-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nm0GJ4NmiMQlMOF70q1zYb+dgyzg7Pxn0rYpHWx3maD87Zy3+pZ5dnOxMJCCq9IR JDee/U7Phonb/EjhoO1h1w== 0000935069-06-002874.txt : 20061026 0000935069-06-002874.hdr.sgml : 20061026 20061026135348 ACCESSION NUMBER: 0000935069-06-002874 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060831 FILED AS OF DATE: 20061026 DATE AS OF CHANGE: 20061026 EFFECTIVENESS DATE: 20061026 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER INTERNATIONAL SMALL CO FUND CENTRAL INDEX KEY: 0001041102 IRS NUMBER: 133955887 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-08299 FILM NUMBER: 061165275 BUSINESS ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY STREET 2: N/A CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 BUSINESS PHONE: 303-768-3200 MAIL ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY STREET 2: N/A CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 0001041102 S000007074 OPPENHEIMER INTERNATIONAL SMALL CO FUND C000019305 A C000019306 B C000019307 C C000019308 N C000019309 Y N-CSR 1 ra815_35024ncsr.txt RA815_35024NCSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-08299 OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND (Exact name of registrant as specified in charter) 6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924 (Address of principal executive offices) (Zip code) ROBERT G. ZACK, ESQ. OPPENHEIMERFUNDS, INC. TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1008 (Name and address of agent for service) Registrant's telephone number, including area code: (303) 768-3200 Date of fiscal year end: AUGUST Date of reporting period: 08/31/2006 ITEM 1. REPORTS TO STOCKHOLDERS. TOP HOLDINGS AND ALLOCATIONS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOP TEN GEOGRAPHICAL HOLDINGS - -------------------------------------------------------------------------------- Canada 35.8% - -------------------------------------------------------------------------------- Korea, Republic of South 8.8 - -------------------------------------------------------------------------------- Australia 8.6 - -------------------------------------------------------------------------------- Japan 7.8 - -------------------------------------------------------------------------------- India 6.9 - -------------------------------------------------------------------------------- Cayman Islands 6.7 - -------------------------------------------------------------------------------- Hong Kong 5.2 - -------------------------------------------------------------------------------- China 5.0 - -------------------------------------------------------------------------------- Germany 3.2 - -------------------------------------------------------------------------------- Norway 2.8 Portfolio holdings and allocations are subject to change. Percentages are as of August 31, 2006, and are based on the total market value of investments. TOP TEN COMMON STOCK HOLDINGS - -------------------------------------------------------------------------------- EuroZinc Mining Corp. 4.0% - -------------------------------------------------------------------------------- Kenedix, Inc. 2.9 - -------------------------------------------------------------------------------- HudBay Minerals, Inc. 2.6 - -------------------------------------------------------------------------------- Paladin Resources Ltd. 2.4 - -------------------------------------------------------------------------------- First Quantum Minerals Ltd. 2.4 - -------------------------------------------------------------------------------- RISA Partners, Inc. 2.0 - -------------------------------------------------------------------------------- Rio Narcea Gold Mines Ltd. 1.9 - -------------------------------------------------------------------------------- Tencent Holdings Ltd. 1.9 - -------------------------------------------------------------------------------- Equinox Minerals Ltd. 1.9 - -------------------------------------------------------------------------------- Xinao Gas Holdings Ltd. 1.8 Portfolio holdings and allocations are subject to change. Percentages are as of August 31, 2006, and are based on net assets. For more current Fund holdings, please visit www.oppenheimerfunds.com. - -------------------------------------------------------------------------------- 9 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND TOP HOLDINGS AND ALLOCATIONS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- REGIONAL ALLOCATION [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Asia 43.3% United States/Canada 37.0 Europe 9.6 Latin America 9.2 Emerging Europe 0.9 Portfolio holdings and allocations are subject to change. Percentages are as of August 31, 2006, and are based on the total market value of investments. - -------------------------------------------------------------------------------- 10 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED AUGUST 31, 2006, FOLLOWED BY A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE BROAD-BASED MARKET INDEX. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. During the fiscal year, despite May's global sell-off, Oppenheimer International Small Company Fund delivered strong performance for our shareholders in absolute terms as well as relative to its benchmark. Strong stock selection was the most significant contributing factor to the Fund's performance. In terms of sectors, the Fund benefited most from exposure to basic materials, particularly mining companies, and information technology, where select internet stocks performed well. Four mining companies, the Canadian-based EuroZinc Mining Corp., HudBay Minerals, Inc., and First Quantum Minerals Ltd., along with a fourth, Australia based Paladin Resources Ltd., made significant contributions to performance. All have benefited from the recovery of a 20-year bear market in mining companies which decimated the supply response and eroded skilled manpower and capital equipment. Recent demand for commodities has been unprecedented, and in the last year, the prices of commodities like copper, zinc, and uranium have more than doubled. At the beginning of our fiscal year, the market incorrectly anticipated that commodity prices had peaked and this sentiment was reflected in the price of mining stocks. But prices had not peaked and mining companies have subsequently benefited from tight supply and growing demand. Opera Software ASA creates internet browsers similar to Microsoft, Inc.'s INTERNET EXPLORER. Unlike the competition, Opera Software's browser is also being used in diverse applications like cell phones, Sony play stations, and internet-enabled home appliances where the products have limited memory and computing power. The market began to recognize the opportunity, and the stock rose accordingly. We continue to hold all of these mining and information technology stocks. We also held some stocks which hurt performance. Xinhua Finance Ltd., China's leading financial information company, was hardest hit. The company provides diverse services to the Chinese business community including a stock market index, a debt rating agency, a business news service similar to Reuters in the U.S., and investor relations for Chinese firms which wish to market themselves to foreign investors. The stock fell on a combination of settlement, technical, and valuation issues. As it is a Chinese business listed on the Japanese stock exchange, few Japanese analysts want to follow the stock. Moreover, settlement of trades in Xinhua Finance can be challenging. Also, the firm's merger and acquisition activity has made the price-to-earnings (P/E) ratio look high, although on a price-to-cash-flow basis the stock is not expensive. Xinhua's stock price is also dependent upon the Chinese financial markets opening up to foreign investors and that has been slow in coming. We believe the company is positioned to benefit from the China story, and took advantage of the sell-off to add to our position. 11 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- Two of our holdings in Korea failed to deliver on the basic thesis behind our original purchase and we sold both. Yedang Entertainment Co. Ltd. and Fantom Co. Ltd., both involved in online music entertainment in Korea, did poorly. The online music market in Korea disappointed as the online portals needed took too long to be set up and the revenues were far less than expected. We have since exited both stocks. Railpower Technologies Corp., a Canadian company that has created a hybrid energy technology system for rail locomotives, also disappointed. Railpower is in the commercial phase of a patented hybrid locomotive which could significantly reduce operating costs. Unfortunately, while their technology is world class, the company experienced problems starting up their production of locomotives, and a significant sell-off of the stock ensued. We believe the technology is sound and that the manufacturing issue can and will be resolved over time, and we continue to hold the stock. In closing, we'd like to remind shareholders that investing in foreign markets, especially in the securities of emerging countries, poses considerable risks, including heightened volatility, political and economic uncertainty and currency fluctuations. COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs that follow show the performance of a hypothetical $10,000 investment in each class of shares of the Fund held until August 31, 2006. In the case of Class A, Class B and Class C shares, performance is measured from the inception of the Classes on November 17, 1997. In the case of Class N shares, performance is measured from inception of the Class on March 1, 2001. In the case of Class Y shares, performance is measured from inception of the Class on September 7, 2005. The Fund's performance reflects the deduction of the maximum initial sales charge on Class A shares, the applicable contingent deferred sales charge on Class B, Class C and Class N shares, and reinvestments of all dividends and capital gains distributions. Past performance cannot guarantee future results. The Fund's performance is compared to the performances of the HSBC James Capel World excluding U.S. Smaller Companies Index (WexUS) and the Morgan Stanley Capital International (MSCI) EAFE Index. The performance of small foreign companies is represented by WexUS, an index comprised of small international securities in Europe, UK, Southeast Asia, Japan, Australia and New Zealand. The performance of large international companies is represented by MSCI EAFE Index, which is comprised of common stocks issued in Europe, Australia and the Far East. Index performance reflects the reinvestment of income but does not consider the effect of transaction costs, and none of the data in the graphs shows the effect of taxes. The Fund's performance reflects the effects of the Fund's business and operating expenses. While index comparisons may be useful to provide a benchmark for the Fund's performance, it must be noted that the Fund's investments are not limited to the investments in either index. 12 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND CLASS A SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer International Small Company Fund (Class A) HSBC James Capel World excluding U.S. Smaller Companies Index MSCI EAFE Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer HSBC James Capel International World excluding Small Company Fund U.S. Smaller MSCI EAFE (Class A) Companies Index Index 11/17/1997 $ 9,425 $ 10,000 $ 10,000 11/30/1997 $ 9,529 $ 10,000 $ 10,000 02/28/1998 $ 10,509 $ 10,806 $ 11,233 05/31/1998 $ 12,187 $ 11,582 $ 11,622 08/31/1998 $ 10,858 $ 9,432 $ 10,370 11/30/1998 $ 11,800 $ 9,886 $ 11,678 02/28/1999 $ 12,646 $ 10,135 $ 11,822 05/31/1999 $ 14,648 $ 10,839 $ 12,163 08/31/1999 $ 17,708 $ 12,418 $ 13,069 11/30/1999 $ 18,461 $ 12,869 $ 14,180 02/29/2000 $ 22,241 $ 14,425 $ 14,868 05/31/2000 $ 18,284 $ 12,637 $ 14,283 08/31/2000 $ 18,714 $ 13,051 $ 14,352 11/30/2000 $ 13,013 $ 11,054 $ 12,839 02/28/2001 $ 11,953 $ 11,503 $ 12,296 05/31/2001 $ 11,545 $ 10,914 $ 11,864 08/31/2001 $ 10,387 $ 10,023 $ 10,896 11/30/2001 $ 10,189 $ 9,621 $ 10,416 02/28/2002 $ 11,134 $ 9,347 $ 9,992 05/31/2002 $ 12,265 $ 10,542 $ 10,758 08/31/2002 $ 10,615 $ 9,211 $ 9,296 11/30/2002 $ 9,937 $ 8,678 $ 9,144 02/28/2003 $ 9,219 $ 8,402 $ 8,276 05/31/2003 $ 11,307 $ 10,002 $ 9,473 08/31/2003 $ 13,981 $ 11,263 $ 10,186 11/30/2003 $ 16,881 $ 13,119 $ 11,407 02/29/2004 $ 18,742 $ 15,203 $ 12,764 05/31/2004 $ 19,076 $ 14,875 $ 12,600 08/31/2004 $ 18,902 $ 14,933 $ 12,538 11/30/2004 $ 21,977 $ 17,422 $ 14,220 02/28/2005 $ 24,593 $ 19,461 $ 15,206 05/31/2005 $ 24,401 $ 18,153 $ 14,520 08/31/2005 $ 26,719 $ 19,925 $ 15,559 11/30/2005 $ 29,229 $ 20,287 $ 16,171 02/28/2006 $ 33,990 $ 23,255 $ 17,929 05/31/2006 $ 36,413 $ 24,105 $ 18,696 08/31/2006 $ 35,666 $ 24,073 $ 19,414 AVERAGE ANNUAL TOTAL RETURNS OF CLASS A SHARES WITH SALES CHARGE OF THE FUND AT 8/31/06 1-Year 25.81% 5-Year 26.48% Since Inception (11/17/97) 15.57% THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE, REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, SINCE-INCEPTION RETURNS FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 18 FOR FURTHER INFORMATION. 13 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- CLASS B SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer International Small Company Fund (Class B) HSBC James Capel World excluding U.S. Smaller Companies Index MSCI EAFE Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer HSBC James Capel International World excluding Small Company Fund U.S. Smaller MSCI EAFE (Class B) Companies Index Index 11/17/1997 $ 10,000 $ 10,000 $ 10,000 11/30/1997 $ 10,110 $ 10,000 $ 10,000 02/28/1998 $ 11,130 $ 10,806 $ 11,233 05/31/1998 $ 12,880 $ 11,582 $ 11,622 08/31/1998 $ 11,450 $ 9,432 $ 10,370 11/30/1998 $ 12,420 $ 9,886 $ 11,678 02/28/1999 $ 13,273 $ 10,135 $ 11,822 05/31/1999 $ 15,349 $ 10,839 $ 12,163 08/31/1999 $ 18,523 $ 12,418 $ 13,069 11/30/1999 $ 19,275 $ 12,869 $ 14,180 02/29/2000 $ 23,180 $ 14,425 $ 14,868 05/31/2000 $ 19,017 $ 12,637 $ 14,283 08/31/2000 $ 19,445 $ 13,051 $ 14,352 11/30/2000 $ 13,491 $ 11,054 $ 12,839 02/28/2001 $ 12,377 $ 11,503 $ 12,296 05/31/2001 $ 11,909 $ 10,914 $ 11,864 08/31/2001 $ 10,697 $ 10,023 $ 10,896 11/30/2001 $ 10,477 $ 9,621 $ 10,416 02/28/2002 $ 11,424 $ 9,347 $ 9,992 05/31/2002 $ 12,570 $ 10,542 $ 10,758 08/31/2002 $ 10,859 $ 9,211 $ 9,296 11/30/2002 $ 10,127 $ 8,678 $ 9,144 02/28/2003 $ 9,396 $ 8,402 $ 8,276 05/31/2003 $ 11,493 $ 10,002 $ 9,473 08/31/2003 $ 14,184 $ 11,263 $ 10,186 11/30/2003 $ 17,111 $ 13,119 $ 11,407 02/29/2004 $ 18,998 $ 15,203 $ 12,764 05/31/2004 $ 19,336 $ 14,875 $ 12,600 08/31/2004 $ 19,160 $ 14,933 $ 12,538 11/30/2004 $ 22,277 $ 17,422 $ 14,220 02/28/2005 $ 24,928 $ 19,461 $ 15,206 05/31/2005 $ 24,734 $ 18,153 $ 14,520 08/31/2005 $ 27,083 $ 19,925 $ 15,559 11/30/2005 $ 29,628 $ 20,287 $ 16,171 02/28/2006 $ 34,454 $ 23,255 $ 17,929 05/31/2006 $ 36,910 $ 24,105 $ 18,696 08/31/2006 $ 36,153 $ 24,073 $ 19,414 AVERAGE ANNUAL TOTAL RETURNS OF CLASS B SHARES WITH SALES CHARGE OF THE FUND AT 8/31/06 1-Year 27.29% 5-Year 26.75% Since Inception (11/17/97) 15.75% 14 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND CLASS C SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer International Small Company Fund (Class C) HSBC James Capel World excluding U.S. Smaller Companies Index MSCI EAFE Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer HSBC James Capel International World excluding Small Company Fund U.S. Smaller MSCI EAFE (Class C) Companies Index Index 11/17/1997 $ 10,000 $ 10,000 $ 10,000 11/30/1997 $ 10,110 $ 10,000 $ 10,000 02/28/1998 $ 11,130 $ 10,806 $ 11,233 05/31/1998 $ 12,870 $ 11,582 $ 11,622 08/31/1998 $ 11,450 $ 9,432 $ 10,370 11/30/1998 $ 12,420 $ 9,886 $ 11,678 02/28/1999 $ 13,273 $ 10,135 $ 11,822 05/31/1999 $ 15,349 $ 10,839 $ 12,163 08/31/1999 $ 18,523 $ 12,418 $ 13,069 11/30/1999 $ 19,265 $ 12,869 $ 14,180 02/29/2000 $ 23,173 $ 14,425 $ 14,868 05/31/2000 $ 19,016 $ 12,637 $ 14,283 08/31/2000 $ 19,445 $ 13,051 $ 14,352 11/30/2000 $ 13,496 $ 11,054 $ 12,839 02/28/2001 $ 12,377 $ 11,503 $ 12,296 05/31/2001 $ 11,908 $ 10,914 $ 11,864 08/31/2001 $ 10,709 $ 10,023 $ 10,896 11/30/2001 $ 10,488 $ 9,621 $ 10,416 02/28/2002 $ 11,420 $ 9,347 $ 9,992 05/31/2002 $ 12,566 $ 10,542 $ 10,758 08/31/2002 $ 10,854 $ 9,211 $ 9,296 11/30/2002 $ 10,135 $ 8,678 $ 9,144 02/28/2003 $ 9,390 $ 8,402 $ 8,276 05/31/2003 $ 11,489 $ 10,002 $ 9,473 08/31/2003 $ 14,181 $ 11,263 $ 10,186 11/30/2003 $ 17,095 $ 13,119 $ 11,407 02/29/2004 $ 18,940 $ 15,203 $ 12,764 05/31/2004 $ 19,231 $ 14,875 $ 12,600 08/31/2004 $ 19,010 $ 14,933 $ 12,538 11/30/2004 $ 22,063 $ 17,422 $ 14,220 02/28/2005 $ 24,654 $ 19,461 $ 15,206 05/31/2005 $ 24,386 $ 18,153 $ 14,520 08/31/2005 $ 26,657 $ 19,925 $ 15,559 11/30/2005 $ 29,097 $ 20,287 $ 16,171 02/28/2006 $ 33,774 $ 23,255 $ 17,929 05/31/2006 $ 36,102 $ 24,105 $ 18,696 08/31/2006 $ 35,300 $ 24,073 $ 19,414 AVERAGE ANNUAL TOTAL RETURNS OF CLASS C SHARES WITH SALES CHARGE OF THE FUND AT 8/31/06 1-Year 31.42% 5-Year 26.94% Since Inception (11/17/97) 15.43% THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE, REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, SINCE-INCEPTION RETURNS FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 18 FOR FURTHER INFORMATION. 15 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND FUND PERFORMANCE DISCUSSION - -------------------------------------------------------------------------------- CLASS N SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer International Small Company Fund (Class N) HSBC James Capel World excluding U.S. Smaller Companies Index MSCI EAFE Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer HSBC James Capel International World excluding Small Company Fund U.S. Smaller MSCI EAFE (Class N) Companies Index Index 03/01/2001 $ 10,000 $ 10,000 $ 10,000 05/31/2001 $ 9,637 $ 9,488 $ 9,648 08/31/2001 $ 8,667 $ 8,714 $ 8,861 11/30/2001 $ 8,502 $ 8,364 $ 8,471 02/28/2002 $ 9,276 $ 8,126 $ 8,126 05/31/2002 $ 10,218 $ 9,165 $ 8,749 08/31/2002 $ 8,840 $ 8,007 $ 7,560 11/30/2002 $ 8,268 $ 7,545 $ 7,437 02/28/2003 $ 7,663 $ 7,304 $ 6,730 05/31/2003 $ 9,377 $ 8,695 $ 7,704 08/31/2003 $ 11,596 $ 9,792 $ 8,284 11/30/2003 $ 13,993 $ 11,405 $ 9,277 02/29/2004 $ 15,518 $ 13,216 $ 10,380 05/31/2004 $ 15,766 $ 12,932 $ 10,247 08/31/2004 $ 15,619 $ 12,982 $ 10,197 11/30/2004 $ 18,137 $ 15,145 $ 11,564 02/28/2005 $ 20,280 $ 16,918 $ 12,366 05/31/2005 $ 20,096 $ 15,781 $ 11,809 08/31/2005 $ 21,986 $ 17,321 $ 12,653 11/30/2005 $ 24,037 $ 17,636 $ 13,151 02/28/2006 $ 27,918 $ 20,216 $ 14,580 05/31/2006 $ 29,882 $ 20,956 $ 15,204 08/31/2006 $ 29,253 $ 20,928 $ 15,789 AVERAGE ANNUAL TOTAL RETURNS OF CLASS N SHARES WITH SALES CHARGE OF THE FUND AT 8/31/06 1-Year 32.06% 5-Year 27.54% Since Inception (3/1/01) 21.55% 16 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND CLASS Y SHARES COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN: Oppenheimer International Small Company Fund (Class Y) HSBC James Capel World excluding U.S. Smaller Companies Index MSCI EAFE Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Oppenheimer HSBC James Capel International World excluding Small Company Fund U.S. Smaller MSCI EAFE (Class Y) Companies Index Index 09/07/2005 $ 10,000 $ 10,000 $ 10,000 11/30/2005 $ 10,671 $ 10,182 $ 10,394 02/28/2006 $ 12,420 $ 11,671 $ 11,523 05/31/2006 $ 13,316 $ 12,098 $ 12,016 08/31/2006 $ 13,060 $ 12,082 $ 12,478 AVERAGE ANNUAL TOTAL RETURNS OF CLASS Y SHARES OF THE FUND AT 8/31/06 1-Year N/A 5-Year N/A Since Inception (9/7/05) 30.60% THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM, OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE, REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES, THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. THERE IS NO SALES CHARGE FOR CLASS Y SHARES. BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE, SINCE-INCEPTION RETURNS FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE PERIOD AFTER CONVERSION. SEE PAGE 18 FOR FURTHER INFORMATION. 17 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND NOTES - -------------------------------------------------------------------------------- Total returns and the ending account values in the graphs include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. The Fund's total returns shown do not reflect the deduction of income taxes on an individual's investment. Taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares. INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. The Fund's investment strategy and focus can change over time. The mention of specific fund holdings does not constitute a recommendation by OppenheimerFunds, Inc. CLASS A shares of the Fund were first publicly offered on 11/17/97. Unless otherwise noted, Class A returns include the maximum initial sales charge of 5.75%. CLASS B shares of the Fund were first publicly offered on 11/17/97. Unless otherwise noted, Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to Class A shares 72 months after purchase, the "since-inception" return for Class B uses Class A performance for the period after conversion. Class B shares are subject to a 0.75% annual asset-based sales charge. CLASS C shares of the Fund were first publicly offered on 11/17/97. Unless otherwise noted, Class C returns include the contingent deferred sales charge of 1% for the 1-year period. Class C shares are subject to a 0.75% annual asset-based sales charge. CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares are offered only through retirement plans. Unless otherwise noted, Class N returns include the contingent deferred sales charge of 1% for the 1-year period. Class N shares are subject to an annual 0.25% asset-based sales charge. 18 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND NOTES - -------------------------------------------------------------------------------- CLASS Y shares of the Fund were first publicly offered on 9/7/05. Class Y shares are offered principally to certain institutional investors under special agreement with the Distributor and are not subject to a sales charge. An explanation of the calculation of performance is in the Fund's Statement of Additional Information. 19 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND FUND EXPENSES - -------------------------------------------------------------------------------- FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions; and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended August 31, 2006. 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 20 | 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. - -------------------------------------------------------------------------------- BEGINNING ENDING EXPENSES ACCOUNT ACCOUNT PAID DURING VALUE VALUE 6 MONTHS ENDED (3/1/06) (8/31/06) AUGUST 31, 2006 - -------------------------------------------------------------------------------- Class A Actual $1,000.00 $1,049.30 $ 6.16 - -------------------------------------------------------------------------------- Class A Hypothetical 1,000.00 1,019.21 6.07 - -------------------------------------------------------------------------------- Class B Actual 1,000.00 1,044.70 10.72 - -------------------------------------------------------------------------------- Class B Hypothetical 1,000.00 1,014.77 10.57 - -------------------------------------------------------------------------------- Class C Actual 1,000.00 1,045.20 10.31 - -------------------------------------------------------------------------------- Class C Hypothetical 1,000.00 1,015.17 10.16 - -------------------------------------------------------------------------------- Class N Actual 1,000.00 1,047.80 8.24 - -------------------------------------------------------------------------------- Class N Hypothetical 1,000.00 1,017.19 8.12 - -------------------------------------------------------------------------------- Class Y Actual 1,000.00 1,051.50 4.20 - -------------------------------------------------------------------------------- Class Y Hypothetical 1,000.00 1,021.12 4.13 Hypothetical assumes 5% annual return before expenses. Expenses are equal to the Fund's annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Those annualized expense ratios based on the 6-month period ended August 31, 2006 are as follows: CLASS EXPENSE RATIOS - -------------------------- Class A 1.19% - -------------------------- Class B 2.07 - -------------------------- Class C 1.99 - -------------------------- Class N 1.59 - -------------------------- Class Y 0.81 - -------------------------------------------------------------------------------- 21 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND STATEMENT OF INVESTMENTS August 31, 2006 - -------------------------------------------------------------------------------- VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- COMMON STOCKS--98.8% - -------------------------------------------------------------------------------- CONSUMER DISCRETIONARY--8.3% - -------------------------------------------------------------------------------- HOUSEHOLD DURABLES--1.9% Gafisa SA 1 2,000,000 $ 26,492,537 - -------------------------------------------------------------------------------- Greentown China Holdings Ltd. 1 7,000,000 8,208,557 --------------- 34,701,094 - -------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL--1.1% Submarino SA 1,000,000 20,522,388 - -------------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS--1.5% Li Ning Co. Ltd. 25,000,000 27,355,428 - -------------------------------------------------------------------------------- MEDIA--1.6% Balaji Telefilms Ltd. 1,124,482 3,161,888 - -------------------------------------------------------------------------------- Television Eighteen India Ltd. 625,001 8,050,405 - -------------------------------------------------------------------------------- Village Roadshow Ltd. 5,000,000 9,352,859 - -------------------------------------------------------------------------------- Village Roadshow Ltd., Cl. A, Preference 5,000,000 8,551,185 --------------- 29,116,337 - -------------------------------------------------------------------------------- MULTILINE RETAIL--1.7% Parkson Retail Group Ltd. 5,000,000 16,715,420 - -------------------------------------------------------------------------------- Robinson Department Store Public Co. Ltd. 1 50,000,000 15,034,593 --------------- 31,750,013 - -------------------------------------------------------------------------------- SPECIALTY RETAIL--0.3% Shinwa Art Auction Co. Ltd. 2 1,500 5,060,899 - -------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS--0.2% Himatsingka Seide Ltd. 1,500,000 3,805,200 - -------------------------------------------------------------------------------- CONSUMER STAPLES--3.5% - -------------------------------------------------------------------------------- BEVERAGES--0.2% Serm Suk Public Co. Ltd. 8,000,000 4,065,993 - -------------------------------------------------------------------------------- FOOD & STAPLES RETAILING--1.2% Wumart Stores, Inc., Series H 6,000,000 20,960,585 VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- FOOD PRODUCTS--2.1% China Vanguard Group Ltd. 2 110,000,000 $ 27,580,443 - -------------------------------------------------------------------------------- Crown Confectionery Co. Ltd. 2 110,000 11,500,052 --------------- 39,080,495 - -------------------------------------------------------------------------------- ENERGY--15.9% - -------------------------------------------------------------------------------- OIL & GAS--15.9% Addax Petroleum Corp. 1,3 1,000,000 24,482,041 - -------------------------------------------------------------------------------- Addax Petroleum Corp. 250,000 6,120,510 - -------------------------------------------------------------------------------- Bear Ridge Resources Ltd. 1 2,000,000 8,432,100 - -------------------------------------------------------------------------------- Calvalley Petroleum, Inc., Cl. A 1 4,500,000 25,649,145 - -------------------------------------------------------------------------------- Centurion Energy International, Inc. 1 4,000,000 26,599,113 - -------------------------------------------------------------------------------- Cyries Energy, Inc. 1 1,250,000 15,210,803 - -------------------------------------------------------------------------------- Great Eastern Shipping Co. Ltd. 3,000,000 17,448,157 - -------------------------------------------------------------------------------- Gulf Keystone Petroleum Ltd. 1,2 16,000,000 19,116,527 - -------------------------------------------------------------------------------- Paladin Resources Ltd. 1 11,000,000 44,511,972 - -------------------------------------------------------------------------------- Petrolifera Petroleum Ltd. 1 1,000,000 18,411,291 - -------------------------------------------------------------------------------- Solana Resources Ltd. 1,2 8,000,000 9,843,481 - -------------------------------------------------------------------------------- Sterling Energy plc 1 60,000,000 23,419,650 - -------------------------------------------------------------------------------- SXR Uranium One, Inc. 1 3,500,000 27,707,410 - -------------------------------------------------------------------------------- UrAsia Energy Ltd. 1 10,000,000 26,237,221 --------------- 293,189,421 - -------------------------------------------------------------------------------- FINANCIALS--9.0% - -------------------------------------------------------------------------------- CAPITAL MARKETS--2.0% RISA Partners, Inc. 2 9,000 36,722,177 - -------------------------------------------------------------------------------- COMMERCIAL BANKS--0.9% Karnataka Bank Ltd. 2 7,000,000 16,606,855 - -------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES--1.0% KIWOOM.COM Securities Co. Ltd. 600,000 18,225,320 22 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- REAL ESTATE MANAGEMENT & DEVELOPMENT--5.1% Guangzhou R&F Properties Co. Ltd., Series H 4,000,000 $ 20,109,936 - -------------------------------------------------------------------------------- Hoosiers Corp. 16,000 21,261,553 - -------------------------------------------------------------------------------- Kenedix, Inc. 11,000 53,034,627 --------------- 94,406,116 - -------------------------------------------------------------------------------- HEALTH CARE--3.7% - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES--1.1% Imaging Dynamics Co. Ltd. 1,2 2,000,000 6,423,595 - -------------------------------------------------------------------------------- Imaging Dynamics Co. Ltd. 1,2 4,000,000 12,847,191 --------------- 19,270,786 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES--2.2% Apollo Hospitals Enterprise Ltd. 1,500,000 14,200,602 - -------------------------------------------------------------------------------- Arques Industries AG 2 1,700,000 26,527,449 --------------- 40,728,051 - -------------------------------------------------------------------------------- PHARMACEUTICALS--0.4% Norwood Abbey Ltd. 1,2 14,000,000 2,030,906 - -------------------------------------------------------------------------------- Norwood Immunology Ltd. 1,2,4 15,000,000 5,712,110 --------------- 7,743,016 - -------------------------------------------------------------------------------- INDUSTRIALS--9.2% - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES--3.5% SBI VeriTrans Co. Ltd. 1,2 9,750 9,384,982 - -------------------------------------------------------------------------------- Wirecard AG 2 5,000,000 32,413,042 - -------------------------------------------------------------------------------- Xinhua Finance Ltd. 1,2 5,000 2,491,588 - -------------------------------------------------------------------------------- Xinhua Finance Ltd., Sponsored ADR 1,2 4,000,000 19,960,000 --------------- 64,249,612 VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING--3.3% IVRCL Infrastructures & Projects Ltd. 2 6,000,000 $ 29,745,353 - -------------------------------------------------------------------------------- Nagarjuna Construction Co. Ltd. 2,716,000 17,016,220 - -------------------------------------------------------------------------------- Nagarjuna Construction Co. Ltd., GDR 1,4 2,262,000 13,956,540 --------------- 60,718,113 - -------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES--1.3% Beijing Enterprises Holdings Ltd., Cl. H 15,000,000 24,265,281 - -------------------------------------------------------------------------------- MACHINERY--1.1% Electrovaya, Inc. 1 2,716,500 417,810 - -------------------------------------------------------------------------------- Fong's Industries Co. Ltd. 16,000,000 10,574,432 - -------------------------------------------------------------------------------- Railpower Technologies Corp. 1,2 5,000,000 8,775,898 --------------- 19,768,140 - -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY--16.3% - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--0.3% Manine Media Co. Ltd. 1,2 2,256,470 6,604,682 - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES--7.3% auFeminin.com SA 1,2 600,000 18,141,054 - -------------------------------------------------------------------------------- CDNetworks Co. Ltd. 1,2 600,000 20,409,862 - -------------------------------------------------------------------------------- Empas Corp. 1,2 900,000 10,719,859 - -------------------------------------------------------------------------------- Mobilians Co. Ltd. 2 1,554,094 8,997,620 - -------------------------------------------------------------------------------- Neowiz Corp. 300,000 22,881,825 - -------------------------------------------------------------------------------- Opera Software ASA 1,2 8,000,000 18,222,082 - -------------------------------------------------------------------------------- Tencent Holdings Ltd. 16,000,000 34,973,802 --------------- 134,346,104 23 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- IT SERVICES--1.6% Travelsky Technology Ltd., Cl. H 2 25,000,000 $ 29,251,985 - -------------------------------------------------------------------------------- SOFTWARE--7.1% Ahnlab, Inc. 2 1,000,000 20,493,082 - -------------------------------------------------------------------------------- Certicom Corp. 1,2 3,000,000 17,099,430 - -------------------------------------------------------------------------------- Duzon Digital Ware Co. Ltd. 2 1,200,000 22,327,969 - -------------------------------------------------------------------------------- Fast Search & Transfer ASA 1 9,000,000 29,468,523 - -------------------------------------------------------------------------------- Intelligent Wave, Inc. 2 16,000 15,385,987 - -------------------------------------------------------------------------------- MacDonald, Dettwiler & Associates Ltd. 1 250,000 8,651,497 - -------------------------------------------------------------------------------- Ninetowns Digital World Trade Holdings Ltd., ADR 1,2 3,000,000 14,430,000 - -------------------------------------------------------------------------------- Trolltech ASA 1 1,219,000 3,624,992 --------------- 131,481,480 - -------------------------------------------------------------------------------- MATERIALS--27.7% - -------------------------------------------------------------------------------- CHEMICALS--0.5% Allen-Vanguard Corp. 1,2 2,400,000 5,406,677 - -------------------------------------------------------------------------------- Hikal Ltd. 446,722 3,501,490 --------------- 8,908,167 - -------------------------------------------------------------------------------- METALS & MINING--27.2% Alamos Gold, Inc. 1 3,000,000 24,156,338 - -------------------------------------------------------------------------------- Anvil Mining Ltd. 1,2 3,000,000 24,699,177 - -------------------------------------------------------------------------------- Baffinland Iron Mines Corp. 1 1,800,000 3,403,601 - -------------------------------------------------------------------------------- Bema Gold Corp. 1 4,000,000 21,677,373 - -------------------------------------------------------------------------------- Eldorado Gold Corp. 1 4,000,000 19,795,531 - -------------------------------------------------------------------------------- Equinox Minerals Ltd. 1,2,3 24,000,000 34,741,699 - -------------------------------------------------------------------------------- EuroZinc Mining Corp. 1 26,000,000 73,627,070 - -------------------------------------------------------------------------------- First Quantum Minerals Ltd. 800,000 43,499,502 VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- METALS & MINING Continued Fortescue Metals Group Ltd. 1 3,500,000 $ 26,248,977 - -------------------------------------------------------------------------------- HudBay Minerals, Inc. 1 3,500,000 47,530,082 - -------------------------------------------------------------------------------- IAMGOLD Corp. 1,000,000 10,980,000 - -------------------------------------------------------------------------------- Ivernia, Inc. 1 9,050,000 8,924,726 - -------------------------------------------------------------------------------- Ivernia, Inc. 1,4 3,200,000 3,155,704 - -------------------------------------------------------------------------------- Kimberley Diamond Co. NL 1 10,000,000 7,579,954 - -------------------------------------------------------------------------------- Macarthur Coal Ltd. 6,500,000 24,764,079 - -------------------------------------------------------------------------------- Minara Resources Ltd. 12,000,000 32,608,683 - -------------------------------------------------------------------------------- Miramar Mining Corp. 1,2 4,000,000 16,791,821 - -------------------------------------------------------------------------------- Olympus Pacific Minerals, Inc. 1,2 13,000,000 5,763,141 - -------------------------------------------------------------------------------- Rio Narcea Gold Mines Ltd. 1,2 14,000,000 35,085,497 - -------------------------------------------------------------------------------- Stornoway Diamond Corp. 1 3,600,000 3,550,167 - -------------------------------------------------------------------------------- Tenke Mining Corp. 1 2,000,000 23,052,565 - -------------------------------------------------------------------------------- Tiberon Minerals Ltd. 1 2,000,000 4,668,416 - -------------------------------------------------------------------------------- Tiberon Minerals Ltd. 1,3 3,000,000 7,002,624 --------------- 503,306,727 - -------------------------------------------------------------------------------- TELECOMMUNICATION SERVICES--1.0% - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES--1.0% Danal Co. Ltd. 1,2 2,300,000 19,356,080 - -------------------------------------------------------------------------------- UTILITIES--4.2% - -------------------------------------------------------------------------------- ELECTRIC UTILITIES--1.0% Geodynamics Ltd. 1 3,000,000 2,336,306 - -------------------------------------------------------------------------------- Sayano-Shushenskaya Hydro-Power Station 9,850,000 8,766,500 - -------------------------------------------------------------------------------- Volzhskaya Hydroelectric Power Station OJSC 4,500,000 1,203,750 - -------------------------------------------------------------------------------- Zhigulyovskaya Hydraulic Power Station 4 36,000,000 7,290,000 --------------- 19,596,556 24 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- GAS UTILITIES--1.8% Xinao Gas Holdings Ltd. 35,000,000 $ 33,302,260 - -------------------------------------------------------------------------------- WATER UTILITIES--1.4% Guangdong Investment Ltd. 65,000,000 25,240,282 --------------- Total Common Stocks (Cost $1,475,316,656) 1,823,705,643
VALUE DATE STRIKE CONTRACTS SEE NOTE 1 - ------------------------------------------------------------------------------------------------------------ OPTIONS PURCHASED--0.0% - ------------------------------------------------------------------------------------------------------------ Norwood Immunology Ltd. Call 1 (Cost $0) 12/31/06 0.57GBP 1,250,000 $ 352
UNITS - ------------------------------------------------------------------------------------------------------------ RIGHTS, WARRANTS AND CERTIFICATES--0.0% - ------------------------------------------------------------------------------------------------------------ Goodpack Ltd. Wts., Exp. 4/13/07 1 (Cost $8,752) 242,000 106,103
PRINCIPAL AMOUNT - ------------------------------------------------------------------------------------------------------------ JOINT REPURCHASE AGREEMENTS--1.2% - ------------------------------------------------------------------------------------------------------------ Undivided interest of 2.54% in joint repurchase agreement (Principal Amount/Value $886,796,000, with a maturity value of $886,924,585) with UBS Warburg LLC, 5.22%, dated 8/31/06, to be repurchased at $22,510,264 on 9/1/06, collateralized by Federal National Mortgage Assn., 5%-5.50%, 9/1/35-12/1/35, with a value of $906,809,462 (Cost $22,507,000) $ 22,507,000 22,507,000 - ------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS, AT VALUE (COST $1,497,832,408) 100.0% 1,846,319,098 - ------------------------------------------------------------------------------------------------------------ LIABILITIES IN EXCESS OF OTHER ASSETS (0.0) (642,668) --------------------------------- NET ASSETS 100.0% $ 1,845,676,430 =================================
25 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND STATEMENT OF INVESTMENTS Continued - -------------------------------------------------------------------------------- FOOTNOTES TO STATEMENT OF INVESTMENTS 1. Non-income producing security. 2. Represents ownership of at least 5% of the voting securities of the issuer, and is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended August 31, 2006. Transactions during the period in which the issuer was an affiliate are as follows:
SHARES GROSS GROSS SHARES AUGUST 31, 2005 ADDITIONS REDUCTIONS AUGUST 31, 2006 - --------------------------------------------------------------------------------------------------------------------------------- Ahnlab, Inc. 750,000 250,000 -- 1,000,000 Allen-Vanguard Corp. 2,400,000 -- -- 2,400,000 Anvil Mining Ltd. -- 3,000,000* -- 3,000,000 Arques Industries AG -- 1,700,000 -- 1,700,000 auFeminin.com SA 600,000 -- -- 600,000 Bluecord Technology Corp. 966,476 -- 966,476 -- CDNetworks Co. Ltd. -- 600,000 -- 600,000 Certicom Corp. 2,500,000 500,000 -- 3,000,000 China Vanguard Group Ltd. (formerly B&B Group Holdings Ltd.) 32,000,000 78,000,000 -- 110,000,000 Crown Confectionery Co. Ltd. 90,000 20,000 -- 110,000 Danal Co. Ltd. 1,200,000 1,100,000 -- 2,300,000 Duzon Digital Ware Co. Ltd. 600,000 600,000* -- 1,200,000 Electrovaya, Inc.** 4,000,000 -- 1,283,500 2,716,500 Emotion Corp. 300,000 362,682 662,682 -- Empas Corp. -- 900,000 -- 900,000 Equinox Minerals Ltd. -- 24,000,000 -- 24,000,000 Gulf Keystone Petroleum Ltd. 9,750,000 6,250,000 -- 16,000,000 HudBay Minerals, Inc.** -- 4,000,000 500,000 3,500,000 Imaging Dynamics Co. Ltd. 2,000,000 -- -- 2,000,000 Imaging Dynamics Co. Ltd. 4,000,000 -- -- 4,000,000 Intelligent Wave, Inc. 5,000 11,000*** -- 16,000 IVRCL Infrastructures & Projects Ltd. -- 6,000,000* -- 6,000,000 Karnataka Bank Ltd. 4,500,000 2,500,000 -- 7,000,000 Manine Media Co. Ltd. -- 2,256,470* -- 2,256,470 Miramar Mining Corp. -- 4,000,000 -- 4,000,000 Mobilians Co. Ltd. 1,000,000 654,094* 100,000 1,554,094 Neowiz Corp.** 400,000 152,600 252,600 300,000 Ninetowns Digital World Trade Holdings Ltd., ADR 1,250,000 1,751,800 1,800 3,000,000 Norwood Abbey Ltd. 8,225,000 5,775,000 -- 14,000,000 Norwood Immunology Ltd. 5,000,000 10,000,000 -- 15,000,000 Olympus Pacific Minerals, Inc. -- 13,000,000 -- 13,000,000 Opera Software ASA 8,000,000 -- -- 8,000,000 Railpower Technologies Corp. 1,250,000 3,750,000 -- 5,000,000 Rio Narcea Gold Mines Ltd. 6,000,000 8,000,000 -- 14,000,000 RISA Partners, Inc. -- 9,000 -- 9,000 SBI VeriTrans Co. Ltd. 604 9,146*** -- 9,750 Shinwa Art Auction Co. Ltd. -- 1,500*** -- 1,500 Solana Resources Ltd. -- 8,000,000 -- 8,000,000 SXR Uranium One, Inc. (formerly Southern Cross Resources, Inc.)** 8,500,000 1,800,000 6,800,000 3,500,000 Trafficmaster plc 10,000,000 -- 10,000,000 -- Travelsky Technology Ltd., Cl. H 13,000,000 12,000,000 -- 25,000,000 Wirecard AG -- 5,000,000*** -- 5,000,000 Xillix Technologies Corp. 15,000,000 -- 15,000,000 --
26 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
SHARES GROSS GROSS SHARES AUGUST 31, 2005 ADDITIONS REDUCTIONS AUGUST 31, 2006 - ---------------------------------------------------------------------------------------------------------------------------------- Xinhua Finance Ltd. 5,000 1,340 1,340* 5,000 Xinhua Finance Ltd., Sponsored ADR -- 4,000,000 -- 4,000,000 Yedang Entertainment Co. Ltd. 1,000,000 400,000 1,400,000 --
VALUE DIVIDEND REALIZED SEE NOTE 1 INCOME GAIN (LOSS) - ---------------------------------------------------------------------------------------------------------------------------------- Ahnlab, Inc. $ 20,493,082 $ 307,992 $ -- Allen-Vanguard Corp. 5,406,677 -- -- Anvil Mining Ltd. 24,699,177 -- -- Arques Industries AG 26,527,449 357,523 -- auFeminin.com SA 18,141,054 -- -- Bluecord Technology Corp. -- -- (4,101,001) CDNetworks Co. Ltd. 20,409,862 -- -- Certicom Corp. 17,099,430 -- -- China Vanguard Group Ltd. (formerly B&B Group Holdings Ltd.) 27,580,443 132,828 -- Crown Confectionery Co. Ltd. 11,500,052 94,593 -- Danal Co. Ltd. 19,356,080 -- -- Duzon Digital Ware Co. Ltd. 22,327,969 269,578 -- Electrovaya, Inc.** -- -- (1,874,465) Emotion Corp. -- -- (8,311,227) Empas Corp. 10,719,859 -- -- Equinox Minerals Ltd. 34,741,699 -- -- Gulf Keystone Petroleum Ltd. 19,116,527 -- -- HudBay Minerals, Inc.** -- -- 3,649,522 Imaging Dynamics Co. Ltd. 6,423,595 -- -- Imaging Dynamics Co. Ltd. 12,847,191 -- -- Intelligent Wave, Inc. 15,385,987 63,981 -- IVRCL Infrastructures & Projects Ltd. 29,745,353 -- -- Karnataka Bank Ltd. 16,606,855 453,701 -- Manine Media Co. Ltd. 6,604,682 -- -- Miramar Mining Corp. 16,791,821 -- -- Mobilians Co. Ltd. 8,997,620 3 (433,679) Neowiz Corp.** -- -- 10,228,684 Ninetowns Digital World Trade Holdings Ltd., ADR 14,430,000 -- (5,346) Norwood Abbey Ltd. 2,030,906 -- -- Norwood Immunology Ltd. 5,712,110 -- -- Olympus Pacific Minerals, Inc. 5,763,141 -- -- Opera Software ASA 18,222,082 -- -- Railpower Technologies Corp. 8,775,898 -- -- Rio Narcea Gold Mines Ltd. 35,085,497 -- -- RISA Partners, Inc. 36,722,177 53,462 -- SBI VeriTrans Co. Ltd. 9,384,982 -- -- Shinwa Art Auction Co. Ltd. 5,060,899 -- -- Solana Resources Ltd. 9,843,481 -- -- SXR Uranium One, Inc. (formerly Southern Cross Resources, Inc.)** -- -- -- Trafficmaster plc -- -- (6,751,501) Travelsky Technology Ltd., Cl. H 29,251,985 718,593 -- Wirecard AG 32,413,042 -- --
27 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND STATEMENT OF INVESTMENTS Continued - --------------------------------------------------------------------------------
VALUE DIVIDEND REALIZED SEE NOTE 1 INCOME GAIN (LOSS) - ---------------------------------------------------------------------------------------------------------------------------------- Xillix Technologies Corp. $ -- $ -- $ (8,074,598) Xinhua Finance Ltd. 2,491,588 -- -- Xinhua Finance Ltd., Sponsored ADR 19,960,000 -- -- Yedang Entertainment Co. Ltd. -- -- (2,264,555) ------------------------------------------------- $ 626,670,252 $ 2,452,254 $ (17,938,166) =================================================
* Result of a corporate action. ** No longer an affiliate as of August 31, 2006. *** All or a portion of the transactions were the result of a stock split or dividend. 3. 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 $66,226,364 or 3.59% of the Fund's net assets as of August 31, 2006. 4. Illiquid security. The aggregate value of illiquid securities as of August 31, 2006 was $30,114,354, which represents 1.63% of the Fund's net assets. See Note 6 of accompanying Notes. DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC HOLDINGS, AS A PERCENTAGE OF TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS: GEOGRAPHIC HOLDINGS VALUE PERCENT - ------------------------------------------------------------------------ Canada $ 660,420,247 35.8% Korea, Republic of South 161,516,351 8.8 Australia 157,984,921 8.6 Japan 143,341,813 7.8 India 127,492,710 6.9 Cayman Islands 123,211,933 6.7 Hong Kong 96,755,415 5.2 China 92,961,063 5.0 Germany 58,940,491 3.2 Norway 51,315,597 2.8 United Kingdom 48,248,639 2.6 Brazil 47,014,925 2.5 United States 22,507,000 1.2 Thailand 19,100,586 1.0 France 18,141,054 1.0 Russia 17,260,250 0.9 Singapore 106,103 0.0 -------------------------------- Total $ 1,846,319,098 100.0% ================================ SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 28 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND STATEMENT OF ASSETS AND LIABILITIES August 31, 2006 - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- ASSETS - ------------------------------------------------------------------------------------------------- Investments, at value--see accompanying statement of investments: Unaffiliated companies (cost $898,731,409) $ 1,219,648,846 Affiliated companies (cost $599,100,999) 626,670,252 ---------------- 1,846,319,098 - ------------------------------------------------------------------------------------------------- Cash 94,296 - ------------------------------------------------------------------------------------------------- Receivables and other assets: Shares of beneficial interest sold 4,652,370 Interest and dividends 471,317 Investments sold 38,864 Other 18,191 ---------------- Total assets 1,851,594,136 - ------------------------------------------------------------------------------------------------- LIABILITIES - ------------------------------------------------------------------------------------------------- Unrealized depreciation on foreign currency contracts 16 - ------------------------------------------------------------------------------------------------- Payables and other liabilities: Shares of beneficial interest redeemed 3,768,961 Distribution and service plan fees 700,703 Foreign capital gains tax 682,480 Transfer and shareholder servicing agent fees 261,255 Shareholder communications 157,716 Trustees' compensation 97,587 Other 248,988 ---------------- Total liabilities 5,917,706 - ------------------------------------------------------------------------------------------------- NET ASSETS $ 1,845,676,430 ================ - ------------------------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS - ------------------------------------------------------------------------------------------------- Paid-in capital $ 1,488,208,327 - ------------------------------------------------------------------------------------------------- Accumulated net investment loss (6,323,790) - ------------------------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions 15,987,124 - ------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 347,804,769 ---------------- NET ASSETS $ 1,845,676,430 ================
29 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND STATEMENT OF ASSETS AND LIABILITIES Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE - -------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net assets of $1,330,250,855 and 56,838,966 shares of beneficial interest outstanding) $23.40 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $24.83 - -------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $124,504,765 and 5,549,853 shares of beneficial interest outstanding) $22.43 - -------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $242,408,130 and 10,801,586 shares of beneficial interest outstanding) $22.44 - -------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $51,761,278 and 2,271,204 shares of beneficial interest outstanding) $22.79 - -------------------------------------------------------------------------------- Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $96,751,402 and 4,121,933 shares of beneficial interest outstanding) $23.47 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 30 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND STATEMENT OF OPERATIONS For the Year Ended August 31, 2006 - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------- INVESTMENT INCOME - ------------------------------------------------------------------------------------- Dividends: Unaffiliated companies (net of foreign withholding taxes of $433,583) $ 9,309,839 Affiliated companies (net of foreign withholding taxes of $204,708) 2,452,254 - ------------------------------------------------------------------------------------- Interest 2,430,161 - ------------------------------------------------------------------------------------- Other income 9,577 - ------------------------------------------------------------------------------------- Portfolio lending fees 349 ------------- Total investment income 14,202,180 - ------------------------------------------------------------------------------------- EXPENSES - ------------------------------------------------------------------------------------- Management fees 10,933,455 - ------------------------------------------------------------------------------------- Distribution and service plan fees: Class A 2,648,779 Class B 1,145,096 Class C 1,839,611 Class N 190,318 - ------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 1,589,921 Class B 293,184 Class C 359,258 Class N 102,941 Class Y 8,960 - ------------------------------------------------------------------------------------- Shareholder communications: Class A 232,727 Class B 52,143 Class C 53,132 Class N 5,453 Class Y 596 - ------------------------------------------------------------------------------------- Custodian fees and expenses 594,799 - ------------------------------------------------------------------------------------- Trustees' compensation 88,456 - ------------------------------------------------------------------------------------- Other 103,570 ------------- Total expenses 20,242,399 Less reduction to custodian expenses (2,538) ------------- Net expenses 20,239,861 - ------------------------------------------------------------------------------------- NET INVESTMENT LOSS (6,037,681)
31 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND STATEMENT OF OPERATIONS Continued - -------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - ---------------------------------------------------------------------------------------- Net realized gain (loss) on: Investments: Unaffiliated companies $ 74,303,670 Affiliated companies (17,938,166) Foreign currency transactions 13,323,051 -------------- Net realized gain 69,688,555 - ---------------------------------------------------------------------------------------- Net change in unrealized appreciation on: Investments (net of foreign capital gains tax of $403,420) 212,257,352 Translation of assets and liabilities denominated in foreign currencies 33,622,973 -------------- Net change in unrealized appreciation 245,880,325 - ---------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 309,531,199 ==============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 32 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 2006 2005 - ----------------------------------------------------------------------------------------------------------------- OPERATIONS - ----------------------------------------------------------------------------------------------------------------- Net investment loss $ (6,037,681) $ (1,640,625) - ----------------------------------------------------------------------------------------------------------------- Net realized gain 69,688,555 78,637,389 - ----------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation 245,880,325 71,289,803 ----------------------------------- Net increase in net assets resulting from operations 309,531,199 148,286,567 - ----------------------------------------------------------------------------------------------------------------- DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS - ----------------------------------------------------------------------------------------------------------------- Dividends from net investment income: Class A -- (1,819,047) Class B -- -- Class C -- (41,765) Class N -- (36,939) Class Y -- -- - ----------------------------------------------------------------------------------------------------------------- Distributions from net realized gain: Class A (78,465,497) (5,454,270) Class B (9,877,066) (1,056,552) Class C (12,481,158) (901,322) Class N (2,719,549) (131,786) Class Y (2,218,004) -- - ----------------------------------------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS - ----------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from beneficial interest transactions: Class A 622,905,053 245,743,351 Class B 27,567,174 16,989,797 Class C 132,578,217 37,805,237 Class N 30,341,396 9,886,814 Class Y 94,327,942 -- - ----------------------------------------------------------------------------------------------------------------- NET ASSETS - ----------------------------------------------------------------------------------------------------------------- Total increase 1,111,489,707 449,270,085 - ----------------------------------------------------------------------------------------------------------------- Beginning of period 734,186,723 284,916,638 ----------------------------------- End of period (including accumulated net investment loss of $6,323,790 and $2,901,241, respectively) $ 1,845,676,430 $ 734,186,723 ===================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 33 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
CLASS A YEAR ENDED AUGUST 31, 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 19.48 $ 14.14 $ 10.51 $ 7.98 $ 7.89 - --------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) (.05) 1 (.02) 1 (.04) .01 .01 Net realized and unrealized gain 6.15 5.78 3.73 2.52 .16 ------------------------------------------------------------------- Total from investment operations 6.10 5.76 3.69 2.53 .17 - --------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- (.11) (.06) -- (.08) Distributions from net realized gain (2.18) (.31) -- -- -- ------------------------------------------------------------------- Total dividends and/or distributions to shareholders (2.18) (.42) (.06) -- (.08) - --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 23.40 $ 19.48 $ 14.14 $ 10.51 $ 7.98 =================================================================== - --------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 33.49% 41.35% 35.20% 31.70% 2.20% - --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 1,330,251 $ 552,861 $ 204,938 $ 132,342 $ 40,089 - --------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 1,098,056 $ 353,479 $ 207,202 $ 48,879 $ 35,136 - --------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income (loss) (0.24)% (0.12)% (0.26)% 0.29% (0.17)% Total expenses 1.20% 1.31% 1.34% 1.69% 2.16% Expenses after payments and waivers and reduction to custodian expenses 1.20% 1.31% 1.34% 1.60% 1.88% - --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 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. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 34 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
CLASS B YEAR ENDED AUGUST 31, 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 18.91 $ 13.77 $ 10.28 $ 7.87 $ 7.77 - --------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment loss (.24) 1 (.17) 1 (.13) (.02) (.07) Net realized and unrealized gain 5.94 5.62 3.62 2.43 .19 ------------------------------------------------------------------- Total from investment operations 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 (2.18) (.31) -- -- -- ------------------------------------------------------------------- Total dividends and/or distributions to shareholders (2.18) (.31) -- -- (.02) - --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 22.43 $ 18.91 $ 13.77 $ 10.28 $ 7.87 =================================================================== - --------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 32.29% 40.07% 33.95% 30.62% 1.51% - --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 124,505 $ 78,469 $ 43,478 $ 23,355 $ 18,859 - --------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 114,900 $ 60,395 $ 37,393 $ 16,884 $ 16,868 - --------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment loss (1.11)% (1.02)% (1.14)% (0.28)% (0.94)% Total expenses 2.09% 2.23% 2.35% 2.85% 2.93% Expenses after payments and waivers and reduction to custodian expenses 2.09% 2.23% 2.31% 2.38% 2.65% - --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 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. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 35 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND FINANCIAL HIGHLIGHTS Continued - --------------------------------------------------------------------------------
CLASS C YEAR ENDED AUGUST 31, 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 18.90 $ 13.76 $ 10.27 $ 7.86 $ 7.77 - --------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment loss (.23) 1 (.16) 1 (.09) (.02) (.06) Net realized and unrealized gain 5.95 5.63 3.59 2.43 .16 ------------------------------------------------------------------- Total from investment operations 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 (2.18) (.31) -- -- -- ------------------------------------------------------------------- Total dividends and/or distributions to shareholders (2.18) (.33) (.01) -- (.01) - --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 22.44 $ 18.90 $ 13.76 $ 10.27 $ 7.86 =================================================================== - --------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 32.42% 40.23% 34.05% 30.66% 1.35% - --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 242,408 $ 86,184 $ 32,401 $ 12,793 $ 6,558 - --------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 184,832 $ 55,819 $ 26,486 $ 7,489 $ 6,180 - --------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment loss (1.06)% (0.96)% (1.00)% (0.38)% (0.95)% Total expenses 2.01% 2.14% 2.19% 2.69% 2.94% Expenses after payments and waivers and reduction to custodian expenses 2.01% 2.14% 2.19% 2.39% 2.66% - --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 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. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 36 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND
CLASS N YEAR ENDED AUGUST 31, 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - --------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 19.08 $ 13.90 $ 10.35 $ 7.89 $ 7.87 - --------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income (loss) (.14) 1 (.09) 1 (.05) (.03) .08 Net realized and unrealized gain 6.03 5.67 3.64 2.49 .07 ------------------------------------------------------------------- Total from investment operations 5.89 5.58 3.59 2.46 .15 - --------------------------------------------------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- (.09) (.04) -- (.13) Distributions from net realized gain (2.18) (.31) -- -- -- ------------------------------------------------------------------- Total dividends and/or distributions to shareholders (2.18) (.40) (.04) -- (.13) - --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 22.79 $ 19.08 $ 13.90 $ 10.35 $ 7.89 =================================================================== - --------------------------------------------------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 2 33.06% 40.76% 34.70% 31.18% 1.99% - --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 51,761 $ 16,673 $ 4,101 $ 1,128 $ 406 - --------------------------------------------------------------------------------------------------------------------- Average net assets (in thousands) $ 38,262 $ 9,698 $ 2,531 $ 625 $ 151 - --------------------------------------------------------------------------------------------------------------------- Ratios to average net assets: 3 Net investment income (loss) (0.63)% (0.51)% (0.50)% 0.25% (0.33)% Total expenses 1.57% 1.75% 1.78% 1.96% 2.32% Expenses after payments and waivers and reduction to custodian expenses 1.57% 1.68% 1.75% 1.90% 2.04% - --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 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. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 37 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND FINANCIAL HIGHLIGHTS Continued - ---------------------------------------------------------------------------- CLASS Y PERIOD ENDED AUGUST 31, 2006 1 - ---------------------------------------------------------------------------- PER SHARE OPERATING DATA - ---------------------------------------------------------------------------- Net asset value, beginning of period $ 19.97 - ---------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income 2 .01 Net realized and unrealized gain 5.67 ------------ Total from investment operations 5.68 - ---------------------------------------------------------------------------- Dividends and/or distributions to shareholders: Dividends from net investment income -- Distributions from net realized gain (2.18) ------------ Total dividends and/or distributions to shareholders (2.18) - ---------------------------------------------------------------------------- Net asset value, end of period $ 23.47 ============ - ---------------------------------------------------------------------------- TOTAL RETURN, AT NET ASSET VALUE 3 30.60% - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------- Net assets, end of period (in thousands) $ 96,751 - ---------------------------------------------------------------------------- Average net assets (in thousands) $ 43,043 - ---------------------------------------------------------------------------- Ratios to average net assets: 4 Net investment income 0.03% Total expenses 0.82% 5 - ---------------------------------------------------------------------------- Portfolio turnover rate 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. Reduction to custodian expenses less than 0.01%. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 38 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer International Small Company Fund (the Fund) is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment objective is to seek long-term capital appreciation. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B, Class C, 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 39 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued will be valued at the mean between the "bid" and "asked" prices. Futures contracts traded on a commodities or futures exchange will be valued at the final settlement price or official closing price on the principal exchange as reported by such principal exchange at its trading session ending at, or most recently prior to, the time when the Fund's assets are valued. Securities (including restricted securities) for which market quotations are not readily available are valued at their fair value. Foreign and domestic securities whose values have been materially affected by what the Manager identifies as a significant event occurring before the Fund's assets are valued but after the close of their respective exchanges will be fair valued. Fair value is determined in good faith using consistently applied procedures under the supervision of the Board of Trustees. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). - -------------------------------------------------------------------------------- FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in U.S. dollars. The values of securities denominated in foreign currencies and amounts related to the purchase and sale of foreign securities and foreign investment income are translated into U.S. dollars as of the close of the New York Stock Exchange (the "Exchange"), normally 4:00 P.M. Eastern time, on each day the Exchange is open for business. Foreign exchange rates may be valued primarily using dealer supplied valuations or a portfolio pricing service authorized by the Board of Trustees. Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the values of assets and liabilities, including investments in securities at fiscal period end, resulting from changes in exchange rates. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund's Statement of Operations. - -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other affiliated funds advised by the Manager, may transfer uninvested cash balances into joint trading accounts on a daily basis. These balances are invested in one or more repurchase agreements. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. In the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. 40 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND - -------------------------------------------------------------------------------- ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. - -------------------------------------------------------------------------------- FEDERAL TAXES. The Fund intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to shareholders, therefore, no federal income or excise tax provision is required. The tax components of capital shown in the table below represent distribution requirements the Fund must satisfy under the income tax regulations, losses the Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation of securities and other investments for federal income tax purposes. NET UNREALIZED APPRECIATION BASED ON COST OF SECURITIES AND UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME INCOME GAIN CARRYFORWARD 1,2,3 TAX PURPOSES ------------------------------------------------------------------------ $23,051,816 $2,804,202 $582,987 $332,287,068 1. The Fund had $582,987 of post-October foreign currency losses which were deferred. 2. During the fiscal year ended August 31, 2006, the Fund did not utilize any capital loss carryforward. 3. During the fiscal year ended August 31, 2005, the Fund did not utilize any capital loss carryforward. Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Fund. Accordingly, the following amounts have been reclassified for August 31, 2006. Net assets of the Fund were unaffected by the reclassifications. REDUCTION TO REDUCTION TO ACCUMULATED ACCUMULATED NET INCREASE TO NET INVESTMENT REALIZED GAIN PAID-IN CAPITAL LOSS ON INVESTMENTS 4 --------------------------------------------------- $4,312,577 $2,615,132 $6,927,709 4. $4,312,577, including $692,855 of long-term capital gain, was distributed in connection with Fund share redemptions. 41 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued The tax character of distributions paid during the years ended August 31, 2006 and August 31, 2005 was as follows: YEAR ENDED YEAR ENDED AUGUST 31, 2006 AUGUST 31, 2005 ------------------------------------------------------------- Distributions paid from: Ordinary income $ 52,234,915 $ 1,896,893 Long-term capital gain 53,526,359 7,544,788 ---------------------------------- Total $ 105,761,274 $ 9,441,681 ================================== The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation of securities and other investments for federal income tax purposes as of August 31, 2006 are noted below. The primary difference between book and tax appreciation or depreciation of securities and other investments, if applicable, is attributable to the tax deferral of losses or tax realization of financial statement unrealized gain or loss. Federal tax cost of securities $ 1,513,350,109 Federal tax cost of other investments (28,902) ---------------- Total federal tax cost $ 1,513,321,207 ================ Gross unrealized appreciation $ 460,972,773 Gross unrealized depreciation (128,685,705) ---------------- Net unrealized appreciation $ 332,287,068 ================ Certain foreign countries impose a tax on capital gains which is accrued by the Fund based on unrealized appreciation, if any, on affected securities. The tax is paid when the gain is realized. - -------------------------------------------------------------------------------- TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the Fund's independent trustees. Benefits are based on years of service and fees paid to each trustee during the years of service. During the year ended August 31, 2006, the Fund's projected benefit obligations were increased by $62,456 and payments of $3,388 were made to retired trustees, resulting in an accumulated liability of $80,424 as of August 31, 2006. The Board of Trustees has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of "Other" within the asset section of the Statement of Assets and Liabilities. Deferral of trustees' fees under the plan will not affect the net assets of the Fund, and will not 42 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND materially affect the Fund's assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the Plan. - -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually. - -------------------------------------------------------------------------------- INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon ex-dividend notification in the case of certain foreign dividends where the ex-dividend date may have passed. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, which includes accretion of discount and amortization of premium, is accrued as earned. - -------------------------------------------------------------------------------- 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 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: 43 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST Continued
YEAR ENDED AUGUST 31, 2006 1 YEAR ENDED AUGUST 31, 2005 SHARES AMOUNT SHARES AMOUNT - --------------------------------------------------------------------------------------------- CLASS A Sold 45,786,785 $ 1,019,057,904 19,910,644 $ 350,648,595 Dividends and/or distributions reinvested 3,562,149 69,639,992 400,661 6,462,659 Redeemed (20,894,266) (465,792,843) 2 (6,423,668) (111,367,903) 3 ------------------------------------------------------------------ Net increase 28,454,668 $ 622,905,053 13,887,637 $ 245,743,351 ================================================================== - --------------------------------------------------------------------------------------------- CLASS B Sold 2,914,524 $ 61,689,329 2,035,409 $ 34,453,596 Dividends and/or distributions reinvested 481,417 9,079,521 62,820 990,049 Redeemed (1,996,614) (43,201,676) 2 (1,106,018) (18,453,848) 3 ------------------------------------------------------------------ Net increase 1,399,327 $ 27,567,174 992,211 $ 16,989,797 ================================================================== - --------------------------------------------------------------------------------------------- CLASS C Sold 7,743,971 $ 166,349,265 3,030,714 $ 51,797,437 Dividends and/or distributions reinvested 548,252 10,340,014 52,750 830,810 Redeemed (2,050,959) (44,111,062) 2 (877,446) (14,823,010) 3 ------------------------------------------------------------------ Net increase 6,241,264 $132,578,217 2,206,018 $ 37,805,237 ================================================================== - --------------------------------------------------------------------------------------------- CLASS N Sold 1,895,944 $ 41,657,866 706,297 $ 12,113,529 Dividends and/or distributions reinvested 133,242 2,543,611 10,338 163,864 Redeemed (631,651) (13,860,081) 2 (138,073) (2,390,579) 3 ------------------------------------------------------------------ Net increase 1,397,535 $ 30,341,396 578,562 $ 9,886,814 ================================================================== - --------------------------------------------------------------------------------------------- CLASS Y Sold 7,062,894 $ 158,790,428 -- $ -- Dividends and/or distributions reinvested 113,389 2,217,895 -- -- Redeemed (3,054,350) (66,680,381) 2 -- -- ------------------------------------------------------------------ Net increase 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 $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. Net of redemption fees of $16,984, $2,902, $2,682 and $466 for Class A, Class B, Class C and Class N, respectively. - -------------------------------------------------------------------------------- 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the year ended August 31, 2006, were as follows: 44 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND PURCHASES SALES ------------------------------------------------------- Investment securities $1,303,711,937 $497,168,438 - -------------------------------------------------------------------------------- 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 average annual rate as shown in the following table: FEE SCHEDULE ------------------------------------------ Up to $250 million of net assets 0.80% Next $250 million of net assets 0.77 Next $500 million of net assets 0.75 Next $1 billion of net assets 0.69 Over $2 billion of net assets 0.67 - -------------------------------------------------------------------------------- TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended August 31, 2006, the Fund paid $2,209,681 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. - -------------------------------------------------------------------------------- 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 up to 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 45 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued class, the Board of Trustees and its independent trustees must determine whether the Distributor shall be entitled to payment from the Fund of all or a portion of the service fee and/or asset-based sales charge in respect to shares sold prior to the effective date of such termination. The Distributor's aggregate uncompensated expenses under the plan at August 31, 2006 for Class B, Class C and Class N shares were $1,546,043, $2,411,079 and $421,745, 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 RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR - ----------------------------------------------------------------------------------------------- August 31, 2006 $995,950 $44,057 $155,576 $114,253 $29,360
- -------------------------------------------------------------------------------- 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. - -------------------------------------------------------------------------------- 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. 46 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND As of August 31, 2006, the Fund had outstanding foreign currency contracts as follows: CONTRACT VALUATION AS OF EXPIRATION AMOUNT AUGUST 31, UNREALIZED CONTRACT DESCRIPTION DATE (000S) 2006 DEPRECIATION - ------------------------------------------------------------------------------- CONTRACTS TO SELL U.S. Dollar 9/5/06 45 $28,918 $16 - -------------------------------------------------------------------------------- 6. ILLIQUID SECURITIES As of August 31, 2006, investments in securities included issues that are illiquid. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Fund will not invest more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. Securities that are illiquid are marked with the applicable footnote on the Statement of Investments. - -------------------------------------------------------------------------------- 7. 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 August 31, 2006, the Fund had no securities on loan. - -------------------------------------------------------------------------------- 8. RECENT ACCOUNTING PRONOUNCEMENT 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 August 31, 2006, the 47 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND NOTES TO FINANCIAL STATEMENTS Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 8. RECENT ACCOUNTING PRONOUNCEMENT Continued Manager is evaluating the implications of FIN 48. Its impact in the Fund's financial statements has not yet been determined. - -------------------------------------------------------------------------------- 9. LITIGATION A consolidated amended complaint was filed as a putative class action against the Manager and the Transfer Agent and other defendants (including 51 of the Oppenheimer funds including the Fund) in the U.S. District Court for the Southern District of New York on January 10, 2005 and was amended on March 4, 2005. The complaint alleged, among other things, that the Manager charged excessive fees for distribution and other costs, and that by permitting and/or participating in those actions, the Directors/Trustees and the Officers of the funds breached their fiduciary duties to fund shareholders under the Investment Company Act of 1940 and at common law. The plaintiffs sought unspecified damages, an accounting of all fees paid, and an award of attorneys' fees and litigation expenses. In response to the defendants' motions to dismiss the suit, seven of the eight counts in the complaint, including the claims against certain of the Oppenheimer funds, as nominal defendants, and against certain present and former Directors, Trustees and Officers of the funds, and the Distributor, as defendants, were dismissed with prejudice, by court order dated March 10, 2006, and the remaining count against the Manager and the Transfer Agent was dismissed with prejudice by court order dated April 5, 2006. The plaintiffs filed an appeal of those dismissals on May 11, 2006. The Manager believes that the allegations contained in the complaint are without merit and that there are substantial grounds to sustain the district court's rulings. The Manager also believes that it is premature to render any opinion as to the likelihood of an outcome unfavorable to it, the funds, the Directors/Trustees or the Officers on the appeal of the decisions of the district court, and that no estimate can yet be made with any degree of certainty as to the amount or range of any potential loss. 48 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND: We have audited the accompanying statement of assets and liabilities of Oppenheimer International Small Company Fund, including the statement of investments, as of August 31, 2006, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 2006, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Oppenheimer International Small Company Fund as of August 31, 2006, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles. KPMG LLP Denver, Colorado October 16, 2006 49 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND FEDERAL INCOME TAX INFORMATION Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- In early 2007, if applicable, shareholders of record will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 2006. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. Capital gain distributions of $1.1009 per share were paid to Class A, Class B, Class C, Class N and Class Y shareholders, respectively, on December 5, 2005. Whether received in stock or in cash, the capital gain distribution should be treated by shareholders as a gain from the sale of the capital assets held for more than one year (long-term capital gains). None of the dividends paid by the Fund during the fiscal year ended August 31, 2006 are eligible for the corporate dividend-received deduction. A portion, if any, of the dividends paid by the Fund during the fiscal year ended August 31, 2006 which are not designated as capital gain distributions are eligible for lower individual income tax rates to the extent that the Fund has received qualified dividend income as stipulated by recent tax legislation. $11,581,744 of the Fund's fiscal year taxable income may be eligible for the lower individual income tax rates. In early 2007, shareholders of record will receive information regarding the percentage of distributions that are eligible for lower individual income tax rates. The Fund has elected the application of Section 853 of the Internal Revenue Code to permit shareholders to take a federal income tax credit or deduction, at their option, on a per share basis for an aggregate amount of $514,512 of foreign income taxes paid by the Fund during the fiscal year ended August 31, 2006. A separate notice will be mailed to each shareholder, which will reflect the proportionate share of such foreign taxes which must be treated by shareholders as gross income for federal income tax purposes. Gross income of $4,315,111 was derived from sources within foreign countries or possessions of the United States. Recent tax legislation allows a regulated investment company to designate distributions not designated as capital gain distributions, as either interest related dividends or short-term capital gain dividends, both of which are exempt from the U.S. withholding tax applicable to non U.S. taxpayers. For the fiscal year ended August 31, 2006, $37,395,248 or 71.59% of the short-term capital gain distribution paid by the Fund qualifies as a short-term capital gain dividend. The foregoing information is presented to assist shareholders in reporting distributions received from the Fund to the Internal Revenue Service. Because of the complexity of the federal regulations which may affect your individual tax return and the many variations in state and local tax regulations, we recommend that you consult your tax advisor for specific guidance. 50 | 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 30, no later than August 31 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. 51 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND TRUSTEES AND OFFICERS Unaudited - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------- NAME, POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS HELD; FUND, LENGTH OF SERVICE, AGE NUMBER OF PORTFOLIOS IN THE FUND COMPLEX CURRENTLY OVERSEEN INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY, CENTENNIAL, COLORADO TRUSTEES 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL. CLAYTON K. YEUTTER, Director of American Commercial Lines (barge company) (since January 2005); Attorney at Hogan Chairman of the Board & Hartson (law firm) (since June 1993); Director of Covanta Holding Corp. (waste-to-energy of Trustees (since 2003), company) (since 2002); Director of Weyerhaeuser Corp. (1999-April 2004); Director of Trustee (since 1997) Caterpillar, Inc. (1993-December 2002); Director of ConAgra Foods (1993-2001); Director of Age: 75 Texas Instruments (1993-2001); Director of FMC Corporation (1993-2001). Oversees 43 portfolios in the OppenheimerFunds complex. MATTHEW P. FINK, Trustee of the Committee for Economic Development (policy research foundation) (since 2005); Trustee (since 2005) Director of ICI Education Foundation (education foundation) (October 1991-August 2006); Age: 65 President of the Investment Company Institute (trade association) (October 1991-June 2004); Director of ICI Mutual Insurance Company (insurance company) (October 1991-June 2004). Oversees 43 portfolios in the OppenheimerFunds complex. ROBERT G. GALLI, A director or trustee of other Oppenheimer funds. Oversees 53 portfolios in the Trustee (since 1997) OppenheimerFunds complex. Age: 73 PHILLIP A. GRIFFITHS, Distinguished Presidential Fellow for International Affairs (since 2002) and Member (since Trustee (since 1999) 1979) of the National Academy of Sciences; Council on Foreign Relations (since 2002); Age: 68 Director of GSI Lumonics Inc. (precision medical equipment supplier) (since 2001); Senior Advisor of The Andrew W. Mellon Foundation (since 2001); Chair of Science Initiative Group (since 1999); Member of the American Philosophical Society (since 1996); Trustee of Woodward Academy (since 1983); Foreign Associate of Third World Academy of Sciences; Director of the Institute for Advanced Study (1991-2004); Director of Bankers Trust New York Corporation (1994-1999); Provost at Duke University (1983-1991). Oversees 43 portfolios in the OppenheimerFunds complex. MARY F. MILLER, Trustee of the American Symphony Orchestra (not-for-profit) (since October 1998); and Senior Trustee (since 2004) Vice President and General Auditor of American Express Company (financial services company) Age: 63 (July 1998-February 2003). Oversees 43 portfolios in the OppenheimerFunds complex. JOEL W. MOTLEY, Director of Columbia Equity Financial Corp. (privately-held financial adviser) (since 2002); Trustee (since 2002) Managing Director of Carmona Motley, Inc. (privately-held financial adviser) (since January Age: 54 2002); Managing Director of Carmona Motley Hoffman Inc. (privately-held financial adviser) (January 1998-December 2001); Member of the Finance and Budget Committee of the Council on Foreign Relations, the Investment Committee of the Episcopal Church of America, the Investment Committee and Board of Human Rights Watch and the Investment Committee of Historic Hudson Valley. Oversees 43 portfolios in the OppenheimerFunds complex.
52 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND KENNETH A. RANDALL, Director of Dominion Resources, Inc. (electric utility holding company) (February Trustee (since 1997) 1972-October 2005); Former Director of Prime Retail, Inc. (real estate investment trust), Age: 79 Dominion Energy Inc. (electric power and oil & gas producer), Lumberman's Mutual Casualty Company, American Motorists Insurance Company and American Manufacturers Mutual Insurance Company; Former President and Chief Executive Officer of The Conference Board, Inc. (international economic and business research). Oversees 43 portfolios in the OppenheimerFunds complex. RUSSELL S. REYNOLDS, JR., Chairman of The Directorship Search Group, Inc. (corporate governance consulting and Trustee (since 1997) executive recruiting) (since 1993); Life Trustee of International House (non-profit Age: 74 educational organization); Founder, Chairman and Chief Executive Officer of Russell Reynolds Associates, Inc. (1969-1993); Banker at J.P. Morgan & Co. (1958-1966); 1st Lt. Strategic Air Command, U.S. Air Force (1954-1958). Oversees 43 portfolios in the OppenheimerFunds complex. JOSEPH M.WIKLER, Director of the following medical device companies: Medintec (since 1992) and Cathco (since Trustee (since 2005) 1996); Director of Lakes Environmental Association (since 1996); Member of the Investment Age: 65 Committee of the Associated Jewish Charities of Baltimore (since 1994); Director of Fortis/Hartford mutual funds (1994-December 2001). Oversees 43 portfolios in the OppenheimerFunds complex. PETER I.WOLD, President of Wold Oil Properties, Inc. (oil and gas exploration and production company) Trustee (since 2005) (since 1994); Vice President, Secretary and Treasurer of Wold Trona Company, Inc. (soda ash Age: 58 processing and production) (since 1996); Vice President of Wold Talc Company, Inc. (talc mining) (since 1999); Managing Member of Hole-in-the-Wall Ranch (cattle ranching) (since 1979); Director and Chairman of the Denver Branch of the Federal Reserve Bank of Kansas City (1993-1999); and Director of PacifiCorp. (electric utility) (1995-1999). Oversees 43 portfolios in the OppenheimerFunds complex. BRIAN F.WRUBLE, General Partner of Odyssey Partners, L.P. (hedge fund) (since September 1995); Director of Trustee (since 2005) Special Value Opportunities Fund, LLC (registered investment company) (since September 2004); Age: 63 Member of Zurich Financial Investment Advisory Board (insurance) (since October 2004); Board of Governing Trustees of The Jackson Laboratory (non-profit) (since August 1990); Trustee of the Institute for Advanced Study (non-profit educational institute) (since May 1992); Special Limited Partner of Odyssey Investment Partners, LLC (private equity investment) (January 1999-September 2004); Trustee of Research Foundation of AIMR (2000-2002) (investment research, non-profit); Governor, Jerome Levy Economics Institute of Bard College (August 1990-September 2001) (economics research); Director of Ray & Berendtson, Inc. (May 2000-April 2002) (executive search firm). Oversees 53 portfolios in the OppenheimerFunds complex. - -------------------------------------------------------------------------------------------------------------------------------- INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IS TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH FLOOR, NEW AND OFFICER YORK, NEW YORK 10281-1008. MR. MURPHY SERVES AS A TRUSTEE FOR AN INDEFINITE TERM, OR UNTIL HIS RESIGNATION, RETIREMENT, DEATH OR REMOVAL AND AS AN OFFICER FOR AN INDEFINITE TERM, OR UNTIL HIS RESIGNATION, RETIREMENT, DEATH OR REMOVAL. MR. MURPHY IS AN INTERESTED TRUSTEE DUE TO HIS POSITIONS WITH OPPENHEIMERFUNDS, INC. AND ITS AFFILIATES.
53 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND TRUSTEES AND OFFICERS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- JOHN V. MURPHY, Chairman, Chief Executive Officer and Director (since June 2001) and President (since Trustee, President and September 2000) of the Manager; President and a director or trustee of other Oppenheimer Principal Executive Officer funds; President and Director of Oppenheimer Acquisition Corp. ("OAC") (the Manager's parent (since 2001) holding company) and of Oppenheimer Partnership Holdings, Inc. (holding company subsidiary of Age: 57 the Manager) (since July 2001); Director of OppenheimerFunds Distributor, Inc. (subsidiary of the Manager) (since November 2001); Chairman and Director of Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer agent subsidiaries of the Manager) (since July 2001); President and Director of OppenheimerFunds Legacy Program (charitable trust program established by the Manager) (since July 2001); Director of the following investment advisory subsidiaries of the Manager: OFI Institutional Asset Management, Inc., Centennial Asset Management Corporation, Trinity Investment Management Corporation and Tremont Capital Management, Inc. (since November 2001), HarbourView Asset Management Corporation and OFI Private Investments, Inc. (since July 2001); President (since November 1, 2001) and Director (since July 2001) of Oppenheimer Real Asset Management, Inc.; Executive Vice President of Massachusetts Mutual Life Insurance Company (OAC's parent company) (since February 1997); Director of DLB Acquisition Corporation (holding company parent of Babson Capital Management LLC) (since June 1995); Member of the Investment Company Institute's Board of Governors (since October 3, 2003); Chief Operating Officer of the Manager (September 2000-June 2001); President and Trustee of MML Series Investment Fund and MassMutual Select Funds (open-end investment companies) (November 1999-November 2001); Director of C.M. Life Insurance Company (September 1999-August 2000); President, Chief Executive Officer and Director of MML Bay State Life Insurance Company (September 1999-August 2000); Director of Emerald Isle Bancorp and Hibernia Savings Bank (wholly-owned subsidiary of Emerald Isle Bancorp) (June 1989-June 1998). Oversees 91 portfolios in the OppenheimerFunds complex. - -------------------------------------------------------------------------------------------------------------------------------- OTHER OFFICERS THE ADDRESSES OF THE OFFICERS IN THE CHART BELOW ARE AS FOLLOWS: FOR MESSRS. SAH, ZACK, OF THE FUND GILLESPIE AND MS. BLOOMBERG, TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET, NEW YORK, NEW YORK 10281-1008, FOR MESSRS. VANDEHEY,WIXTED, PETERSEN, SZILAGYI AND MS. IVES, 6803 S. TUCSON WAY, CENTENNIAL, COLORADO 80112-3924. EACH OFFICER SERVES FOR AN INDEFINITE TERM OR UNTIL HIS OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL. ROHIT SAH, Vice President of the Manager since January 2004; an officer of 1 portfolio in the Vice President (since 2004) OppenheimerFunds complex. Formerly Assistant Vice President and Assistant Portfolio Manager Age: 41 of the Manager (December 2000 - December 2003). An equity analyst of the Manager (June 1996-December 2000). An officer of 1 portfolio in the OppenheimerFunds complex. MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer of the Manager (since March 2004); Vice Vice President and Chief President of OppenheimerFunds Distributor, Inc., Centennial Asset Management Corporation and Compliance Officer Shareholder Services, Inc. (since June 1983). Former Vice President and Director of Internal (since 2004) Audit of the Manager (1997-February 2004). An officer of 91 portfolios in the Age: 56 OppenheimerFunds complex.
54 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND BRIAN W. WIXTED, Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer of the Treasurer and Principal following: HarbourView Asset Management Corporation, Shareholder Financial Services, Inc., Financial and Accounting Shareholder Services, Inc., Oppenheimer Real Asset Management Corporation, and Oppenheimer Officer (since 1999) Partnership Holdings, Inc. (since March 1999), OFI Private Investments, Inc. (since March Age: 47 2000), OppenheimerFunds International Ltd. (since May 2000), OppenheimerFunds plc (since May 2000), OFI Institutional Asset Management, Inc. (since November 2000), and OppenheimerFunds Legacy Program (charitable trust program established by the Manager) (since June 2003); Treasurer and Chief Financial Officer of OFI Trust Company (trust company subsidiary of the Manager) (since May 2000); Assistant Treasurer of the following: OAC (since March 1999), Centennial Asset Management Corporation (March 1999-October 2003) and OppenheimerFunds Legacy Program (April 2000-June 2003); Principal and Chief Operating Officer of Bankers Trust Company-Mutual Fund Services Division (March 1995-March 1999). An officer of 91 portfolios in the OppenheimerFunds complex. BRIAN S. PETERSEN, Assistant Vice President of the Manager (since August 2002); Manager/Financial Product Assistant Treasurer Accounting of the Manager (November 1998-July 2002). An officer of 91 portfolios in the (since 2004) OppenheimerFunds complex. Age: 36 BRIAN C. SZILAGYI, Assistant Vice President of the Manager (since July 2004); Director of Financial Reporting Assistant Treasurer and Compliance of First Data Corporation (April 2003-July 2004); Manager of Compliance of (since 2005) Berger Financial Group LLC (May 2001-March 2003); Director of Mutual Fund Operations at Age: 36 American Data Services, Inc. (September 2000-May 2001). An officer of 91 portfolios in the OppenheimerFunds complex. ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since March 2002) of the Secretary (since 2001) Manager; General Counsel and Director of the Distributor (since December 2001); General Age: 58 Counsel of Centennial Asset Management Corporation (since December 2001); Senior Vice President and General Counsel of HarbourView Asset Management Corporation (since December 2001); Secretary and General Counsel of OAC (since November 2001); Assistant Secretary (since September 1997) and Director (since November 2001) of OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President and Director of Oppenheimer Partnership Holdings, Inc. (since December 2002); Director of Oppenheimer Real Asset Management, Inc. (since November 2001); Senior Vice President, General Counsel and Director of Shareholder Financial Services, Inc. and Shareholder Services, Inc. (since December 2001); Senior Vice President, General Counsel and Director of OFI Private Investments, Inc. and OFI Trust Company (since November 2001); Vice President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice President and General Counsel of OFI Institutional Asset Management, Inc. (since November 2001); Director of OppenheimerFunds (Asia) Limited (since December 2003); Senior Vice President (May 1985-December 2003), Acting General Counsel (November 2001-February 2002) and Associate General Counsel (May 1981-October 2001) of the Manager; Assistant Secretary of the following: Shareholder Services, Inc. (May 1985-November 2001), Shareholder Financial Services, Inc. (November 1989-November 2001), and OppenheimerFunds International Ltd. (September 1997-November 2001). An officer of 91 portfolios in the OppenheimerFunds complex.
55 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND TRUSTEES AND OFFICERS Unaudited / Continued - -------------------------------------------------------------------------------- LISA I. BLOOMBERG, Vice President and Associate Counsel of the Manager (since May 2004); First Vice President Assistant Secretary (April 2001-April 2004), Associate General Counsel (December 2000-April 2004), Corporate Vice (since 2004) President (May 1999-April 2001) and Assistant General Counsel (May 1999-December 2000) of UBS Age: 38 Financial Services Inc. (formerly, PaineWebber Incorporated). An officer of 91 portfolios in the OppenheimerFunds complex. KATHLEEN T. IVES, Vice President (since June 1998) and Senior Counsel and Assistant Secretary (since October Assistant Secretary 2003) of the Manager; Vice President (since 1999) and Assistant Secretary (since October (since 2001) 2003) of the Distributor; Assistant Secretary of Centennial Asset Management Corporation Age: 40 (since October 2003); Vice President and Assistant Secretary of Shareholder Services, Inc. (since 1999); Assistant Secretary of OppenheimerFunds Legacy Program and Shareholder Financial Services, Inc. (since December 2001); Assistant Counsel of the Manager (August 1994-October 2003). An officer of 91 portfolios in the OppenheimerFunds complex. PHILLIP S. GILLESPIE, Senior Vice President and Deputy General Counsel of the Manager (since September 2004); First Assistant Secretary Vice President (2000-September 2004), Director (2000-September 2004) and Vice President (since 2004) (1998-2000) of Merrill Lynch Investment Management. An officer of 91 portfolios in the Age: 42 OppenheimerFunds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION ABOUT THE FUND'S TRUSTEES AND OFFICERS AND IS AVAILABLE WITHOUT CHARGE UPON REQUEST, BY CALLING 1.800.525.7048. 56 | OPPENHEIMER INTERNATIONAL SMALL COMPANY FUND ITEM 2. CODE OF ETHICS. The registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The Board of Trustees of the registrant has determined that the registrant does not have an audit committee financial expert serving on its Audit Committee. In this regard, no member of the Audit Committee was identified as having all of the technical attributes identified in Instruction 2(b) to Item 3 of Form N-CSR to qualify as an "audit committee financial expert," whether through the type of specialized education or experience described in that Instruction. The Board has concluded that while the members of the Audit Committee collectively have the necessary attributes and experience required to serve effectively as an Audit Committee, no single member possesses all of the required technical attributes through the particular methods of education or experience set forth in the Instructions to be designated as an audit committee financial expert. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Audit Fees The principal accountant for the audit of the registrant's annual financial statements billed $18,000 in fiscal 2006 and $18,000 in fiscal 2005. (b) Audit-Related Fees The principal accountant for the audit of the registrant's annual financial statements billed no such fees during the last two fiscal years. The principal accountant for the audit of the registrant's annual financial statements billed $75,000 in fiscal 2006 and $132,059 in fiscal 2005 to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. Such services include: internal control reviews. (c) Tax Fees The principal accountant for the audit of the registrant's annual financial statements billed $201 in fiscal 2006 and no such fees in fiscal 2005. The principal accountant for the audit of the registrant's annual financial statements billed no such fees during fiscal 2006 and $5,000 during fiscal 2005 to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. Such services include: Venezuelan tax filing and filing form 5500. (d) All Other Fees The principal accountant for the audit of the registrant's annual financial statements billed no such fees during the last two fiscal years. The principal accountant for the audit of the registrant's annual financial statements billed $8,000 in fiscal 2006 and no such fees in 2005 to the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. Such fees would include the cost to the principal accountant of attending audit committee meetings and consultations regarding the registrant's retirement plan with respect to its trustees. (e) (1) During its regularly scheduled periodic meetings, the registrant's audit committee will pre-approve all audit, audit-related, tax and other services to be provided by the principal accountants of the registrant. The audit committee has delegated pre-approval authority to its Chairman for any subsequent new engagements that arise between regularly scheduled meeting dates provided that any fees such pre-approved are presented to the audit committee at its next regularly scheduled meeting. Under applicable laws, pre-approval of non-audit services maybe waived provided that: 1) the aggregate amount of all such services provided constitutes no more than five percent of the total amount of fees paid by the registrant to it principal accountant during the fiscal year in which services are provided 2) such services were not recognized by the registrant at the time of engagement as non-audit services and 3) such services are promptly brought to the attention of the audit committee of the registrant and approved prior to the completion of the audit. (2) 100% (f) Not applicable as less than 50%. (g) The principal accountant for the audit of the registrant's annual financial statements billed $83,201 in fiscal 2006 and $137,059 in fiscal 2005 to the registrant and the registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant related to non-audit fees. Those billings did not include any prohibited non-audit services as defined by the Securities Exchange Act of 1934. (h) The registrant's audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. THE FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS 1. The Fund's Governance Committee (the "Committee") will evaluate potential Board candidates to assess their qualifications. The Committee shall have the authority, upon approval of the Board, to retain an executive search firm to assist in this effort. The Committee may consider recommendations by business and personal contacts of current Board members and by executive search firms which the Committee may engage from time to time and may also consider shareholder recommendations. The Committee may consider the advice and recommendation of the Funds' investment manager and its affiliates in making the selection. 2. The Committee shall screen candidates for Board membership. The Committee has not established specific qualifications that it believes must be met by a trustee nominee. In evaluating trustee nominees, the Committee considers, among other things, an individual's background, skills, and experience; whether the individual is an "interested person" as defined in the Investment Company Act of 1940; and whether the individual would be deemed an "audit committee financial expert" within the meaning of applicable SEC rules. The Committee also considers whether the individual's background, skills, and experience will complement the background, skills, and experience of other nominees and will contribute to the Board. There are no differences in the manner in which the Committee evaluates nominees for trustees based on whether the nominee is recommended by a shareholder. 3. The Committee may consider nominations from shareholders for the Board at such times as the Committee meets to consider new nominees for the Board. The Committee shall have the sole discretion to determine the candidates to present to the Board and, in such cases where required, to shareholders. Recommendations for trustee nominees should, at a minimum, be accompanied by the following: o the name, address, and business, educational, and/or other pertinent background of the person being recommended; o a statement concerning whether the person is an "interested person" as defined in the Investment Company Act of 1940; o any other information that the Funds would be required to include in a proxy statement concerning the person if he or she was nominated; and o the name and address of the person submitting the recommendation and, if that person is a shareholder, the period for which that person held Fund shares. The recommendation also can include any additional information which the person submitting it believes would assist the Committee in evaluating the recommendation. 4. Shareholders should note that a person who owns securities issued by Massachusetts Mutual Life Insurance Company (the parent company of the Funds' investment adviser) would be deemed an "interested person" under the Investment Company Act of 1940. In addition, certain other relationships with Massachusetts Mutual Life Insurance Company or its subsidiaries, with registered broker-dealers, or with the Funds' outside legal counsel may cause a person to be deemed an "interested person." 5. Before the Committee decides to nominate an individual as a trustee, Committee members and other directors customarily interview the individual in person. In addition, the individual customarily is asked to complete a detailed questionnaire which is designed to elicit information which must be disclosed under SEC and stock exchange rules and to determine whether the individual is subject to any statutory disqualification from serving as a trustee of a registered investment company. ITEM 11. CONTROLS AND PROCEDURES. Based on their evaluation of the registrant's disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR 270.30a-3(c)) as of 08/31/2006, the registrant's principal executive officer and principal financial officer found the registrant's disclosure controls and procedures to provide reasonable assurances that information required to be disclosed by the registrant in the reports that it files under the Securities Exchange Act of 1934 (a) is accumulated and communicated to registrant's management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure, and (b) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the U.S. Securities and Exchange Commission. There have been no changes in the registrant's internal controls over financial reporting that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a) (1) Exhibit attached hereto. (2) Exhibits attached hereto. (3) Not applicable. (b) Exhibit attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Oppenheimer International Small Company Fund By: /S/ John V. Murphy --------------------------- John V. Murphy Principal Executive Officer Date: 10/16/2006 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: 10/16/2006 By: /S/ Brian W. Wixted --------------------------- Brian W. Wixted Principal Financial Officer Date: 10/16/2006 EX-99.CERT 2 ra815_35024cert302.txt RA815_35024CERT302 Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, John V. Murphy, certify that: 1. I have reviewed this report on Form N-CSR of Oppenheimer International Small Company Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of Trustees (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 10/16/2006 /S/ John V. Murphy - --------------------------- John V. Murphy Principal Executive Officer Exhibit 99.CERT Section 302 Certifications CERTIFICATIONS I, Brian W. Wixted, certify that: 1. I have reviewed this report on Form N-CSR of Oppenheimer International Small Company Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of Trustees (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 10/16/2006 /S/ Brian W. Wixted - --------------------------- Brian W. Wixted Principal Financial Officer EX-99.906CERT 3 ra815_35024cert906.txt RA815_35024CERT906 EX-99.906CERT Section 906 Certifications CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 John V. Murphy, Principal Executive Officer, and Brian W. Wixted, Principal Financial Officer, of Oppenheimer International Small Company Fund (the "Registrant"), each certify to the best of his knowledge that: 1. The Registrant's periodic report on Form N-CSR for the period ended 08/31/2006 (the "Form N-CSR") fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Form N-CSR filed with the Commission. Principal Executive Officer Principal Financial Officer Oppenheimer International Small Oppenheimer International Small Company Fund Company Fund /S/ John V. Murphy /S/ Brian W. Wixted - ------------------------------- ------------------------------- John V. Murphy Brian W. Wixted Date: 10/16/2006 Date: 10/16/2006 EX-99.CODE ETH 4 ra815_35024ex99codeeth.txt RA815_35024EX99CODEETH EX-99.CODE ETH CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS OF THE OPPENHEIMER FUNDS AND OF OPPENHEIMERFUNDS, INC. This Code of Ethics for Principal Executive and Senior Financial Officers (referred to in this document as the "Code") has been adopted by each of the investment companies for which OppenheimerFunds, Inc. or one of its subsidiaries or affiliates (referred to collectively in this document as "OFI") acts as investment adviser (individually, a "Fund" and collectively, the "Funds"), and by OFI to effectuate compliance with Section 406 under the Sarbanes-Oxley Act of 2002 and the rules adopted to implement Section 406. This Code applies to OFI's and each Fund's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions ("Covered Officers"). A listing of positions currently within the ambit of Covered Officers is attached as EXHIBIT A. 1 1. PURPOSE OF THE CODE This Code sets forth standards and procedures that are reasonably designed to deter wrongdoing and promote: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely, and understandable disclosure in reports and documents that a Fund files with, or submits to, the U.S. Securities and Exchange Commission ("SEC") and in other public communications made by the Fund; o compliance with applicable governmental laws, rules and regulations; o the prompt internal reporting of violations of this Code to the Code Administrator identified below; and o accountability for adherence to this Code. In general, the principles that govern honest and ethical conduct, including the avoidance of conflicts of interest between personal and professional relationships, reflect, - ---------- 1 The obligations imposed by this Code on Covered Officers are separate from and in addition to any obligations that may be imposed on such persons as Covered Persons under the Code of Ethics adopted by OFI and the Funds under Rule 17j-1 of the Investment Company Act of 1940, as amended and any other code of conduct applicable to Covered Officers in whatever capacity they serve. This Code does not incorporate by reference any provisions of the Rule 17j-1 Code of Ethics and accordingly, any violations or waivers granted under the Rule 17j-1 Code of Ethics will not be considered a violation or waiver under this Code. at the minimum, the following: (1) the duty at all times in performing any responsibilities as a Fund financial officer, controller, accountant or principal executive officer to place the interests of the Funds ahead of personal interests; (2) the fundamental standard that Covered Officers should not take inappropriate advantage of their positions; (3) the duty to assure that a Fund's financial statements and reports to its shareholders are prepared honestly and accurately in accordance with applicable rules, regulations and accounting standards; and (4) the duty to conduct the Funds' business and affairs in an honest and ethical manner. Each Covered Officer should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. It is acknowledged that, as a result of the contractual relationship between each Fund and OFI, of which the Covered Officers are also officers or employees, and subject to OFI's fiduciary duties to each Fund, the Covered Officers will, in the normal course of their duties, be involved in establishing policies and implementing decisions that will have different effects on OFI and the Funds. It is further acknowledged that the participation of the Covered Officers in such activities is inherent in the contractual relationship between each Fund and OFI and is consistent with the expectations of the Board of Trustees/Directors of the performance by the Covered Officers of their duties as officers of the Funds. 1. PROHIBITIONS The specific provisions and reporting requirements of this Code are concerned primarily with promoting honest and ethical conduct and avoiding conflicts of interest in personal and professional relationships. No Covered Officer may use information concerning the business and affairs of a Fund, including the investment intentions of a Fund, or use his or her ability to influence such investment intentions, for personal gain to himself or herself, his or her family or friends or any other person or in a manner detrimental to the interests of a Fund or its shareholders. No Covered Officer may use his or her personal influence or personal relationships to influence the preparation and issuance of financial reports of a Fund whereby the Covered Officer would benefit personally to the detriment of the Fund and its shareholders. No Covered Officer shall intentionally for any reason take any action or fail to take any action in connection with his or her official acts on behalf of a Fund that causes the Fund to violate applicable laws, rules and regulations. No Covered Officer shall, in connection with carrying out his or her official duties and responsibilities on behalf of a Fund: (i) employ any device, scheme or artifice to defraud a Fund or its shareholders; (ii) intentionally cause a Fund to make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading in its official documents, regulatory filings, financial statements or communications to the public; (iii) engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any Fund or its shareholders; (iv) engage in any manipulative practice with respect to any Fund; (v) use his or her personal influence or personal relationships to influence any business decision, investment decisions, or financial reporting by a Fund whereby the Covered Officer would benefit personally to the detriment of the Fund or its shareholders; (vi) intentionally cause a Fund to fail to comply with applicable laws, rules and regulations, including failure to comply with the requirement of full, fair, accurate, understandable and timely disclosure in reports and documents that a Fund files with, or submits to, the SEC and in other public communications made by the Fund; (vii) intentionally mislead or omit to provide material information to the Fund's independent auditors or to the Board of Trustees/Directors or the officers of the Fund or its investment adviser in connection with financial reporting matters; (viii) fail to notify the Code Administrator or the Chief Executive Officer of the Fund or its investment adviser promptly if he or she becomes aware of any existing or potential violations of this Code or applicable laws; (ix) retaliate against others for, or otherwise discourage the reporting of, actual or apparent violations of this Code; or (x) fails to acknowledge or certify compliance with this Code if requested to do so. 3. REPORTS OF CONFLICTS OF INTERESTS If a Covered Officer becomes aware of a conflict of interest under this Code or, to the Covered Officer's reasonable belief, the appearance of one, he or she must immediately report the matter to the Code's Administrator. If the Code Administrator is involved or believed to be involved in the conflict of interest or appearance of conflict of interest, the Covered Officer shall report the matter directly to the OFI's Chief Executive Officer. Upon receipt of a report of a conflict, the Code Administrator will take prompt steps to determine whether a conflict of interest exists. If the Code Administrator determines that an actual conflict of interest exists, the Code Administrator will take steps to resolve the conflict. If the Code Administrator determines that the appearance of a conflict exists, the Code Administrator will take appropriate steps to remedy such appearance. If the Code Administrator determines that no conflict or appearance of a conflict exists, the Code Administrator shall meet with the Covered Officer to advise him or her of such finding and of his or her reason for taking no action. In lieu of determining whether a conflict or appearance of conflict exists, the Code Administrator may in his or her discretion refer the matter to the Fund's Board of Trustees/Directors. 4. WAIVERS Any Covered Officer requesting a waiver of any of the provisions of this Code must submit a written request for such waiver to the Code Administrator, setting forth the basis of such request and all necessary facts upon which such request can be evaluated. The Code Administrator shall review such request and make a written determination thereon, which shall be binding. The Code Administrator may in reviewing such request, consult at his discretion with legal counsel to OFI or to the Fund. In determining whether to waive any of the provisions of this Code, the Code Administrator shall consider whether the proposed waiver: (i) is prohibited by this Code; (ii) is consistent with honest and ethical conduct; and (iii) will result in a conflict of interest between the Covered Officer's personal and professional obligations to a Fund. In lieu of determining whether to grant a waiver, the Code Administrator in his or her discretion may refer the matter to the appropriate Fund's Board of Trustees/Directors. 5. REPORTING REQUIREMENTS (a) Each Covered Officer shall, upon becoming subject to this Code, be provided with a copy of this Code and shall affirm in writing that he or she has received, read, understands and shall adhere to this Code. (b) At least annually, all Covered Officers shall be provided with a copy of this Code and shall certify that they have read and understand this Code and recognize that they are subject thereto. (c) At least annually, all Covered Officers shall certify that they have complied with the requirements of this Code and that they have disclosed or reported any violations of this Code to the Code Administrator or the Chief Executive Officer of the Fund or its investment adviser. (d) The Code Administrator shall submit a quarterly report to the Board of Trustees/Directors of each Fund containing (i) a description of any report of a conflict of interest or apparent conflict and the disposition thereof; (ii) a description of any request for a waiver from this Code and the disposition thereof; (iii) any violation of the Code that has been reported or found and the sanction imposed; (iv) interpretations issued under the Code by the Code Administrator; and (v) any other significant information arising under the Code including any proposed amendments. (e) Each Covered Officer shall notify the Code Administrator promptly if he or she knows of or has a reasonable belief that any violation of this Code has occurred or is likely to occur. Failure to do so is itself a violation of this Code. (f) Any changes to or waivers of this Code, including "implicit" waivers as defined in applicable SEC rules, will, to the extent required, be disclosed by the Code Administrator or his or her designee as provided by applicable SEC rules. 2 6. ANNUAL RENEWAL At least annually, the Board of Trustees/Directors of each Fund shall review the Code and determine whether any amendments (including any amendments that may be recommended by OFI or the Fund's legal counsel) are necessary or desirable, and shall consider whether to renew and/or amend the Code. 7. SANCTIONS Any violation of this Code of Ethics shall be subject to the imposition of such sanctions by OFI as may be deemed appropriate under the circumstances to achieve the purposes of this Code and may include, without limitation, a letter of censure, suspension from employment or termination of employment, in the sole discretion of OFI. 8. ADMINISTRATION AND CONSTRUCTION (a) The administration of this Code of Ethics shall be the responsibility of OFI's General Counsel or his designee as the "Code Administrator" of this Code, acting under the terms of this Code and the oversight of the Trustees/Directors of the Funds. (b) The duties of such Code Administrator will include: (i) Continuous maintenance of a current list of the names of all Covered Officers; (ii) Furnishing all Covered Officers a copy of this Code and initially and periodically informing them of their duties and obligations thereunder; (iii) Maintaining or supervising the maintenance of all records required by this Code, including records of waivers granted hereunder; - ---------- 2 An "implicit waiver" is the failure to take action within a reasonable period of time regarding a material departure from a provision of this Code that has been made known to the General Counsel, the Code Administrator, an executive officer of the Fund or OFI. (iv) Issuing interpretations of this Code which appear to the Code Administrator to be consistent with the objectives of this Code and any applicable laws or regulations; (v) Conducting such inspections or investigations as shall reasonably be required to detect and report any violations of this Code, with his or her recommendations, to the Chief Executive Officer of OFI and to the Trustees/Directors of the affected Fund(s) or any committee appointed by them to deal with such information; and (vi) Periodically conducting educational training programs as needed to explain and reinforce the terms of this Code. (c) In carrying out the duties and responsibilities described under this Code, the Code Administrator may consult with legal counsel, who may include legal counsel to the applicable Funds, and such other persons as the Administrator shall deem necessary or desirable. The Code Administrator shall be protected from any liability hereunder or under any applicable law, rule or regulation, for decisions made in good faith based upon his or her reasonable judgment. 9. REQUIRED RECORDS The Administrator shall maintain and cause to be maintained in an easily accessible place, the following records for the period required by applicable SEC rules (currently six years following the end of the fiscal year of OFI in which the applicable event or report occurred): (a) A copy of any Code which has been in effect during the period; (b) A record of any violation of any such Code and of any action taken as a result of such violation, during the period; (c) A copy of each annual report pursuant to the Code made by a Covered Officer during the period; (d) A copy of each report made by the Code Administrator pursuant to this Code during the period; (e) A list of all Covered Officers who are or have been required to make reports pursuant to this Code during the period, plus those person(s) who are or were responsible for reviewing these reports; (f) A record of any request to waive any requirement of this Code, the decision thereon and the reasons supporting the decision; and (g) A record of any report of any conflict of interest or appearance of a conflict of interest received by the Code Administrator or discovered by the Code Administrator during the period, the decision thereon and the reasons supporting the decision. 10. AMENDMENTS AND MODIFICATIONS Other than non-substantive or administrative changes, this Code may not be amended or modified unless approved or ratified by the Board of Trustees/Directors of each Fund. 11. CONFIDENTIALITY. This Code is identified for the internal use of the Funds and OFI. Reports and records prepared or maintained under this Code are considered confidential and shall be maintained and protected accordingly to the extent permitted by applicable laws, rules and regulations. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Trustees/Directors of the affected Fund(s) and their counsel, the independent auditors of the affected Funds and/or OFI, and to OFI, except as such disclosure may be required pursuant to applicable judicial or regulatory process. Dated as of: June 25, 2003, as revised July 31, 2006 Adopted by Board I of the Oppenheimer Funds June 13, 2003, revisions approved August 10, 2006 /S/ ROBERT G. ZACK - ------------------ Robert G. Zack, Secretary Adopted by Board II of the Oppenheimer/Centennial Funds June 24, 2003, revisions approved August 30, 2006 /S/ ROBERT G. ZACK - ------------------ Robert G. Zack, Secretary Adopted by Board III of the Oppenheimer Funds June 9, 2003, revisions approved July 31, 2006 /S/ ROBERT G. ZACK - ------------------ Robert G. Zack, Secretary Robert G. Zack, Secretary Adopted by the Boards of Directors of OppenheimerFunds, Inc. and its subsidiaries and affiliates that act as investment adviser to the Oppenheimer or Centennial funds June 1, 2003 /S/ ROBERT G. ZACK - ------------------ Robert G. Zack, Senior Vice President and General Counsel Exhibit A Positions Covered by this Code of Ethics for Senior Officers EACH OPPENHEIMER OR CENTENNIAL FUND Principal Executive Officer Principal Financial Officer Treasurer Assistant Treasurer PERSONNEL OF OFI WHO BY VIRTUE OF THEIR JOBS PERFORM CRITICAL FINANCIAL AND ACCOUNTING FUNCTIONS FOR OFI ON BEHALF OF A FUND, INCLUDING: Chief Financial Officer Treasurer Senior Vice President/Fund Accounting Vice President/Fund Accounting -----END PRIVACY-ENHANCED MESSAGE-----