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.
TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1008
(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: August 31, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN GEOGRAPHICAL HOLDINGS
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Korea, Republic of South 21.0%
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Canada 15.7
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India 11.7
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Australia 9.3
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Japan 7.4
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United Kingdom 7.0
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Hong Kong 5.5
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United States 4.8
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Germany 3.4
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Bermuda 3.3
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2005, and are based on total market value of investments.
TOP TEN COMMON STOCK HOLDINGS
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Opera Software ASA 2.6%
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NETellar plc 2.1
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Great Eastern Shipping Co. Ltd. 2.1
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Arvind Mills Ltd. 2.1
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Paladin Resources Ltd. 2.0
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Solarworld AG 1.9
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EuroZinc Mining Corp. 1.8
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Xinhua Finance Ltd. 1.8
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First Quantum Minerals Ltd. 1.7
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auFeminin.com SA 1.7
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2005, and are based on net assets.
For more current Fund holdings, please visit www.oppenheimerfunds.com.
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9 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
TOP HOLDINGS AND ALLOCATIONS
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[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
REGIONAL ALLOCATION
Asia 55.7%
United States/Canada 20.5
Europe 16.7
Latin America 6.0
Middle East/Africa 1.1
Portfolio holdings and allocations are subject to change. Percentages are as of
August 31, 2005 and are based on total market value of investments.
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10 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
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, 2005, 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, 2005, Oppenheimer International Small Company Fund delivered strong
performance on both an absolute and relative basis, results we attribute to
several factors.
In general, individual stock selection again proved to be the most
significant contributor to the Fund's performance this year, as we successfully
identified strong performers in several countries and industries. For example,
our top ten performers for the period included companies in mining, textiles,
entertainment and software, and originated in countries all over the world, such
as Germany, Korea, Australia, India, France, Japan, Sweden and the UK. The very
fact that the portfolio's top performer was Solarworld AG, a solar panel
manufacturer that posted robust returns despite overall dismal economic
conditions in its country of origin, Germany, helps support and exemplify the
success of our individual stock selection for the period.
The Fund's exposure to small-cap companies in India also substantially
added to performance for the period. Thanks to high GDP growth and low interest
rates, much improved corporate profits and corporate governance, Indian
small-cap stocks have continued to deliver very strong performance relative to
other countries.
Likewise, our Japanese small-cap stocks have performed well this year,
although not as dramatically as India. That said, Japanese small-cap growth
stocks, our preferred method of investment in the largest small cap market
outside the US, are expensive. We may need to consider value stocks in Japan in
the future.
Another positive influence to performance emanated from our exposure to
emerging-market small caps. Emerging market economies continue to benefit from
years of macroeconomic and corporate restructuring. The tailwind of strong
commodity prices has changed the fortunes of such economies and companies beyond
recognition.
On the downside, we fared badly in 3 companies: Xillix, Allen-Vanguard and
Trafficmaster. Xillix, a Canadian medical devices company, got derated as the
market became impatient with an extended FDA approval process and what it
perceived as low sales. The key problem was that Xillix has negative cashflow,
taking away any financial support to the stock. Allen-Vanguard is a Canadian
firm dealing with anti-terrorism devices. Unfortunately, funds from the U.S.
Department of Homeland Security establishment were released too slowly and the
problems were compounded when the company lost a key contract. A capital
injection was required diluting existing shareholders such as ourselves.
Trafficmaster got hit from the bankruptcy of British car company, MG Rover.
11 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
FUND PERFORMANCE DISCUSSION
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The business continues to do well, but the market chose to punish the share
price given the legacy of problems dating back to the late 1990s. In closing, we
remind shareholders that investing in foreign securities, particularly the
securities of emerging markets, poses considerable risks, including heightened
volatility, political and economic uncertainty, currency fluctuations and higher
expenses. Small-cap investments are more volatile than stocks of larger, more
established companies.
COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the
performance of a hypothetical $10,000 investment in each class of shares of the
Fund held until August 31, 2005. In the case of Class A, Class B and Class C
shares, performance is measured from the inception of the Classes on November
17, 1997. 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 reinvestments
of all dividends and capital gains distributions. Past performance cannot
guarantee future results.
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 income but does not
consider the effect of transaction costs, and none of the data in the graphs
shows the effect of taxes. The Fund's performance reflects the effects of the
Fund's 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 investments in either index.
12 | 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
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
International HSBC James Capel
Small Company World excluding U.S. MSCI EAFE
Fund (Class A) Smaller Companies Index Index
11/17/1997 9,425 10,000 10,000
11/30/1997 9,529 10,000 10,000
02/28/1998 10,509 10,806 11,233
05/31/1998 12,187 11,582 11,622
08/31/1998 10,858 9,432 10,370
11/30/1998 11,800 9,886 11,678
02/28/1999 12,646 10,135 11,822
05/31/1999 14,648 10,839 12,163
08/31/1999 17,708 12,418 13,069
11/30/1999 18,461 12,869 14,180
02/29/2000 22,241 14,425 14,868
05/31/2000 18,284 12,637 14,283
08/31/2000 18,714 13,051 14,352
11/30/2000 13,013 11,054 12,839
02/28/2001 11,953 11,503 12,296
05/31/2001 11,545 10,914 11,864
08/31/2001 10,387 10,023 10,896
11/30/2001 10,189 9,621 10,416
02/28/2002 11,134 9,347 9,992
05/31/2002 12,265 10,542 10,758
08/31/2002 10,615 9,211 9,296
11/30/2002 9,937 8,678 9,144
02/28/2003 9,219 8,402 8,276
05/31/2003 11,307 10,002 9,473
08/31/2003 13,981 11,263 10,186
11/30/2003 16,881 13,119 11,407
02/29/2004 18,742 15,203 12,764
05/31/2004 19,076 14,875 12,600
08/31/2004 18,902 14,933 12,538
11/30/2004 21,977 17,422 14,220
02/28/2005 24,593 19,461 15,206
05/31/2005 24,401 18,153 14,520
08/31/2005 26,719 19,925 15,559
AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT
8/31/05
1-Year 33.22% 5-Year 6.12% Since Inception (11/17/97) 13.45%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE,
SINCE-INCEPTION RETURNS FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE
PERIOD AFTER CONVERSION. SEE PAGE 17 FOR FURTHER INFORMATION.
13 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
FUND PERFORMANCE DISCUSSION
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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
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
International HSBC James Capel
Small Company World excluding U.S. MSCI EAFE
Fund (Class B) Smaller Companies Index Index
11/17/1997 10,000 10,000 10,000
11/30/1997 10,110 10,000 10,000
02/28/1998 11,130 10,806 11,233
05/31/1998 12,880 11,582 11,622
08/31/1998 11,450 9,432 10,370
11/30/1998 12,420 9,886 11,678
02/28/1999 13,273 10,135 11,822
05/31/1999 15,349 10,839 12,163
08/31/1999 18,523 12,418 13,069
11/30/1999 19,275 12,869 14,180
02/29/2000 23,180 14,425 14,868
05/31/2000 19,017 12,637 14,283
08/31/2000 19,445 13,051 14,352
11/30/2000 13,491 11,054 12,839
02/28/2001 12,377 11,503 12,296
05/31/2001 11,909 10,914 11,864
08/31/2001 10,697 10,023 10,896
11/30/2001 10,477 9,621 10,416
02/28/2002 11,424 9,347 9,992
05/31/2002 12,570 10,542 10,758
08/31/2002 10,859 9,211 9,296
11/30/2002 10,127 8,678 9,144
02/28/2003 9,396 8,402 8,276
05/31/2003 11,493 10,002 9,473
08/31/2003 14,184 11,263 10,186
11/30/2003 17,111 13,119 11,407
02/29/2004 18,998 15,203 12,764
05/31/2004 19,336 14,875 12,600
08/31/2004 19,160 14,933 12,538
11/30/2004 22,277 17,422 14,220
02/28/2005 24,928 19,461 15,206
05/31/2005 24,734 18,153 14,520
08/31/2005 27,083 19,925 15,559
AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT
8/31/05
1-Year 35.07% 5-Year 6.16% Since Inception (11/17/97) 13.65%
14 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
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
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
International HSBC James Capel
Small Company World excluding U.S. MSCI EAFE
Fund (Class C) Smaller Companies Index Index
11/17/1997 10,000 10,000 10,000
11/30/1997 10,110 10,000 10,000
02/28/1998 11,130 10,806 11,233
05/31/1998 12,870 11,582 11,622
08/31/1998 11,450 9,432 10,370
11/30/1998 12,420 9,886 11,678
02/28/1999 13,273 10,135 11,822
05/31/1999 15,349 10,839 12,163
08/31/1999 18,523 12,418 13,069
11/30/1999 19,265 12,869 14,180
02/29/2000 23,173 14,425 14,868
05/31/2000 19,016 12,637 14,283
08/31/2000 19,445 13,051 14,352
11/30/2000 13,496 11,054 12,839
02/28/2001 12,377 11,503 12,296
05/31/2001 11,908 10,914 11,864
08/31/2001 10,709 10,023 10,896
11/30/2001 10,488 9,621 10,416
02/28/2002 11,420 9,347 9,992
05/31/2002 12,566 10,542 10,758
08/31/2002 10,854 9,211 9,296
11/30/2002 10,135 8,678 9,144
02/28/2003 9,390 8,402 8,276
05/31/2003 11,489 10,002 9,473
08/31/2003 14,181 11,263 10,186
11/30/2003 17,095 13,119 11,407
02/29/2004 18,940 15,203 12,764
05/31/2004 19,231 14,875 12,600
08/31/2004 19,010 14,933 12,538
11/30/2004 22,063 17,422 14,220
02/28/2005 24,654 19,461 15,206
05/31/2005 24,386 18,153 14,520
08/31/2005 26,657 19,925 15,559
AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT
8/31/05
1-Year 39.23% 5-Year 6.51% Since Inception (11/17/97) 13.41%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE,
SINCE-INCEPTION RETURNS FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE
PERIOD AFTER CONVERSION. SEE PAGE 17 FOR FURTHER INFORMATION.
15 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
FUND PERFORMANCE DISCUSSION
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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
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer
International HSBC James Capel
Small Company World excluding U.S. MSCI EAFE
Fund (Class N) Smaller Companies Index Index
03/01/2001 10,000 10,000 10,000
05/31/2001 9,637 9,488 9,648
08/31/2001 8,667 8,714 8,861
11/30/2001 8,502 8,364 8,471
02/28/2002 9,276 8,126 8,126
05/31/2002 10,218 9,165 8,749
08/31/2002 8,840 8,007 7,560
11/30/2002 8,268 7,545 7,437
02/28/2003 7,663 7,304 6,730
05/31/2003 9,377 8,695 7,704
08/31/2003 11,596 9,792 8,284
11/30/2003 13,993 11,405 9,277
02/29/2004 15,518 13,216 10,380
05/31/2004 15,766 12,932 10,247
08/31/2004 15,619 12,982 10,197
11/30/2004 18,137 15,145 11,564
02/28/2005 20,280 16,918 12,366
05/31/2005 20,096 15,781 11,809
08/31/2005 21,986 17,321 12,653
AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT
8/31/05
1-Year 39.76% Since Inception (3/1/01) 19.13%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE 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 THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE,
SINCE-INCEPTION RETURNS FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE
PERIOD AFTER CONVERSION. SEE PAGE 17 FOR FURTHER INFORMATION.
16 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
NOTES
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TOTAL RETURNS AND THE ENDING ACCOUNT VALUES IN THE GRAPHS INCLUDE CHANGES IN
SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS IN A
HYPOTHETICAL INVESTMENT FOR THE PERIODS SHOWN. THE FUND'S TOTAL RETURNS SHOWN DO
NOT 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.
INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER
CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS
THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR
FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT
WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
THE FUND'S INVESTMENT STRATEGY AND FOCUS CAN CHANGE OVER TIME. THE MENTION OF
SPECIFIC FUND HOLDINGS DOES NOT CONSTITUTE A RECOMMENDATION BY OPPENHEIMERFUNDS,
INC.
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) and 2% (5-year). Because Class B shares convert to
Class A shares 72 months after purchase, the "since-inception" return for Class
B uses Class A performance for the period after conversion. 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 1-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.
17 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
FUND EXPENSES
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FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments,
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended August 31, 2005.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), redemption fees, or a $12.00 fee
imposed annually on accounts valued at less than $500.00 (subject to
18 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
exceptions described in the Statement of Additional Information). Therefore, the
"hypothetical" lines of the table are useful in comparing ongoing costs only,
and will not help you determine the relative total costs of owning different
funds. In addition, if these transactional costs were included, your costs would
have been higher.
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BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT PAID DURING
VALUE VALUE 6 MONTHS ENDED
(3/1/05) (8/31/05) AUGUST 31, 2005
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Class A Actual $1,000.00 $1,086.40 $ 6.86
- --------------------------------------------------------------------------------
Class A Hypothetical 1,000.00 1,018.65 6.64
- --------------------------------------------------------------------------------
Class B Actual 1,000.00 1,081.20 11.81
- --------------------------------------------------------------------------------
Class B Hypothetical 1,000.00 1,013.91 11.43
- --------------------------------------------------------------------------------
Class C Actual 1,000.00 1,081.20 11.34
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Class C Hypothetical 1,000.00 1,014.37 10.97
- --------------------------------------------------------------------------------
Class N Actual 1,000.00 1,084.10 8.76
- --------------------------------------------------------------------------------
Class N Hypothetical 1,000.00 1,016.84 8.47
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 184/365
(to reflect the one-half year period). Those annualized expense ratios based on
the 6-month period ended August 31, 2005 are as follows:
CLASS EXPENSE RATIOS
- ---------------------------
Class A 1.30%
- ---------------------------
Class B 2.24
- ---------------------------
Class C 2.15
- ---------------------------
Class N 1.66
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Transfer Agent that can be terminated at any time, without advance
notice. The "Financial Highlights" tables in the Fund's financial statements,
included in this report, also show the gross expense ratios, without such
waivers or reimbursements.
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19 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF INVESTMENTS August 31, 2005
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--95.5%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--13.6%
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--1.9%
IG Group Holdings
plc 1 3,500,000 $ 9,558,532
- --------------------------------------------------------------------------------
Ukbetting plc 1 4,000,000 4,182,139
----------------
13,740,671
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--0.9%
Nissen Co. Ltd. 539,800 6,806,098
- --------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS--0.9%
Fantom Co. Ltd. 1 200,000 6,631,609
- --------------------------------------------------------------------------------
MEDIA--6.4%
Balaji Telefilms Ltd. 2,250,000 7,287,905
- --------------------------------------------------------------------------------
Hurriyet Gazetecilik
ve Matbaacilik AS 3,000,000 7,892,977
- --------------------------------------------------------------------------------
S. M. Entertainment Co. 325,000 4,888,254
- --------------------------------------------------------------------------------
Television Eighteen
India Ltd. 541,667 4,529,226
- --------------------------------------------------------------------------------
Village Roadshow Ltd. 1 5,000,000 10,941,002
- --------------------------------------------------------------------------------
Yedang Entertainment
Co. Ltd. 1,2 1,000,000 11,657,445
----------------
47,196,809
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--0.8%
French Connection
Group plc 1,250,000 5,797,394
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--2.7%
Arvind Mills Ltd. 1 5,000,000 15,100,004
- --------------------------------------------------------------------------------
Himatsingka Seide Ltd. 350,000 4,506,474
----------------
19,606,478
- --------------------------------------------------------------------------------
CONSUMER STAPLES--4.5%
- --------------------------------------------------------------------------------
BEVERAGES--1.4%
Kook Soon Dang
Brewery Co. Ltd. 700,000 10,160,562
- --------------------------------------------------------------------------------
FOOD PRODUCTS--3.1%
B&B Group Holdings
Ltd. 2,3 32,000,000 6,093,944
- --------------------------------------------------------------------------------
Crown Confectionery
Co. Ltd. 2 90,000 10,830,347
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
FOOD PRODUCTS Continued
Thorntons plc 2,000,000 $ 6,120,128
----------------
23,044,419
- --------------------------------------------------------------------------------
ENERGY--4.9%
- --------------------------------------------------------------------------------
OIL & GAS--4.9%
Great Eastern
Shipping Co. Ltd. 3,500,000 15,387,280
- --------------------------------------------------------------------------------
Gulf Keystone
Petroleum Ltd. 1 9,750,000 12,478,819
- --------------------------------------------------------------------------------
Southern Cross
Resources, Inc. 1,2 8,500,000 8,377,912
----------------
36,244,011
- --------------------------------------------------------------------------------
FINANCIALS--6.4%
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--1.7%
Karnataka Bank Ltd. 4,500,000 12,071,550
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--0.8%
SFCG Co. Ltd. 25,000 6,025,574
- --------------------------------------------------------------------------------
REAL ESTATE--3.9%
Great Eagle
Holdings Ltd. 3,500,000 10,358,161
- --------------------------------------------------------------------------------
Hoosiers Corp. 2,000 7,395,472
- --------------------------------------------------------------------------------
Kenedix, Inc. 3,500 10,859,964
----------------
28,613,597
- --------------------------------------------------------------------------------
HEALTH CARE--7.0%
- --------------------------------------------------------------------------------
BIOTECHNOLOGY--0.4%
Norwood
Immunology Ltd. 1,3 5,000,000 3,244,763
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--3.4%
Elekta AB, B Shares 1 100,000 4,513,358
- --------------------------------------------------------------------------------
Imaging Dynamics
Co. Ltd. 1 2,000,000 4,683,880
- --------------------------------------------------------------------------------
Imaging Dynamics
Co. Ltd. 1 4,000,000 9,367,760
- --------------------------------------------------------------------------------
Ortivus AB, Cl. B 1 450,000 1,727,253
- --------------------------------------------------------------------------------
Xillix Technologies
Corp. 1,2 15,000,000 4,738,638
----------------
25,030,889
20 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--1.5%
Apollo Hospitals
Enterprise Ltd. 1,250,000 $ 10,664,395
- --------------------------------------------------------------------------------
PHARMACEUTICALS--1.7%
Norwood Abbey Ltd. 1 8,225,000 2,307,250
- --------------------------------------------------------------------------------
Tsumura & Co. 500,000 9,846,711
----------------
12,153,961
- --------------------------------------------------------------------------------
INDUSTRIALS--9.6%
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--5.0%
NETellar plc 1 1,000,000 15,529,798
- --------------------------------------------------------------------------------
SBI VeriTrans Co. Ltd. 1 604 1,511,923
- --------------------------------------------------------------------------------
Trafficmaster plc 1,2 10,000,000 6,871,688
- --------------------------------------------------------------------------------
Xinhua Finance Ltd. 1 5,000 13,188,778
----------------
37,102,187
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--2.4%
Electrovaya, Inc. 1,2 4,000,000 1,246,788
- --------------------------------------------------------------------------------
RHJ International Ltd. 1 100,000 2,461,231
- --------------------------------------------------------------------------------
Solarworld AG 125,000 13,663,225
----------------
17,371,244
- --------------------------------------------------------------------------------
MACHINERY--2.2%
Fong's Industries
Co. Ltd. 15,000,000 11,713,513
- --------------------------------------------------------------------------------
Railpower
Technologies Corp. 1 1,250,000 4,422,729
----------------
16,136,242
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--25.2%
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--1.7%
LG Telecom Ltd. 1 2,250,000 12,209,783
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--0.7%
Lectra 1,000,000 5,267,898
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--13.7%
Ahnlab, Inc. 2 750,000 12,267,757
- --------------------------------------------------------------------------------
auFeminin.com SA 2 600,000 12,783,597
- --------------------------------------------------------------------------------
Emotion Corp. 1,2 300,000 7,076,274
- --------------------------------------------------------------------------------
Mobilians Co. Ltd. 1,2 1,000,000 11,412,367
- --------------------------------------------------------------------------------
NCsoft Corp. 1 150,000 10,442,481
- --------------------------------------------------------------------------------
Neowiz Corp. 1,2 400,000 8,401,325
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES Continued
NHN Corp. 1 85,000 $ 11,781,465
- --------------------------------------------------------------------------------
Ninetowns Digital
World Trade Holdings
Ltd., ADR 1 1,250,000 6,800,000
- --------------------------------------------------------------------------------
Opera Software ASA 1,2 8,000,000 19,423,407
----------------
100,388,673
- --------------------------------------------------------------------------------
IT SERVICES--3.1%
Travelsky Technology
Ltd., Cl. H 13,000,000 11,324,980
- --------------------------------------------------------------------------------
United Internet AG 350,000 11,688,688
----------------
23,013,668
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--0.7%
Bluecord Technology
Corp. 1,2 966,476 5,476,036
- --------------------------------------------------------------------------------
SOFTWARE--5.3%
Certicom Corp. 1,2 2,500,000 8,887,578
- --------------------------------------------------------------------------------
Duzon Digital Ware
Co. Ltd. 1,2 600,000 9,340,953
- --------------------------------------------------------------------------------
Intelligent Wave, Inc. 5,000 11,749,999
- --------------------------------------------------------------------------------
MacDonald, Dettwiler
& Associates Ltd. 1 300,000 8,602,839
----------------
38,581,369
- --------------------------------------------------------------------------------
MATERIALS--19.1%
- --------------------------------------------------------------------------------
CHEMICALS--2.8%
Allen-Vanguard Corp. 1,2 2,400,000 4,043,638
- --------------------------------------------------------------------------------
Hikal Ltd. 650,000 9,279,814
- --------------------------------------------------------------------------------
Micro Inks Ltd. 500,000 7,155,026
----------------
20,478,478
- --------------------------------------------------------------------------------
CONTAINERS & PACKAGING--0.8%
Goodpack Ltd. 6,250,000 6,058,579
- --------------------------------------------------------------------------------
METALS & MINING--15.5%
Centennial Coal Co. 3,000,000 12,120,297
- --------------------------------------------------------------------------------
EuroZinc Mining
Corp. 1 19,000,000 13,285,034
- --------------------------------------------------------------------------------
First Quantum
Minerals Ltd. 600,000 12,828,440
- --------------------------------------------------------------------------------
Gallery Gold Ltd. 1,2 25,000,000 6,355,307
- --------------------------------------------------------------------------------
Ivernia, Inc. 1 6,906,900 8,669,627
21 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
METALS & MINING Continued
Ivernia, Inc. 1,3 3,200,000 $ 4,016,680
- --------------------------------------------------------------------------------
Macarthur Coal Ltd. 2,000,000 9,843,856
- --------------------------------------------------------------------------------
Minara Resources Ltd. 6,500,000 8,856,355
- --------------------------------------------------------------------------------
Paladin Resources
Ltd. 1 11,000,000 14,475,032
- --------------------------------------------------------------------------------
Rio Narcea Gold
Mines Ltd. 1,2 6,000,000 9,603,639
- --------------------------------------------------------------------------------
Stornoway Diamond
Corp. 1 3,600,000 3,548,292
- --------------------------------------------------------------------------------
Tiberon Minerals
Ltd. 1 2,000,000 3,875,153
- --------------------------------------------------------------------------------
Tiberon Minerals
Ltd. 1,4 3,000,000 5,812,729
----------------
113,290,441
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--3.0%
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.6%
Dacom Corp. 1 1,000,000 $ 11,858,011
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--1.4%
Danal Co. Ltd. 2 1,200,000 10,373,863
- --------------------------------------------------------------------------------
UTILITIES--2.2%
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES--0.5%
Geodynamics Ltd. 1 2,700,000 3,422,647
- --------------------------------------------------------------------------------
GAS UTILITIES--1.7%
Xinao Gas
Holdings Ltd. 18,000,000 12,622,798
----------------
Total Common Stocks
(Cost $598,338,110) 700,684,697
DATE STRIKE CONTRACTS
- -------------------------------------------------------------------------------------------------------------
OPTIONS PURCHASED--0.0%
- -------------------------------------------------------------------------------------------------------------
Norwood Immunology Ltd. Call 1
(Cost $0) 12/31/06 0.57GBP 1,250,000 98,562
UNITS
- -------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.1%
- -------------------------------------------------------------------------------------------------------------
Goodpack Ltd. Wts., Exp. 4/13/07 1 781,250 269,477
- -------------------------------------------------------------------------------------------------------------
Television Eighteen India Ltd. Wts.:
Exp. 3/15/06 1 41,667 198,101
Exp. 8/15/07 1 41,667 210,624
--------------
Total Rights, Warrants and Certificates (Cost $826,824) 678,202
PRINCIPAL
AMOUNT
- -------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--4.8%
- -------------------------------------------------------------------------------------------------------------
Undivided interest of 8.07% in joint repurchase agreement (Principal Amount/
Value $438,604,000, with a maturity value of $438,647,129) with UBS Warburg
LLC, 3.54%, dated 8/31/05, to be repurchased at $35,392,480 on 9/1/05,
collateralized by Federal National Mortgage Assn., 6%, 4/1/35, with a
value of $447,924,090 (Cost $35,389,000) $ 35,389,000 35,389,000
- -------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $634,553,934) 100.4% 736,850,461
- -------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.4) (2,663,738)
----------------------------
NET ASSETS 100.0% $734,186,723
============================
22 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
FOOTNOTES TO STATEMENT OF INVESTMENTS
STRIKE IS REPORTED IN THE FOLLOWING CURRENCY:
GBP British Pound Sterling
1. Non-income producing security.
2. 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, 2005.
The aggregate fair value of securities of affiliated companies held by the Fund
as of August 31, 2005 amounts to $175,262,503. Transactions during the period in
which the issuer was an affiliate are as follows:
SHARES SHARES
AUGUST 31, GROSS GROSS AUGUST 31,
2004 ADDITIONS REDUCTIONS 2005
- ----------------------------------------------------------------------------------------
Ahnlab, Inc. -- 750,000 -- 750,000
Allen-Vanguard Corp. -- 2,500,000 100,000 2,400,000
auFeminin.com SA 400,000 200,000 -- 600,000
B&B Group Holdings Ltd.
(formerly B&B Natural Products Ltd.) 30,000,000 2,000,000 -- 32,000,000
Bluecord Technology Corp. -- 1,000,000 33,524 966,476
Certicom Corp. -- 2,500,000 -- 2,500,000
Crisil Ltd. (formerly Credit Rating
Information Services of India Ltd.) 325,000 -- 325,000* --
Crown Confectionery Co. Ltd. -- 90,000 -- 90,000
Danal Co. Ltd. -- 1,200,000 -- 1,200,000
Duzon Digital Ware Co. Ltd. -- 700,000 100,000 600,000
Electrovaya, Inc. 3,700,000 300,000 -- 4,000,000
Emotion Corp. -- 300,000 -- 300,000
G. Accion SA de CV, Series B 6,657,000 -- 6,657,000* --
Gallery Gold Ltd. -- 25,000,000 -- 25,000,000
iTouch plc 21,000,000 -- 21,000,000* --
Mobilians Co. Ltd. -- 1,000,000 -- 1,000,000
Neowiz Corp. -- 400,000 -- 400,000
Opera Software ASA 5,000,000 3,000,000 -- 8,000,000
Rio Narcea Gold Mines Ltd. -- 6,000,000 -- 6,000,000
Southern Cross Resources, Inc. -- 8,500,000 -- 8,500,000
Trafficmaster plc 6,000,000 4,000,000 -- 10,000,000
Xillix Technologies Corp. 7,000,000 8,000,000 -- 15,000,000
Yedang Entertainment Co. Ltd. 2,400,000 300,000 1,700,000 1,000,000
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME GAIN (LOSS)
- -----------------------------------------------------------------------------------------
Ahnlab, Inc. $12,267,757 $ -- $ --
Allen-Vanguard Corp. 4,043,638 -- (260,933)
auFeminin.com SA 12,783,597 468,578 --
B&B Group Holdings Ltd.
(formerly B&B Natural Products Ltd.) 6,093,944 71,010 --
Bluecord Technology Corp. 5,476,036 -- (110,545)
Certicom Corp. 8,887,578 -- --
Crisil Ltd. (formerly Credit Rating
Information Services of India Ltd.) -- -- 4,705,323
Crown Confectionery Co. Ltd. 10,830,347 -- --
23 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME GAIN (LOSS)
- ----------------------------------------------------------------------------------------
Danal Co. Ltd. $ 10,373,863 $ -- $ --
Duzon Digital Ware Co. Ltd. 9,340,953 -- 196,668
Electrovaya, Inc. 1,246,788 -- --
Emotion Corp. 7,076,274 -- --
G. Accion SA de CV, Series B -- -- 2,632,071
Gallery Gold Ltd. 6,355,307 -- --
iTouch plc -- -- 6,020,497
Mobilians Co. Ltd. 11,412,367 -- --
Neowiz Corp. 8,401,325 -- --
Opera Software ASA 19,423,407 -- --
Rio Narcea Gold Mines Ltd. 9,603,639 -- --
Southern Cross Resources, Inc. 8,377,912 -- --
Trafficmaster plc 6,871,688 -- --
Xillix Technologies Corp. 4,738,638 -- --
Yedang Entertainment Co. Ltd. 11,657,445 -- 8,394,335
---------------------------------------
$175,262,503 $ 539,588 $21,577,416
=======================================
*Result of a tender offer.
3. Illiquid security. The aggregate value of illiquid securities as of August
31, 2005 was $13,355,387, which represents 1.82% of the Fund's net assets. See
Note 6 of Notes to Financial Statements.
4. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $5,812,729 or 0.79% of the Fund's net
assets as of August 31, 2005.
DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC HOLDINGS, AS A PERCENTAGE OF
TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS:
GEOGRAPHIC HOLDINGS VALUE PERCENT
- --------------------------------------------------------------------------------
Korea, Republic of South $154,808,532 21.0%
Canada 116,011,356 15.7
India 86,390,399 11.7
Australia 68,321,746 9.3
Japan 54,195,741 7.4
United Kingdom 51,403,004 7.0
Hong Kong 40,399,883 5.5
United States 35,389,000 4.8
Germany 25,351,913 3.4
Bermuda 24,192,332 3.3
Cayman Islands 19,988,778 2.7
Norway 19,423,407 2.6
France 18,051,495 2.5
Turkey 7,892,977 1.1
Singapore 6,328,056 0.9
Sweden 6,240,611 0.8
Belgium 2,461,231 0.3
----------------------------
Total $736,850,461 100.0%
============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF ASSETS AND LIABILITIES August 31, 2005
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $460,163,144) $ 561,587,958
Affiliated companies (cost $174,390,790) 175,262,503
--------------
736,850,461
- -------------------------------------------------------------------------------------------------------
Cash 283,930
- -------------------------------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 1,324
- -------------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 5,431,933
Investments sold 1,662,497
Interest and dividends 258,582
Other 9,524
--------------
Total assets 744,498,251
- -------------------------------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------
Unrealized depreciation on foreign currency contracts 794
- -------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 8,074,154
Shares of beneficial interest redeemed 1,227,285
Foreign capital gains tax 382,591
Distribution and service plan fees 279,060
Transfer and shareholder servicing agent fees 116,672
Shareholder communications 70,477
Trustees' compensation 28,573
Other 131,922
--------------
Total liabilities 10,311,528
- -------------------------------------------------------------------------------------------------------
NET ASSETS $ 734,186,723
==============
- -------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- -------------------------------------------------------------------------------------------------------
Paid-in capital $ 576,175,968
- -------------------------------------------------------------------------------------------------------
Accumulated net investment loss (2,901,241)
- -------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 58,987,552
- -------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies 101,924,444
--------------
NET ASSETS $ 734,186,723
==============
25 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF ASSETS AND LIABILITIES Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- --------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $552,861,084
and 28,384,298 shares of beneficial interest outstanding) $19.48
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $20.67
- --------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $78,468,722 and 4,150,526 shares
of beneficial interest outstanding) $18.91
- --------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $86,184,200 and 4,560,322 shares of
beneficial interest outstanding) $18.90
- --------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $16,672,717 and 873,669 shares of
beneficial interest outstanding) $19.08
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF OPERATIONS For the Year Ended August 31, 2005
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
INVESTMENT INCOME
- ---------------------------------------------------------------------------------------
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $248,325) $ 4,565,576
Affiliated companies 539,588
- ---------------------------------------------------------------------------------------
Interest 576,843
------------
Total investment income 5,682,007
- ---------------------------------------------------------------------------------------
EXPENSES
- ---------------------------------------------------------------------------------------
Management fees 3,746,252
- ---------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 846,886
Class B 601,144
Class C 554,999
Class N 47,923
- ---------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 662,014
Class B 193,366
Class C 141,451
Class N 35,297
- ---------------------------------------------------------------------------------------
Shareholder communications:
Class A 71,501
Class B 34,345
Class C 19,924
Class N 2,629
- ---------------------------------------------------------------------------------------
Custodian fees and expenses 250,542
- ---------------------------------------------------------------------------------------
Trustees' compensation 19,806
- ---------------------------------------------------------------------------------------
Other 106,558
------------
Total expenses 7,334,637
Less reduction to custodian expenses (3,877)
Less waivers and reimbursements of expenses (8,128)
------------
Net expenses 7,322,632
- ---------------------------------------------------------------------------------------
NET INVESTMENT LOSS (1,640,625)
27 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF OPERATIONS For the Year Ended August 31, 2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
- --------------------------------------------------------------------------------------
Net realized gain on:
Investments:
Unaffiliated companies $ 48,397,104
Affiliated companies 21,577,416
Foreign currency transactions 8,662,869
------------
Net realized gain 78,637,389
- --------------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments (net of foreign capital gains tax of $382,591) 69,045,064
Translation of assets and liabilities denominated in foreign currencies 2,244,739
------------
Net change in unrealized appreciation 71,289,803
- --------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $148,286,567
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 2005 2004
- ----------------------------------------------------------------------------------------------
OPERATIONS
- ----------------------------------------------------------------------------------------------
Net investment loss $ (1,640,625) $ (1,247,030)
- ----------------------------------------------------------------------------------------------
Net realized gain 78,637,389 56,311,208
- ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation 71,289,803 1,508,051
------------------------------
Net increase in net assets resulting from operations 148,286,567 56,572,229
- ----------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- ----------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (1,819,047) (947,584)
Class B -- --
Class C (41,765) (10,140)
Class N (36,939) (5,408)
- ----------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (5,454,270) --
Class B (1,056,552) --
Class C (901,322) --
Class N (131,786) --
- ----------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest
transactions:
Class A 245,743,351 29,773,580
Class B 16,989,797 12,191,038
Class C 37,805,237 15,110,445
Class N 9,886,814 2,615,556
- ----------------------------------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------------------------
Total increase 449,270,085 115,299,716
- ----------------------------------------------------------------------------------------------
Beginning of period 284,916,638 169,616,922
------------------------------
End of period (including accumulated net investment loss
of $2,901,241 and $622,352, respectively) $ 734,186,723 $ 284,916,638
==============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001
- --------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.14 $ 10.51 $ 7.98 $ 7.89 $ 15.23
- --------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.02) 1 (.04) .01 .01 .04
Net realized and unrealized gain (loss) 5.78 3.73 2.52 .16 (6.65)
------------------------------------------------------
Total from investment operations 5.76 3.69 2.53 .17 (6.61)
- --------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.11) (.06) -- (.08) (.11)
Distributions from net realized gain (.31) -- -- -- (.62)
------------------------------------------------------
Total dividends and/or distributions
to shareholders (.42) (.06) -- (.08) (.73)
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 19.48 $ 14.14 $ 10.51 $ 7.98 $ 7.89
======================================================
- --------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 41.35% 35.20% 31.70% 2.20% (44.50)%
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $552,861 $204,938 $132,342 $40,089 $27,991
- --------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $353,479 $207,202 $ 48,879 $35,136 $39,311
- --------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) (0.12)% (0.26)% 0.29% (0.17)% 0.36%
Total expenses 1.31% 1.34% 1.69% 2.16% 1.58%
Expenses after payments and waivers and
reduction to custodian expenses N/A 4 N/A 4 1.60% 1.88% N/A 4
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51% 124% 53% 62% 145%
1. Per share amounts calculated based on the average shares outstanding during
the period.
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%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
CLASS B YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001
- ------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.77 $ 10.28 $ 7.87 $ 7.77 $ 14.99
- ------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.17) 1 (.13) (.02) (.07) (.03)
Net realized and unrealized gain (loss) 5.62 3.62 2.43 .19 (6.57)
----------------------------------------------------
Total from investment operations 5.45 3.49 2.41 .12 (6.60)
- ------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- -- -- (.02) -- 2
Distributions from net realized gain (.31) -- -- -- (.62)
----------------------------------------------------
Total dividends and/or distributions
to shareholders (.31) -- -- (.02) (.62)
- ------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 18.91 $ 13.77 $ 10.28 $ 7.87 $ 7.77
====================================================
- ------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 40.07% 33.95% 30.62% 1.51% (44.99)%
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 78,469 $ 43,478 $ 23,355 $18,859 $14,989
- ------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 60,395 $ 37,393 $ 16,884 $16,868 $20,147
- ------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss (1.02)% (1.14)% (0.28)% (0.94)% (0.33)%
Total expenses 2.23% 2.35% 2.85% 2.93% 2.34%
Expenses after payments and waivers and
reduction to custodian expenses N/A 5,6 2.31% 2.38% 2.65% N/A 5
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate 51% 124% 53% 62% 145%
1. Per share amounts calculated based on the average shares outstanding during
the period.
2. Less than $0.005 per share.
3. 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.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
6. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS C YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001
- -----------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.76 $ 10.27 $ 7.86 $ 7.77 $ 14.97
- -----------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.16) 1 (.09) (.02) (.06) (.03)
Net realized and unrealized gain (loss) 5.63 3.59 2.43 .16 (6.55)
---------------------------------------------------
Total from investment operations 5.47 3.50 2.41 .10 (6.58)
- -----------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.02) (.01) -- (.01) --
Distributions from net realized gain (.31) -- -- -- (.62)
---------------------------------------------------
Total dividends and/or distributions
to shareholders (.33) (.01) -- (.01) (.62)
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $ 18.90 $ 13.76 $ 10.27 $ 7.86 $ 7.77
===================================================
- -----------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 40.23% 34.05% 30.66% 1.35% (44.93)%
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 86,184 $ 32,401 $12,793 $6,558 $ 5,142
- -----------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 55,819 $ 26,486 $ 7,489 $6,180 $ 7,095
- -----------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.96)% (1.00)% (0.38)% (0.95)% (0.32)%
Total expenses 2.14% 2.19% 2.69% 2.94% 2.34%
Expenses after payments and waivers and
reduction to custodian expenses N/A 4 N/A 4,5 2.39% 2.66% N/A 4
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate 51% 124% 53% 62% 145%
1. Per share amounts calculated based on the average shares outstanding during
the period.
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%.
5. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
CLASS N YEAR ENDED AUGUST 31, 2005 2004 2003 2002 2001 1
- -----------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.90 $ 10.35 $ 7.89 $ 7.87 $ 9.08
- -----------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.09) 2 (.05) (.03) .08 .07
Net realized and unrealized gain (loss) 5.67 3.64 2.49 .07 (1.28)
---------------------------------------------------
Total from investment operations 5.58 3.59 2.46 .15 (1.21)
- -----------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.09) (.04) -- (.13) --
Distributions from net realized gain (.31) -- -- -- --
---------------------------------------------------
Total dividends and/or distributions
to shareholders (.40) (.04) -- (.13) --
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $ 19.08 $ 13.90 $ 10.35 $ 7.89 $ 7.87
===================================================
- -----------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 40.76% 34.70% 31.18% 1.99% (13.33)%
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 16,673 $ 4,101 $ 1,128 $ 406 $ 6
- -----------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 9,698 $ 2,531 $ 625 $ 151 $ 2
- -----------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss) (0.51)% (0.50)% 0.25% (0.33)% 5.85%
Total expenses 1.75% 1.78% 1.96% 2.32% 1.94%
Expenses after payments and waivers and
reduction to custodian expenses 1.68% 1.75% 1.90% 2.04% N/A 5
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate 51% 124% 53% 62% 145%
1. For the period from March 1, 2001 (inception of offering) to August 31, 2001.
2. Per share amounts calculated based on the average shares outstanding during
the period.
3. 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.
4. Annualized for periods of less than one full year.
5. Reduction to custodian expenses less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33 | 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 with respect to the Fund in
general and exclusive voting rights on matters that affect that class alone.
Earnings, net assets and net asset value per share may differ due to each class
having its own expenses, such as transfer and shareholder servicing agent fees
and shareholder communications, directly attributable to that class. Class 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. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities listed
or traded on National Stock Exchanges or other domestic 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 traded on foreign exchanges are valued based on the last sale price
on the principal exchange on which the security is traded, in the country that
is identified by the portfolio pricing service, prior to the time when the
Fund's assets are valued. In the absence of a sale, the security is valued at
the official closing price on the principal exchange. Corporate, government and
municipal debt instruments having a remaining maturity in excess of sixty days
and all mortgage-backed securities will be valued at the mean between the "bid"
and "asked" prices. Futures contracts traded on a commodities or futures
exchange will be valued at the final settlement price or official closing price
on the principal exchange as reported by such principal exchange at its trading
session ending at, or most recently prior to, the time when the Fund's assets
are valued. Securities may be valued primarily
34 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
using dealer-supplied valuations or a portfolio pricing service authorized by
the Board of Trustees. Securities (including restricted securities) for which
market quotations are not readily available are valued at their fair value.
Foreign and domestic securities whose values have been materially affected by
what the Manager identifies as a significant event occurring before the Fund's
assets are valued but after the close of their respective exchanges will be fair
valued. 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. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income are translated into U.S. dollars as of the close of The New
York Stock Exchange (the Exchange), normally 4:00 P.M. Eastern time, on each day
the Exchange is open for business. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
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. 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.
35 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 securities and other investments for
federal income tax purposes.
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3 TAX PURPOSES
------------------------------------------------------------------------
$ 33,109,539 $ 27,464,713 $ 254,098 $ 97,717,772
1. The Fund had $254,098 of post-October foreign currency losses which were
deferred.
2. During the fiscal year ended August 31, 2005, the Fund did not utilize any
capital loss carryforward.
3. During the fiscal year ended August 31, 2004, the Fund utilized $49,704,115
of capital loss carryforward to offset capital gains realized in that fiscal
year.
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, 2005. Net assets of the
Fund were unaffected by the reclassifications.
REDUCTION TO REDUCTION TO
ACCUMULATED ACCUMULATED NET
INCREASE TO NET INVESTMENT REALIZED GAIN
PAID-IN CAPITAL LOSS ON INVESTMENTS 4
------------------------------------------------------------------------
$ 10,109,778 $ 1,259,487 $ 11,369,265
4. $10,109,778, including $4,583,831 of long-term capital gain, was distributed
in connection with Fund share redemptions.
36 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
The tax character of distributions paid during the years ended August 31, 2005
and August 31, 2004 was as follows:
YEAR ENDED YEAR ENDED
AUGUST 31, 2005 AUGUST 31, 2004
------------------------------------------------------------
Distributions paid from:
Ordinary income $ 1,896,893 $ 963,132
Long-term capital gain 7,544,788 --
---------------------------------
Total $ 9,441,681 $ 963,132
=================================
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of August 31, 2005 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.
Federal tax cost of securities $ 638,759,321
Federal tax cost of other investments 1,738,184
-------------
Total federal tax cost $ 640,497,505
=============
Gross unrealized appreciation $ 151,566,355
Gross unrealized depreciation (53,848,583)
-------------
Net unrealized appreciation $ 97,717,772
=============
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, 2005, the Fund's projected benefit obligations were increased by $10,531 and
payments of $288 were made to retired trustees, resulting in an accumulated
liability of $21,356 as of August 31, 2005.
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.
For purposes of determining the amount owed to the Trustee under the plan,
deferred amounts are treated as though equal dollar amounts had been invested in
shares of the Fund or in other Oppenheimer funds selected by the Trustee. The
Fund purchases shares of the funds selected for deferral by the Trustee in
amounts equal to his or her deemed investment, resulting in a Fund asset equal
to the deferred compensation liability. Such assets are included as a component
of "Other" within the asset section of the Statement of Assets and Liabilities.
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.
37 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. 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.
- --------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts at a rate equal to the Federal
Funds Rate plus 0.50%. The Reduction to Custodian Expenses line item, if
applicable, represents earnings on cash balances maintained by the Fund during
the period. Such interest expense and other custodian fees may be paid with
these earnings.
- --------------------------------------------------------------------------------
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 U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
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, 2005 YEAR ENDED AUGUST 31, 2004
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------
CLASS A
Sold 19,910,644 $ 350,648,595 19,018,040 $ 259,059,078
Dividends and/or
distributions reinvested 400,661 6,462,659 54,884 714,050
Redeemed (6,423,668) (111,367,903) 1 (17,164,279) (229,999,548)
-------------------------------------------------------------
Net increase 13,887,637 $ 245,743,351 1,908,645 $ 29,773,580
=============================================================
38 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
YEAR ENDED AUGUST 31, 2005 YEAR ENDED AUGUST 31, 2004
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------
CLASS B
Sold 2,035,409 $ 34,453,596 1,929,304 $ 26,176,829
Dividends and/or
distributions reinvested 62,820 990,049 -- --
Redeemed (1,106,018) (18,453,848) 1 (1,042,024) (13,985,791)
------------------------------------------------------------
Net increase 992,211 $ 16,989,797 887,280 $ 12,191,038
============================================================
- ---------------------------------------------------------------------------------------
CLASS C
Sold 3,030,714 $ 51,797,437 2,151,199 $ 29,064,769
Dividends and/or
distributions reinvested 52,750 830,810 729 9,296
Redeemed (877,446) (14,823,010) 1 (1,042,730) (13,963,620)
------------------------------------------------------------
Net increase 2,206,018 $ 37,805,237 1,109,198 $ 15,110,445
============================================================
- ---------------------------------------------------------------------------------------
CLASS N
Sold 706,297 $ 12,113,529 317,194 $ 4,290,090
Dividends and/or
distributions reinvested 10,338 163,864 421 5,404
Redeemed (138,073) (2,390,579) 1 (131,418) (1,679,938)
------------------------------------------------------------
Net increase 578,562 $ 9,886,814 186,197 $ 2,615,556
============================================================
1. Net of redemption fees of $16,984, $2,902, $2,682 and $466 for Class A, Class
B, Class C and Class N, respectively.
- --------------------------------------------------------------------------------
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, 2005, were as
follows:
PURCHASES SALES
-----------------------------------------------------
Investment securities $ 509,808,196 $ 234,901,246
- --------------------------------------------------------------------------------
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 an
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, 2005, the Fund paid
$974,668 to OFS for services to the Fund.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
39 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
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. The Distributor currently uses all of those fees to
pay dealers, brokers, banks and other financial institutions quarterly for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years. Fees incurred by the Fund under the Plan are detailed in the Statement of
Operations.
- --------------------------------------------------------------------------------
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 to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% per year on
Class B and Class C shares and 0.25% per year on Class N shares. The Distributor
also receives a service fee of 0.25% per year under each plan. If either the
Class B, Class C or Class N plan is terminated by the Fund or by the
shareholders of a class, the Board of Trustees and its independent trustees must
determine whether the Distributor shall be entitled to payment from the Fund of
all or a portion of the service fee and/or asset-based sales charge in respect
to shares sold prior to the effective date of such termination. The
Distributor's aggregate uncompensated expenses under the plan at August 31, 2005
for Class B, Class C and Class N shares were $995,020, $675,418 and $101,295,
respectively. Fees incurred by the Fund under the plans are detailed in the
Statement of Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- --------------------------------------------------------------------------------------------------------
August 31, 2005 $ 465,514 $ -- $ 125,575 $ 24,467 $ 10,595
- --------------------------------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit
transfer and shareholder servicing agent fees for all classes to 0.35% of
average annual net assets per class. During the year ended August 31, 2005, OFS
waived $1,700 and $6,428 for
40 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
Class B and Class N shares, respectively. This undertaking may be amended or
withdrawn at any time.
- --------------------------------------------------------------------------------
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 gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of August 31, 2005, the Fund had outstanding foreign currency contracts as
follows:
CONTRACT VALUATION AS OF
EXPIRATION AMOUNT AUGUST 31, UNREALIZED UNREALIZED
CONTRACT DESCRIPTION DATES (000S) 2005 APPRECIATION DEPRECIATION
- ----------------------------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Australian Dollar [AUD] 9/1/05-9/2/05 134AUD $ 100,749 $ 675 $ --
Hong Kong Dollar [HKD] 9/1/05 1,166HKD 150,084 -- 22
Indian Rupee [INR] 9/1/05 57,888INR 1,314,890 -- 732
Japanese Yen [JPY] 9/1/05-9/2/05 19,006JPY 171,707 649 40
---------------------------
Total unrealized appreciation and depreciation $ 1,324 $ 794
===========================
- --------------------------------------------------------------------------------
6. ILLIQUID SECURITIES
As of August 31, 2005, 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 will not invest more than 10% of its net assets (determined at the time of
purchase and reviewed periodically) in illiquid securities. Securities that are
illiquid are marked with the applicable footnote on the Statement of
Investments.
- --------------------------------------------------------------------------------
7. SUBSEQUENT EVENT
Effective September 2, 2005, the Fund will offer Class Y shares.
41 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS Continued
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8. LITIGATION
A consolidated amended complaint has been filed as putative derivative and class
actions against the Manager, OFS and the Distributor, as well as 51 of the
Oppenheimer funds (as "Nominal Defendants") including the Fund, 30 present and
former Directors or Trustees and 8 present and former officers of the funds.
This complaint, initially filed in the U.S. District Court for the Southern
District of New York on January 10, 2005 and amended on March 4, 2005,
consolidates into a single action and amends six individual previously-filed
putative derivative and class action complaints. Like those prior complaints,
the complaint alleges that the Manager charged excessive fees for distribution
and other costs, improperly used assets of the funds in the form of directed
brokerage commissions and 12b-1 fees to pay brokers to promote sales of the
funds, and failed to properly disclose the use of assets of the funds to make
those payments in violation of the Investment Company Act of 1940 and the
Investment Advisers Act of 1940. Also, like those prior complaints, the
complaint further alleges that by permitting and/or participating in those
actions, the Directors/Trustees and the Officers breached their fiduciary duties
to shareholders of the funds under the Investment Company Act of 1940 and at
common law. The complaint seeks unspecified compensatory and punitive damages,
rescission of the funds' investment advisory agreements, an accounting of all
fees paid, and an award of attorneys' fees and litigation expenses.
The defendants believe that the allegations contained in the Complaints
are without merit and that they have meritorious defenses against the claims
asserted. The defendants intend to defend these lawsuits vigorously and to
contest any claimed liability. The defendants believe that it is premature to
render any opinion as to the likelihood of an outcome unfavorable to them and
that no estimate can yet be made with any degree of certainty as to the amount
or range of any potential loss.
42 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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- --------------------------------------------------------------------------------
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, 2005, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
years in the two-year period then ended, and the financial highlights for each
of the years in the five-year 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 the standards of the Public
Company Accounting Oversight Board (United States). 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, 2005, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers 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, 2005, the results
of its operations for the year then ended, the changes in its net assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended, in
conformity with U.S. generally accepted accounting principles.
KPMG LLP
Denver, Colorado
October 17, 2005
43 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
FEDERAL INCOME TAX INFORMATION Unaudited
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- --------------------------------------------------------------------------------
In early 2006, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2005. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Dividends and distributions of $0.4199, $0.3149, $0.3295 and $0.4031 per
share were paid to Class A, Class B, Class C and Class N shareholders,
respectively, on December 6, 2004, of which $0.3149 was designated as a "capital
gain distribution" for federal income tax purposes. Whether received in stock or
in cash, the capital gain distribution should be treated by shareholders as a
gain from the sale of the capital assets held for more than one year (long-term
capital gains).
None of the dividends paid by the Fund during the year ended August 31,
2005 are eligible for the corporate dividend-received deduction.
A portion, if any, of the dividends paid by the Fund during the fiscal
year ended August 31, 2005 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. $3,966,897 of the Fund's fiscal year taxable income may be eligible
for the lower individual income tax rates. In early 2006, shareholders of record
will receive information regarding the percentage of distributions that are
eligible for lower individual income tax rates.
The Fund has elected the application of Section 853 of the Internal
Revenue Code to permit shareholders to take a federal income tax credit or
deduction, at their option, on a per share basis for an aggregate amount of
$2,353,346 of foreign income taxes paid by the Fund during the fiscal year ended
August 31, 2005. A separate notice will be mailed to each shareholder, which
will reflect the proportionate share of such foreign taxes which must be treated
by shareholders as gross income for federal income tax purposes.
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.
44 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
REPORT OF SHAREHOLDER MEETING Unaudited
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On August 17, 2005, a joint special meeting of shareholders was held at which
the eleven Trustees identified below were elected (Proposal No. 1). The meeting
was adjourned until September 16, 2005 to allow the Fund to solicit additional
votes for the proposals to change, add or eliminate certain fundamental
investment policies (Proposal No. 2) as described in the Fund's proxy statement
for that meeting. On September 16, 2005, the meeting was reconvened and the
proposals regarding changes in, or the addition or elimination of, certain
fundamental investment policies were approved (Proposal No. 2). The following is
a report of the votes cast:
- --------------------------------------------------------------------------------
PROPOSAL NO.1
NOMINEE FOR WITHHELD TOTAL
- --------------------------------------------------------------------------------
TRUSTEES
Matthew P. Fink 17,989,942.848 326,188.190 18,316,131.038
Robert G. Galli 17,979,195.742 336,935.296 18,316,131.038
Phillip A. Griffiths 17,985,201.646 330,929.392 18,316,131.038
Mary F. Miller 17,977,559.713 338,571.325 18,316,131.038
Joel W. Motley 17,987,475.736 328,655.302 18,316,131.038
John V. Murphy 17,990,459.673 325,671.365 18,316,131.038
Kenneth A. Randall 17,971,316.575 344,814.463 18,316,131.038
Russell S. Reynolds, Jr. 17,964,742.515 351,388.523 18,316,131.038
Joseph M. Wikler 17,982,932.808 333,198.230 18,316,131.038
Peter I. Wold 17,986,979.675 329,151.363 18,316,131.038
Clayton K. Yeutter 17,947,748.964 368,382.074 18,316,131.038
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PROPOSAL NO. 2: TO APPROVE A MODIFICATION TO THE FUND'S FUNDAMENTAL INVESTMENT
OBJECTIVE
BROKER
FOR AGAINST ABSTAIN NON-VOTES TOTAL
- --------------------------------------------------------------------------------
2A: Borrowing
11,357,048.968 575,601.622 573,456.552 3,693,240.000 16,199,347.142
2B: Concentration of Investments
11,477,333.388 469,231.246 559,542.508 3,693,240.000 16,199,347.142
2C: Diversification of Investments
11,535,773.396 427,842.315 542,491.431 3,693,240.000 16,199,347.142
2H: Lending
11,255,923.786 650,600.302 599,583.054 3,693,240.000 16,199,347.142
2K: Real Estate and Commodities
11,442,952.000 470,365.044 592,790.098 3,693,240.000 16,199,347.142
2L: Senior Securities
11,443,505.771 446,045.697 616,555.674 3,693,240.000 16,199,347.142
45 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
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- --------------------------------------------------------------------------------
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
1.800.525.7048, (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 is required to
file 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 Fund's voting record is
available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at
www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
46 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited
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- --------------------------------------------------------------------------------
Each year, the Board of Trustees (the "Board"), including a majority of the
independent Trustees, is required to determine whether to renew the Fund's
advisory agreement. The Investment Company Act of 1940, as amended, requires
that the Board request and evaluate, and that the Manager provide, such
information as may be reasonably necessary to evaluate the terms of the advisory
agreement. The Board employs an independent consultant to prepare a report that
provides information, including comparative information, that the Board requests
for this purpose. In addition, the Board receives information throughout the
year regarding Fund services, fees, expenses and performance.
NATURE AND EXTENT OF SERVICES. In considering the renewal of the Fund's
advisory agreement for the current year, the Board evaluated the nature and
extent of the services provided by the Manager and its affiliates. The Manager
provides the Fund with office space, facilities and equipment; administrative,
accounting, clerical, legal and compliance personnel; securities trading
services; oversight of third party service providers and the services of the
portfolio manager and the Manager's investment team, who provide research,
analysis and other advisory services in regard to the Fund's investments.
QUALITY OF SERVICES. The Board also considered the quality of the services
provided and the quality of the Manager's resources that were available to the
Fund. The Board noted that the Manager has had over forty years of experience as
an investment adviser and that its assets under management rank it among the top
mutual fund managers in the United States. The Board evaluated the Manager's
administrative, accounting, legal and compliance services and information the
Board received regarding the experience and professional qualifications of the
Manager's personnel and the size and functions of its staff. The Board members
also considered their experiences as directors or trustees of the Fund and other
funds advised by the Manager. The Board received and reviewed information
regarding the quality of services provided by affiliates of the Manager, which
it also reviews at other times during the year in connection with the renewal of
the Fund's service agreements. The Board considered that the relatively low
redemption rate for funds advised by the Manager provided an indication of
shareholder satisfaction with the overall level of services provided by the
Manager. The Board was aware that there are alternatives to retaining the
Manager.
PORTFOLIO MANAGEMENT SERVICES AND PERFORMANCE. In its evaluation of the
quality of the portfolio management services to be provided, the Board
considered the experience of Rohit Sah and the Manager's Global investment team
and analysts. Mr. Sah has been primarily responsible for the day-to-day
management of the Fund's portfolio since January 2004. He has been a Vice
President of the Fund and of the Manager since 2004
47 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
and has had over nine years of experience managing fixed income and global/
international investments.
The Board also reviewed information, prepared by the Manager and by the
independent consultant, comparing the Fund's historical performance to relevant
market indices and to the performance of other international small/mid cap
growth funds advised by other investment advisers. The Board also receives and
reviews comparative performance information regarding the Fund and other funds
at each Board meeting. The Board considered that the Fund's one-year and
three-year performance were better than its peer group average, although its
five-year performance was below its peer group average.
MANAGEMENT FEES AND EXPENSES. The Board also reviewed information,
including comparative information, regarding the fees paid to the Manager and
its affiliates and the other expenses borne by the Fund. The independent
consultant provided comparative data in regard to the fees and expenses of the
Fund, other international small/mid cap growth and core funds and other funds
with comparable asset levels and distribution features. The Board considered
that the Fund's management fees and total expenses were lower than its peer
group average. In addition, the Board evaluated the comparability of the fees
charged and the services provided to the Fund to the fees charged and services
provided to other types of entities advised by the Manager.
PROFITABILITY OF THE MANAGER AND AFFILIATES. The Board also reviewed
information regarding the cost of services provided by the Manager and its
affiliates and the Manager's profitability. The Board considered that the
Manager must be able to pay and retain experienced professional personnel at
competitive rates to provide services to the Fund and that maintaining the
financial viability of the Manager is important in order for the Manager to
continue to provide significant services to the Fund and its shareholders. In
addition the Board considered information that was provided regarding the direct
and indirect benefits the Manager receives as a result of its relationship with
the Fund, including compensation paid to the Manager's affiliates and research
provided to the Manager in connection with permissible brokerage arrangements
(soft dollar arrangements).
ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may
realize economies of scale in managing and supporting the Fund and the current
level of Fund assets in relation to the Fund's breakpoint schedule for its
management fees. The Board considered that the Fund has recently experienced
significant asset growth but that, based on current asset levels, the Fund is
not yet approaching its last management fee breakpoint.
48 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
CONCLUSIONS. These factors were also considered by the independent
Trustees meeting separately from the full Board, assisted by experienced counsel
to the Fund and the independent Trustees. Fund counsel is independent of the
Manager within the meaning and intent of the Securities and Exchange Commission
Rules.
Based on its review of the information it received and its evaluations
described above, the Board, including a majority of the independent Trustees,
concluded that the nature, extent and quality of the services provided to the
Fund by the Manager are a benefit to the Fund and in the best interest of the
Fund's shareholders and that the amount and structure of the compensation
received by the Manager and its affiliates are reasonable in relation to the
services provided. Accordingly, the Board elected to continue the advisory
agreement for another year. In arriving at this decision, the Board did not
single out any factor or factors as being more important than others, but
considered all of the factors together. The Board judged the terms and
conditions of the advisory agreement, including the management fee, in light of
all of the surrounding circumstances.
49 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
TRUSTEES AND OFFICERS Unaudited
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- ----------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS; OTHER
THE FUND, LENGTH OF TRUSTEESHIPS/DIRECTORSHIPS HELD; NUMBER OF PORTFOLIOS IN THE FUND COMPLEX
SERVICE, AGE CURRENTLY OVERSEEN
INDEPENDENT TRUSTEES THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY,
CENTENNIAL, CO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, OR
UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
CLAYTON K. YEUTTER, Director of American Commercial Lines (barge company) (since January 2005);
Chairman of the Board of Attorney at Hogan & Hartson (law firm) (since June 1993); Director of
Trustees (since 2003); Danielson Holding Corp. (waste-to-energy company) (since 2002); Director of
Trustee (since 1997) Weyerhaeuser Corp. (1999-April 2004); Director of Caterpillar, Inc.
Age: 74 (1993-December 2002); Director of ConAgra Foods (1993-2001); Director of
Texas Instruments (1993-2001); Director of FMC Corporation (1993-2001).
Oversees 38 portfolios in the OppenheimerFunds complex.
MATTHEW P. FINK, Trustee of the Committee for Economic Development (policy research
Trustee (since 2005) foundation) (since 2005); Director of ICI Education Foundation (education
Age: 64 foundation) (since October 1991); President of the Investment Company
Institute (trade association) (1991-2004); Director of ICI Mutual Insurance
Company (insurance company) (1991-2004). Oversees 38 portfolios in the
OppenheimerFunds complex.
ROBERT G. GALLI, A trustee or director of other Oppenheimer funds. Oversees 48 portfolios in
Trustee (since 1997) the OppenheimerFunds complex.
Age: 72
PHILLIP A. GRIFFITHS, Director of GSI Lumonics Inc. (precision medical equipment supplier) (since
Trustee (since 1999) 2001); Trustee of Woodward Academy (since 1983); Senior Advisor of The
Age: 67 Andrew W. Mellon Foundation (since 2001); Member of the National Academy of
Sciences (since 1979); Member of the American Philosophical Society (since
1996); Council on Foreign Relations (since 2002); Director of the Institute
for Advanced Study (1991-2004); Director of Bankers Trust New York
Corporation (1994-1999). Oversees 38 portfolios in the OppenheimerFunds
complex.
MARY F. MILLER, Trustee of the American Symphony Orchestra (not-for-profit) (since October
Trustee (since 2004) 1998); and Senior Vice President and General Auditor of American Express
Age: 62 Company (financial services company) (July 1998-February 2003). Oversees 38
portfolios in the OppenheimerFunds complex.
JOEL W. MOTLEY, Director of Columbia Equity Financial Corp. (privately-held financial
Trustee (since 2002) adviser) (since 2002); Managing Director of Carmona Motley, Inc.
Age: 53 (privately-held financial adviser) (since January 2002); Managing Director
of Carmona Motley Hoffman Inc. (privately-held financial adviser) (January
1998-December 2001). Oversees 38 portfolios in the OppenheimerFunds complex.
KENNETH A. RANDALL, Director of Dominion Resources, Inc. (electric utility holding company)
Trustee (since 1997) (since February 1972); Former Director of Prime Retail, Inc. (real estate
Age: 78 investment trust), Dominion Energy Inc. (electric power and oil & gas
producer), Lumbermens Mutual Casualty Company, American Motorists
Insurance Company and American Manufacturers Mutual Insurance Company;
Former President and Chief Executive Officer of The Conference Board, Inc.
(international economic and business research). Oversees 38 portfolios in
the OppenheimerFunds complex.
50 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
RUSSELL S. REYNOLDS, JR., Chairman of The Directorship Search Group, Inc. (corporate governance
Trustee (since 1997) consulting and executive recruiting) (since 1993); Life Trustee of
Age: 73 International House (non-profit educational organization); Former Trustee
of The Historical Society of the Town of Greenwich. Oversees 38 portfolios
in the OppenheimerFunds complex.
JOSEPH M. WIKLER, Director of the following medical device companies: Medintec (since 1992)
Trustee (since 2005) and Cathco (since 1996); Director of Lakes Environmental Association (since
Age: 64 1996); Member of the Investment Committee of the Associated Jewish
Charities of Baltimore (since 1994); Director of Fortis/Hartford mutual
funds (1994-December 2001). Oversees 39 portfolios in the OppenheimerFunds
complex.
PETER I. WOLD, President of Wold Oil Properties, Inc. (oil and gas exploration and
Trustee (since 2005) production company) (since 1994); Vice President, Secretary and Treasurer
Age: 57 of Wold Trona Company, Inc. (soda ash processing and production) (since
1996); Vice President of Wold Talc Company, Inc. (talc mining) (since
1999); Managing Member of Hole-in-the-Wall Ranch (cattle ranching) (since
1979); Director and Chairman of the Denver Branch of the Federal Reserve
Bank of Kansas City (1993-1999); and Director of PacifiCorp. (electric
utility) (1995-1999). Oversees 39 portfolios in the OppenheimerFunds
complex.
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INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY
AND OFFICER STREET, 11TH FLOOR, NEW YORK, NY 10281-1008. MR. MURPHY SERVES AS A TRUSTEE
FOR AN INDEFINITE TERM AND AS AND OFFICER FOR AN ANNUAL TERM, OR UNTIL HIS
RESIGNATION, RETIREMENT, DEATH OR REMOVAL. MR. MURPHY IS AN INTERESTED
TRUSTEE DUE TO HIS POSITIONS WITH OPPENHEIMERFUNDS, INC. AND ITS AFFILIATES.
JOHN V. MURPHY, Chairman, Chief Executive Officer and Director (since June 2001) and
President and Principal President (since September 2000) of the Manager; President and Director or
Executive Officer (since Trustee of other Oppenheimer funds; President and Director of OAC and of
2001) and Trustee (since Oppenheimer Partnership Holdings, Inc. (holding company subsidiary of the
2001) Manager) (since July 2001); Director of OppenheimerFunds Distributor, Inc.
Age: 56 (subsidiary of the Manager) (since November 2001); Chairman and Director of
Shareholder Services, Inc. and of Shareholder Financial Services, Inc.
(transfer agent subsidiaries of the Manager) (since July 2001); President
and Director of OppenheimerFunds Legacy Program (charitable trust program
established by the Manager) (since July 2001); Director of the following
investment advisory subsidiaries of the Manager: OFI Institutional Asset
Management, Inc., Centennial Asset Management Corporation, Trinity
Investment Management Corporation and Tremont Capital Management, Inc.
(since November 2001), HarbourView Asset Management Corporation and OFI
Private Investments, Inc. (since July 2001); President (since November 1,
2001) and Director (since July 2001) of Oppenheimer Real Asset Management,
Inc.; Executive Vice President of Massachusetts Mutual Life Insurance
Company (OAC's parent company) (since February 1997); Director of DLB
Acquisition Corporation (holding company parent of Babson Capital
Management LLC) (since June 1995); Member of the Investment Company
Institute's Board of Governors (since October 3, 2003); Chief Operating
Officer of the Manager (September 2000-June 2001); President and Trustee of
MML Series Investment Fund and MassMutual Select Funds (open-end investment
companies) (November 1999-November 2001); Director of C.M. Life Insurance
Company (September 1999-August 2000); President, Chief Executive Officer
and Director of MML Bay State Life Insurance Company (September 1999-August
2000); Director of Emerald Isle Bancorp and Hibernia Savings Bank
(wholly-owned subsidiary of Emerald Isle Bancorp) (June 1989-June 1998).
Oversees 87 portfolios as a Director or Trustee and as an officer in the
OppenheimerFunds complex.
51 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
OTHER OFFICERS THE ADDRESS OF THE OFFICERS IN THE CHART BELOW IS AS FOLLOWS: FOR MR. SAH
OF THE FUND AND MR. ZACK, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH FLOOR,
NEW YORK, NY 10281-1008, AND FOR MR. WIXTED AND MR. VANDEHEY, 6803 S.
TUCSON WAY, CENTENNIAL, CO 80112-3924. EACH OFFICER SERVES FOR AN ANNUAL
TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
ROHIT SAH, Vice President of the Manager since January 2004; an officer of 1 portfolio
Vice President in the OppenheimerFunds complex. Formerly Assistant Vice President and
(since 2004) Assistant Portfolio Manager of the Manager (December 2000 - December 2003).
Age: 40 An equity analyst of the Manager (June 1996-December 2000).
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since
Vice President and Chief March 2004); Vice President of OppenheimerFunds Distributor, Inc.,
Compliance Officer (since Centennial Asset Management Corporation and Shareholder Services, Inc.
2004) (since June 1983). Former Vice President and Director of Internal Audit of
Age: 55 the Manager (1997-February 2004). An officer of 87 portfolios in the
OppenheimerFunds complex.
BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999);
Treasurer and Principal Treasurer of the following: HarbourView Asset Management Corporation,
Financial and Accounting Shareholder Financial Services, Inc., Shareholder Services, Inc.,
Officer (since 1999) Oppenheimer Real Asset Management Corporation, and Oppenheimer Partnership
Age: 46 Holdings, Inc. (since March 1999), OFI Private Investments, Inc. (since
March 2000), OppenheimerFunds International Ltd. (since May 2000),
OppenheimerFunds plc (since May 2000), OFI Institutional Asset Management,
Inc. (since November 2000), and OppenheimerFunds Legacy Program (charitable
trust program established by the Manager) (since June 2003); Treasurer and
Chief Financial Officer of OFI Trust Company (trust company subsidiary of
the Manager) (since May 2000); Assistant Treasurer of the following: OAC
(since March 1999), Centennial Asset Management Corporation (March
1999-October 2003) and OppenheimerFunds Legacy Program (April 2000-June
2003); Principal and Chief Operating Officer of Bankers Trust
Company-Mutual Fund Services Division (March 1995-March 1999). An officer
of 87 portfolios in the OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since
Secretary (since 2001) March 2002) of the Manager; General Counsel and Director of the Distributor
Age: 57 (since December 2001); General Counsel of Centennial Asset Management
Corporation (since December 2001); Senior Vice President and General
Counsel of HarbourView Asset Management Corporation (since December 2001);
Secretary and General Counsel of OAC (since November 2001); Assistant
Secretary (since September 1997) and Director (since November 2001) of
OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice
President and Director of Oppenheimer Partnership Holdings, Inc. (since
December 2002); Director of Oppenheimer Real Asset Management, Inc. (since
November 2001); Senior Vice President, General Counsel and Director of
Shareholder Financial Services, Inc. and Shareholder Services, Inc. (since
December 2001); Senior Vice President, General Counsel and Director of OFI
Private Investments, Inc. and OFI Trust Company (since November 2001); Vice
President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice
President and General Counsel of OFI Institutional Asset Management, Inc.
(since November 2001); Director of OppenheimerFunds (Asia) Limited (since
December 2003); Senior Vice President (May 1985-December 2003), Acting
General Counsel (November 2001-February 2002) and Associate General Counsel
(May 1981-October 2001) of the Manager; Assistant Secretary of the
following: Shareholder Services, Inc. (May 1985-November 2001),
52 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
ROBERT G. ZACK, Shareholder Financial Services, Inc. (November 1989-November 2001), and
Continued OppenheimerFunds International Ltd. (September 1997-November 2001). An
officer of 87 portfolios in the OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND OFFICERS AND IS AVAILABLE WITHOUT CHARGE UPON
REQUEST, BY CALLING 1.800.525.7048.
53 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees of the registrant has determined that the registrant does
not have an audit committee financial expert serving on its Audit Committee. In
this regard, no member of the Audit Committee was identified as having all of
the technical attributes identified in Instruction 2(b) to Item 3 of Form N-CSR
to qualify as an "audit committee financial expert," whether through the type of
specialized education or experience described in that Instruction. The Board
has concluded that while the members of the Audit Committee collectively have
the necessary attributes and experience required to serve effectively as an
Audit Committee, no single member possesses all of the required technical
attributes through the particular methods of education or experience set forth
in the Instructions to be designated as an audit committee financial expert.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The principal accountant for the audit of the registrant's annual financial
statements billed $18,000 in fiscal 2005 and $18,000 in fiscal 2004.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed $132,059 in fiscal 2005 and $39,500 in fiscal 2004 to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
Such services: internal control reviews.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees in fiscal 2005 and $11,825 in fiscal 2004 to the
registrant during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed $5,000 in fiscal 2005 and $6,000 in fiscal 2004 to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
Such services: Computations of capital gain tax liability, preparation of tax
returns, preparation of Form 5500 and tax consultations on pass through of
foreign withholding taxes and mortgage dollar roll transactions.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years.
The principal accountant for the audit of the registrant's annual financial
statements billed no such fees during the last two fiscal years to the
registrant's investment adviser or any entity controlling, controlled by, or
under common control with the adviser that provides ongoing services to the
registrant.
(e) (1) During its regularly scheduled periodic meetings, the registrant's
audit committee will pre-approve all audit, audit-related, tax and other
services to be provided by the principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its Chairman
for any subsequent new engagements that arise between regularly scheduled
meeting dates provided that any fees such pre-approved are presented to
the audit committee at its next regularly scheduled meeting.
Under applicable laws, pre-approval of non-audit services maybe waived
provided that: 1) the aggregate amount of all such services provided
constitutes no more than five percent of the total amount of fees paid by
the registrant to it principal accountant during the fiscal year in which
services are provided 2) such services were not recognized by the
registrant at the time of engagement as non-audit services and 3) such
services are promptly brought to the attention of the audit committee of
the registrant and approved prior to the completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed $137,059 in fiscal 2005 and $57,325 in fiscal
2004 to the registrant and the registrant's investment adviser or any
entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant related to
non-audit fees. Those billings did not include any prohibited non-audit
services as defined by the Securities Exchange Act of 1934.
The registrant's audit committee of the board of trustees has considered whether
the provision of non-audit services that were rendered to the registrant's
investment adviser, and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal accountant's
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
THE FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF
DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS
1. The Fund's Governance Committee (the "Committee") will evaluate potential
Board candidates to assess their qualifications. The Committee shall have
the authority, upon approval of the Board, to retain an executive search
firm to assist in this effort. The Committee may consider recommendations
by business and personal contacts of current Board members and by
executive search firms which the Committee may engage from time to time
and may also consider shareholder recommendations. The Committee may
consider the advice and recommendation of the Funds' investment manager
and its affiliates in making the selection.
2. The Committee shall screen candidates for Board membership. The Committee
has not established specific qualifications that it believes must be met
by a trustee nominee. In evaluating trustee nominees, the Committee
considers, among other things, an individual's background, skills, and
experience; whether the individual is an "interested person" as defined in
the Investment Company Act of 1940; and whether the individual would be
deemed an "audit committee financial expert" within the meaning of
applicable SEC rules. The Committee also considers whether the
individual's background, skills, and experience will complement the
background, skills, and experience of other nominees and will contribute
to the Board. There are no differences in the manner in which the
Committee evaluates nominees for trustees based on whether the nominee is
recommended by a shareholder.
3. The Committee may consider nominations from shareholders for the Board at
such times as the Committee meets to consider new nominees for the Board.
The Committee shall have the sole discretion to determine the candidates
to present to the Board and, in such cases where required, to
shareholders. Recommendations for trustee nominees should, at a minimum,
be accompanied by the following:
o the name, address, and business, educational, and/or other pertinent
background of the person being recommended;
o a statement concerning whether the person is an "interested person"
as defined in the Investment Company Act of 1940;
o any other information that the Funds would be required to include in
a proxy statement concerning the person if he or she was nominated;
and
o the name and address of the person submitting the recommendation
and, if that person is a shareholder, the period for which that
person held Fund shares.
The recommendation also can include any additional information which the
person submitting it believes would assist the Committee in evaluating the
recommendation.
4. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company (the parent company of the
Funds' investment adviser) would be deemed an "interested person" under
the Investment Company Act of 1940. In addition, certain other
relationships with Massachusetts Mutual Life Insurance Company or its
subsidiaries, with registered broker-dealers, or with the Funds' outside
legal counsel may cause a person to be deemed an "interested person."
5. Before the Committee decides to nominate an individual as a trustee,
Committee members and other directors customarily interview the individual
in person. In addition, the individual customarily is asked to complete a
detailed questionnaire which is designed to elicit information which must
be disclosed under SEC and stock exchange rules and to determine whether
the individual is subject to any statutory disqualification from serving
as a trustee of a registered investment company.
ITEM 11. CONTROLS AND PROCEDURES.
Based on their evaluation of the registrant's disclosure controls and procedures
(as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR
270.30a-3(c)) as of August 31, 2005, the registrant's principal executive
officer and principal financial officer found the registrant's disclosure
controls and procedures to provide reasonable assurances that information
required to be disclosed by the 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.
There have been no changes in the registrant's internal controls over financial
reporting that occurred during the registrant's second fiscal quarter of the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a) (1) Exhibit attached hereto.
(2) Exhibits attached hereto.
(3) Not applicable.
(b) Exhibit attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Oppenheimer International Small Company Fund
By: /s/ John V. Murphy
------------------
John V. Murphy
Principal Executive Officer
Date: October 17, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John V. Murphy
------------------
John V. Murphy
Principal Executive Officer
Date: October 17, 2005
By: /s/ Brian W. Wixted
-------------------
Brian W. Wixted
Principal Financial Officer
Date: October 17, 2005