UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-08299
OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
(Exact name of registrant as specified in charter)
6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924
(Address of principal executive offices)
(Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
498 Seventh Avenue, New York, New York 10018
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(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
--------------
Date of fiscal year end: August 31
Date of reporting period: September 1, 2002 - August 31, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
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FUND PERFORMANCE DISCUSSION
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How has the Fund performed? Below is a discussion by OppenheimerFunds, Inc., of
the Fund's performance during its fiscal year ended August 31, 2003, followed by
a graphical comparison of the Fund's performance to an appropriate broad-based
market index.
Management's Discussion of Fund Performance. For the fiscal year
ended August 31, 2003, several factors supported the favorable performance
delivered by Oppenheimer International Small Company Fund. In general, global
financial conditions improved significantly in the second half of the period,
substantially adding to performance for the year. As investors' outlook for the
global markets improved, they became comfortable taking more risk in their
portfolios. Growth-oriented stocks were the key beneficiaries of this shift, and
because small-cap stocks are among the more volatile segments of the equity
markets, they improved more dramatically than did their large-cap counterparts.
These events directly impacted Fund performance, given our emphasis on both of
these types of stocks.
Second, our stock-by-stock selection process aided performance, as the market
continued to offer select opportunities in various markets worldwide. Through
our investment process of seeking companies with new ideas and innovative ways
of doing business, we successfully identified good performers amidst varied
economic conditions, markets and regions.
In terms of sector exposures, the portfolio's Internet stocks proved to be
the strongest performers for the Fund's portfolio. Three stocks in particular
performed exceptionally well, each coming from different countries. The first
was Rakuten, Inc., the second largest Internet company in Japan, which markets
an extensive online shopping mall. The second was NCsoft Corp., a Korean online
gaming company. The final stock that substantially added to performance was
United Internet AG. This is a very profitable German web hosting company.
The Fund experienced good performance from stocks in other industries. For
instance, Banco Latinoamericano de Exportaciones SA, Cl. E (Bladex), a Panama
based multi-national bank which finances foreign trade in Latin America, was
another big contributor to performance.
There were a few basic strategies that we employed over the period that also
supported performance. First, we stuck to our main stock picks, keeping our
focus on their growth prospects and fundamentals. Second, we sold financially
leveraged companies. We felt that in a potentially lower global growth
environment, the risk overwhelmed the rewards in such companies.
Another strategy we used successfully was buying on weakness. For example, in
August 2002, Rakuten's share price dropped, and we used the chance to add to our
existing position. The stock's value increased substantially thereafter.
Finally, in the emerging markets, our team's expertise again paid off and we
successfully added select stocks from various industries that performed well.
One example of this is Aygaz AS, a distributor of liquefied natural gas to
Turkey, which performed well for the Fund.
On the negative side, some of the stocks we held were badly hit, particularly
in the first half of the fiscal year. This was due, in part, to the difficult
conditions that dominated
5 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
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FUND PERFORMANCE DISCUSSION
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the first half of the period, such as extreme risk aversion among investors and
disappointing global earnings announcements. Since the Fund's portfolio was
comprised of two of the most volatile segments of the markets--small-cap and
international stocks--it was no surprise the Fund felt the effects of these
events. Select stocks from virtually all areas and industries experienced poor
performance; it was not a case of a single sector or region underperforming.
Specifically, one stock that performed poorly was Intelligent Wave, Inc., a
credit card software company in Japan. While we believe this company remains a
great company because of formidable barriers to entry, its stock suffered on the
heels of negative earnings announcements. However, we maintain our positive
outlook for this company, since we believe it will only be a matter of time
before credit card purchases take a more prominent role in Japanese consumer
habits. In line with our strategy to buy on weakness, we have added to our
position.
Finally, another stock that detracted from performance was a French biotech
company issue called Nicox SA. When an announcement was released that one of
Nicox's promising drugs was not working as well as hoped, the stock dropped
dramatically. We decided that this was more of an isolated disappointment rather
than a structural failure of the company's strategy or business model, and
increased our position.
The Fund's holdings, allocations, management and strategies are subject to
change. Investing in foreign markets, especially in emerging securities, poses
considerable risks, including heightened volatility, political and economic
uncertainty, currency fluctuations and higher expenses.
Comparing the Fund's Performance to the Market. The graphs that follow show the
performance of a hypothetical $10,000 investment in Class A, Class B and Class C
shares of the Fund from the inception date of November 17, 1997 until August 31,
2003. In the case of Class N shares, performance is measured from inception of
the Class on March 1, 2001. The Fund's performance reflects the deduction of the
maximum initial sales charge on Class A shares, the applicable contingent
deferred sales charge on Class B, Class C and Class N shares, and reinvestment
of all dividends and capital gains distributions.
The Fund's performance is compared to the performances of the HSBC James
Capel World excluding U.S. Smaller Companies Index (WexUS) and the Morgan
Stanley Capital International (MSCI) EAFE Index. The performance of small
foreign companies is represented by WexUS, an index comprised of 1,200 small
international securities in Europe, UK, Southeast Asia, Japan, Australia and New
Zealand. The performance of large international companies is represented by MSCI
EAFE Index, which is comprised of common stocks issued in Europe, Australia and
the Far East. Index performance reflects the reinvestment of dividends but does
not consider the effect of capital gains or transaction costs, and none of the
data in the graphs shows the effect of taxes. The Fund's performance reflects
the effect 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 either index
shown.
6 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer International Small Company Fund (Class A)
HSBC James Capel World excluding U.S. Smaller Companies Index
MSCI EAFE Index
[GRAPHIC]
EDGAR REPRESENTATION OF DATA POINTS IN PRINTED GRAPHIC
Oppenheimer
International HSBC James Capel World
Small Company Fund excluding U.S. Smaller
Date (Class A) Companies Index MSCI EAFE Index
11/17/1997 9,425.00 10,000.00 10,000.00
11/30/1997 9,529.00 10,000.00 10,000.00
02/28/1998 10,509.00 10,806.00 11,233.00
05/31/1998 12,187.00 11,582.00 11,622.00
08/31/1998 10,858.00 9,432.00 10,370.00
11/30/1998 11,800.00 9,886.00 11,678.00
02/28/1999 12,646.00 10,135.00 11,822.00
05/31/1999 14,648.00 10,839.00 12,163.00
08/31/1999 17,708.00 12,418.00 13,069.00
11/30/1999 18,461.00 12,869.00 14,180.00
02/29/2000 22,241.00 14,425.00 14,868.00
05/31/2000 18,284.00 12,637.00 14,283.00
08/31/2000 18,714.00 13,051.00 14,352.00
11/30/2000 13,013.00 11,054.00 12,839.00
02/28/2001 11,953.00 11,503.00 12,296.00
05/31/2001 11,545.00 10,914.00 11,864.00
08/31/2001 10,387.00 10,023.00 10,896.00
11/30/2001 10,189.00 9,621.00 10,416.00
02/28/2002 11,134.00 9,347.00 9,992.00
05/31/2002 12,265.00 10,542.00 10,758.00
08/31/2002 10,615.00 9,211.00 9,296.00
11/30/2002 9,937.00 8,678.00 9,144.00
02/28/2003 9,219.00 8,402.00 8,276.00
05/31/2003 11,307.00 10,002.00 9,473.00
08/31/2003 13,981.00 11,263.00 10,186.00
Average Annual Total Returns of Class A Shares of the Fund at 8/31/03*
1-Year 24.13% 5-Year 3.95% Since Inception 5.96%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer International Small Company Fund (Class B)
HSBC James Capel World excluding U.S. Smaller Companies Index
MSCI EAFE Index
[GRAPHIC]
EDGAR REPRESENTATION OF DATA POINTS IN PRINTED GRAPHIC
Oppenheimer
International HSBC James Capel World
Small Company Fund excluding U.S. Smaller
Date (Class B) Companies Index MSCI EAFE Index
11/17/1997 10,000.00 10,000.00 10,000.00
11/30/1997 10,110.00 10,000.00 10,000.00
02/28/1998 11,130.00 10,806.00 11,233.00
05/31/1998 12,880.00 11,582.00 11,622.00
08/31/1998 11,450.00 9,432.00 10,370.00
11/30/1998 12,420.00 9,886.00 11,678.00
02/28/1999 13,273.00 10,135.00 11,822.00
05/31/1999 15,349.00 10,839.00 12,163.00
08/31/1999 18,523.00 12,418.00 13,069.00
11/30/1999 19,275.00 12,869.00 14,180.00
02/29/2000 23,180.00 14,425.00 14,868.00
05/31/2000 19,017.00 12,637.00 14,283.00
08/31/2000 19,445.00 13,051.00 14,352.00
11/30/2000 13,491.00 11,054.00 12,839.00
02/28/2001 12,377.00 11,503.00 12,296.00
05/31/2001 11,909.00 10,914.00 11,864.00
08/31/2001 10,697.00 10,023.00 10,896.00
11/30/2001 10,477.00 9,621.00 10,416.00
02/28/2002 11,424.00 9,347.00 9,992.00
05/31/2002 12,570.00 10,542.00 10,758.00
08/31/2002 10,859.00 9,211.00 9,296.00
11/30/2002 10,127.00 8,678.00 9,144.00
02/28/2003 9,396.00 8,402.00 8,276.00
05/31/2003 11,493.00 10,002.00 9,473.00
08/31/2003 14,084.00 11,263.00 10,186.00
Average Annual Total Returns of Class B Shares of the Fund at 8/31/03*
1-Year 25.62% 5-Year 4.07% Since Inception 6.09%
*See Notes on page 9 for further details.
The performance information for both indices in the graphs begins on 11/30/97
for Class A, Class B and Class C, and 2/28/01 for Class N.
Past performance cannot guarantee future results. Graphs are not drawn to same
scale.
7 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
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FUND PERFORMANCE DISCUSSION
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Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer International Small Company Fund (Class C)
HSBC James Capel World excluding U.S. Smaller Companies Index
MSCI EAFE Index
[GRAPHIC]
EDGAR REPRESENTATION OF DATA POINTS IN PRINTED GRAPHIC
Oppenheimer
International HSBC James Capel World
Small Company Fund excluding U.S. Smaller
Date (Class C) Companies Index MSCI EAFE Index
11/17/1997 10,000.00 10,000.00 10,000.00
11/30/1997 10,110.00 10,000.00 10,000.00
02/28/1998 11,130.00 10,806.00 11,233.00
05/31/1998 12,870.00 11,582.00 11,622.00
08/31/1998 11,450.00 9,432.00 10,370.00
11/30/1998 12,420.00 9,886.00 11,678.00
02/28/1999 13,273.00 10,135.00 11,822.00
05/31/1999 15,349.00 10,839.00 12,163.00
08/31/1999 18,523.00 12,418.00 13,069.00
11/30/1999 19,265.00 12,869.00 14,180.00
02/29/2000 23,173.00 14,425.00 14,868.00
05/31/2000 19,016.00 12,637.00 14,283.00
08/31/2000 19,445.00 13,051.00 14,352.00
11/30/2000 13,496.00 11,054.00 12,839.00
02/28/2001 12,377.00 11,503.00 12,296.00
05/31/2001 11,908.00 10,914.00 11,864.00
08/31/2001 10,709.00 10,023.00 10,896.00
11/30/2001 10,488.00 9,621.00 10,416.00
02/28/2002 11,420.00 9,347.00 9,992.00
05/31/2002 12,566.00 10,542.00 10,758.00
08/31/2002 10,854.00 9,211.00 9,296.00
11/30/2002 10,135.00 8,678.00 9,144.00
02/28/2003 9,390.00 8,402.00 8,276.00
05/31/2003 11,489.00 10,002.00 9,473.00
08/31/2003 14,181.00 11,263.00 10,186.00
Average Annual Total Returns of Class C Shares of the Fund at 8/31/03*
1-Year 29.66% 5-Year 4.37% Since Inception 6.22%
Class N Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer International Small Company Fund (Class N)
HSBC James Capel World excluding U.S. Smaller Companies Index
MSCI EAFE Index
[GRAPHIC]
EDGAR REPRESENTATION OF DATA POINTS IN PRINTED GRAPHIC
Oppenheimer
International HSBC James Capel World
Small Company Fund excluding U.S. Smaller
Date (Class N) Companies Index MSCI EAFE Index
03/01/2001 10,000.00 10,000.00 10,000.00
05/31/2001 9,637.00 9,488.00 9,648.00
08/31/2001 8,667.00 8,714.00 8,861.00
11/30/2001 8,502.00 8,364.00 8,471.00
02/28/2002 9,276.00 8,126.00 8,126.00
05/31/2002 10,218.00 9,165.00 8,749.00
08/31/2002 8,840.00 8,007.00 7,560.00
11/30/2002 8,268.00 7,545.00 7,437.00
02/28/2003 7,663.00 7,304.00 6,730.00
05/31/2003 9,377.00 8,695.00 7,704.00
08/31/2003 11,596.00 9,792.00 8,284.00
Average Annual Total Returns of Class N Shares of the Fund at 8/31/03*
1-Year 30.18% Since Inception 6.10%
*See Notes on page 9 for further details.
The performance information for both indices in the graphs begins on 11/30/97
for Class A, Class B and Class C, and 2/28/01 for Class N.
Past performance cannot guarantee future results. Graphs are not drawn to same
scale.
8 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
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NOTES
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In reviewing performance and rankings, please remember that past performance
cannot 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
fluctuations, and current performance may be more or less than the results
shown. For updates on the Fund's performance, visit our website at
www.oppenheimerfunds.com.
Total returns and the ending account values in the graph includes 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 reflect the deduction 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. For more complete information
about the Fund, including charges, expenses and risks, please refer to the
prospectus. To obtain a copy, call your financial advisor, call OppenheimerFunds
Distributor, Inc. at 1.800.CALL OPP (1.800.225.5677). Read the prospectus
carefully before you invest or send money.
Class A shares of the Fund were first publicly offered on 11/17/97. Unless
otherwise noted, Class A returns include the maximum initial sales charge of
5.75%.
Class B shares of the Fund were first publicly offered on 11/17/97. Unless
otherwise noted, Class B returns include the applicable contingent deferred
sales charge of 5% (1-year), 2% (5-year) and 1% (since inception). Class B
shares are subject to a 0.75% annual asset-based sales charge.
Class C shares of the Fund were first publicly offered on 11/17/97. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for the one-year period. Class C shares are subject to a 0.75% annual
asset-based sales charge. Class N shares of the Fund were first publicly offered
on 3/1/01.
Class N shares are offered only through retirement plans. Unless
otherwise noted, Class N returns include the contingent deferred sales charge of
1% for the 1-year period. Class N shares are subject to an annual 0.25%
asset-based sales charge.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
9 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
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STATEMENT OF INVESTMENTS August 31, 2003
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Market Value
Shares See Note 1
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Common Stocks--91.6%
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Consumer Discretionary--21.1%
- --------------------------------------------------------------------------------
Distributors--1.2%
Medion AG 50,000 $ 2,008,607
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Hotels, Restaurants & Leisure--0.7%
Berjaya Sports
Toto Berhad 1,100,000 1,221,579
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Household Durables--2.1%
Saeco International
Group SpA 1,000,000 3,579,153
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Internet & Catalog Retail--3.1%
Rakuten, Inc. 2,200 5,185,122
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Leisure Equipment & Products--1.4%
Noritsu Koki Co. Ltd. 35,000 1,259,856
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Zapf Creation AG 30,000 1,073,417
--------------
2,333,273
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Media--6.8%
Balaji Telefilms Ltd. 1,730,000 2,677,651
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Grupo Radio
Centro SA de CV,
Sponsored ADR 395,000 1,975,000
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HIT Entertainment plc 300,000 1,214,167
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Impresa-Sociedade
Gestora de
Participacoes SA 1 400,000 1,163,774
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Macmillan India Ltd. 200,000 959,860
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Navneet
Publications India 36,438 111,762
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Toei Animation
Co. Ltd. 20,000 1,131,299
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Village
Roadshow Ltd. 1 2,500,000 2,297,738
--------------
11,531,251
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Multiline Retail--2.0%
Mothercare plc 1 600,000 1,825,688
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Stockmann AB, Cl. A 90,000 1,573,071
--------------
3,398,759
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Specialty Retail--1.5%
Pantaloon
Retail India Ltd. 1 209,809 779,689
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Point, Inc. 90,000 1,812,650
--------------
2,592,339
Market Value
Shares See Note 1
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Textiles, Apparel & Luxury Goods--2.3%
Folli-Follie SA 100,000 $ 1,993,786
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Tod's SpA 50,000 1,882,898
--------------
3,876,684
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Consumer Staples--6.7%
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Beverages--1.2%
Southcorp
Holdings Ltd. 1,000,000 2,000,002
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Food Products--3.3%
Lindt & Spruengli AG 560 3,798,508
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Thorntons plc 1,000,000 1,850,648
--------------
5,649,156
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Household Products--2.2%
Marico
Industries Ltd. 1,2 875,946 257,968
- --------------------------------------------------------------------------------
Marico Industries Ltd. 750,000 3,496,401
--------------
3,754,369
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Financials--15.7%
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Commercial Banks--2.0%
Banco Latinoamericano
de Exportaciones
SA, Cl. E 1 300,000 3,339,000
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Diversified Financial Services--9.3%
Collins Stewart
Tullett plc 300,000 1,835,843
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Credit Rating
Information Services
of India Ltd. 286,126 2,403,733
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Matsui Securities
Co. Ltd. 200,000 2,673,980
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MLP AG 1 200,000 2,790,861
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SFCG Co. Ltd. 30,000 3,445,321
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Van der Moolen
Holding NV 200,000 2,659,113
--------------
15,808,851
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Real Estate--4.4%
Kennedy-Wilson
Japan 1 1,606 3,014,347
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Leopalace21 Corp. 550,000 4,473,346
--------------
7,487,693
10 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Health Care--12.5%
- --------------------------------------------------------------------------------
Biotechnology--2.7%
Berna Biotech AG 1 72,000 $ 822,534
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Chr. Hansen Holding AS, Cl. B 50,000 2,180,839
- --------------------------------------------------------------------------------
Q-Med AB 1 100,000 1,560,781
--------------
4,564,154
- --------------------------------------------------------------------------------
Health Care Equipment & Supplies--1.8%
Elekta AB, B Shares 1 100,000 1,483,040
- --------------------------------------------------------------------------------
Ortivus AB, B Shares 1 450,000 1,480,051
--------------
2,963,091
- --------------------------------------------------------------------------------
Health Care Providers & Services--2.6%
Nicox SA 1 693,000 4,488,983
- --------------------------------------------------------------------------------
Pharmaceuticals--5.4%
Norwood
Abbey Ltd. 1 4,000,000 3,106,800
- --------------------------------------------------------------------------------
Novogen Ltd. 1 485,000 1,541,329
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SkyePharma plc 1 1,506,550 1,572,771
- --------------------------------------------------------------------------------
Tsumura & Co. 1 350,000 2,921,666
--------------
9,142,566
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Industrials--14.3%
- --------------------------------------------------------------------------------
Airlines--1.0%
Koninklijke
Luchtvaart
Maatschappij
NV (KLM) 150,000 1,666,612
- --------------------------------------------------------------------------------
Commercial Services & Supplies--4.9%
BTG plc 1 500,000 2,463,576
- --------------------------------------------------------------------------------
Buhrmann NV 1 200,000 1,649,045
- --------------------------------------------------------------------------------
Drake Beam
Morin-Japan, Inc. 86,800 2,231,745
- --------------------------------------------------------------------------------
Iroonet Co. Ltd. 300,000 1,960,535
--------------
8,304,901
- --------------------------------------------------------------------------------
Construction & Engineering--1.0%
Koninklijke Boskalis
Westminster NV 74,560 1,710,861
- --------------------------------------------------------------------------------
Electrical Equipment--1.9%
Cosel Co. Ltd. 100,000 2,271,169
- --------------------------------------------------------------------------------
Electrovaya, Inc. 1,3 3,601,900 753,020
- --------------------------------------------------------------------------------
SGL Carbon AG 1 14,550 284,345
--------------
3,308,534
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Industrial Conglomerates--1.3%
Aalberts
Industries NV 102,578 $ 2,196,097
- --------------------------------------------------------------------------------
Machinery--2.8%
Ashok Leyland Ltd. 900,000 3,193,390
- --------------------------------------------------------------------------------
Shima Seiki
Manufacturing Ltd. 35,000 1,310,850
- --------------------------------------------------------------------------------
ZENON
Environmental, Inc. 1 25,000 287,460
--------------
4,791,700
- --------------------------------------------------------------------------------
Road & Rail--1.4%
ComfortDelGro
Corp. Ltd. 1 5,000,000 2,324,719
- --------------------------------------------------------------------------------
Information Technology--15.5%
- --------------------------------------------------------------------------------
Communications Equipment--1.5%
Toyo Communication
Equipment Co. Ltd. 1 461,000 2,497,017
- --------------------------------------------------------------------------------
Computers & Peripherals--1.9%
Logitech
International SA 1 100,000 3,213,023
- --------------------------------------------------------------------------------
Electronic Equipment & Instruments--3.0%
Epcos AG 1 150,000 2,527,914
- --------------------------------------------------------------------------------
Tandberg ASA 1 400,000 2,625,348
--------------
5,153,262
- --------------------------------------------------------------------------------
Internet Software & Services--1.8%
NCsoft Corp. 60,000 3,085,933
- --------------------------------------------------------------------------------
IT Services--2.1%
SSI Ltd. 620,000 1,357,264
- --------------------------------------------------------------------------------
United Internet AG 110,000 2,113,457
--------------
3,470,721
- --------------------------------------------------------------------------------
Semiconductors & Semiconductor Equipment--3.1%
ARM Holdings plc 1 2,000,000 3,574,756
- --------------------------------------------------------------------------------
ASM International NV 1 90,000 1,634,400
--------------
5,209,156
- --------------------------------------------------------------------------------
Software--2.1%
Eidos plc 1 400,000 813,020
- --------------------------------------------------------------------------------
Intelligent Wave, Inc. 2,590 2,819,078
--------------
3,632,098
- --------------------------------------------------------------------------------
Telecommunication Services--5.0%
- --------------------------------------------------------------------------------
Diversified Telecommunication Services--5.0%
Song Networks
Holding AB 1 700,000 4,562,742
11 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Diversified Telecommunication Services Continued
Versatel Telecom
International NV 1 2,500,000 $ 3,870,097
--------------
8,432,839
- --------------------------------------------------------------------------------
Utilities--0.8%
- --------------------------------------------------------------------------------
Gas Utilities--0.8%
Aygaz AS 660,000,000 1,388,978
--------------
Total Common Stocks
(Cost $125,897,025) 155,311,083
Principal Market Value
Amount See Note 1
- --------------------------------------------------------------------------------
Joint Repurchase Agreements--12.1% 4
Undivided interest of 5.29% in joint
repurchase agreement (Principal Amount/
Market Value $388,120,000, with a maturity
value of $388,162,693) with Zions Bank/
Capital Markets Group, 0.99%, dated
8/29/03, to be repurchased at $20,524,257
on 9/2/03, collateralized by U.S. Treasury Nts.,
2.375%--2.75%, 10/31/03--8/15/06, with a
value of $336,611,159 and U.S. Treasury
Bills, 11/28/03--2/5/04, with a
value of $60,243,636
(Cost $20,522,000) $20,522,000 $ 20,522,000
- --------------------------------------------------------------------------------
Total Investments,
at Value
(Cost $146,419,025) 103.7% 175,833,083
- --------------------------------------------------------------------------------
Liabilities in Excess
of Other Assets (3.7) 6,216,161)
----------------------------
Net Assets 100.0% $ 169,616,922
============================
Footnotes to Statement of Investments
1. Non-income producing security.
2. Identifies issues considered to be illiquid. See Note 6 of Notes to Financial
Statements.
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 August 31, 2003.
The aggregate fair value of securities of affiliated companies held by the Fund
as of August 31, 2003 amounts to $753,020. Transactions during the period in
which the issuer was an affiliate are as follows:
Shares Shares
August 31, Gross Gross August 31, Unrealized Dividend Realized
2002 Additions Reductions 2003 Depreciation Income Gain
- --------------------------------------------------------------------------------------------------------------
Stocks and/or Warrants
Electrovaya, Inc. 1,743,500 1,858,400 -- 3,601,900 $1,939,199 $ -- $ --
Marico Industries Ltd.* 875,946 -- 125,946 750,000 -- 280,050 1,490
-------------------------------
$1,939,199 $280,050 $1,490
===============================
*No longer an affiliate as of August 31, 2003.
4. The Fund may have elements of risk due to concentrated investments. Such
concentrations may subject the Fund to additional risks.
12 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
Distribution of investments representing geographic holdings, as a percentage of
total investments at value, is as follows:
Geographic Holdings Market Value Percent
- -------------------------------------------------------------------------------
Japan $ 37,047,446 21.1%
United States 20,522,000 11.7
The Netherlands 15,386,225 8.7
India 15,237,718 8.7
Great Britain 15,150,469 8.6
Germany 10,798,601 6.1
Sweden 9,086,614 5.2
Australia 8,945,869 5.1
Switzerland 7,834,065 4.4
Italy 5,462,051 3.1
Korea, Republic of South 5,046,468 2.9
France 4,488,983 2.6
Panama 3,339,000 1.9
Norway 2,625,348 1.5
Singapore 2,324,719 1.3
Denmark 2,180,839 1.2
Greece 1,993,786 1.1
Mexico 1,975,000 1.1
Finland 1,573,071 0.9
Turkey 1,388,978 0.8
Malaysia 1,221,579 0.7
Portugal 1,163,774 0.7
Canada 1,040,480 0.6
------------------------------
Total $175,833,083 100.0%
==============================
See accompanying Notes to Financial Statements.
13 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES August 31, 2003
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Assets
Investments, at value (including cost and market value of $20,522,000
in repurchase agreements)--see accompanying statement:
Unaffiliated companies (cost $143,726,806) $175,080,063
Affiliated companies (cost $2,692,219) 753,020
--------------
175,833,083
- ---------------------------------------------------------------------------------------------------------
Cash 194,947
- ---------------------------------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 27,510
- ---------------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 3,276,033
Investments sold 109,925
Interest and dividends 98,993
Other 1,308
--------------
Total assets 179,541,799
- ---------------------------------------------------------------------------------------------------------
Liabilities
Bank overdraft--foreign currencies (cost $30,338) 30,355
- ---------------------------------------------------------------------------------------------------------
Unrealized depreciation on foreign currency contracts 2,523
- ---------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 9,104,895
Shares of beneficial interest redeemed 314,687
Foreign capital gains taxes 275,459
Shareholder reports 62,869
Distribution and service plan fees 51,809
Transfer and shareholder servicing agent fees 32,625
Trustees' compensation 10,016
Other 39,639
--------------
Total liabilities 9,924,877
- ---------------------------------------------------------------------------------------------------------
Net Assets $169,616,922
==============
- ---------------------------------------------------------------------------------------------------------
Composition of Net Assets
Paid-in capital $194,155,893
- ---------------------------------------------------------------------------------------------------------
Overdistributed net investment income (116,266)
- ---------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (53,549,295)
- ---------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies, net of foreign capital gains taxes 29,126,590
--------------
Net Assets $169,616,922
==============
14 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- ------------------------------------------------------------------------------------------------
Net Asset Value Per Share
- ------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$132,341,661 and 12,588,016 shares of beneficial interest outstanding) $10.51
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering price) $11.15
- ------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $23,354,618
and 2,271,035 shares of beneficial interest outstanding) $10.28
- ------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $12,792,960
and 1,245,106 shares of beneficial interest outstanding) $10.27
- ------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $1,127,683
and 108,910 shares of beneficial interest outstanding) $10.35
See accompanying Notes to Financial Statements.
15 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Year Ended August 31, 2003
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $156,302) $ 1,114,505
Affiliated companies (net of foreign withholding taxes of $9,966) 280,050
- -------------------------------------------------------------------------------------------------------
Interest 49,677
------------
Total investment income 1,444,232
- -------------------------------------------------------------------------------------------------------
Expenses
Management fees 588,745
- -------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 114,629
Class B 168,718
Class C 74,721
Class N 3,116
- -------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 189,919
Class B 131,045
Class C 46,259
Class N 2,418
- -------------------------------------------------------------------------------------------------------
Custodian fees and expenses 87,654
- -------------------------------------------------------------------------------------------------------
Shareholder reports 66,932
- -------------------------------------------------------------------------------------------------------
Trustees' compensation 2,945
- -------------------------------------------------------------------------------------------------------
Other 43,815
------------
Total expenses 1,520,916
Less reduction to custodian expenses (667)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class A (41,893)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class B (78,715)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class C (22,591)
Less voluntary waiver of transfer and shareholder servicing agent fees--Class N (354)
------------
Net expenses 1,376,696
- -------------------------------------------------------------------------------------------------------
Net Investment Income 67,536
- -------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments:
Unaffiliated companies (12,619,361)
Affiliated companies 1,490
Foreign currency transactions 3,134,483
------------
Net realized loss (9,483,388)
- -------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments (net of foreign capital gains tax of $190,693) 38,572,363
Translation of assets and liabilities denominated in foreign currencies (234,582)
------------
Net change in unrealized appreciation 38,337,781
- -------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $ 28,921,929
============
See accompanying Notes to Financial Statements.
16 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Ended August 31, 2003 2002
- -----------------------------------------------------------------------------------------------------------
Operations
Net investment income (loss) $ 67,536 $ (275,920)
- -----------------------------------------------------------------------------------------------------------
Net realized loss (9,483,388) (1,142,554)
- -----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 38,337,781 (66,190)
----------------------------
Net increase (decrease) in net assets resulting from operations 28,921,929 (1,484,664)
- -----------------------------------------------------------------------------------------------------------
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Class A -- (288,253)
Class B -- (31,235)
Class C -- (9,130)
Class N -- (203)
- -----------------------------------------------------------------------------------------------------------
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest
transactions:
Class A 71,357,496 13,016,518
Class B (548,115) 4,400,999
Class C 3,500,713 1,764,669
Class N 473,566 414,271
- -----------------------------------------------------------------------------------------------------------
Net Assets
Total increase 103,705,589 17,782,972
- -----------------------------------------------------------------------------------------------------------
Beginning of period 65,911,333 48,128,361
----------------------------
End of period [including overdistributed net investment
income of $116,266 and $54,564, respectively] $169,616,922 $65,911,333
============================
See accompanying Notes to Financial Statements.
17 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Class A Year Ended August 31, 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 7.98 $7.89 $15.23 $17.42 $11.52
- -------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .01 .01 .04 (.10) .06
Net realized and unrealized gain (loss) 2.52 .16 (6.65) 1.12 6.72
------------------------------------------------------------
Total from investment operations 2.53 .17 (6.61) 1.02 6.78
- -------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.08) (.11) (.18) (.04)
Distributions from net realized gain -- -- (.62) (3.03) (.84)
-----------------------------------------------------------
Total dividends and/or
distributions to shareholders -- (.08) (.73) (3.21) (.88)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.51 $7.98 $ 7.89 $15.23 $17.42
============================================================
- -------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 31.70% 2.20% (44.50)% 5.68% 63.10%
- -------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $132,342 $40,089 $27,991 $60,336 $26,965
- -------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 48,879 $35,136 $39,311 $52,095 $14,208
- -------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income (loss) 0.29% (0.17)% 0.36% (0.67)% 0.73%
Total expenses 1.69% 2.16% 1.58% 1.74% 2.05%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses 1.60% 1.88% N/A 3 N/A 3 N/A 3
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 53% 62% 145% 199% 280%
<FN>
1. Assumes an investment on the business day before the first day of the fiscal
period, 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. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
18 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
Class B Year Ended August 31, 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 7.87 $ 7.77 $14.99 $17.22 $11.45
- -------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.02) (.07) (.03) (.19) .02
Net realized and unrealized gain (loss) 2.43 .19 (6.57) 1.09 6.59
------------------------------------------------------------
Total from investment operations 2.41 .12 (6.60) .90 6.61
- -------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.02) -- 1 (.10) --
Distributions from net realized gain -- -- (.62) (3.03) (.84)
------------------------------------------------------------
Total dividends and/or
distributions to shareholders -- (.02) (.62) (3.13) (.84)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.28 $ 7.87 $ 7.77 $14.99 $17.22
============================================================
- -------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 30.62% 1.51% (44.99)% 4.98% 61.77%
- -------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $23,355 $18,859 $14,989 $31,807 $11,764
- -------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $16,884 $16,868 $20,147 $25,377 $ 5,367
- -------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) (0.28)% (0.94)% (0.33)% (1.44)% 0.09%
Total expenses 2.85% 2.93% 2.34% 2.51% 2.84%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses 2.38% 2.65% N/A 4 N/A 4 N/A 4
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 53% 62% 145% 199% 280%
<FN>
1. Less than $0.005 per share.
2. Assumes an investment on the business day before the first day of the fiscal
period, 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. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
19 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
Class C Year Ended August 31, 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 7.86 $7.77 $14.97 $17.22 $11.45
- -------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.02) (.06) (.03) (.16) .04
Net realized and unrealized gain (loss) 2.43 .16 (6.55) 1.07 6.57
------------------------------------------------------------
Total from investment operations 2.41 .10 (6.58) .91 6.61
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.01) -- (.13) --
Distributions from net realized gain -- -- (.62) (3.03) (.84)
------------------------------------------------------------
Total dividends and/or distributions
to shareholders -- (.01) (.62) (3.16) (.84)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.27 $7.86 $ 7.77 $14.97 $17.22
============================================================
- -------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 30.66% 1.35% (44.93)% 4.98% 61.77%
- -------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $12,793 $6,558 $5,142 $11,946 $2,815
- -------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 7,489 $6,180 $7,095 $ 9,003 $1,256
Ratios to average net assets: 2
Net investment income (loss) (0.38)% (0.95)% (0.32)% (1.38)% 0.09%
Total expenses 2.69% 2.94% 2.34% 2.51% 2.84%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses 2.39% 2.66% N/A 3 N/A 3 N/A 3
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 53% 62% 145% 199% 280%
<FN>
1. Assumes an investment on the business day before the first day of the fiscal
period, 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. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
20 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
Class N Year Ended August 31, 2003 2002 2001 1
- -----------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 7.89 $7.87 $9.08
- -----------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.03) .08 .07
Net realized and unrealized gain (loss) 2.49 .07 (1.28)
----------------------------------
Total from investment operations 2.46 .15 (1.21)
- -----------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- (.13) --
Distributions from net realized gain -- -- --
----------------------------------
Total dividends and/or distributions to shareholders -- (.13) --
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $10.35 $7.89 $7.87
==================================
- -----------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 31.18% 1.99% (13.33)%
- -----------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $1,128 $406 $6
- -----------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 625 $151 $2
- -----------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) 0.25% (0.33)% 5.85%
Total expenses 1.96% 2.32% 1.94%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses 1.90% 2.04% N/A 4
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 53% 62% 145%
<FN>
1. For the period from March 1, 2001 (inception of offering) to August 31, 2001.
2. Assumes an investment on the business day before the first day of the fiscal
period (or inception of offering), with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Sales
charges are not reflected in the total returns. Total returns are not annualized
for periods of less than one full year. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
</FN>
See accompanying Notes to Financial Statements.
21 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer International Small Company Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund's investment objective is to seek long-term
capital appreciation. The Fund's investment advisor is OppenheimerFunds, Inc.
(the Manager).
The Fund offers Class A, Class B, Class C and Class N shares. Class A shares
are sold at their offering price, which is normally net asset value plus a
front-end sales charge. Class B, Class C and Class N shares are sold without a
front-end sales charge but may be subject to a contingent deferred sales charge
(CDSC). Class N shares are sold only through retirement plans. Retirement plans
that offer Class N shares may impose charges on those accounts. All classes of
shares have identical rights and voting privileges. Earnings, net assets and
net asset value per share may differ by minor amounts due to each class having
its own expenses directly attributable to that class. Classes A, B, C and N
have separate distribution and/or service plans. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The Fund assesses a 2% fee on the proceeds of fund shares that are redeemed
(either by selling or exchanging to another Oppenheimer fund) within 30 days of
their purchase. The fee, which is retained by the Fund, is accounted for as an
addition to paid-in capital.
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. Securities traded on NASDAQ are valued based on the closing
price provided by NASDAQ 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 using 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 Fund's accounting records 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
22 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
and reported with all other foreign currency gains and losses in the Fund's
Statement of Operations.
- --------------------------------------------------------------------------------
Joint Repurchase Agreements. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint
trading accounts on a daily basis. Secured by U.S. government securities, these
balances are invested in one or more repurchase agreements. Securities pledged
as collateral for repurchase agreements are held by a custodian bank until the
agreements mature. Each agreement requires that the market value of the
collateral be sufficient to cover payments of interest and principal. In the
event of default by the other party to the agreement, retention of the
collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis 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 comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years
and unrealized appreciation or depreciation of investment for federal income
tax purposes.
Net Unrealized
Appreciation Based
Undistributed Undistributed Accumulated on Cost of Securities
Net Investment Long-Term Loss for Federal Income
Income Gain Carryforward 1,2,3 Tax Purposes
-------------------------------------------------------------------------
$912,915 $-- $53,247,983 $27,805,716
1. As of August 31, 2003, the Fund had $49,704,115 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of August 31, 2003,
details of the capital loss carryforwards were as follows:
Expiring
----------------------
2010 $43,082,483
2011 6,621,632
-----------
Total $49,704,115
===========
2. During the fiscal years ended August 31, 2003 and August 31, 2002, the Fund
did not utilize any capital loss carryforwards.
3. As of August 31, 2003, the Fund had $3,520,098 of post-October losses
available to offset future realized capital gains, if any. Such losses, if
unutilized, will expire in 2012. Additionally, the Fund had $23,770 of
post-October foreign currency losses which were deferred.
23 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their 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 net realized gain was recorded by the Fund. Accordingly,
the following amounts have been reclassified for August 31, 2003. Net assets of
the Fund were unaffected by the reclassifications.
From From Net
Ordinary Capital Tax Return Investment
Income Loss of Capital Loss
-------------------------------------------------------
$129,238 $31,150 $-- $--
The tax character of distributions paid during the years ended August 31, 2003
and August 31, 2002 was as follows:
Year Ended Year Ended
August 31, 2003 August 31, 2002
-------------------------------------------------------
Distributions paid from:
Ordinary income $-- $ 328,821
The aggregate cost of investments and the composition of unrealized
appreciation and depreciation of investments for federal income tax purposes as
of August 31, 2003 are noted below. The primary difference between book and tax
appreciation or depreciation of investments, if applicable, is attributable to
the tax deferral of losses or tax realization of financial statement unrealized
gain or loss.
Federal tax cost $148,015,358
============
Gross unrealized appreciation $ 33,492,480
Gross unrealized depreciation (5,686,764)
------------
Net unrealized appreciation $ 27,805,716
============
Certain foreign countries impose a tax on capital gains which is accrued by the
Fund based on unrealized appreciation, if any, on affected securities. The tax
is paid when the gain is realized.
- --------------------------------------------------------------------------------
Trustees' Compensation. The Fund has adopted an unfunded 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
August 31, 2003, the Fund's projected benefit obligations were decreased by $16
and payments of $299 were made to retired trustees, resulting in an accumulated
liability of $9,618 as of August 31, 2003.
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 the annual compensation they are entitled to receive from the
Fund. Under the plan, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the
24 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
Fund or are invested in other selected Oppenheimer 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. Amounts will be deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
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. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
Investment Income. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and
amortization of premium, is accrued as earned.
- --------------------------------------------------------------------------------
Expense Offset Arrangement. The reduction of custodian fees represents earnings
on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Security Transactions. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
Other. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
- --------------------------------------------------------------------------------
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
Year Ended August 31, 2003 Year Ended August 31, 2002
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------
Class A
Sold 15,409,639 $134,438,670 5,830,865 $ 50,323,436
Dividends and/or
distributions reinvested -- -- 32,708 251,857
Redeemed (7,842,814) (63,081,174) (4,389,330) (37,558,775)
--------------------------------------------------------------------
Net increase 7,566,825 $ 71,357,496 1,474,243 $ 13,016,518
====================================================================
- ----------------------------------------------------------------------------------------------------
Class B
Sold 803,004 $ 6,658,561 1,241,249 $ 10,730,310
Dividends and/or
distributions reinvested -- -- 3,967 30,268
Redeemed (928,190) (7,206,676) (776,973) (6,359,579)
--------------------------------------------------------------------
Net increase (decrease) (125,186) $ (548,115) 468,243 $ 4,400,999
====================================================================
25 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. Shares of Beneficial Interest Continued
Year Ended August 31, 2003 Year Ended August 31, 2002
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------
Class C
Sold 1,088,305 $9,296,830 780,836 $ 6,731,711
Dividends and/or
distributions reinvested -- -- 1,046 7,973
Redeemed (677,201) (5,796,117) (609,966) (4,975,015)
--------------------------------------------------------------------
Net increase 411,104 $3,500,713 171,916 $ 1,764,669
====================================================================
- ----------------------------------------------------------------------------------------------------
Class N
Sold 86,695 $ 698,270 94,679 $ 819,546
Dividends and/or
distributions reinvested -- -- 24 188
Redeemed (29,219) (224,704) (44,078) (405,463)
--------------------------------------------------------------------
Net increase 57,476 $ 473,566 50,625 $ 414,271
====================================================================
- --------------------------------------------------------------------------------
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, 2003, were
$101,527,345 and $38,436,237, respectively.
- --------------------------------------------------------------------------------
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 at
annual rate of 0.80% of the first $250 million of average annual net assets of
the Fund, 0.77% of the next $250 million, 0.75% of the next $500 million, 0.69%
of the next $1 billion and 0.67% of average annual net assets in excess of $2
billion.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the
Manager, acts as the transfer and shareholder servicing agent for the Fund. The
Fund pays OFS a per account fee. For the year ended August 31, 2003, the Fund
paid $237,023 to OFS for services to the Fund.
OFS has voluntarily agreed to limit transfer and shareholder servicing agent
fees for all classes, up to an annual rate of 0.35% of average net assets per
class. This undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
Distribution and Service Plan (12b-1) Fees. Under its General Distributor's
Agreement with the Manager, OppenheimerFunds Distributor, Inc. (the
Distributor) acts as the Fund's principal underwriter in the continuous public
offering of the different classes of shares of the Fund.
26 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the
period indicated.
Aggregate Class A Concessions Concessions Concessions Concessions
Front-End Front-End On Class A On Class B On Class C On Class N
Sales Charges Sales Charges Shares Shares Shares Shares
On Class A Retained by Advanced by Advanced by Advanced by Advanced by
Year Ended Shares Distributor Distributor 1 Distributor 1 Distributor 1 Distributor 1
- --------------------------------------------------------------------------------------------------------
August 31, 2003 $149,143 $45,216 $8,157 $106,230 $28,441 $3,985
1. The Distributor advances concession payments to dealers for certain sales of
Class A shares and for sales of Class B, Class C and Class N shares from its
own resources at the time of sale.
Class A Class B Class C Class N
Contingent Contingent Contingent Contingent
Deferred Deferred Deferred Deferred
Sales Charges Sales Charges Sales Charges Sales Charges
Retained by Retained by Retained by Retained by
Year Ended Distributor Distributor Distributor Distributor
- -----------------------------------------------------------------------------
August 31, 2003 $487 $51,215 $1,857 $1,464
- --------------------------------------------------------------------------------
Service Plan for Class A Shares. The Fund has adopted a Service Plan for Class
A Shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. For the year ended August 31, 2003, expense under
the Class A Plan totaled $114,629, all of which were paid by the Distributor to
recipients, which included $491 retained by the Distributor and $6,891 which
was 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.
- --------------------------------------------------------------------------------
Distribution and Service Plans for Class B, Class C and Class N Shares. The
Fund has adopted Distribution and Service Plans for Class B, Class C and Class
N shares. Under the plans, the Fund pays the Distributor an annual asset-based
sales charge of 0.75% per year on Class B shares and on Class C shares and the
Fund pays the Distributor an annual asset-based sales charge of 0.25% per year
on Class N shares. The Distributor also receives a service fee of 0.25% per
year under each plan.
Distribution fees paid to the Distributor for the year ended August 31, 2003,
were as follows:
Distributor's
Distributor's Aggregate
Aggregate Unreimbursed
Unreimbursed Expenses as %
Total Payments Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
- --------------------------------------------------------------------------------
Class B Plan $168,718 $133,518 $637,783 2.73%
Class C Plan 74,721 27,456 165,040 1.29
Class N Plan 3,116 2,708 7,934 0.70
27 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation
or depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gain or loss. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of August 31, 2003, the Fund had outstanding foreign currency contracts as
follows:
Contract Valuation
Expiration Amount as of Unrealized Unrealized
Contract Description Dates (000s) August 31, 2003 Appreciation Depreciation
- -----------------------------------------------------------------------------------------------------
Contracts to Purchase
British Pound Sterling [GBP] 9/2/03 171GBP $ 270,946 $ 368 $ --
Euro [EUR] 9/2/03 2,045EUR 2,245,385 19,730 --
Japanese Yen [JPY] 9/2/03 164,299JPY 1,408,113 3,880 2,523
Swedish Krone [SEK] 9/2/03 2,131SEK 254,925 3,532 --
----------------------
Total unrealized appreciation and depreciation $27,510 $2,523
======================
- --------------------------------------------------------------------------------
6. Illiquid Securities
As of August 31, 2003, investments in securities included issues that are
illiquid. 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 securities. The
aggregate value of illiquid securities subject to this limitation as of August
31, 2003 was $257,968, which represents 0.15% of the Fund's net assets.
28 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
7. Borrowing and Lending Arrangements
The Fund entered into an "interfund borrowing and lending arrangement" with
other funds in the Oppenheimer funds complex, to allow funds to borrow for
liquidity purposes. The arrangement was initiated pursuant to exemptive relief
granted by the Securities and Exchange Commission to allow these affiliated
funds to lend money to, and borrow money from, each other, in an attempt to
reduce borrowing costs below those of bank loan facilities. Under the
arrangement the Fund may lend money to other Oppenheimer funds and may borrow
from other Oppenheimer funds at a rate set by the Fund's Board of Trustees,
based upon a recommendation by the Manager. The Fund's borrowings, if any, are
subject to asset coverage requirements under the Investment Company Act and the
provisions of the SEC order and other applicable regulations. If the Fund
borrows money, there is a risk that the loan could be called on one day's
notice, in which case the Fund might have to borrow from a bank at higher rates
if a loan were not available from another Oppenheimer fund. If the Fund lends
money to another fund, it will be subject to the risk that the other fund might
not repay the loan in a timely manner, or at all.
The Fund had no interfund borrowings or loans outstanding during the year
ended or at August 31, 2003.
29 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders of
Oppenheimer International Small Company Fund:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer International Small Company Fund, including the statement of
investments, as of August 31, 2003, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the five years in the period then ended. 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, 2003, by
correspondence with the custodian and brokers or by other appropriate auditing
procedures where replies were not received. 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 Small Company Fund as of August 31, 2003, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended, in conformity with
accounting principles generally accepted in the United States of America.
KPMG LLP
Denver, Colorado
September 22, 2003
30 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2004, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2003. Regulations of the U.S. Treasury Department require the
Fund to report this information to the Internal Revenue Service.
None of the dividends paid by the Fund during the year ended August 31, 2003
are eligible for the corporate dividend-received deduction.
A portion of the dividends paid by the Fund during the fiscal year ended
August 31, 2003 which are not designated as capital gain distributions are
eligible for lower individual income tax rates to the extent that the Fund has
received qualified dividend income as stipulated by recent tax legislation.
$1,560,824 of the Fund's fiscal year taxable income is eligible for the lower
individual income tax rates. In early 2004, shareholders of record will receive
information regarding the percentage of distributions that are eligible for
lower individual income tax rates.
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.
- --------------------------------------------------------------------------------
PORTFOLIO PROXY VOTING
POLICIES AND PROCEDURES Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and
Procedures is available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.225.5677, (ii) on the Fund's website at
www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In
addition, the Fund will be required to file new Form N-PX, with its complete
proxy voting record for the 12 months ended June 30th, no later than August
31st of each year. The first such filing is due no later than August 31, 2004,
for the twelve months ended June 30, 2004. Once filed, the Fund's Form N-PX
filing will be available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.225.5677, and (ii) on the SEC's website at www.sec.gov.
31 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Name, Position(s) Held with Principal Occupation(s) During Past 5 Years;
Fund, Length of Service, Age Other Trusteeships/Directorships Held by Trustee;
Number of Portfolios in Fund Complex Currently Overseen by Trustee
INDEPENDENT The address of each Trustee in the chart below is 6803 S. Tucson Way,
TRUSTEES Centennial, CO 80112-3924. Each Trustee serves for an indefinite term, until his
or her resignation, retirement, death or removal.
Clayton K. Yeutter, Of Counsel (since 1993), Hogan & Hartson (a law firm). Other directorships:
Chairman of the Board Weyerhaeuser Corp. (since 1999) and Danielson Holding Corp. (since 2002);
of Trustees (since 2003), formerly a director of Caterpillar, Inc. (1993-December 2002). Oversees 29
Trustee (since 1997) portfolios in the OppenheimerFunds complex.
Age: 72
Robert G. Galli, A trustee or director of other Oppenheimer funds. Formerly Trustee (May
Trustee (since 1997) 2000-2002) of Research Foundation of AIMR (investment research, non-profit) and
Age: 70 Vice Chairman (October 1995-December 1997) of OppenheimerFunds, Inc. (the
Manager). Oversees 39 portfolios in the OppenheimerFunds complex.
Phillip A. Griffiths, A director (since 1991) of the Institute for Advanced Study, Princeton, N.J., a
Trustee (since 1999) director (since 2001) of GSI Lumonics, a trustee (since 1983) of Woodward
Age: 64 Academy, a Senior Advisor (since 2001) of The Andrew W. Mellon Foundation. A
member of: the National Academy of Sciences (since 1979), American Academy of
Arts and Sciences (since 1995), American Philosophical Society (since 1996) and
Council on Foreign Relations (since 2002). Formerly a director of Bankers Trust
New York Corporation (1994-1999). Oversees 29 portfolios in the OppenheimerFunds
complex.
Joel W. Motley, Director (since 2002) Columbia Equity Financial Corp. (privately-held financial
Trustee (since 2002) adviser); Managing Director (since 2002) Carmona Motley, Inc. (privately-held
Age: 51 financial adviser); Formerly he held the following positions: Managing Director
(January 1998-December 2001), Carmona Motley Hoffman Inc. (privately-held
financial adviser); Managing Director (January 1992-December 1997), Carmona
Motley & Co. (privately-held financial adviser). Oversees 29 portfolios in the
OppenheimerFunds complex.
Kenneth A. Randall, A director of Dominion Resources, Inc. (electric utility holding company) and
Trustee (since 1997) Prime Retail, Inc. (real estate investment trust); formerly a director of
Age: 76 Dominion Energy, Inc. (electric power and oil & gas producer), President and
Chief Executive Officer of The Conference Board, Inc. (international economic
and business research) and a director of Lumbermens Mutual Casualty Company,
American Motorists Insurance Company and American Manufacturers Mutual Insurance
Company. Oversees 29 portfolios in the OppenheimerFunds complex.
Edward V. Regan, President, Baruch College, CUNY; a director of RBAsset (real estate manager); a
Trustee (since 1997) director of OffitBank; formerly Trustee, Financial Accounting Foundation (FASB
Age: 73 and GASB), Senior Fellow of Jerome Levy Economics Institute, Bard College,
Chairman of Municipal Assistance Corporation for the City of New York, New York
State Comptroller and Trustee of New York State and Local Retirement Fund.
Oversees 29 investment companies in the OppenheimerFunds complex.
Russell S. Reynolds, Jr., Chairman (since 1993) of The Directorship Search Group, Inc. (corporate
Trustee (since 1997) governance consulting and executive recruiting); a life trustee of International
Age: 71 House (non-profit educational organization), and a trustee (since 1996) of the
Greenwich Historical Society. Oversees 29 portfolios in the OppenheimerFunds
complex.
32 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
Donald W. Spiro, Chairman Emeritus (since January 1991) of the Manager. Formerly a director
Vice Chairman of the (January 1969-August 1999) of the Manager. Oversees 29 portfolios in the
Board of Trustees, OppenheimerFunds complex.
Trustee (since 1997)
Age: 77
- ------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE The address of Mr. Murphy in the chart below is 498 Seventh Avenue, New York,
AND OFFICER NY 10018. Mr. Murphy serves for an indefinite term, until his resignation,
death or removal.
John V. Murphy, Chairman, Chief Executive Officer and director (since June 2001) and President
President and Trustee, (since September 2000) of the Manager; President and a director or trustee of
Trustee (since 2001) other Oppenheimer funds; President and a director (since July 2001) of
Age: 54 Oppenheimer Acquisition Corp. (the Manager's parent holding company) and of
Oppenheimer Partnership Holdings, Inc. (a holding company subsidiary of the
Manager); a director (since November 2001) of OppenheimerFunds Distributor, Inc.
(a subsidiary of the Manager); Chairman and a director (since July 2001) of
Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer
agent subsidiaries of the Manager); President and a director (since July 2001)
of OppenheimerFunds Legacy Program (a charitable trust program established by
the Manager); a director of the investment advisory subsidiaries of the Manager:
OFI Institutional Asset Management, Inc. and Centennial Asset Management
Corporation (since November 2001), HarbourView Asset Management Corporation and
OFI Private Investments, Inc. (since July 2001); President (since November 1,
2001) and a director (since July 2001) of Oppenheimer Real Asset Management,
Inc.; a director (since November 2001) of Trinity Investment Management Corp.
and Tremont Advisers, Inc. (investment advisory affiliates of the Manager);
Executive Vice President (since February 1997) of Massachusetts Mutual Life
Insurance Company (the Manager's parent company); a director (since June 1995)
of DLB Acquisition Corporation (a holding company that owns the shares of David
L. Babson & Company, Inc.); formerly, Chief Operating Officer (September
2000-June 2001) of the Manager; President and trustee (November 1999-November
2001) of MML Series Investment Fund and MassMutual Institutional Funds (open-end
investment companies); a director (September 1999-August 2000) of C.M. Life
Insurance Company; President, Chief Executive Officer and director (September
1999-August 2000) of MML Bay State Life Insurance Company; a director (June
1989-June 1998) of Emerald Isle Bancorp and Hibernia Savings Bank (a
wholly-owned subsidiary of Emerald Isle Bancorp). Oversees 75 portfolios in the
OppenheimerFunds complex.
- ------------------------------------------------------------------------------------------------------------------------------
OFFICERS The address of the Officers in the chart below is as follows: for Messrs. Sah
and Zack, 498 Seventh Avenue, New York, NY 10018, for Mr. Wixted, 6803 S. Tucson
Way, Centennial, CO 80112-3924. Each Officer serves for an annual term or until
his or her earlier resignation, death or removal.
Rohit Sah, Assistant Vice President of the Manager (since 1999). Mr. Sah joined the Manager
Assistant Vice President in June 1996; an officer of 1 portfolio in the OppenheimerFunds complex.
(since 2000)
Age: 37
33 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
Brian W. Wixted, Senior Vice President and Treasurer (since March 1999) of the Manager; Treasurer
Treasurer (since 1999) (since March 1999) of HarbourView Asset Management Corporation, Shareholder
Age: 43 Services, Inc., Oppenheimer Real Asset Management Corporation, Shareholder
Financial Services, Inc., Oppenheimer Partnership Holdings, Inc., OFI Private
Investments, Inc. (since March 2000), OppenheimerFunds International Ltd. and
OppenheimerFunds plc (since May 2000) and OFI Institutional Asset Management,
Inc. (since November 2000) (offshore fund management subsidiaries of the
Manager); Treasurer and Chief Financial Officer (since May 2000) of Oppenheimer
Trust Company (a trust company subsidiary of the Manager); Assistant Treasurer
(since March 1999) of Oppenheimer Acquisition Corp. and OppenheimerFunds Legacy
Program (since April 2000); formerly Principal and Chief Operating Officer
(March 1995-March 1999), Bankers Trust Company-Mutual Fund Services Division. An
officer of 91 portfolios in the OppenheimerFunds complex.
Robert G. Zack, Senior Vice President (since May 1985) and General Counsel (since February 2002)
Secretary (since 2001) of the Manager; General Counsel and a director (since November 2001) of
Age: 55 OppenheimerFunds Distributor, Inc.; Senior Vice President and General Counsel
(since November 2001) of HarbourView Asset Management Corporation; Vice
President and a director (since November 2000) of Oppenheimer Partnership
Holdings, Inc.; Senior Vice President, General Counsel and a director (since
November 2001) of Shareholder Services, Inc., Shareholder Financial Services,
Inc., OFI Private Investments, Inc., Oppenheimer Trust Company and OFI
Institutional Asset Management, Inc.; General Counsel (since November 2001) of
Centennial Asset Management Corporation; a director (since November 2001) of
Oppenheimer Real Asset Management, Inc.; Assistant Secretary and a director
(since November 2001) of OppenheimerFunds International Ltd.; Vice President
(since November 2001) of OppenheimerFunds Legacy Program; Secretary (since
November 2001) of Oppenheimer Acquisition Corp.; formerly Acting General Counsel
(November 2001-February 2002) and Associate General Counsel (May 1981-October
2001) of the Manager; Assistant Secretary of Shareholder Services, Inc. (May
1985-November 2001), Shareholder Financial Services, Inc. (November
1989-November 2001); OppenheimerFunds International Ltd. and OppenheimerFunds
plc (October 1997-November 2001). An officer of 91 portfolios in the
OppenheimerFunds complex.
The Fund's Statement of Additional Information contains additional information
about the Fund's Trustees and is available without charge upon request.
34 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
ITEM 2. CODE OF ETHICS
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the Fund has determined that Edward
V. Regan, the Chairman of the Board's Audit Committee, possesses the technical
attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as
an "audit committee financial expert," and has designated Mr. Regan as the Audit
Committee's financial expert. Mr. Regan is an "independent" Trustee pursuant to
paragraph (a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES - NOT REQUIRED
ITEM 5. NOT APPLICABLE
ITEM 6. RESERVED
ITEM 7. NOT APPLICABLE
ITEM 8. RESERVED
ITEM 9. CONTROLS AND PROCEDURES
(a) Based on their evaluation of registrant's disclosure controls and
procedures (as defined in rule 30a-2(c) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(c)) as of August 31, 2003, registrant's
principal executive officer and principal financial officer found
registrant's disclosure controls and procedures to be appropriately
designed to ensure that information required to be disclosed by
registrant in the reports that it files under the Securities Exchange
Act of 1934 (a) is accumulated and communicated to registrant's
management, including its principal executive officer and principal
financial officer, to allow timely decisions regarding required
disclosure, and (b) is recorded, processed, summarized and reported,
within the time periods specified in the rules and forms adopted by the
U.S. Securities and Exchange Commission.
(b) There have been no significant changes in registrant's internal
controls or in other factors that could significantly affect
registrant's internal controls subsequent to the date of the most
recent evaluation as indicated, including no significant deficiencies
or material weaknesses that required corrective action.
ITEM 10. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)