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
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OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
--------------------------------------------
(Exact name of registrant as specified in charter)
6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924
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(Address of principal executive offices) (Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1008
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(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
--------------
Date of fiscal year end: AUGUST 31
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Date of reporting period: FEBRUARY 28, 2007
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ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN GEOGRAPHICAL HOLDINGS
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Canada 38.1%
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Japan 8.0
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Australia 7.0
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Hong Kong 6.3
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United States 5.9
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India 5.5
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Korea, Republic of South 4.9
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China 3.8
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Cayman Islands 3.5
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Brazil 3.3
Portfolio holdings and allocations are subject to change. Percentages are as of
February 28, 2007, and are based on the total market value of investments.
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TOP TEN COMMON STOCK HOLDINGS
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HudBay Minerals, Inc. 2.8%
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Lundin Mining Corp. 2.8
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UrAsia Energy Ltd. 2.7
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Kenedix, Inc. 2.7
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First Quantum Minerals Ltd. 2.5
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Travelsky Technology Ltd. 2.3
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RISA Partners, Inc. 2.1
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Fortescue Metals Group Ltd. 2.0
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Minara Resources Ltd. 2.0
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Arques Industries AG 1.9
Portfolio holdings and allocations are subject to change. Percentages are as of
February 28, 2007, and are based on net assets.
For up-to-date Top 10 Fund holdings, please visit www.oppenheimerfunds.com.
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10 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
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REGIONAL ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
United States/Canada 44.0%
Asia 36.3
Europe 8.4
Latin America 6.8
Emerging Europe 2.3
Middle East/Africa 2.2
Portfolio holdings and allocations are subject to change. Percentages are as of
February 28, 2007, and are based on the total market value of investments.
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11 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
NOTES
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Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
Cumulative total returns are not annualized. 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.
CLASS Y shares of the Fund were first publicly offered on 9/7/05. Class Y shares
are offered only to certain institutional investors under special agreements
with the Distributor.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
12 | 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 February 28, 2007.
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
13 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
FUND EXPENSES
- --------------------------------------------------------------------------------
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
(9/1/06) (2/28/07) FEBRUARY 28, 2007
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Class A Actual $ 1,000.00 $ 1,210.80 $ 6.49
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Class A Hypothetical 1,000.00 1,018.94 5.92
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Class B Actual 1,000.00 1,205.70 11.15
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Class B Hypothetical 1,000.00 1,014.73 10.19
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Class C Actual 1,000.00 1,206.10 10.77
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Class C Hypothetical 1,000.00 1,015.08 9.84
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Class N Actual 1,000.00 1,208.00 8.85
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Class N Hypothetical 1,000.00 1,016.81 8.08
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Class Y Actual 1,000.00 1,213.10 4.40
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Class Y Hypothetical 1,000.00 1,020.83 4.02
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 181/365
(to reflect the one-half year period). Those annualized expense ratios,
excluding indirect expenses from affiliated fund, based on the 6-month period
ended February 28, 2007 are as follows:
CLASS EXPENSE RATIOS
- ---------------------------------------------
Class A 1.18%
- ---------------------------------------------
Class B 2.03
- ---------------------------------------------
Class C 1.96
- ---------------------------------------------
Class N 1.61
- ---------------------------------------------
Class Y 0.80
The expense ratios reflect voluntary waivers or reimbursements of expenses by
the Fund's Manager 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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14 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF INVESTMENTS February 28, 2007 / Unaudited
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VALUE
SHARES SEE NOTE 1
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COMMON STOCKS--94.2%
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CONSUMER DISCRETIONARY--6.5%
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AUTO COMPONENTS--0.3%
Azure Dynamics Corp. 1,2,3 21,000,000 $ 8,169,460
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HOUSEHOLD DURABLES--0.9%
Gafisa SA 1,500,000 21,843,905
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INTERNET & CATALOG RETAIL--1.4%
Submarino SA 1,000,000 32,963,924
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MEDIA--2.2%
Network 18 Fincap Ltd. 1 720,000 5,494,116
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PVR Ltd. 3 2,000,000 8,205,534
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Television Eighteen India Ltd. 840,000 10,942,292
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Village Roadshow Ltd. 5,000,000 13,630,633
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Village Roadshow Ltd., Cl. A, Preference 5,000,000 13,315,474
-----------------
51,588,049
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MULTILINE RETAIL--1.4%
Parkson Retail Group Ltd. 3,000,000 18,123,640
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Robinson Department Store Public Co. Ltd. 1 50,000,000 14,474,651
-----------------
32,598,291
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SPECIALTY RETAIL--0.1%
Shinwa Art Auction Co. Ltd. 1 1,500 2,593,912
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TEXTILES, APPAREL & LUXURY GOODS--0.2%
Himatsingka Seide Ltd. 1,500,000 4,133,258
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CONSUMER STAPLES--2.0%
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BEVERAGES--0.2%
Serm Suk Public Co. Ltd. 7,010,000 3,893,872
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FOOD & STAPLES RETAILING--0.9%
Wumart Stores, Inc. 24,000,000 21,984,651
VALUE
SHARES SEE NOTE 1
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FOOD PRODUCTS--0.9%
China Vanguard Group Ltd. 3 165,000,000 $ 8,553,053
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Crown Confectionery Co. Ltd. 3 110,000 12,965,913
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21,518,966
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ENERGY--18.2%
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OIL & GAS--18.2%
Addax Petroleum Corp. 4 1,000,000 28,941,518
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Addax Petroleum Corp. 500,000 14,470,759
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Calvalley Petroleum, Inc., Cl. A 1,3 6,000,000 34,422,025
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Crew Energy, Inc. 1 1,500,000 13,530,267
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Cyries Energy, Inc. 1 2,000,000 18,142,955
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First Calgary Petroleums Ltd. 1 7,000,000 37,106,703
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Great Eastern Shipping Co. Ltd.(The) 1,600,000 7,532,919
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Gulf Keystone Petroleum Ltd. 1,3 17,000,000 23,926,783
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Paladin Resources Ltd. 1 6,000,000 44,069,669
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Petrolifera Petroleum Ltd. 1 2,000,000 29,668,263
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Sterling Energy plc 1 60,000,000 19,957,457
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SXR Uranium One, Inc. 1 3,000,000 43,450,752
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UraMin, Inc. 1 5,750,000 26,879,186
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UraMin, Inc. 1 5,250,000 24,541,866
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UrAsia Energy Ltd. 1 10,000,000 63,525,992
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430,167,114
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FINANCIALS--12.6%
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CAPITAL MARKETS--2.1%
RISA Partners, Inc. 3 9,000 49,134,644
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COMMERCIAL BANKS--1.0%
Karnataka Bank Ltd. 6,000,000 23,783,173
15 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
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VALUE
SHARES SEE NOTE 1
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DIVERSIFIED FINANCIAL SERVICES--1.1%
KIWOOM.COM Securities Co. Ltd. 500,000 $ 16,124,663
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Simplex Investment Advisors, Inc. 4,000 4,338,142
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World Energy Solutions, Inc. 1,3 6,000,000 5,386,457
-----------------
25,849,262
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REAL ESTATE--1.1%
Ishaan Real Estate plc 1,3 14,000,000 26,122,994
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REAL ESTATE MANAGEMENT & DEVELOPMENT--7.3%
Funai Zaisan Consultants Co. Ltd. 2,500 13,153,450
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Greentown China Holdings Ltd. 1 14,000,000 20,714,194
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Hoosiers Corp. 16,000 15,675,057
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Kenedix, Inc. 12,000 62,953,458
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Klabin Segall SA 1,3 3,000,000 23,272,813
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Shenzhen Investment Ltd. 60,000,000 26,791,947
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Sistema Hals, GDR 1,2 900,000 11,205,000
-----------------
173,765,919
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HEALTH CARE--3.3%
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HEALTH CARE EQUIPMENT & SUPPLIES--0.5%
Imaging Dynamics Co. Ltd. 1,3 2,000,000 3,625,171
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Imaging Dynamics Co. Ltd. 1,3 4,000,000 7,250,342
-----------------
10,875,513
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HEALTH CARE PROVIDERS & SERVICES--2.6%
Apollo Hospitals Enterprise Ltd. 1,500,000 16,846,414
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Arques Industries AG 3 2,000,000 45,619,988
-----------------
62,466,402
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PHARMACEUTICALS--0.2%
Norwood Immunology Ltd. 1,2,3 15,000,000 4,713,924
VALUE
SHARES SEE NOTE 1
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INDUSTRIALS--8.0%
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AEROSPACE & DEFENSE--0.0%
Atlantis Systems Corp. 1 1,200,000 $ 636,115
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COMMERCIAL SERVICES & SUPPLIES--3.0%
SBI VeriTrans Co. Ltd. 1,3 9,750 7,201,432
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Wirecard AG 1 3,000,000 32,316,121
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Xinhua Finance Ltd. 1,3 10,000 6,112,645
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Xinhua Finance Ltd., Sponsored ADR 1,3 4,000,000 24,560,000
-----------------
70,190,198
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CONSTRUCTION & ENGINEERING--2.1%
IVRCL Infrastructures & Projects Ltd. 3,500,000 23,232,055
- --------------------------------------------------------------------------------
Nagarjuna Construction Co. Ltd. 7,500,000 26,408,809
-----------------
49,640,864
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ELECTRICAL EQUIPMENT--0.5%
Siloviye Mashiny 1 65,000,000 12,025,000
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INDUSTRIAL CONGLOMERATES--1.5%
Beijing Enterprises Holdings Ltd. 14,000,000 34,196,201
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MACHINERY--0.8%
Fong's Industries Co. Ltd. 16,000,000 12,942,532
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Railpower Technologies Corp. 1,3 5,250,000 4,937,586
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Railpower Technologies Corp. 1,3 1,750,000 1,645,862
-----------------
19,525,980
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MARINE--0.1%
Great Offshore Ltd. 1 225,000 2,905,308
16 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
VALUE
SHARES SEE NOTE 1
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INFORMATION TECHNOLOGY--13.2%
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INTERNET SOFTWARE & SERVICES--7.1%
auFeminin.com SA 1,3 600,000 $ 21,009,247
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CDNetworks Co. Ltd. 1,3 550,000 15,899,035
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Danal Co. Ltd. 1,3 2,300,000 16,872,783
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Empas Corp. 1,3 1,000,000 18,223,469
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Kaboose, Inc. 1 7,500,000 21,802,326
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Kaboose, Inc. 1 1,000,000 2,906,977
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Macromill, Inc. 6,000 15,652,175
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Mobilians Co. Ltd. 3 1,554,094 10,832,948
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Opera Software ASA 1,3 11,000,000 22,599,976
- --------------------------------------------------------------------------------
Tencent Holdings Ltd. 6,000,000 20,619,480
-----------------
166,418,416
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IT SERVICES--2.3%
Travelsky Technology Ltd. 3 30,000,000 54,908,486
- --------------------------------------------------------------------------------
SOFTWARE--3.8%
Absolute Software Corp. 1 906,300 10,150,932
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Certicom Corp. 1,3 3,000,000 14,620,383
- --------------------------------------------------------------------------------
Duzon Digital Ware Co. Ltd. 3 1,200,000 24,949,663
- --------------------------------------------------------------------------------
Intelligent Wave, Inc. 3 16,000 12,931,340
- --------------------------------------------------------------------------------
MacDonald, Dettwiler & Associates Ltd. 1 250,000 10,078,232
- --------------------------------------------------------------------------------
Ninetowns Internet Technology Group Co. Ltd. 1,3 3,000,000 14,130,000
- --------------------------------------------------------------------------------
Trolltech ASA 1 1,219,000 2,703,257
-----------------
89,563,807
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MATERIALS--26.3%
- --------------------------------------------------------------------------------
CHEMICALS--0.8%
Allen-Vanguard Corp. 1,3 4,250,000 18,931,686
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
METALS & MINING--25.5%
Alamos Gold, Inc. 1 3,750,000 $ 29,657,575
- --------------------------------------------------------------------------------
Anvil Mining Ltd. 1,3 3,500,000 40,996,922
- --------------------------------------------------------------------------------
Baffinland Iron Mines Corp. 1 1,800,000 3,647,401
- --------------------------------------------------------------------------------
Blue Pearl Mining Ltd. 1 3,000,000 22,546,170
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Eldorado Gold Corp. 1 4,000,000 23,871,409
- --------------------------------------------------------------------------------
Energy Metals Corp. 1 3,000,000 33,472,982
- --------------------------------------------------------------------------------
Equinox Minerals Ltd. 1,3,4 23,000,000 41,296,170
- --------------------------------------------------------------------------------
First Quantum Minerals Ltd. 1,000,000 58,096,785
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Fortescue Metals Group Ltd. 1 3,500,000 46,935,077
- --------------------------------------------------------------------------------
HudBay Minerals, Inc. 1 3,500,000 67,330,711
- --------------------------------------------------------------------------------
IAMGOLD Corp. 1,000,000 8,360,000
- --------------------------------------------------------------------------------
Ivernia, Inc. 1 9,050,000 13,231,447
- --------------------------------------------------------------------------------
Ivernia, Inc. 1,2 3,200,000 4,678,523
- --------------------------------------------------------------------------------
Lundin Mining Corp. 1,3 6,000,000 65,355,677
- --------------------------------------------------------------------------------
Minara Resources Ltd. 9,000,000 46,740,399
- --------------------------------------------------------------------------------
Miramar Mining Corp. 1,3 3,400,000 15,523,256
- --------------------------------------------------------------------------------
Olympus Pacific Minerals, Inc. 1,3 13,000,000 7,113,543
- --------------------------------------------------------------------------------
Rio Narcea Gold Mines Ltd. 1,3 14,000,000 44,288,646
- --------------------------------------------------------------------------------
Stornoway Diamond Corp. 1 3,600,000 3,478,112
- --------------------------------------------------------------------------------
Tenke Mining Corp. 1 2,000,000 25,906,293
-----------------
602,527,098
- --------------------------------------------------------------------------------
UTILITIES--4.1%
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES--1.3%
Sayano-Shushenskaya Hydro Power Station 9,850,000 15,464,500
17 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES Continued
Volzhskaya Hydroelectric Power Station OJSC 4,500,000 $ 2,250,000
- --------------------------------------------------------------------------------
Zhigulyovskaya Hydraulic Power Station 2 36,000,000 12,960,000
-----------------
30,674,500
- --------------------------------------------------------------------------------
GAS UTILITIES--1.5%
Xinao Gas Holdings Ltd. 35,000,000 34,135,415
- --------------------------------------------------------------------------------
WATER UTILITIES--1.3%
Guangdong Investment Ltd. 60,000,000 31,485,984
-----------------
Total Common Stocks
(Cost $1,569,482,895) 2,225,932,291
VALUE
UNITS SEE NOTE 1
- --------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- --------------------------------------------------------------------------------
China Vanguard Group Ltd. Wts., Exp. 11/2/08 1 22,000,000 $ 168,949
- --------------------------------------------------------------------------------
Railpower Technologies Corp.
Wts., Exp. 3/15/07 1 875,000 151,197
-----------------
Total Rights, Warrants and
Certificates (Cost $0) 320,146
SHARES
- --------------------------------------------------------------------------------
INVESTMENTS IN AFFILIATED COMPANIES--5.9%
- --------------------------------------------------------------------------------
Oppenheimer Institutional Money
Market Fund, Cl. E, 5.25% 3,5
(Cost $139,874,548) 139,874,548 139,874,548
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE
(COST $1,709,357,443) 100.1% 2,366,126,985
- --------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.1) (2,718,544)
-------------------------------
NET ASSETS 100.0% $ 2,363,408,441
===============================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income producing security.
2. Illiquid security. The aggregate value of illiquid securities as of February
28, 2007 was $41,726,907, which represents 1.77% of the Fund's net assets. See
Note 6 of accompanying Notes.
3. Is or was an affiliate, as defined in the Investment Company Act of 1940, at
or during the period ended February 28, 2007 by virtue of the Fund owning at
least 5% of the voting securities of the issuer or as a result of the Fund and
the issuer having the same investment advisor. Transactions during the period in
which the issuer was an affiliate are as follows:
SHARES GROSS GROSS SHARES
AUGUST 31, 2006 ADDITIONS REDUCTIONS FEB. 28, 2007
- -----------------------------------------------------------------------------------------------------------
Ahnlab, Inc. 1,000,000 -- 1,000,000 --
Allen-Vanguard Corp. 2,400,000 1,850,000 -- 4,250,000
Anvil Mining Ltd. 3,000,000 500,000 -- 3,500,000
Arques Industries AG 1,700,000 300,000 -- 2,000,000
auFeminin.com SA 600,000 -- -- 600,000
Azure Dynamics Corp. -- 21,000,000 -- 21,000,000
Calvalley Petroleum, Inc., Cl. A 4,500,000 1,500,000 -- 6,000,000
CDNetworks Co. Ltd. 600,000 -- 50,000 550,000
Certicom Corp. 3,000,000 -- -- 3,000,000
China Vanguard Group Ltd. 110,000,000 55,000,000 a -- 165,000,000
Crown Confectionery Co. Ltd. 110,000 -- -- 110,000
18 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
SHARES GROSS GROSS SHARES
AUGUST 31, 2006 ADDITIONS REDUCTIONS FEB. 28, 2007
- -------------------------------------------------------------------------------------------------------------
Danal Co. Ltd. 2,300,000 -- -- 2,300,000
Duzon Digital Ware Co. Ltd. 1,200,000 -- -- 1,200,000
Empas Corp. 900,000 100,000 -- 1,000,000
Equinox Minerals Ltd. 24,000,000 -- 1,000,000 23,000,000
Gulf Keystone Petroleum Ltd. 16,000,000 1,000,000 -- 17,000,000
Imaging Dynamics Co. Ltd. 2,000,000 -- -- 2,000,000
Imaging Dynamics Co. Ltd. 4,000,000 -- -- 4,000,000
Intelligent Wave, Inc. 16,000 -- -- 16,000
Ishaan Real Estate plc -- 14,000,000 -- 14,000,000
IVRCL Infrastructure & Projects Ltd. b 6,000,000 -- 2,500,000 3,500,000
Karnataka Bank Ltd. b 7,000,000 -- 1,000,000 6,000,000
Klabin Segall SA -- 3,000,000 -- 3,000,000
Lundin Mining Corp. -- 6,475,200 a 475,200 6,000,000
Manine Media Co. Ltd. 2,256,470 -- 2,256,470 --
Miramar Mining Corp. 4,000,000 3,400,000 4,000,000 3,400,000
Mobilians Co. Ltd. 1,554,094 -- -- 1,554,094
Ninetowns Internet Technology Group
Co. Ltd. (formerly Ninetowns Digital World
Trade Holdings Ltd., ADR) 3,000,000 -- -- 3,000,000
Norwood Abbey Ltd. 14,000,000 -- 14,000,000 --
Norwood Immunology Ltd. 15,000,000 -- -- 15,000,000
Olympus Pacific Minerals, Inc. 13,000,000 -- -- 13,000,000
Opera Software ASA 8,000,000 3,000,000 -- 11,000,000
Oppenheimer Institutional Money Market Fund,
Cl. E, 5.25% -- 439,259,145 299,384,597 139,874,548
PVR Ltd. -- 2,000,000 -- 2,000,000
Railpower Technologies Corp. 5,000,000 250,000 -- 5,250,000
Railpower Technologies Corp. -- 1,750,000 -- 1,750,000
Rio Narcea Gold Mines Ltd. 14,000,000 -- -- 14,000,000
RISA Partners, Inc. 9,000 -- -- 9,000
SBI VeriTrans Co. Ltd. 9,750 -- -- 9,750
Shinwa Art Auction Co. Ltd. b 1,500 -- -- 1,500
Solana Resources Ltd. 8,000,000 241,325 8,241,325 --
Travelsky Technology Ltd. 25,000,000 5,000,000 -- 30,000,000
Wirecard AG b 5,000,000 -- 2,000,000 3,000,000
World Energy Solutions, Inc. -- 6,000,000 -- 6,000,000
Xinhua Finance Ltd. 5,000 5,000 -- 10,000
Xinhua Finance Ltd., Sponsored ADR 4,000,000 -- -- 4,000,000
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME GAIN (LOSS)
- -------------------------------------------------------------------------------------------------------------
Ahnlab, Inc. $ -- $ -- $ 682,675
Allen-Vanguard Corp. 18,931,686 -- --
Anvil Mining Ltd. 40,996,922 -- --
Arques Industries AG 45,619,988 -- --
auFeminin.com SA 21,009,247 -- --
Azure Dynamics Corp. 8,169,460 -- --
Calvalley Petroleum, Inc., Cl. A 34,422,025 -- --
CDNetworks Co. Ltd. 15,899,035 -- (272,260)
19 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS, Continued
VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME GAIN (LOSS)
- -----------------------------------------------------------------------------------------------------------
Certicom Corp. $ 14,620,383 $ -- $ --
China Vanguard Group Ltd. 8,553,053 -- --
Crown Confectionery Co. Ltd. 12,965,913 73,566 --
Danal Co. Ltd. 16,872,783 -- --
Duzon Digital Ware Co. Ltd. 24,949,663 374,519 --
Empas Corp. 18,223,469 -- --
Equinox Minerals Ltd. 41,296,170 -- 996,813
Gulf Keystone Petroleum Ltd. 23,926,783 -- --
Imaging Dynamics Co. Ltd. 3,625,171 -- --
Imaging Dynamics Co. Ltd. 7,250,342 -- --
Intelligent Wave, Inc. 12,931,340 -- --
Ishaan Real Estate plc 26,122,994 -- --
IVRCL Infrastructure & Projects Ltd. b -- -- 545,489
Karnataka Bank Ltd. b -- -- (298,676)
Klabin Segall SA 23,272,813 -- --
Lundin Mining Corp. 65,355,677 -- 11,787,412
Manine Media Co. Ltd. -- -- (4,505,998)
Miramar Mining Corp. 15,523,256 -- 5,742,486
Mobilians Co. Ltd. 10,832,948 104,594 --
Ninetowns Internet Technology Group Co. Ltd.
(formerly Ninetowns Digital World
Trade Holdings Ltd., ADR) 14,130,000 -- --
Norwood Abbey Ltd. -- -- (6,183,645)
Norwood Immunology Ltd. 4,713,924 -- --
Olympus Pacific Minerals, Inc. 7,113,543 -- --
Opera Software ASA 22,599,976 -- --
Oppenheimer Institutional Money Market Fund, Cl. E, 5.25% 139,874,548 1,865,530 --
PVR Ltd. 8,205,534 -- --
Railpower Technologies Corp. 4,937,586 -- --
Railpower Technologies Corp. 1,645,862 -- --
Rio Narcea Gold Mines Ltd. 44,288,646 -- --
RISA Partners, Inc. 49,134,644 139,221 --
SBI VeriTrans Co. Ltd. 7,201,432 -- --
Shinwa Art Auction Co. Ltd. b -- -- --
Solana Resources Ltd. -- -- (8,474,618)
Travelsky Technology Ltd. 54,908,486 -- --
Wirecard AG b -- -- 340,165
World Energy Solutions, Inc. 5,386,457 -- --
Xinhua Finance Ltd. 6,112,645 -- --
Xinhua Finance Ltd., Sponsored ADR 24,560,000 -- --
-------------------------------------------
$ 906,184,404 $ 2,557,430 $ 359,843
===========================================
a. All or a portion is the result of a corporate action.
b. No longer an affiliate as of February 28, 2007. The value of the
security has therefore been excluded from this table.
20 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
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 $70,237,688 or 2.97% of the Fund's net
assets as of February 28, 2007.
5. Rate shown is the 7-day yield as of February 28, 2007.
DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC HOLDINGS, AS A PERCENTAGE OF
TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS:
GEOGRAPHIC HOLDINGS VALUE PERCENT
- --------------------------------------------------------------------------------
Canada $ 902,403,582 38.1%
Japan 189,746,255 8.0
Australia 164,691,252 7.0
Hong Kong 148,100,304 6.3
United States 139,874,548 5.9
India 129,483,878 5.5
Korea, Republic of South 115,868,474 4.9
China 91,023,137 3.8
Cayman Islands 84,191,091 3.5
Brazil 78,080,642 3.3
Germany 77,936,109 3.3
United Kingdom 74,721,158 3.1
Russia 53,904,500 2.3
South Africa 51,421,052 2.2
Norway 25,303,233 1.1
France 21,009,247 0.9
Thailand 18,368,523 0.8
----------------------------
Total $ 2,366,126,985 100.0%
============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
February 28, 2007
- --------------------------------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $938,400,056) $ 1,459,942,581
Affiliated companies (cost $770,957,387) 906,184,404
----------------
2,366,126,985
- --------------------------------------------------------------------------------------------------------
Cash 289,274
- --------------------------------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 22,678
- --------------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 9,204,920
Investments sold 6,636,766
Interest and dividends 1,696,635
Other 52,203
----------------
Total assets 2,384,029,461
- --------------------------------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------------------------------
Bank overdraft-foreign currencies (cost $15,240) 15,123
- --------------------------------------------------------------------------------------------------------
Unrealized depreciation on foreign currency contracts 8,585
- --------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 9,162,062
Investments purchased 9,119,454
Distribution and service plan fees 836,624
Foreign capital gains tax 744,536
Transfer and shareholder servicing agent fees 246,055
Trustees' compensation 183,905
Shareholder communications 172,673
Other 132,003
----------------
Total liabilities 20,621,020
- --------------------------------------------------------------------------------------------------------
NET ASSETS $ 2,363,408,441
================
- --------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------------------------------
Paid-in capital $ 1,666,064,039
- --------------------------------------------------------------------------------------------------------
Accumulated net investment loss (20,244,948)
- --------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 61,568,046
- --------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies 656,021,304
----------------
NET ASSETS $ 2,363,408,441
================
22 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- --------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $1,641,940,275 and 59,346,598 shares of beneficial interest outstanding) $27.67
Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price) $29.36
- --------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $140,745,795
and 5,301,516 shares of beneficial interest outstanding) $26.55
- --------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $302,382,543
and 11,382,052 shares of beneficial interest outstanding) $26.57
- --------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $63,441,828
and 2,354,024 shares of beneficial interest outstanding) $26.95
- --------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $214,898,000 and 7,756,211 shares of beneficial interest outstanding) $27.71
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
For the Six Months Ended February 28, 2007
- ------------------------------------------------------------------------------------
INVESTMENT INCOME
- ------------------------------------------------------------------------------------
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $247,401) $ 7,496,875
Affiliated companies (net of foreign withholding taxes of $119,691) 2,557,430
- ------------------------------------------------------------------------------------
Interest 135,214
- ------------------------------------------------------------------------------------
Portfolio lending fees 23
- ------------------------------------------------------------------------------------
Other income 13,067
-------------
Total investment income 10,202,609
- ------------------------------------------------------------------------------------
EXPENSES
- ------------------------------------------------------------------------------------
Management fees 7,415,647
- ------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 1,753,661
Class B 650,307
Class C 1,331,821
Class N 139,006
- ------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 1,026,333
Class B 143,696
Class C 218,120
Class N 88,006
Class Y 13,201
- ------------------------------------------------------------------------------------
Shareholder communications:
Class A 90,619
Class B 20,917
Class C 20,526
Class N 2,176
Class Y 1,550
- ------------------------------------------------------------------------------------
Custodian fees and expenses 369,876
- ------------------------------------------------------------------------------------
Trustees' compensation 104,030
- ------------------------------------------------------------------------------------
Other 124,743
-------------
Total expenses 13,514,235
Less reduction to custodian expenses (1,105)
Less waivers and reimbursements of expenses (35,507)
-------------
Net expenses 13,477,623
- ------------------------------------------------------------------------------------
NET INVESTMENT LOSS (3,275,014)
24 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- ----------------------------------------------------------------------------------------
Net realized gain on:
Investments:
Unaffiliated companies $ 76,827,028
Affiliated companies 359,843
Foreign currency transactions 6,521,165
--------------
Net realized gain 83,708,036
- ----------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments (net of foreign capital gains tax of $62,056) 326,305,355
Translation of assets and liabilities denominated in foreign currencies (18,088,820)
--------------
Net change in unrealized appreciation 308,216,535
- ----------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 388,649,557
==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 28, 2007 AUGUST 31,
(UNAUDITED) 2006
- ------------------------------------------------------------------------------------------------------------------
OPERATIONS
- ------------------------------------------------------------------------------------------------------------------
Net investment loss $ (3,275,014) $ (6,037,681)
- ------------------------------------------------------------------------------------------------------------------
Net realized gain 83,708,036 69,688,555
- ------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 308,216,535 245,880,325
-------------------------------------
Net increase in net assets resulting from operations 388,649,557 309,531,199
- ------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (9,069,835) --
Class B -- --
Class C -- --
Class N (181,029) --
Class Y (1,395,280) --
-------------------------------------
(10,646,144) --
- ------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (26,759,457) (78,465,497)
Class B (2,532,822) (9,877,066)
Class C (5,166,400) (12,481,158)
Class N (1,049,882) (2,719,549)
Class Y (2,618,553) (2,218,004)
-------------------------------------
(38,127,114) (105,761,274)
- ------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- ------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from beneficial
interest transactions:
Class A 72,256,142 622,905,053
Class B (5,771,172) 27,567,174
Class C 14,792,166 132,578,217
Class N 2,363,680 30,341,396
Class Y 94,214,896 94,327,942
-------------------------------------
177,855,712 907,719,782
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------------------------
Total increase 517,732,011 1,111,489,707
- ------------------------------------------------------------------------------------------------------------------
Beginning of period 1,845,676,430 734,186,723
-------------------------------------
End of period (including accumulated net investment loss of
$20,244,948 and $6,323,790, respectively) $ 2,363,408,441 $ 1,845,676,430
=====================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 28, 2007 AUGUST 31,
CLASS A (UNAUDITED) 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 23.40 $ 19.48 $ 14.14 $ 10.51 $ 7.98 $ 7.89
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.02) 1 (.05) 1 (.02) 1 (.04) .01 .01
Net realized and unrealized gain 4.93 6.15 5.78 3.73 2.52 .16
---------------------------------------------------------------------------------------
Total from investment operations 4.91 6.10 5.76 3.69 2.53 .17
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.16) -- (.11) (.06) -- (.08)
Distributions from net realized gain (.48) (2.18) (.31) -- -- --
---------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.64) (2.18) (.42) (.06) -- (.08)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 27.67 $ 23.40 $ 19.48 $ 14.14 $ 10.51 $ 7.98
=======================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 21.08% 33.49% 41.35% 35.20% 31.70% 2.20%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 1,641,940 $ 1,330,251 $ 552,861 $ 204,938 $ 132,342 $ 40,089
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 1,457,891 $ 1,098,056 $ 353,479 $ 207,202 $ 48,879 $ 35,136
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) (0.18)% (0.24)% (0.12)% (0.26)% 0.29% (0.17)%
Total expenses 1.18% 4 1.20% 1.31% 1.34% 1.69% 2.16%
Expenses after payments and waivers
and reduction to custodian expenses 1.18% 1.20% 1.31% 1.34% 1.60% 1.88%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 25% 35% 51% 124% 53% 62%
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. Expenses including indirect expenses from affiliated fund were as follows:
Six Months Ended February 28, 2007 1.18%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 28, 2007 AUGUST 31,
CLASS B (UNAUDITED) 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 22.43 $ 18.91 $ 13.77 $ 10.28 $ 7.87 $ 7.77
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.12) 1 (.24) 1 (.17) 1 (.13) (.02) (.07)
Net realized and unrealized gain 4.72 5.94 5.62 3.62 2.43 .19
---------------------------------------------------------------------------------------
Total from investment operations 4.60 5.70 5.45 3.49 2.41 .12
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- -- -- -- -- (.02)
Distributions from net realized gain (.48) (2.18) (.31) -- -- --
---------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.48) (2.18) (.31) -- -- (.02)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 26.55 $ 22.43 $ 18.91 $ 13.77 $ 10.28 $ 7.87
=======================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 20.57% 32.29% 40.07% 33.95% 30.62% 1.51%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 140,746 $ 124,505 $ 78,469 $ 43,478 $ 23,355 $ 18,859
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 131,550 $ 114,900 $ 60,395 $ 37,393 $ 16,884 $ 16,868
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (1.02)% (1.11)% (1.02)% (1.14)% (0.28)% (0.94)%
Total expenses 2.03% 4 2.09% 2.23% 2.35% 2.85% 2.93%
Expenses after payments and waivers and
reduction to custodian expenses 2.03% 2.09% 2.23% 2.31% 2.38% 2.65%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 25% 35% 51% 124% 53% 62%
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. Expenses including indirect expenses from affiliated fund were as follows:
Six Months Ended February 28, 2007 2.03%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 28, 2007 AUGUST 31,
CLASS C (UNAUDITED) 2006 2005 2004 2003 2002
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 22.44 $ 18.90 $ 13.76 $ 10.27 $ 7.86 $ 7.77
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.12) 1 (.23) 1 (.16) 1 (.09) (.02) (.06)
Net realized and unrealized gain 4.73 5.95 5.63 3.59 2.43 .16
----------------------------------------------------------------------------------------
Total from investment operations 4.61 5.72 5.47 3.50 2.41 .10
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- -- (.02) (.01) -- (.01)
Distributions from net realized gain (.48) (2.18) (.31) -- -- --
----------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.48) (2.18) (.33) (.01) -- (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 26.57 $ 22.44 $ 18.90 $ 13.76 $ 10.27 $ 7.86
========================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 20.61% 32.42% 40.23% 34.05% 30.66% 1.35%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 302,382 $ 242,408 $ 86,184 $ 32,401 $ 12,793 $ 6,558
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 269,360 $ 184,832 $ 55,819 $ 26,486 $ 7,489 $ 6,180
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.96)% (1.06)% (0.96)% (1.00)% (0.38)% (0.95)%
Total expenses 1.96% 4 2.01% 2.14% 2.19% 2.69% 2.94%
Expenses after payments and waivers and
reduction to custodian expenses 1.96% 2.01% 2.14% 2.19% 2.39% 2.66%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 25% 35% 51% 124% 53% 62%
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. Expenses including indirect expenses from affiliated fund were as follows:
Six Months Ended February 28, 2007 1.96%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 28, 2007 AUGUST 31,
CLASS N (UNAUDITED) 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 22.79 $ 19.08 $ 13.90 $ 10.35 $ 7.89 $ 7.87
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.07) 1 (.14) 1 (.09) 1 (.05) (.03) .08
Net realized and unrealized gain 4.79 6.03 5.67 3.64 2.49 .07
---------------------------------------------------------------------------------------
Total from investment operations 4.72 5.89 5.58 3.59 2.46 .15
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.08) -- (.09) (.04) -- (.13)
Distributions from net realized gain (.48) (2.18) (.31) -- -- --
---------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.56) (2.18) (.40) (.04) -- (.13)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 26.95 $ 22.79 $ 19.08 $ 13.90 $ 10.35 $ 7.89
=======================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 20.80% 33.06% 40.76% 34.70% 31.18% 1.99%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 63,442 $ 51,761 $ 16,673 $ 4,101 $ 1,128 $ 406
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 56,227 $ 38,262 $ 9,698 $ 2,531 $ 625 $ 151
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) (0.60)% (0.63)% (0.51)% (0.50)% 0.25% (0.33)%
Total expenses 1.61% 4 1.57% 1.75% 1.78% 1.96% 2.32%
Expenses after payments and waivers and
reduction to custodian expenses 1.61% 1.57% 1.68% 1.75% 1.90% 2.04%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 25% 35% 51% 124% 53% 62%
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. Expenses including indirect expenses from affiliated fund were as follows:
Six Months Ended February 28, 2007 1.61%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
SIX MONTHS PERIOD
ENDED ENDED
FEBRUARY 28, 2007 AUGUST 31,
CLASS Y (UNAUDITED) 2006 1
- --------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------
Net asset value, beginning of period $ 23.47 $ 19.97
- --------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2 .02 .01
Net realized and unrealized gain 4.95 5.67
----------------------------
Total from investment operations 4.97 5.68
- --------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.25) --
Distributions from net realized gain (.48) (2.18)
----------------------------
Total dividends and/or distributions
to shareholders (.73) (2.18)
- --------------------------------------------------------------------------------
Net asset value, end of period $ 27.71 $ 23.47
============================
- --------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 21.31% 30.60%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 214,898 $ 96,751
- --------------------------------------------------------------------------------
Average net assets (in thousands) $ 146,229 $ 43,043
- --------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 0.14% 0.03%
Total expenses 0.80% 5,6 0.82% 6
- --------------------------------------------------------------------------------
Portfolio turnover rate 25% 35%
1. For the period from September 7, 2005 (inception of offering) to August 31,
2006.
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. Expenses including indirect expenses from affiliated fund were as follows:
Six Months Ended February 28, 2007 0.80%
6. Reduction to custodian expenses less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, Class N and Class Y shares.
Class A shares are sold at their offering price, which is normally net asset
value plus a front-end sales charge. Class B, 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. Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC, however, the institutional investor
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. No such plan has been adopted for
Class Y shares. Class B shares will automatically convert to Class A shares six
years after the date of purchase. The 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 may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. 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(R) 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, as 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
32 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
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. Options are valued daily based upon the last sale
price on the principal exchange on which the option is traded. 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. Investments in open-end registered
investment companies (including affiliated funds) are valued at that fund's net
asset value. 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.
- --------------------------------------------------------------------------------
INVESTMENT IN OPPENHEIMER INSTITUTIONAL MONEY MARKET FUND. The Fund is permitted
to invest daily available cash balances in an affiliated money market fund. The
Fund may invest the available cash in Class E shares of Oppenheimer
Institutional Money Market Fund ("IMMF") which seeks current income and
stability of principal. IMMF is a registered open-end management investment
company, regulated as a money market fund under the Investment Company Act of
1940, as amended. The Manager is also the investment advisor of IMMF. The Fund's
investment in IMMF is included in the Statement of Investments. As a
shareholder, the Fund is subject to its proportional share of IMMF's
33 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
Class E expenses, including its management fee. The Manager will waive fees
and/or reimburse Fund expenses in an amount equal to the indirect management
fees incurred through the Fund's investment in IMMF.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
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.
As of February 28, 2007, the Fund had available for federal income tax
purposes an estimated capital loss carryforward of zero expiring by 2015. This
estimated capital loss carryforward represents carryforward as of the end of
the last fiscal year, increased for losses deferred under tax accounting rules
to the current fiscal year and is increased or decreased by capital losses or
gains realized in the first six months of the current fiscal year. As of
February 28, 2007, it is estimated that the Fund will utilize $582,987 of
capital loss carryforward to offset realized capital gains. During the fiscal
year ended August 31, 2006, the Fund did not utilize any capital loss
carryforward to offset capital gains realized in that fiscal year.
As of August 31, 2006, the Fund had available for federal income tax
purposes post-October losses of $582,987.
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 (the
"Plan") for the Fund's independent trustees. Benefits are based on years of
service and fees paid to each trustee during their period of service. The Plan
was frozen with respect to adding new participants effective December 31, 2006
(the "Freeze Date") and existing Plan Participants as of the Freeze Date will
continue to receive accrued benefits under the Plan. Active independent trustees
as of the Freeze Date have each elected a distribution method with respect to
their benefits under the Plan. During the six months ended
34 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
February 28, 2007, the Fund's projected benefit obligations were increased by
$83,082 and payments of $28,425 were made to retired trustees, resulting in an
accumulated liability of $135,081 as of February 28, 2007.
The Board of Trustees has adopted a compensation deferral 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 compensation deferral plan.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.
- --------------------------------------------------------------------------------
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, to the extent they are not
offset by positive cash balances maintained by the Fund, 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.
- --------------------------------------------------------------------------------
INDEMNIFICATIONS. The Fund's organizational documents provide current and former
trustees and officers with a limited indemnification against liabilities arising
in connection with the performance of their duties to the Fund. In the normal
course of business, the Fund may also enter into contracts that provide general
indemnifications. The Fund's maximum exposure under these arrangements is
unknown as this would be dependent
35 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
on future claims that may be made against the Fund. The risk of material loss
from such claims is considered remote.
- --------------------------------------------------------------------------------
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:
SIX MONTHS ENDED FEBRUARY 28, 2007 YEAR ENDED AUGUST 31, 2006 1
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------
CLASS A
Sold 10,699,183 $ 273,901,788 45,786,785 $ 1,019,057,904
Dividends and/or
distributions reinvested 1,202,874 31,924,236 3,562,149 69,639,992
Redeemed (9,394,425) (233,569,882) 2 (20,894,266) (465,792,843) 3
--------------------------------------------------------------------------
Net increase 2,507,632 $ 72,256,142 28,454,668 $ 622,905,053
==========================================================================
- -----------------------------------------------------------------------------------------------------
CLASS B
Sold 433,426 $ 10,644,474 2,914,524 $ 61,689,329
Dividends and/or
distributions reinvested 91,165 2,326,517 481,417 9,079,521
Redeemed (772,928) (18,742,163) 2 (1,996,614) (43,201,676) 3
--------------------------------------------------------------------------
Net increase (decrease) (248,337) $ (5,771,172) 1,399,327 $ 27,567,174
==========================================================================
- -----------------------------------------------------------------------------------------------------
CLASS C
Sold 1,485,687 $ 36,732,647 7,743,971 $ 166,349,265
Dividends and/or
distributions reinvested 160,548 4,098,794 548,252 10,340,014
Redeemed (1,065,769) (26,039,275) 2 (2,050,959) (44,111,062) 3
--------------------------------------------------------------------------
Net increase 580,466 $ 14,792,166 6,241,264 $ 132,578,217
==========================================================================
- -----------------------------------------------------------------------------------------------------
CLASS N
Sold 503,379 $ 12,634,118 1,895,944 $ 41,657,866
Dividends and/or
distributions reinvested 44,606 1,154,396 133,242 2,543,611
Redeemed (465,165) (11,424,834) 2 (631,651) (13,860,081) 3
--------------------------------------------------------------------------
Net increase 82,820 $ 2,363,680 1,397,535 $ 30,341,396
==========================================================================
36 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
SIX MONTHS ENDED FEBRUARY 28, 2007 YEAR ENDED AUGUST 31, 2006 1
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------
CLASS Y
Sold 3,613,871 $ 93,578,730 7,062,894 $ 158,790,428
Dividends and/or
distributions reinvested 150,835 4,006,165 113,389 2,217,895
Redeemed (130,428) (3,369,999) 2 (3,054,350) (66,680,381) 3
--------------------------------------------------------------------------
Net increase 3,634,278 $ 94,214,896 4,121,933 $ 94,327,942
==========================================================================
1. For the year ended August 31, 2006, for Class A, Class B, Class C and Class N
shares and for the period from September 7, 2005 (inception of offering) to
August 31, 2006, for Class Y shares.
2. Net of redemption fees of $8,690, $784, $1,606, $335 and $872 for Class A,
Class B, Class C, Class N and Class Y, respectively.
3. Net of redemption fees of $70,860, $7,415, $11,928, $2,469 and $2,778 for
Class A, Class B, Class C, Class N and Class Y, respectively.
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations and money market funds, for the six months ended
February 28, 2007, were as follows:
PURCHASES SALES
- -------------------------------------------------------------------------------
Investment securities $ 516,510,105 $ 505,986,725
- -------------------------------------------------------------------------------
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 average net assets as shown in the following table:
FEE SCHEDULE
---------------------------------------------------
Up to $250 million 0.80%
Next $250 million 0.77
Next $500 million 0.75
Next $1 billion 0.69
Over $2 billion 0.67
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS or the Transfer Agent), 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 six months ended
February 28, 2007, the Fund paid $1,504,556 to OFS for services to the Fund.
Additionally, Class Y shares are subject to minimum fees of $10,000 per
annum for assets of $10 million or more. The Class Y shares are subject to the
minimum fees in the event that the per account fee does not equal or exceed the
applicable minimum fees. OFS may voluntarily waive the minimum fees.
37 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued
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.
- --------------------------------------------------------------------------------
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
periodically 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 periodically 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
periods. 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% on Class B and
Class C shares and 0.25% 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 determines its
uncompensated expenses under the plan at calendar quarter ends. The
Distributor's aggregate uncompensated expenses under the plan at December 31,
2006 for Class B, Class C and Class N shares were $1,238,307, $1,969,876 and
$397,240, 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 following table 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
SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- -------------------------------------------------------------------------------------------------
February 28, 2007 $336,377 $85,272 $76,312 $52,138 $2,344
38 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
- --------------------------------------------------------------------------------
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. This undertaking may be amended or
withdrawn at any time.
The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's investment in
IMMF. During the six months ended February 28, 2007, the Manager waived $35,507
for IMMF management fees.
- --------------------------------------------------------------------------------
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 February 28, 2007, the Fund had outstanding foreign currency contracts as
follows:
CONTRACT
EXPIRATION AMOUNT VALUATION AS OF UNREALIZED UNREALIZED
CONTRACT DESCRIPTION DATES (000S) FEBRUARY 28, 2007 APPRECIATION DEPRECIATION
- -----------------------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Canadian Dollar [CAD] 3/1/07-3/14/07 1,473CAD $1,259,709 $ -- $ 8,585
----------------------
CONTRACTS TO SELL
Norwegian Krone [NOK] 3/1/07 40,702NOK 6,636,766 22,678 --
----------------------
Total unrealized appreciation
and depreciation $22,678 $ 8,585
======================
- --------------------------------------------------------------------------------
6. ILLIQUID SECURITIES
As of February 28, 2007, 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.
39 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. SECURITIES LENDING
The Fund lends portfolio securities from time to time in order to earn
additional income. In return, the Fund receives collateral in the form of
securities, letters of credit or cash, against the loaned securities and
maintains collateral in an amount not less than 100% of the market value of the
loaned securities during the period of the loan. The market value of the loaned
securities is determined at the close of business each day. If the Fund is
undercollateralized at the close of business due to an increase in market value
of securities on loan, additional collateral is requested from the borrowing
counterparty and is delivered to the Fund on the next business day. Cash
collateral may be invested in approved investments and the Fund bears the risk
of any loss in value of these investments. The Fund retains a portion of the
interest earned from the collateral. If the borrower defaults on its obligation
to return the securities loaned because of insolvency or other reasons, the Fund
could experience delays and cost in recovering the securities loaned or in
gaining access to the collateral. The Fund continues to receive the economic
benefit of interest or dividends paid on the securities loaned in the form of a
substitute payment received from the borrower. As of February 28, 2007, the Fund
had no securities on loan.
- --------------------------------------------------------------------------------
8. RECENT ACCOUNTING PRONOUNCEMENTS
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in
an enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Fund's tax returns to determine whether it
is "more-likely-than-not" that tax positions taken in the Fund's tax return will
be ultimately sustained. A tax liability and expense must be recorded in respect
of any tax position that, in Management's judgment, will not be fully realized.
FIN 48 is effective for fiscal years beginning after December 15, 2006. As of
February 28, 2007, the Manager has evaluated the implications of FIN 48 and does
not currently anticipate a material impact to the Fund's financial statements.
The Manager will continue to monitor the Fund's tax positions prospectively for
potential future impacts.
In September 2006, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 157, FAIR VALUE MEASUREMENTS. This standard establishes a
single authoritative definition of fair value, sets out a framework for
measuring fair value and expands disclosures about fair value measurements.
SFAS No. 157 applies to fair value measurements already required or permitted by
existing standards. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. As of February 28, 2007, the Manager does not believe the
adoption of SFAS No. 157 will materially impact the financial statement amounts;
however, additional disclosures may be required about the inputs used to
develop the measurements and the effect of certain of the measurements on
changes in net assets for the period.
40 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and
Procedures is available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.525.7048, (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.
41 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
investment advisory agreement (the "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 Agreement. The Board employs an independent consultant to
prepare a report that provides information, including comparative information,
that the Board requests for that purpose. In addition, the Board receives
information throughout the year regarding Fund services, fees, expenses and
performance.
The Manager and the independent consultant provided information to the
Board on the following factors: (i) the nature, quality and extent of the
Manager's services, (ii) the investment performance of the Fund and the Manager,
(iii) the fees and expenses of the Fund, including comparative expense
information, (iv) the profitability of the Manager and its affiliates, including
an analysis of the cost of providing services by the Manager and its affiliates,
(v) the extent to which economies of scale are realized as the Fund grows and
whether fee levels reflect these economies of scale for Fund investors and (vi)
other benefits to the Manager from its relationship with the Fund. The Board was
aware that there are alternatives to retaining the Manager.
NATURE AND EXTENT OF SERVICES. The Board considered information about the
nature and extent of the services provided to the Fund and information regarding
the Manager's key personnel who provide such services. The Manager's duties
include providing the Fund with 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; securities trading services;
oversight of third party service providers; monitoring compliance with
applicable Fund policies and procedures and adherence to the Fund's investment
restrictions. The Manager is responsible for providing certain administrative
services to the Fund as well. Those services include providing and supervising
all administrative and clerical personnel who are necessary in order to
provide effective corporate administration for the Fund; compiling and
maintaining records with respect to the Fund's operations; preparing and filing
reports required by the Securities and Exchange Commission; preparing periodic
reports regarding the operations of the Fund for its shareholders; preparing
proxy materials for shareholder meetings; and preparing the registration
statements required by Federal and state securities laws for the sale of the
Fund's shares. The Manager also provides the Fund with office space, facilities
and equipment.
42 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
QUALITY OF SERVICES. The Board also considered the quality of the services
provided and the quality of the Manager's resources that are available to the
Fund. The Board took account of the fact 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 has received regarding the experience and
professional qualifications of the Manager's personnel and the size and
functions of its staff. In its evaluation of the quality of the portfolio
management services provided, the Board considered the experience of Rohit Sah
and the Manager's Global Equity investment team and analysts. The Board members
also considered their experiences with the Manager and its officers and other
personnel through their service as on the boards of the Fund and other funds
advised by the Manager. The Board considered information regarding the quality
of services provided by affiliates of the Manager, which its members have become
knowledgeable about in connection with the renewal of the Fund's service
agreements. In light of the foregoing, the Board concluded that the Fund
benefits from the services provided under the Agreement and from the Manager's
experience, reputation, personnel, operations, and resources.
INVESTMENT PERFORMANCE OF THE MANAGER AND THE FUND. During the year, the
Manager provided information on the investment performance of the Fund and the
Manager at each Board meeting, including comparative performance information.
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 all other retail front-end
load and no-load international small/ mid-cap growth funds advised by the
Manager and by other investment advisers. The Board noted that the Fund's
one-year, three-year, and five-year performance were better than its peer group
median.
MANAGEMENT FEES AND EXPENSES. The Board reviewed the fees paid to the
Manager and its affiliates and the other expenses borne by the Fund. The Board
also evaluated the comparability of the fees charged and the services provided
to the Fund to the fees and services for other clients or accounts advised by
the Manager. The independent consultant provided comparative data in regard to
the fees and expenses of the Fund, other international small/mid-cap growth
funds, other international small/mid-cap core funds and other funds with
comparable asset levels and distribution features. The Board noted that the
Fund's contractual and actual management fees and total expenses are lower than
its peer group median.
43 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
BOARD APPROVAL OF THE FUND'S INVESTMENT
ADVISORY AGREEMENT Unaudited / Continued
- --------------------------------------------------------------------------------
ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may
realize economies of scale in managing and supporting the Fund, the extent to
which those economies of scale benefit the Fund's shareholders and the current
level of Fund assets in relation to the Fund's breakpoint schedule for its
management fees. The Board also noted the Fund's breakpoints, which are intended
to share economies of scale that may exist as the Fund grows with its
shareholders.
BENEFITS TO THE MANAGER. The Board considered information regarding the
Manager's costs in serving as the Fund's investment adviser, including the costs
associated with the personnel and systems necessary to manage the Fund, and
information regarding the Manager's profitability from its relationship with the
Fund. 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 to considering the profits
realized by the Manager, the Board considered information 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 for services
provided and research provided to the Manager in connection with permissible
brokerage arrangements (soft dollar arrangements).
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 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 Agreement,
including the management fee, in light of all of the surrounding circumstances.
44 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
ITEM 2. CODE OF ETHICS.
Not applicable to semiannual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to semiannual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to semiannual reports.
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 February 28, 2007, 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) Not applicable to semiannual reports.
(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: April 10, 2007
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: April 10, 2007
By: /s/ Brian W. Wixted
---------------------------
Brian W. Wixted
Principal Financial Officer
Date: April 10, 2007