------
Sweden 13,429,683 5.8
- ---------------------------------------------------------------------------------------------
Germany 12,317,521 5.3
- ---------------------------------------------------------------------------------------------
Italy 10,699,921 4.6
- ---------------------------------------------------------------------------------------------
Norway 9,688,710 4.2
- ---------------------------------------------------------------------------------------------
Brazil 9,649,413 4.1
- ---------------------------------------------------------------------------------------------
Australia 6,664,326 2.9
- ---------------------------------------------------------------------------------------------
Portugal 3,597,302 1.5
- ---------------------------------------------------------------------------------------------
Argentina 2,749,950 1.2
- ---------------------------------------------------------------------------------------------
Austria 2,358,847 1.0
- ---------------------------------------------------------------------------------------------
Mexico 2,220,000 0.9
- ---------------------------------------------------------------------------------------------
Philippines 459,374 0.2
------------ -----
Total $232,676,949 100.0%
============ =====
</TABLE>
1. Non-income producing security.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $2,220,000 or 0.94% of the Fund's net
assets as of November 30, 1997.
3. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer, and is or was an affiliate as defined in the
Investment Company Act of 1940, at or during the period ended November 30,
1997. The aggregate fair value of securities of affiliated companies held by
the Fund as of November 30, 1997, amounts to $7,496,822. Transactions during
the period in which the issuer was an affiliate were as follows:
<TABLE>
<CAPTION>
SHARES GROSS GROSS SHARES
NOVEMBER 30, 1996 ADDITIONS REDUCTIONS NOVEMBER 30, 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lusomundo SGPS SA 40,000 426,000 25,000 441,000
- --------------------------------------------------------------------------------------------------------
Ockham Holdings plc -- 2,700,000 -- 2,700,000
</TABLE>
4. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, face amount disclosed represents total underlying
principal.
5. Identifies issues considered to be illiquid or restricted--See Note 6 of
Notes to Financial Statements.
See accompanying Notes to Financial Statements.
15 Oppenheimer International Growth Fund
<PAGE> 16
STATEMENT OF ASSETS AND LIABILITIES November 30, 1997
<TABLE>
=============================================================================================================
<S> <C>
ASSETS
Investments, at value (including repurchase agreements of $26,400,000)--see
accompanying statement:
Unaffiliated companies (cost $213,547,431) $225,180,127
Affiliated companies (cost $7,308,734) 7,496,822
- -------------------------------------------------------------------------------------------------------------
Unrealized appreciation on forward foreign currency exchange contracts--Note 5 308,631
- -------------------------------------------------------------------------------------------------------------
Receivables:
Investments sold 6,135,772
Shares of beneficial interest sold 2,148,005
Interest and dividends 225,917
- -------------------------------------------------------------------------------------------------------------
Deferred organization costs--Note 1 12,803
- -------------------------------------------------------------------------------------------------------------
Other 927
------------
Total assets 241,509,004
=============================================================================================================
LIABILITIES
Bank overdraft 577,920
- -------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 5,000,222
Shares of beneficial interest redeemed 224,760
Distribution and service plan fees 91,599
Transfer and shareholder servicing agent fees 66,897
Trustees' fees--Note 1 49,879
Other 305,222
------------
Total liabilities 6,316,499
=============================================================================================================
NET ASSETS $235,192,505
============
=============================================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $219,677,359
- -------------------------------------------------------------------------------------------------------------
Accumulated net investment loss (40,740)
- -------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 3,465,952
- -------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and
liabilities denominated in foreign currencies 12,089,934
------------
Net assets $235,192,505
============
</TABLE>
16 Oppenheimer International Growth Fund
<PAGE> 17
<TABLE>
=================================================================================================================
<S> <C>
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $122,720,086 and 8,542,249 shares of beneficial interest outstanding) $14.37
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $15.25
- -----------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net assets
of $90,564,815 and 6,399,267 shares of beneficial interest outstanding) $14.15
- -----------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $21,907,604
and 1,546,171 shares of beneficial interest outstanding) $14.17
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer International Growth Fund
<PAGE> 18
STATEMENT OF OPERATIONS For the Year Ended November 30, 1997
<TABLE>
==================================================================================================
<S> <C>
INVESTMENT INCOME
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $46,070) $ 1,198,289
Affiliated companies (net of foreign withholding taxes of $11,459) 64,932
- --------------------------------------------------------------------------------------------------
Interest 468,774
-----------
Total income 1,731,995
==================================================================================================
EXPENSES
Management fees--Note 4 976,002
- --------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 149,393
Class B 453,262
Class C 108,112
- --------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 431,128
- --------------------------------------------------------------------------------------------------
Custodian fees and expenses 206,456
- --------------------------------------------------------------------------------------------------
Shareholder reports 121,085
- --------------------------------------------------------------------------------------------------
Registration and filing fees 57,643
- --------------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 50,597
- --------------------------------------------------------------------------------------------------
Legal and auditing fees 40,364
- --------------------------------------------------------------------------------------------------
Other 23,974
-----------
Total expenses 2,618,016
==================================================================================================
NET INVESTMENT LOSS (886,021)
==================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments:
Unaffiliated companies 7,134,528
Affiliated companies (32,323)
Foreign currency transactions (2,765,883)
-----------
Net realized gain 4,336,322
- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 11,918,884
Translation of assets and liabilities denominated in foreign currencies (2,378,439)
-----------
Net change 9,540,445
-----------
Net realized and unrealized gain 13,876,767
==================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $12,990,746
===========
</TABLE>
See accompanying Notes to Financial Statements.
18 Oppenheimer International Growth Fund
<PAGE> 19
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1997 1996(1)
===================================================================================================================
<S> <C> <C>
OPERATIONS
Net investment loss $ (886,021) $ (61,280)
- -------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 4,336,322 (21,004)
- -------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 9,540,445 2,549,489
------------ -----------
Net increase in net assets resulting from operations 12,990,746 2,467,205
===================================================================================================================
BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from beneficial
interest transactions--Note 2:
Class A 98,104,269 15,320,568
Class B 77,610,892 7,990,083
Class C 18,746,638 1,962,104
===================================================================================================================
NET ASSETS
Total increase 207,452,545 27,739,960
- -------------------------------------------------------------------------------------------------------------------
Beginning of period 27,739,960 --
------------ -----------
End of period (including accumulated net investment
losses of $40,740 and $21,513, respectively) $235,192,505 $27,739,960
============ ===========
</TABLE>
1. For the period from March 25, 1996 (commencement of operations) to November
30, 1996.
See accompanying Notes to Financial Statements.
19 Oppenheimer International Growth Fund
<PAGE> 20
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
------------------------------------
YEAR ENDED NOVEMBER 30,
1997 1996(1)
=========================================================================================
<S> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.74 $10.00
- -----------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.05)(2) (.01)
Net realized and unrealized gain 2.68(2) 1.75
------ ------
Total income from investment operations 2.63 1.74
- -----------------------------------------------------------------------------------------
Net asset value, end of period $14.37 $11.74
====== ======
=========================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 22.40% 17.40%
=========================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $122,720 $16,918
- -----------------------------------------------------------------------------------------
Average net assets (in thousands) $ 66,156 $ 8,992
- -----------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment loss (0.36)% (0.26)%(4)
Expenses 1.78% 1.88%(4)(5)
- -----------------------------------------------------------------------------------------
Portfolio turnover rate(6) 64.2% 42.6%
Average brokerage commission rate(7) $0.0075 $0.0137
</TABLE>
1. For the period from March 25, 1996 (commencement of operations) to November
30, 1996.
2. Based on average shares outstanding for the period.
3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or commencement of operations), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
4. Annualized.
5. The expense ratio reflects the effect of expenses paid indirectly by the
Fund.
20 Oppenheimer International Growth Fund
<PAGE> 21
<TABLE>
<CAPTION>
CLASS B CLASS C
- ------------------------------- -------------------------------
YEAR ENDED NOVEMBER 30, YEAR ENDED NOVEMBER 30,
1997 1996(1) 1997 1996(1)
================================================================================
<S> <C> <C> <C>
$11.65 $10.00 $11.66 $10.00
- --------------------------------------------------------------------------------
(.12)(2) (.10) (.13)(2) (.09)
2.62(2) 1.75 2.64(2) 1.75
------ ------ ------ ------
2.50 1.65 2.51 1.66
- --------------------------------------------------------------------------------
$14.15 $11.65 $14.17 $11.66
====== ====== ====== ======
================================================================================
21.46% 16.50% 21.53% 16.60%
================================================================================
$90,565 $8,673 $21,908 $2,149
- --------------------------------------------------------------------------------
$45,553 $3,628 $10,864 $ 938
- --------------------------------------------------------------------------------
(1.14)% (1.46)%(4) (1.18)% (1.48)%(4)
2.56% 2.84%(4)(5) 2.55% 2.82%(4)(5)
- --------------------------------------------------------------------------------
64.2% 42.6% 64.2% 42.6%
$0.0075 $0.0137 $0.0075 $0.0137
</TABLE>
6. 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 November 30, 1997 were $237,460,822 and $73,217,631,
respectively.
7. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
See accompanying Notes to Financial Statements.
21 Oppenheimer International Growth Fund
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer International Growth 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 capital
appreciation, primarily through investments in common stocks of foreign
companies. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). The Fund offers Class A, Class B and Class C shares. Class A shares
are sold with a front-end sales charge. Class B and Class C shares may be
subject to a contingent deferred sales charge. All classes of shares have
identical rights to earnings, assets and voting privileges, except that each
class has its own distribution and/or service plan, expenses directly
attributable to that class and exclusive voting rights with respect to matters
affecting that class. 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.
- --------------------------------------------------------------------------------
INVESTMENT 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. Forward foreign currency exchange contracts are valued
based on the closing prices of the forward currency contract rates in the
London foreign exchange markets on a daily basis as provided by a reliable bank
or dealer.
- --------------------------------------------------------------------------------
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 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.
22 Oppenheimer International Growth Fund
<PAGE> 23
================================================================================
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, AND GAINS AND LOSSES. Income, expenses (other
than those attributable to a specific class) and 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' FEES AND EXPENSES. 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. During the year ended
November 30, 1997, a provision of $32,791 was made for the Fund's projected
benefit obligations and payments of $1,509 were made to retired trustees,
resulting in an accumulated liability of $40,740 at November 30, 1997.
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
ORGANIZATION COSTS. The Manager advanced $15,000 for organization and start-up
costs of the Fund. Such expenses are being amortized over a five-year period
from the date operations commenced. In the event that all or part of the
Manager's initial investment in shares of the Fund is withdrawn during the
amortization period, the redemption proceeds will be reduced to reimburse the
Fund for any unamortized expenses, in the same ratio as the number of shares
redeemed bears to the number of initial shares outstanding at the time of such
redemption.
23 Oppenheimer International Growth Fund
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes primarily because of the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes. The character of the
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
year ended November 30, 1997, amounts have been reclassified to reflect a
decrease in accumulated net realized gain on investments of $866,794.
Accumulated net investment loss was decreased by the same amount.
- --------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the investments
are purchased or sold (trade date) and dividend income is recorded on 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.
24 Oppenheimer International Growth Fund
<PAGE> 25
================================================================================
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1997 PERIOD ENDED NOVEMBER 30, 1996(1)
---------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 9,482,388 $131,799,793 1,689,570 $17,975,411
Redeemed (2,380,909) (33,695,524) (248,800) (2,654,843)
---------- ------------ --------- -----------
Net increase 7,101,479 $ 98,104,269 1,440,770 $15,320,568
========== ============ ========= ===========
- ------------------------------------------------------------------------------------------------------
Class B:
Sold 6,811,211 $ 93,996,802 784,237 $ 8,424,204
Redeemed (1,156,189) (16,385,910) (39,992) (434,121)
---------- ------------ --------- -----------
Net increase 5,655,022 $ 77,610,892 744,245 $ 7,990,083
========== ============ ========= ===========
- ------------------------------------------------------------------------------------------------------
Class C:
Sold 2,911,937 $ 40,604,864 206,770 $ 2,202,270
Redeemed (1,550,039) (21,858,226) (22,497) (240,166)
---------- ------------ --------- -----------
Net increase 1,361,898 $ 18,746,638 184,273 $ 1,962,104
========== ============ ========= ===========
</TABLE>
1. For the period from March 25, 1996 (commencement of operations) to November
30, 1996.
================================================================================
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At November 30, 1997, net unrealized appreciation on investments of $11,820,784
was composed of gross appreciation of $24,626,574 and gross depreciation of
$12,805,790.
================================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
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, 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.
For the year ended November 30, 1997, commissions (sales charges paid
by investors) on sales of Class A shares totaled $1,433,719, of which $411,249
was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and
Class C shares totaled $2,575,841 and $189,963, respectively, of which $133,149
and $1,539, respectively, were paid to an affiliated broker/dealer. During the
year ended November 30, 1997, OFDI received contingent deferred sales charges
of $69,652 and $11,033, respectively, upon redemption of Class B and Class C
shares, as reimbursement for sales commissions advanced by OFDI at the time of
sale of such shares.
25 Oppenheimer International Growth Fund
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued)
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer and
shareholder servicing agent for the Fund and for other registered investment
companies. OFS's total costs of providing such services are allocated ratably
to these companies.
The Fund has adopted a Service Plan for Class A shares to reimburse
OFDI for a portion of its costs incurred in connection with the personal
service and maintenance of shareholder accounts that hold Class A shares.
Reimbursement is made quarterly at an annual rate that may not exceed 0.25% of
the average annual net assets of Class A shares of the Fund. OFDI uses the
service fee to reimburse brokers, dealers, banks and other financial
institutions quarterly for providing personal service and maintenance of
accounts of their customers that hold Class A shares. During the year ended
November 30, 1997, OFDI paid $12,197 to an affiliated broker/dealer as
reimbursement for Class A personal service and maintenance expenses.
The Fund has adopted Distribution and Service Plans for Class B and
Class C shares to compensate OFDI for its costs in distributing Class B and
Class C shares and servicing accounts. Under the Plans, the Fund pays OFDI an
annual asset-based sales charge of 0.75% per year on Class B and Class C shares
for its services rendered in distributing Class B and Class C shares. OFDI also
receives a service fee of 0.25% per year to compensate dealers for providing
personal services for accounts that hold Class B and C shares. Each fee is
computed on the average annual net assets of Class B and Class C shares,
determined as of the close of each regular business day. During the year ended
November 30, 1997, OFDI retained $412,248 and $83,329, respectively, as
compensation for Class B and Class C sales commissions and service fee
advances, as well as financing costs. If either Plan is terminated by the Fund,
the Board of Trustees may allow the Fund to continue payments of the
asset-based sales charge to OFDI for distributing shares before the Plan was
terminated. As of November 30, 1997, OFDI had incurred unreimbursed expenses of
$3,036,155 for Class B and $293,442 for Class C.
================================================================================
5. FORWARD CONTRACTS
A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future date, at a negotiated rate.
The Fund uses forward contracts to seek to manage foreign currency
risks. They may also be used to tactically shift portfolio currency risk. The
Fund generally enters into forward contracts as a hedge upon the purchase or
sale of a security denominated in a foreign currency. In addition, the Fund may
enter into such contracts as a hedge against changes in foreign currency
exchange rates on portfolio positions.
Forward contracts are valued based on the closing prices of the forward
currency contract rates in the London foreign exchange markets on a daily basis
as provided by a reliable bank or dealer. The Fund will realize a gain or loss
upon the closing or settlement of the forward transaction.
26 Oppenheimer International Growth Fund
<PAGE> 27
================================================================================
Securities held in segregated accounts to cover net exposure on outstanding
forward contracts are noted in the Statement of Investments where applicable.
Gains and losses on outstanding contracts (unrealized appreciation or
depreciation on forward contracts) are reported in the Statement of Assets and
Liabilities. Realized gains and losses are reported with all other foreign
currency gains and losses in the Fund's Statement of Operations.
Risks include the potential inability of the counterparty to meet the
terms of the contract and unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
At November 30, 1997, outstanding forward contracts were as follows:
<TABLE>
<CAPTION>
CONTRACT VALUATION AS OF UNREALIZED
CONTRACTS TO SELL EXPIRATION DATE AMOUNT (000s) NOVEMBER 30, 1997 APPRECIATION
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Japanese Yen (JPY) 2/17/98 2,481,600 JPY $19,691,369 $308,631
</TABLE>
================================================================================
6. ILLIQUID AND RESTRICTED SECURITIES
At November 30, 1997, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933,
may have contractual restrictions on resale, and are valued under methods
approved by the Board of Trustees as reflecting fair value. A security may be
considered illiquid if it lacks a readily-available market or if its valuation
has not changed for a certain period of time. The Fund intends to invest no
more than 10% of its net assets (determined at the time of purchase and
reviewed periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid or restricted securities
subject to this limitation at November 30, 1997 was $1,359,192, which
represents 0.58% of the Fund's net assets.
================================================================================
7. 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 year ended November
30, 1997.
27 Oppenheimer International Growth Fund
<PAGE> 28
INDEPENDENT AUDITORS' REPORT
================================================================================
The Board of Trustees and Shareholders of
Oppenheimer International Growth Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer International Growth Fund as of November 30, 1997,
and the related statement of operations for the year then ended, the statement
of changes in net assets for the year then ended and the period from March 25,
1996 (commencement of operations) to November 30, 1996, and the financial
highlights for the year ended November 30, 1997 and the period ended November
30, 1996. 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 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
November 30, 1997 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 International Growth Fund as of November 30, 1997, the
results of its operations for the year then ended, the changes in its net
assets for the year then ended and the period from March 25, 1996 (commencement
of operations) to November 30, 1996, and the financial highlights for the year
ended November 30, 1997 and the period ended November 30, 1996, in conformity
with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Denver, Colorado
December 19, 1997
28 Oppenheimer International Growth Fund
<PAGE> 29
FEDERAL INCOME TAX INFORMATION (Unaudited)
================================================================================
In early 1998 shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1997. 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.
29 Oppenheimer International Growth Fund
<PAGE> 30
OPPENHEIMER INTERNATIONAL GROWTH 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
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
George Evans, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
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 Peat Marwick LLP
====================================================================================================================================
LEGAL COUNSEL Gordon Altman Butowsky Weitzen Shalov & Wein
This is a copy of a report to shareholders of Oppenheimer International Growth Fund.
This report must be preceded or accompanied by a Prospectus of Oppenheimer International
Growth 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, and are not insured by the FDIC or any other agency, and involve
investment risks, including possible loss of the principal amount invested.
</TABLE>
30 Oppenheimer International Growth Fund
<PAGE> 31
OPPENHEIMERFUNDS FAMILY
<TABLE>
===================================================================================================================
<S> <C> <C>
REAL ASSET FUNDS
- -------------------------------------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
===================================================================================================================
STOCK FUNDS
- -------------------------------------------------------------------------------------------------------------------
Developing Markets Fund Discovery Fund Growth Fund
International Small Quest Small Cap Value Fund Global Fund
Company Fund MidCap Fund Quest Global Value Fund
Enterprise Fund Capital Appreciation Fund(1) Disciplined Value Fund
International Growth Fund Quest Capital Value Fund Quest Value Fund
===================================================================================================================
STOCK & BOND FUNDS
- -------------------------------------------------------------------------------------------------------------------
Main Street Income & Quest Growth & Income Disciplined Allocation Fund
Growth Fund Value Fund Multiple Strategies Fund(2)
Quest Opportunity Value Fund Global Growth &Income Fund Bond Fund for Growth
Total Return Fund Equity Income Fund
===================================================================================================================
BOND FUNDS
- -------------------------------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
High Yield Fund Strategic Income Fund Limited-Term Government Fund
Bond Fund
===================================================================================================================
MUNICIPAL FUNDS
- -------------------------------------------------------------------------------------------------------------------
California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division:
Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York
New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund
===================================================================================================================
MONEY MARKET FUNDS(4)
- -------------------------------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
===================================================================================================================
LIFESPAN
- -------------------------------------------------------------------------------------------------------------------
Growth Fund Balanced Fund Income Fund
</TABLE>
1. On 12/18/96, the Fund's name was changed from "Target Fund."
2. On 3/16/97, the Fund's name was changed from "Asset Allocation Fund."
3. Available only to investors in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
U.S. government and there can be no assurance that a money market fund will be
able to maintain a stable net asset value of $1.00 per share. Oppenheimer funds
are distributed by OppenheimerFunds Distributor, Inc., Two World Trade Center,
New York, NY 10048-0203.
(C) Copyright 1998 OppenheimerFunds, Inc. All rights reserved.
31 Oppenheimer International Growth Fund
<PAGE> 32
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RA0825.001.1197 January 29, 1998
