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 811-07657
OPPENHEIMER DEVELOPING MARKETS FUND
(Exact name of registrant as specified in charter)
6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924
(Address of principal executive offices)
(Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
498 Seventh Avenue, New York, New York 10018
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
--------------
Date of fiscal year end: August 31
Date of reporting period: September 1, 2002 - August 31, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
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, 2003, followed by
a graphical comparison of the Fund's performance to an appropriate broad-based
market index.
Management's Discussion of Fund Performance. Oppenheimer Developing Markets
Fund Class A shares returned 27.93% (without sales charge) for the
fiscal year ended August 31, 2003. This compares to a one-year total
return of 29.27% for its benchmark index, the Morgan Stanley Capital
International (MSCI) Emerging Markets Free Index. The Fund considered the effect
of worldwide growth themes and sought to identify what are believed to be
well-managed, reasonably valued companies that may benefit from these themes.
The largest country weights in the Fund for the period were in India, South
Korea, Brazil and Mexico, where the Fund continued to find opportunities to
invest in good business at good prices. Our investment decisions were made
through a bottom-up approach with the primary consideration being the company in
which we invest. We found more companies in the above countries to be
interesting investments because of the price structures, risk/reward profiles
and overall quality of companies available there.
The Fund owned fewer companies directly in Russia and China compared with the
benchmark index during the period because of our concerns with the quality of
information, legal structure and corporate governance regulations in both of
these countries. While these markets experienced significant growth during the
period, the Fund was unable to find suitable investments that fulfilled the
Fund's quality criteria for risk/reward profile, valuation, financial reporting
or shareholder protection.
Among the Fund's principal individual contributors was application software
company Amdocs Ltd. The Israel-based provider of customer care and billing
services to the telecommunications industry had a strong balance sheet,
high-quality customer base and was available at what we regarded was an
attractive multiple. The stock price rebounded from its lows as telecom
companies continued to spend money on a key source of their competitive
advantage, customer care. Next, Mexico's leading low-cost housing developer
Corporacion GEO SA de CV benefited from the availability of cheaper credit to
the housing market and a government commitment to increase the levels of home
ownership in the country. In a similar vein, Housing Development Finance Corp.
Ltd, India's largest and lowest cost home mortgage lender, advanced as economic
conditions and declining interest rates boosted demand. Another contributor was
Brazilian supermarket operator Lojas Americanas SA, where management efforts in
restructuring and cost cutting, as well as store remodeling led to higher sales
profits.
5 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND PERFORMANCE DISCUSSION
In contrast, LG Home Shopping, Inc., a leading South Korean home shopping
network, came under severe pressure as rising defaults forced the government to
intervene in the issuance of personal credit cards. While headline events
deflated consumer confidence, increased competition also factored into the
stock's decline. Given the excellent long-term profile for the company, we
believed this setback is merely temporary. Taiwanese convenience store operator
President Chain Store Corporation also fell when investors questioned its
involvement in a larger-scale mall project. In light of continued strong cash
flow generation in its core business, the Fund has used recent declines to
increase its position.
Country, industry sector and market capitalization weightings were the result
of individual stock selection and do not reflect predetermined target
allocations. The Fund's holdings, allocations, management and strategies are
subject to change. Investing in emerging market securities poses considerable
risks, including heightened volatility, political and economic uncertainty,
currency fluctuations and higher expenses.
Comparing the Fund's Performance to the Market. The graphs that follow show
the performance of a hypothetical $10,000 investment in Class A, Class B and
Class C shares of the Fund held from the inception date of November 18, 1996
until August 31, 2003. In the case of Class N shares, performance is measured
from inception of the Class on March 1, 2001. The Fund's performance reflects
the deduction of the maximum initial sales charge on Class A shares, the
applicable contingent deferred sales charge on Class B, Class C and Class N
shares, and reinvestment of all dividends and capital gains distributions.
The Fund's performance is compared to the performance of the Morgan Stanley
Capital International (MSCI) Emerging Markets Free Index, an unmanaged
capitalization-weighted equity index of issuers located in 25 developing
markets. The MSCI Emerging Markets Free Index is widely recognized as a measure
of performance in developing markets. Index performance reflects the
reinvestment of dividends but does not consider the effect of capital gains or
transaction costs, and none of the data in the graphs show the effect of taxes.
The Fund's performance reflects the effect of Fund business and operating
expenses. While index comparisons may be useful to provide a benchmark for the
Fund's performance, it must be noted that the Fund's investments are not limited
to the securities in the index shown.
6 | OPPENHEIMER DEVELOPING MARKETS FUND
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Developing Markets Fund (Class A)
MSCI Emerging Markets Free Index
[LINE CHART]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
Value of Investment Morgan Stanley
Date In Fund Emerging Market Free
- ---- ------- --------------------
11/18/1996 9,425 10,000
11/30/1996 9,331 10,000
02/28/1997 11,008 11,162
05/31/1997 11,923 11,102
08/31/1997 12,083 10,306
11/30/1997 10,641 8,504
02/28/1998 11,331 8,831
05/31/1998 11,073 7,796
08/31/1998 7,693 5,062
11/30/1998 9,091 6,415
02/28/1999 8,275 6,247
05/31/1999 10,552 7,787
08/31/1999 11,533 8,538
11/30/1999 13,617 9,157
02/29/2000 18,933 10,485
05/31/2000 16,504 9,094
08/31/2000 17,198 8,923
11/30/2000 14,677 6,875
02/28/2001 16,147 7,352
05/31/2001 15,456 6,963
08/31/2001 13,745 6,281
11/30/2001 13,309 6,202
02/28/2002 15,614 7,010
05/31/2002 15,981 7,295
08/31/2002 14,492 6,296
11/30/2002 13,920 6,369
02/28/2003 13,564 5,925
05/31/2003 15,372 6,645
08/31/2003 18,538 7,911
Average Annual Total Returns of Class A Shares of the Fund at 8/31/03*
1-Year 20.57% 5-Year 17.83% Since Inception 9.52%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Developing Markets Fund (Class B)
MSCI Emerging Markets Free Index
[LINE CHART]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
Value of Investment Morgan Stanley
Date In Fund Emerging Market Free
- ---- ------- --------------------
11/18/1996 10,000 10,000
11/30/1996 9,900 10,000
02/28/1997 11,650 11,162
05/31/1997 12,580 11,102
08/31/1997 12,730 10,306
11/30/1997 11,190 8,504
02/28/1998 11,886 8,831
05/31/1998 11,593 7,796
08/31/1998 8,039 5,062
11/30/1998 9,492 6,415
02/28/1999 8,617 6,247
05/31/1999 10,978 7,787
08/31/1999 11,962 8,538
11/30/1999 14,101 9,157
02/29/2000 19,586 10,485
05/31/2000 17,039 9,094
08/31/2000 17,729 8,923
11/30/2000 15,096 6,875
02/28/2001 16,577 7,352
05/31/2001 15,842 6,963
08/31/2001 14,065 6,281
11/30/2001 13,593 6,202
02/28/2002 15,917 7,010
05/31/2002 16,259 7,295
08/31/2002 14,713 6,296
11/30/2002 14,119 6,369
02/28/2003 13,759 5,925
05/31/2003 15,592 6,645
08/31/2003 18,804 7,911
Average Annual Total Returns of Class B Shares of the Fund at 8/31/03*
1-Year 21.98% 5-Year 18.17% Since Inception 9.75%
*See Notes on page 9 for further details.
7 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND PERFORMANCE DISCUSSION
- --------------------------------------------------------------------------------
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Developing Markets Fund (Class C)
MSCI Emerging Markets Free Index
[LINE CHART]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
Value of Investment Morgan Stanley
Date In Fund Emerging Market Free
- ---- ------- --------------------
11/18/1996 10,000 10,000
11/30/1996 9,900 10,000
02/28/1997 11,660 11,162
05/31/1997 12,590 11,102
08/31/1997 12,740 10,306
11/30/1997 11,190 8,504
02/28/1998 11,895 8,831
05/31/1998 11,602 7,796
08/31/1998 8,042 5,062
11/30/1998 9,497 6,415
02/28/1999 8,622 6,247
05/31/1999 10,984 7,787
08/31/1999 11,980 8,538
11/30/1999 14,109 9,157
02/29/2000 19,582 10,485
05/31/2000 17,032 9,094
08/31/2000 17,722 8,923
11/30/2000 15,087 6,875
02/28/2001 16,577 7,352
05/31/2001 15,840 6,963
08/31/2001 14,058 6,281
11/30/2001 13,585 6,202
02/28/2002 15,905 7,010
05/31/2002 16,249 7,295
08/31/2002 14,696 6,296
11/30/2002 14,097 6,369
02/28/2003 13,709 5,925
05/31/2003 15,512 6,645
08/31/2003 18,671 7,911
Average Annual Total Returns of Class C Shares of the Fund at 8/31/03*
1-Year 26.05% 5-Year 18.35% Since Inception 9.64%
Class N Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Developing Markets Fund (Class N)
MSCI Emerging Markets Free Index
[LINE CHART]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
Value of Investment Morgan Stanley
Date In Fund Emerging Market Free
- ---- ------- --------------------
03/01/2001 10,000 10,000
05/31/2001 9,522 9,471
08/31/2001 8,460 8,543
11/30/2001 8,185 8,436
02/28/2002 9,593 9,534
05/31/2002 9,820 9,921
08/31/2002 8,894 8,563
11/30/2002 8,541 8,663
02/28/2003 8,319 8,059
05/31/2003 9,423 9,038
08/31/2003 11,360 10,759
Average Annual Total Returns of Class N Shares of the Fund at 8/31/03*
1-Year 26.73% Since Inception 5.23%
The performance information for the MSCI Emerging Markets Free Index in the
graphs begins on 11/30/96 for Class A, Class B and Class C shares, and 2/28/01
for Class N shares.
Past performance cannot guarantee future results. Graphs are not drawn to same
scale.
8 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES
In reviewing performance and rankings, please remember that past performance
cannot guarantee future results. Investment return and principal value of an
investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original cost. Because of ongoing
market volatility, the Fund's performance may be subject to substantial
fluctuations, and current performance may be more or less than the results
shown. For updates on the Fund's performance, visit our website at
www.oppenheimerfunds.com.
Total returns and the ending account values in the graph includes changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares. For more complete information
about the Fund, including charges, expenses and risks, please refer to the
prospectus. To obtain a copy, call your financial advisor, call OppenheimerFunds
Distributor, Inc. at 1.800.CALL OPP (1.800.225.5677). Read the prospectus
carefully before you invest or send money.
Class A shares of the Fund were first publicly offered on 11/18/96. 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 11/18/96. 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 an annual 0.75% asset-based sales charge.
Class C shares of the Fund were first publicly offered on 11/18/96. Unless
otherwise noted, Class C returns include the contingent deferred sales charge of
1% for one-year period. Class C shares are subject to a 0.75% annual asset-based
sales charge.
Class N shares of the Fund were first publicly offered on 3/1/01.Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
9 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS August 31, 2003
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Common Stocks--93.7%
- --------------------------------------------------------------------------------
Consumer Discretionary--21.4%
- --------------------------------------------------------------------------------
Automobiles--0.7%
Bajaj Auto Ltd. 340,000 $ 5,399,651
- --------------------------------------------------------------------------------
Hotels, Restaurants & Leisure--3.7%
Danubius Hotel
& Spa Rt. 1 210,000 2,949,689
- --------------------------------------------------------------------------------
Greek Organization
of Football
Prognostics SA 375,000 4,462,962
- --------------------------------------------------------------------------------
Hongkong &
Shanghai Hotels
Ltd. (The) 11,850,000 6,457,269
- --------------------------------------------------------------------------------
Intralot SA 500,000 8,750,261
- --------------------------------------------------------------------------------
Jollibee Foods Corp. 18,586,890 5,748,174
--------------
28,368,355
- --------------------------------------------------------------------------------
Household Durables--3.2%
Corporacion GEO SA
de CV, Series B 1,2 5,273,000 23,896,492
- --------------------------------------------------------------------------------
Internet & Catalog Retail--2.8%
LG Home
Shopping, Inc. 326,500 21,337,153
- --------------------------------------------------------------------------------
Leisure Equipment & Products--0.2%
Pihsiang Machinery
Manufacturing
Co. Ltd. 475,000 1,543,562
- --------------------------------------------------------------------------------
Media--7.4%
Grupo Televisa SA,
Sponsored GDR 505,000 18,937,500
- --------------------------------------------------------------------------------
Hurriyet Gazetecilik
ve Matbaacilik AS 1,269,910,000 2,672,540
- --------------------------------------------------------------------------------
Shaw Brothers Ltd.
(Hong Kong) 4,500,000 4,673,466
- --------------------------------------------------------------------------------
Singapore Press
Holdings Ltd. 785,000 8,374,408
- --------------------------------------------------------------------------------
Television
Broadcasts Ltd. 2,850,000 12,022,156
- --------------------------------------------------------------------------------
Zee Telefilms Ltd. 4,400,000 9,819,372
--------------
56,499,442
- --------------------------------------------------------------------------------
Multiline Retail--1.5%
Lojas Americanas
SA, Preference 2 2,000,000,000 11,347,518
- --------------------------------------------------------------------------------
Specialty Retail--1.2%
Courts (Singapore)
Ltd. 2,3 11,300,000 3,674,483
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Specialty Retail Continued
JD Group Ltd. 1,231,649 $ 5,311,381
--------------
8,985,864
- --------------------------------------------------------------------------------
Textiles, Apparel & Luxury Goods--0.7%
Folli-Follie SA 268,470 5,352,717
- --------------------------------------------------------------------------------
Consumer Staples--12.7%
- --------------------------------------------------------------------------------
Beverages--3.3%
Coca-Cola FEMSA
SA, Sponsored ADR 1 213,700 4,626,605
- --------------------------------------------------------------------------------
Companhia de
Bebidas das
Americas, ADR 480,000 10,651,200
- --------------------------------------------------------------------------------
Serm Suk
Public Co. Ltd. 8,583,000 6,162,047
- --------------------------------------------------------------------------------
United Breweries
Holdings Ltd. 1,2 1,850,000 994,819
- --------------------------------------------------------------------------------
United Breweries
Ltd. 1,2 1,450,289 3,046,746
--------------
25,481,417
- --------------------------------------------------------------------------------
Food & Staples Retailing--3.6%
Companhia
Brasileira de
Distribuicao Grupo
Pao de Acucar,
Sponsored ADR 171,000 3,361,860
- --------------------------------------------------------------------------------
Dairy Farm
International
Holdings Ltd. 6,000,000 8,100,000
- --------------------------------------------------------------------------------
Jeronimo Martins
& Filho SA 1 590,000 4,521,371
- --------------------------------------------------------------------------------
President Chain
Store Corp. 7,116,000 9,395,503
- --------------------------------------------------------------------------------
PT Hero
Supermarket Tbk 1,2,3 17,938,200 1,796,991
--------------
27,175,725
- --------------------------------------------------------------------------------
Food Products--1.3%
Sadia SA, Preference 12,600,000 9,744,681
- --------------------------------------------------------------------------------
Personal Products--1.7%
Amore Pacific Corp. 102,000 12,812,221
- --------------------------------------------------------------------------------
Tobacco--2.8%
Eastern
Tobacco Co. 3 600,000 6,731,707
- --------------------------------------------------------------------------------
ITC Ltd. 800,000 14,527,051
--------------
21,258,758
10 | OPPENHEIMER DEVELOPING MARKETS FUND
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Energy--4.7%
- --------------------------------------------------------------------------------
Oil & Gas--4.7%
Bharat Petroleum
Corp. Ltd. 3,000,000 $ 21,662,304
- --------------------------------------------------------------------------------
SK Corp. 1,000,000 14,173,562
--------------
35,835,866
- --------------------------------------------------------------------------------
Financials--20.9%
- --------------------------------------------------------------------------------
Commercial Banks--8.2%
Commercial
International Bank,
Sponsored GDR 150,000 898,500
- --------------------------------------------------------------------------------
Commercial
International Bank,
Sponsored GDR 4 900,000 5,391,000
- --------------------------------------------------------------------------------
Grupo Financiero
Banorte SA de CV 4,400,000 11,724,826
- --------------------------------------------------------------------------------
Grupo Financiero
Inbursa SA de CV 13,441,100 13,827,289
- --------------------------------------------------------------------------------
ICICI Bank Ltd. 580,000 2,271,161
- --------------------------------------------------------------------------------
ICICI Bank Ltd.,
Sponsored ADR 1 2,030,000 19,670,700
- --------------------------------------------------------------------------------
Uniao de Bancos
Brasileiros SA
(Unibanco),
Sponsored ADR 425,000 8,181,250
--------------
61,964,726
- --------------------------------------------------------------------------------
Consumer Finance--0.6%
Tisco Finance
Public Co. Ltd. 1 6,499,980 4,824,760
- --------------------------------------------------------------------------------
Diversified Financial Services--4.2%
Fubon Financial
Holding Co. Ltd.,
GDR 1,080,000 9,763,200
- --------------------------------------------------------------------------------
Haci Omer Sabanci
Holding AS 675,000,000 1,805,778
- --------------------------------------------------------------------------------
Haci Omer Sabanci
Holding AS,
Sponsored ADR 3 10,000,000 6,750,000
- --------------------------------------------------------------------------------
Hong Kong
Exchanges &
Clearing Ltd. 3,040,000 5,456,865
- --------------------------------------------------------------------------------
Kiatnakin Finance
Public Co. Ltd. 2,999,920 2,537,046
- --------------------------------------------------------------------------------
Kotak Mahindra
Bank Ltd. 1,297,700 5,933,637
--------------
32,246,526
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Insurance--2.2%
Aksigorta AS 3,074,518,594 $ 9,266,872
- --------------------------------------------------------------------------------
Sanlam Ltd. 7,700,000 7,615,962
--------------
16,882,834
- --------------------------------------------------------------------------------
Real Estate--2.7%
Brazil Realty SA
Empreendimentos
e Participacoes 2,3 49,000 57,920
- --------------------------------------------------------------------------------
Brazil Realty SA,
GDR 1,2,4 435,720 4,650,222
- --------------------------------------------------------------------------------
G. Accion SA de CV,
Series B 1,3 5,000,000 2,265,929
- --------------------------------------------------------------------------------
Medinet Nasr
for Housing &
Development Co. 3 720,000 3,315,512
- --------------------------------------------------------------------------------
Solidere, GDR 3 3,075 15,529
- --------------------------------------------------------------------------------
Solidere, GDR 3 2,046,925 10,336,971
--------------
20,642,083
- --------------------------------------------------------------------------------
Thrifts & Mortgage Finance--3.0%
Housing
Development
Finance Corp. Ltd. 2,132,400 22,447,417
- --------------------------------------------------------------------------------
Health Care--6.3%
- --------------------------------------------------------------------------------
Health Care Providers & Services--0.6%
Grupo Casa Saba
SA de CV,
Sponsored ADR 400,000 4,720,000
- --------------------------------------------------------------------------------
Pharmaceuticals--5.7%
Dr. Reddy's
Laboratories Ltd. 421,000 10,585,615
- --------------------------------------------------------------------------------
Dr. Reddy's
Laboratories Ltd.,
Sponsored ADR 290,100 7,354,035
- --------------------------------------------------------------------------------
Pliva d.d., GDR 4 920,000 13,800,000
- --------------------------------------------------------------------------------
Sun Pharmaceutical
Industries Ltd. 1,064,027 11,718,456
--------------
43,458,106
- --------------------------------------------------------------------------------
Industrials--9.5%
- --------------------------------------------------------------------------------
Aerospace & Defense--4.6%
Empresa Brasileira
de Aeronautica
SA (Embraer),
Preference 6,800,000 34,677,474
-----------
Air Freight & Logistics--1.0%
Sinotrans Ltd. 1 21,322,000 7,244,617
11 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Construction & Engineering--0.9%
Larsen & Toubro
Ltd. 1,040,000 $ 6,560,122
- --------------------------------------------------------------------------------
Orascom
Construction
Industries 3 15,354 123,556
------------
6,683,678
- --------------------------------------------------------------------------------
Machinery--3.0%
Hyundai Heavy
Industries Co. Ltd. 1 899,000 23,118,778
- --------------------------------------------------------------------------------
Information Technology--6.2%
- --------------------------------------------------------------------------------
Computers & Peripherals--1.0%
Lite-On
Technology Corp. 1 6,953,246 7,877,821
- --------------------------------------------------------------------------------
Electronic Equipment & Instruments--1.9%
Hankuk Electric
Glass Co. Ltd. 43,000 3,612,985
- --------------------------------------------------------------------------------
Synnex Technology
International Corp. 7,370,000 11,111,746
------------
14,724,731
- --------------------------------------------------------------------------------
IT Services--1.0%
NIIT Ltd. 2 2,500,000 7,452,552
- --------------------------------------------------------------------------------
Semiconductors & Semiconductor Equipment--1.2%
PKL Corp. 1 1,325,000 8,670,274
- --------------------------------------------------------------------------------
Software--1.1%
Amdocs Ltd. 1 360,000 8,056,800
- --------------------------------------------------------------------------------
Materials--5.2%
- --------------------------------------------------------------------------------
Chemicals--1.5%
Asian Paints Ltd.
(India) 1,687,500 11,334,669
- --------------------------------------------------------------------------------
Metals & Mining--3.7%
Anglo American
Platinum Corp. Ltd. 310,000 11,516,099
- --------------------------------------------------------------------------------
Antofagasta plc 550,000 6,785,709
- --------------------------------------------------------------------------------
PT Aneka
Tambang Tbk 94,772,600 9,494,014
------------
27,795,822
- --------------------------------------------------------------------------------
Telecommunication Services--5.2%
- --------------------------------------------------------------------------------
Diversified Telecommunication Services--3.3%
IMPSAT Fiber
Networks, Inc. 1,3 156,240 1,394,442
- --------------------------------------------------------------------------------
Portugal
Telecom SA 960,000 6,935,213
- --------------------------------------------------------------------------------
Portugal Telecom
SA, Sponsored ADR 565,000 4,101,900
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Diversified Telecommunication Services Continued
Tele Norte Leste
Participacoes SA
(Telemar) 750,000,000 $ 7,193,516
- --------------------------------------------------------------------------------
Telemar Norte
Leste SA, Preference 230,000,000 3,507,092
- --------------------------------------------------------------------------------
Videsh Sanchar
Nigam Ltd. 87,924 231,702
- --------------------------------------------------------------------------------
Videsh Sanchar
Nigam Ltd.,
Sponsored ADR 300,100 1,614,538
-----------
24,978,403
- --------------------------------------------------------------------------------
Wireless Telecommunication Services--1.9%
SK Telecom Co. Ltd. 48,000 8,188,415
- --------------------------------------------------------------------------------
SK Telecom Co. Ltd.,
ADR 320,000 6,099,200
-----------
14,287,615
- --------------------------------------------------------------------------------
Utilities--1.6%
- --------------------------------------------------------------------------------
Electric Utilities--1.6%
Companhia
Energetica de Minas
Gerais, Preference 925,000,000 10,109,085
- --------------------------------------------------------------------------------
Companhia Paranaense
Energia, Sponsored
ADR, B Shares,
Preference 1 600,700 1,681,960
-----------
11,791,045
-----------
Total Common Stocks
(Cost $574,789,957) 710,920,153
- --------------------------------------------------------------------------------
Preferred Stocks--0.0%
Sun Pharmaceutical
Industries Ltd.,
6% Cum. 1,3
(Cost $41,055) 1,768,000 83,309
12 | OPPENHEIMER DEVELOPING MARKETS FUND
Principal Market Value
Amount See Note 1
- --------------------------------------------------------------------------------
Joint Repurchase Agreements--6.0%
Undivided interest of 26.29% in joint repurchase
agreement (Principal Amount/Market Value
$174,849,000, with a maturity value of
$174,868,622) with PaineWebber, Inc.,
1.01%, dated 8/29/03, to be repurchased
at $45,971,158 on 9/2/03, collateralized
by Federal National Mortgage Assn.,
5%--6%, 4/1/18--3/1/33, with a value
of $178,650,471
(Cost $45,966,000) $45,966,000 $ 45,966,000
Market Value
See Note 1
- --------------------------------------------------------------------------------
Total Investments,
at Value
(Cost $620,797,012) 99.7% $756,969,462
- --------------------------------------------------------------------------------
Other Assets
Net of Liabilities 0.3 1,975,499
-----------------------------
Net Assets 100.0% $758,944,961
=============================
Footnotes to Statement of Investments
1. Non-income producing security.
2. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer, and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the period ended August 31, 2003.
The aggregate fair value of securities of affiliated companies held by the Fund
as of August 31, 2003 amounts to $56,917,742. Transactions during the period in
which the issuer was an affiliate are as follows:
Unrealized
Shares Gross Gross Shares Appreciation Dividend Realized
August 31, 2002 Additions Reductions August 31, 2003 (Depreciation) Income Gain
- ------------------------------------------------------------------------------------------------------------------------------------
Stocks and/or Warrants
Brazil Realty SA
Empreendimentos e
Participacoes 28,000 21,000 -- 49,000 $ 10,739 $ 1,394 $ --
Brazil Realty SA, GDR 435,720 -- -- 435,720 (1,413,497) 208,666 --
Corporacion GEO SA
de CV, Series B 5,218,000 55,000 -- 5,273,000 14,133,399 -- --
Courts (Singapore) Ltd. 10,877,000 423,000 -- 11,300,000 (694,763) 94,323 --
Lojas Americanas SA,
Preference 2,122,357,600 -- 122,357,600 2,000,000,000 6,839,619 826,695 130,018
Medinet Nasr
for Housing &
Development Co.* 539,032 180,968 -- 720,000 -- 232,718 --
NIIT Ltd. 1,475,000 1,025,000 -- 2,500,000 (8,433,310) 97,787 --
PT Aneka Tambang Tbk* 99,100,000 10,755,501 5,082,900 94,772,600 -- 792,779 143,990
PT Hero Supermarket Tbk 13,531,400 4,406,800 -- 17,938,200 (120,484) -- --
United Breweries
Holdings Ltd. 1,953,227 678,064 781,291** 1,850,000 (1,795,568) -- --
United Breweries Ltd. -- 1,450,289** -- 1,450,289 (85,854) -- --
--------------------------------------
$ 8,440,281 $2,254,362 $ 274,008
======================================
*No longer an affiliate as of August 31, 2003.
**United Breweries Ltd. is the result of a spin off from United Breweries
Holdings Ltd.
3. Identifies issues considered to be illiquid. See Note 6 of Notes to Financial
Statements.
4. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $23,841,222 or 3.14% of the Fund's net
assets as of August 31, 2003.
13 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
Distribution of investments representing geographic holdings, as a percentage
of total investments at value, is as follows:
Geographic Holdings Market Value Percent
- ----------------------------------------------------------------------------
India $ 162,707,856 21.4%
Brazil 105,163,778 13.9
Korea, Republic of South 98,012,588 12.9
Mexico 79,998,641 10.5
United States 55,417,242 7.3
Taiwan 39,691,832 5.2
Hong Kong 28,609,756 3.8
South Africa 24,443,442 3.2
Turkey 20,495,190 2.7
Singapore 20,148,891 2.7
Greece 18,565,940 2.5
Egypt 16,460,275 2.2
Portugal 15,558,484 2.1
Croatia 13,800,000 1.8
Thailand 13,523,853 1.8
Indonesia 11,291,005 1.5
Lebanon 10,352,500 1.4
China 7,244,617 1.0
Great Britain 6,785,709 0.9
Philippines 5,748,174 0.8
Hungary 2,949,689 0.4
---------------------------------
Total $756,969,462 100.0%
=================================
See accompanying Notes to Financial Statements.
14 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF ASSETS AND LIABILITIES August 31, 2003
- --------------------------------------------------------------------------------------------------
Assets
Investments, at value--see accompanying statement:
Unaffiliated companies (cost $572,319,551) $700,051,720
Affiliated companies (cost $48,477,461) 56,917,742
--------------
756,969,462
- --------------------------------------------------------------------------------------------------
Cash 252,824
- --------------------------------------------------------------------------------------------------
Cash--foreign currencies (cost $2,178,248) 2,226,380
- --------------------------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 181
- --------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 9,460,507
Interest and dividends 3,920,037
Other 3,338
--------------
Total assets 772,832,729
- --------------------------------------------------------------------------------------------------
Liabilities
Unrealized depreciation on foreign currency contracts 912
- --------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 5,713,289
Shares of beneficial interest redeemed 4,241,910
Foreign capital gains taxes 3,168,045
Distribution and service plan fees 275,569
Transfer and shareholder servicing agent fees 185,362
Shareholder reports 93,372
Trustees' compensation 48,545
Other 160,764
--------------
Total liabilities 13,887,768
- --------------------------------------------------------------------------------------------------
Net Assets $758,944,961
==============
- --------------------------------------------------------------------------------------------------
Composition of Net Assets
Paid-in capital $656,912,584
- --------------------------------------------------------------------------------------------------
Undistributed net investment income 1,063,410
- --------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (32,115,941)
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and
liabilities denominated in foreign currencies, net of foreign capital gains taxes 133,084,908
--------------
Net Assets $758,944,961
==============
15 | OPPENHEIMER DEVELOPING MARKETS 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
$588,450,190 and 34,776,882 shares of beneficial interest outstanding) $16.92
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $17.95
- -------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $84,705,437
and 5,045,546 shares of beneficial interest outstanding) $16.79
- -------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $77,080,802
and 4,624,141 shares of beneficial interest outstanding) $16.67
- -------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $8,708,532
and 519,340 shares of beneficial interest outstanding) $16.77
See accompanying Notes to Financial Statements.
16 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF OPERATIONS For the Year Ended August 31, 2003
- --------------------------------------------------------------------------------------------
Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $1,751,916) $ 13,202,966
Affiliated companies (net of foreign withholding taxes of $193,373) 2,254,362
- --------------------------------------------------------------------------------------------
Interest 281,534
-------------
Total investment income 15,738,862
- --------------------------------------------------------------------------------------------
Expenses
Management fees 4,792,388
- --------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 902,108
Class B 626,169
Class C 521,534
Class N 20,884
- --------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 1,414,254
Class B 301,138
Class C 199,992
Class N 16,313
- --------------------------------------------------------------------------------------------
Custodian fees and expenses 823,931
- --------------------------------------------------------------------------------------------
Shareholder reports 171,516
- --------------------------------------------------------------------------------------------
Trustees' compensation 31,805
- --------------------------------------------------------------------------------------------
Other 72,640
-------------
Total expenses 9,894,672
Less reduction to custodian expenses (1,889)
Less voluntary waiver of transfer and shareholder servicing agent fees-Class A (168,717)
Less voluntary waiver of transfer and shareholder servicing agent fees-Class B (94,725)
Less voluntary waiver of transfer and shareholder servicing agent fees-Class C (24,960)
Less voluntary waiver of transfer and shareholder servicing agent fees-Class N (3,665)
-------------
Net expenses 9,600,716
- --------------------------------------------------------------------------------------------
Net Investment Income 6,138,146
- --------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments:
Unaffiliated companies (10,418,126)
Affiliated companies 274,008
Foreign currency transactions (2,464,143)
-------------
Net realized loss (12,608,261)
- --------------------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments (net of foreign capital gains tax of $2,860,619) 146,174,177
Translation of assets and liabilities denominated in foreign currencies 10,699,207
-------------
Net change in unrealized appreciation 156,873,384
- --------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $150,403,269
=============
See accompanying Notes to Financial Statements.
17 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended August 31, 2003 2002
- --------------------------------------------------------------------------------------------------------------------
Operations
Net investment income $ 6,138,146 $ 5,915,150
- --------------------------------------------------------------------------------------------------------------------
Net realized loss (12,608,261) (10,082,312)
- --------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 156,873,384 3,810,385
-----------------------------------
Net increase (decrease) in net assets resulting from operations 150,403,269 (356,777)
- --------------------------------------------------------------------------------------------------------------------
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Class A (5,036,106) (2,829,231)
Class B (444,216) (317,608)
Class C (484,074) (190,847)
Class N (56,763) (1,342)
- --------------------------------------------------------------------------------------------------------------------
Beneficial Interest Transactions
Net increase in net assets resulting from beneficial interest transactions:
Class A 139,680,513 173,089,553
Class B 5,073,409 17,214,907
Class C 15,689,824 26,983,183
Class N 5,246,193 1,769,282
- --------------------------------------------------------------------------------------------------------------------
Net Assets
Total increase 310,072,049 215,361,120
- --------------------------------------------------------------------------------------------------------------------
Beginning of period 448,872,912 233,511,792
-----------------------------------
End of period [including undistributed net investment
income of $1,063,410 and $986,368, respectively] $758,944,961 $448,872,912
===================================
See accompanying Notes to Financial Statements.
18 | OPPENHEIMER DEVELOPING MARKETS FUND
FINANCIAL HIGHLIGHTS
Class A Year Ended August 31, 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 13.43 $ 12.93 $ 16.85 $ 11.40 $ 7.76
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .19 .25 .21 .20 .10
Net realized and unrealized gain (loss) 3.50 .45 (3.54) 5.37 3.71
-------------------------------------------------------------------------
Total from investment operations 3.69 .70 (3.33) 5.57 3.81
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.20) (.20) (.20) (.12) (.10)
Distributions from net realized gain -- -- (.39) -- (.07)
-------------------------------------------------------------------------
Total dividends and/or
distributions to shareholders (.20) (.20) (.59) (.12) (.17)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.92 $13.43 $12.93 $16.85 $11.40
=========================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 27.93% 5.44% (20.08)% 49.12% 49.92%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $588,450 $337,405 $167,178 $114,137 $40,046
- ---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $374,841 $257,746 $153,027 $ 77,848 $29,183
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 1.42% 1.91% 1.76% 1.56% 1.11%
Total expenses 1.81% 1.81% 1.69% 1.96% 2.36%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses 1.76% 1.77% N/A 3 N/A 3 N/A 3
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 6% 10% 16% 22% 37%
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
See accompanying Notes to Financial Statements.
19 | OPPENHEIMER DEVELOPING MARKETS FUND
FINANCIAL HIGHLIGHTS Continued
Class B Year Ended August 31, 2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 13.32 $ 12.82 $ 16.70 $ 11.30 $ 7.69
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .09 .15 .12 .11 .04
Net realized and unrealized gain (loss) 3.47 .44 (3.53) 5.33 3.68
------------------------------------------------------------------------
Total from investment operations 3.56 .59 (3.41) 5.44 3.72
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.09) (.09) (.08) (.04) (.04)
Distributions from net realized gain -- -- (.39) -- (.07)
------------------------------------------------------------------------
Total dividends and/or
distributions to shareholders (.09) (.09) (.47) (.04) (.11)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.79 $13.32 $12.82 $16.70 $11.30
========================================================================
- -----------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 26.98% 4.61% (20.67)% 48.20% 48.81%
- -----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $84,705 $63,005 $45,393 $48,146 $21,028
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $62,676 $54,744 $48,135 $37,333 $16,430
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 0.66% 1.14% 0.92% 0.78% 0.37%
Total expenses 2.67% 2.58% 2.46% 2.72% 3.10%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses 2.52% 2.54% N/A 3 N/A 3 N/A 3
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 6% 10% 16% 22% 37%
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
See accompanying Notes to Financial Statements.
20 | OPPENHEIMER DEVELOPING MARKETS FUND
Class C Year Ended August 31, 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 13.25 $ 12.78 $ 16.68 $ 11.31 $ 7.68
- -------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .10 .17 .12 .09 .04
Net realized and unrealized gain (loss) 3.44 .41 (3.52) 5.32 3.69
-----------------------------------------------------------------------
Total from investment operations 3.54 .58 (3.40) 5.41 3.73
- -------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.12) (.11) (.11) (.04) (.03)
Distributions from net realized gain -- -- (.39) -- (.07)
-----------------------------------------------------------------------
Total dividends and/or
distributions to shareholders (.12) (.11) (.50) (.04) (.10)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.67 $13.25 $12.78 $16.68 $11.31
=======================================================================
- -------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 1 27.05% 4.54% (20.68)% 47.93% 48.98%
- -------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $77,081 $46,722 $20,864 $16,363 $5,064
- -------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $52,236 $33,334 $19,646 $10,230 $4,022
- -------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 0.66% 1.15% 0.94% 0.82% 0.41%
Total expenses 2.57% 2.57% 2.46% 2.71% 3.08%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses 2.52% 2.53% N/A 3 N/A 3 N/A 3
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 6% 10% 16% 22% 37%
1. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. Total returns are not annualized for periods of less than one
full year. Returns do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
2. Annualized for periods of less than one full year.
3. Reduction to custodian expenses less than 0.01%.
See accompanying Notes to Financial Statements.
21 | OPPENHEIMER DEVELOPING MARKETS FUND
FINANCIAL HIGHLIGHTS Continued
Class N Year Ended August 31, 2003 2002 2001 1
- ------------------------------------------------------------------------------------------------------
Per Share Operating Data
Net asset value, beginning of period $ 13.36 $ 12.91 $ 15.26
- ------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .22 .32 .05
Net realized and unrealized gain (loss) 3.41 .34 (2.40)
---------------------------------------
Total from investment operations 3.63 .66 (2.35)
- ------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.22) (.21) --
Distributions from net realized gain -- -- --
---------------------------------------
Total dividends and/or distributions to shareholders (.22) (.21) --
- ------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.77 $13.36 $12.91
=======================================
- ------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value 2 27.73% 5.13% (15.40)%
- ------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net assets, end of period (in thousands) $8,709 $1,741 $77
- ------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $4,196 $ 686 $35
- ------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.27% 1.68% 1.63%
Total expenses 2.08% 2.04% 1.96%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses 1.99% 2.00% N/A 4
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate 6% 10% 16%
1. For the period from March 1, 2001 (inception of offering) to August 31, 2001.
2. Assumes an investment on the business day before the first day of the fiscal
period (or inception of offering), with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Sales
charges are not reflected in the total returns. Total returns are not annualized
for periods of less than one full year. Returns do not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption of
Fund shares.
3. Annualized for periods of less than one full year.
4. Reduction to custodian expenses less than 0.01%.
See accompanying Notes to Financial Statements.
22 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer Developing Markets 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 aggressively seek
capital appreciation. The Fund's investment advisor is OppenheimerFunds, Inc.
(the Manager).
The Fund offers Class A, Class B, Class C and Class N shares. Class A shares
are sold at their offering price, which is normally net asset value plus a
front-end sales charge. Class B, Class C and Class N shares are sold without a
front-end sales charge but may be subject to a contingent deferred sales charge
(CDSC). Class N shares are sold only through retirement plans. Retirement plans
that offer Class N shares may impose charges on those accounts. All classes of
shares have identical rights and voting privileges. Earnings, net assets and
net asset value per share may differ by minor amounts due to each class having
its own expenses directly attributable to that class. Classes A, B, C and N
have separate distribution and/or service plans. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The Fund assesses a 2% fee on the proceeds of fund shares that are redeemed
(either by selling or exchanging to another Oppenheimer fund) within 30 days of
their purchase. The fee, which is retained by the Fund, is accounted for as an
addition to paid-in capital.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Securities listed or traded on National Stock Exchanges
or other domestic or foreign exchanges are valued based on the last sale price
of the security traded on that exchange prior to the time when the Fund's
assets are valued. Securities traded on NASDAQ are valued based on the closing
price provided by NASDAQ prior to the time when the Fund's assets are valued.
In the absence of a sale, the security is valued at the last sale price on the
prior trading day, if it is within the spread of the closing bid and asked
prices, and if not, at the closing bid price. Securities (including restricted
securities) for which quotations are not readily available are valued primarily
using dealer-supplied valuations, a portfolio pricing service authorized by the
Board of Trustees, or at their fair value. Fair value is determined in good
faith using consistently applied procedures under the supervision of the Board
of Trustees. Short-term "money market type" debt securities with remaining
maturities of sixty days or less are valued at amortized cost (which
approximates market value).
- --------------------------------------------------------------------------------
Foreign Currency Translation. The Fund's accounting records are maintained in
U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
23 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
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. Secured by U.S. government securities, these
balances are invested in one or more repurchase agreements. Securities pledged
as collateral for repurchase agreements are held by a custodian bank until the
agreements mature. Each agreement requires that the market value of the
collateral be sufficient to cover payments of interest and principal. In the
event of default by the other party to the agreement, retention of the
collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years
and unrealized appreciation or depreciation of investment for federal income
tax purposes.
24 | OPPENHEIMER DEVELOPING MARKETS FUND
Net Unrealized
Appreciation
Undistributed Undistributed Accumulated Based on Cost of
Net Investment Long-Term Loss Securities for Federal
Income Gain Carryforward 1,2,3 Income Tax Purposes
---------------------------------------------------------------------------------------
$21,813,532 $-- $31,889,842 $112,153,051
1. As of August 31, 2003, the Fund had $19,295,605 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of August 31, 2003, details
of the capital loss carryforwards were as follows:
Expiring
----------------------
2010 $ 8,068,791
2011 11,226,814
-------------
Total $19,295,605
=============
2. During the fiscal years ended August 31, 2003 and August 31, 2002, the Fund
did not utilize any capital loss carryforwards.
3. As of August 31, 2003, the Fund had $12,594,237 of post-October losses
available to offset future realized capital gains, if any. Such losses, if
unutilized, will expire in 2012.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for August 31, 2003. Net assets of the
Fund were unaffected by the reclassifications.
From To Net
Ordinary Capital Tax Return Investment
Income Loss of Capital Loss
-------------------------------------------------------
$39,945 $9,051 $-- $--
The tax character of distributions paid during the years ended August 31, 2003
and August 31, 2002 was as follows:
Year Ended Year Ended
August 31, 2003 August 31, 2002
------------------------------------------------------
Distributions paid from:
Ordinary income $6,021,159 $3,339,028
The aggregate cost of investments and the composition of unrealized
appreciation and depreciation of investments for federal income tax purposes as
of August 31, 2003 are noted below. The primary difference between book and tax
appreciation or depreciation of investments, if applicable, is attributable to
the tax deferral of losses or tax realization of financial statement unrealized
gain or loss.
Federal tax cost $644,896,914
=============
Gross unrealized appreciation $145,967,329
Gross unrealized depreciation (33,814,278)
-------------
Net unrealized appreciation $112,153,051
=============
25 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
1. Significant Accounting Policies Continued
Certain foreign countries impose a tax on capital gains which is accrued by the
Fund based on unrealized appreciation, if any, on affected securities. The tax
is paid when the gain is realized.
- --------------------------------------------------------------------------------
Trustees' Compensation. The Fund has adopted an unfunded retirement plan for
the Fund's independent trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service. During the year ended
August 31, 2003, the Fund's projected benefit obligations were increased by
$8,677 and payments of $1,368 were made to retired trustees, resulting in an
accumulated liability of $44,365 as of August 31, 2003.
The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or
a portion of the annual compensation they are entitled to receive from the
Fund. Under the plan, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the Fund or are invested in other
selected Oppenheimer funds. Deferral of trustees' fees under the plan will not
affect the net assets of the Fund, and will not materially affect the Fund's
assets, liabilities or net investment income per share. Amounts will be
deferred until distributed in accordance to the Plan.
- --------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income and capital gain distributions, if
any, are declared and paid annually.
- --------------------------------------------------------------------------------
Investment Income. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and
amortization of premium, is accrued as earned.
- --------------------------------------------------------------------------------
Expense Offset Arrangement. The reduction of custodian fees represents earnings
on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Security Transactions. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.
- --------------------------------------------------------------------------------
Other. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
26 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
Year Ended August 31, 2003 Year Ended August 31, 2002
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------
Class A
Sold 27,774,840 $ 381,173,305 24,549,643 $ 345,324,115
Dividends and/or
distributions reinvested 345,063 4,409,888 196,759 2,577,550
Redeemed (18,474,251) (245,902,680) (12,543,703) (174,812,112)
-----------------------------------------------------------------
Net increase 9,645,652 $ 139,680,513 12,202,699 $ 173,089,553
=================================================================
- --------------------------------------------------------------------------------------------
Class B
Sold 2,331,057 $ 31,318,480 2,392,548 $ 33,442,516
Dividends and/or
distributions reinvested 31,756 404,888 21,908 286,340
Redeemed (2,048,970) (26,649,959) (1,224,073) (16,513,949)
-----------------------------------------------------------------
Net increase 313,843 $ 5,073,409 1,190,383 $ 17,214,907
=================================================================
- --------------------------------------------------------------------------------------------
Class C
Sold 2,690,076 $ 35,884,161 2,631,550 $ 36,946,809
Dividends and/or
distributions reinvested 33,761 427,423 13,133 170,863
Redeemed (1,624,911) (20,621,760) (752,220) (10,134,489)
-----------------------------------------------------------------
Net increase 1,098,926 $ 15,689,824 1,892,463 $ 26,983,183
=================================================================
- --------------------------------------------------------------------------------------------
Class N
Sold 508,343 $ 6,839,560 153,629 $ 2,190,151
Dividends and/or
distributions reinvested 4,454 56,525 101 1,328
Redeemed (123,773) (1,649,892) (29,368) (422,197)
-----------------------------------------------------------------
Net increase 389,024 $ 5,246,193 124,362 $ 1,769,282
=================================================================
- --------------------------------------------------------------------------------
3. Purchases and Sales of Securities
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended August 31, 2003, were
$168,028,746 and $26,900,975, respectively.
- --------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with
the investment advisory agreement with the Fund which provides for a fee at an
annual rate of 1.00% of the first $250 million of average annual net assets of
the Fund, 0.95% of the next $250 million, 0.90% of the next $500 million and
0.85% of average annual net assets over $1 billion.
27 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
4. Fees and Other Transactions with Affiliates Continued
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the
Manager, acts as the transfer and shareholder servicing agent for the Fund. The
Fund pays OFS a per account fee. For the year ended August 31, 2003, the Fund
paid $1,659,576 to OFS for services to the Fund.
OFS has voluntarily agreed to limit transfer and shareholder servicing agent
fees for all classes, up to an annual rate of 0.35% of average net assets per
class. This undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
Distribution and Service Plan (12b-1) Fees. Under its General Distributor's
Agreement with the Manager, OppenheimerFunds Distributor, Inc. (the
Distributor) acts as the Fund's principal underwriter in the continuous public
offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the
period indicated.
Aggregate Class A Concessions Concessions Concessions Concessions
Front-End Front-End on Class A on Class B on Class C on Class N
Sales Charges Sales Charges Shares Shares Shares Shares
on Class A Retained by Advanced by Advanced by Advanced by Advanced by
Year Ended Shares Distributor Distributor 1 Distributor 1 Distributor 1 Distributor 1
--------------------------------------------------------------------------------------------------------------------
August 31, 2003 $903,547 $192,174 $225,942 $508,114 $265,308 $49,110
1. The Distributor advances concession payments to dealers for certain sales of
Class A shares and for sales of Class B, Class C and Class N shares from its own
resources at the time of sale.
Class A Class B Class C Class N
Contingent Contingent Contingent Contingent
Deferred Deferred Deferred Deferred
Sales Charges Sales Charges Sales Charges Sales Charges
Retained by Retained by Retained by Retained by
Year Ended Distributor Distributor Distributor Distributor
- ----------------------------------------------------------------------------------
August 31, 2003 $14,364 $205,512 $31,227 $21,239
- --------------------------------------------------------------------------------
Service Plan for Class A Shares. The Fund has adopted a Service Plan for Class
A Shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. For the year ended August 31, 2003, expense under
the Class A Plan totaled $902,108, all of which were paid by the Distributor to
recipients, which included $7,107 retained by the Distributor and $19,747 which
was paid to an affiliate of the Manager. Any unreimbursed expenses the
Distributor incurs with respect to Class A shares in any fiscal year cannot be
recovered in subsequent years.
- --------------------------------------------------------------------------------
Distribution and Service Plans for Class B, Class C and Class N Shares. The
Fund has adopted Distribution and Service Plans for Class B, Class C and Class
N shares. Under the plans, the Fund pays the Distributor an annual asset-based
sales charge of 0.75% per year on Class B shares and on Class C shares and the
Fund pays the Distributor an annual asset-based sales charge of 0.25% per year
on Class N shares. The Distributor also receives a service fee of 0.25% per
year under each plan.
28 | OPPENHEIMER DEVELOPING MARKETS FUND
Distribution fees paid to the Distributor for the year ended August 31, 2003,
were as follows:
Distributor's
Distributor's Aggregate
Aggregate Unreimbursed
Unreimbursed Expenses as %
Total Payments Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
- -------------------------------------------------------------------------------------------
Class B Plan $626,169 $505,387 $1,615,583 1.91%
Class C Plan 521,534 245,067 1,014,558 1.32
Class N Plan 20,884 17,899 71,912 0.83
- --------------------------------------------------------------------------------
5. Foreign Currency Contracts
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into
foreign currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation
or depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gain or loss. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of August 31, 2003, the Fund had outstanding foreign currency contracts as
follows:
Contract Valuation
Expiration Amount as of Unrealized Unrealized
Contract Description Dates (000s) August 31, 2003 Appreciation Depreciation
- -----------------------------------------------------------------------------------------------------------------
Contracts to Purchase
Egyptian Pounds [EGP] 9/2/03 1,144EGP $186,090 $ -- $912
Mexican Nuevo Peso [MXN] 9/2/03 1,133MXN 102,699 181 --
---------------------------
Total unrealized appreciation and depreciation $181 $912
===========================
- --------------------------------------------------------------------------------
6. Illiquid Securities
As of August 31, 2003, investments in securities included issues that are
illiquid. A security may be considered illiquid if it lacks a readily available
market or if its valuation has not changed for a certain period of time. The
Fund intends to invest no more than 15% of its net assets (determined at the
time of purchase and reviewed periodically) in illiquid securities. The
aggregate value of illiquid securities subject to this limitation as of August
31, 2003 was $36,546,349, which represents 4.82% of the Fund's net assets.
29 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
7. Borrowing and Lending Arrangements
The Fund entered into an "interfund borrowing and lending arrangement" with
other funds in the Oppenheimer funds complex, to allow funds to borrow for
liquidity purposes. The arrangement was initiated pursuant to exemptive relief
granted by the Securities and Exchange Commission to allow these affiliated
funds to lend money to, and borrow money from, each other, in an attempt to
reduce borrowing costs below those of bank loan facilities. Under the
arrangement the Fund may lend money to other Oppenheimer funds and may borrow
from other Oppenheimer funds at a rate set by the Fund's Board of Trustees,
based upon a recommendation by the Manager. The Fund's borrowings, if any, are
subject to asset coverage requirements under the Investment Company Act and the
provisions of the SEC order and other applicable regulations. If the Fund
borrows money, there is a risk that the loan could be called on one day's
notice, in which case the Fund might have to borrow from a bank at higher rates
if a loan were not available from another Oppenheimer fund. If the Fund lends
money to another fund, it will be subject to the risk that the other fund might
not repay the loan in a timely manner, or at all.
The Fund had no interfund borrowings or loans outstanding during the year
ended or at August 31, 2003.
30 | OPPENHEIMER DEVELOPING MARKETS FUND
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders of
Oppenheimer Developing Markets Fund:
We have audited the accompanying statement of assets and liabilities of
Oppenheimer Developing Markets Fund, including the statement of investments, as
of August 31, 2003, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of August 31, 2003, by
correspondence with the custodian and brokers or by other appropriate auditing
procedures where replies from brokers were not received. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Developing Markets Fund as of August 31, 2003, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
KPMG LLP
Denver, Colorado
September 22, 2003
31 | OPPENHEIMER DEVELOPING MARKETS FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
In early 2004, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2003. Regulations of the U.S. Treasury Department require the
Fund to report this information to the Internal Revenue Service.
Dividends of $0.1966, $0.0939, $0.1241 and $0.2229 per share were paid to
Class A, Class B, Class C and Class N shareholders, respectively, on December
12, 2002, all of which was designated as "ordinary income" for federal income
tax purposes.
None of the dividends paid by the Fund during the year ended August 31, 2003
are eligible for the corporate dividend-received deduction.
A portion of the dividends paid by the Fund during the fiscal year ended
August 31, 2003 which are not designated as capital gain distributions are
eligible for lower individual income tax rates to the extent that the Fund has
received qualified dividend income as stipulated by recent tax legislation.
$17,402,617 of the Fund's fiscal year taxable income is eligible for the lower
individual income tax rates. In early 2004, shareholders of record will receive
information regarding the percentage of distributions that are eligible for
lower individual income tax rates.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because
of the complexity of the federal regulations which may affect your individual
tax return and the many variations in state and local tax regulations, we
recommend that you consult your tax advisor for specific guidance.
PORTFOLIO PROXY VOTING
POLICIES AND PROCEDURES Unaudited
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and
Procedures is available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.225.5677, (ii) on the Fund's website at
www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In
addition, the Fund will be required to file new Form N-PX, with its complete
proxy voting record for the 12 months ended June 30th, no later than August
31st of each year. The first such filing is due no later than August 31, 2004,
for the twelve months ended June 30, 2004. Once filed, the Fund's Form N-PX
filing will be available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.225.5677, and (ii) on the SEC's website at www.sec.gov.
32 | OPPENHEIMER DEVELOPING MARKETS FUND
TRUSTEES AND OFFICERS Unaudited
- ------------------------------------------------------------------------------------------------------------------
Name, Position(s) Held with Principal Occupation(s) During Past 5 Years; Other Trusteeships/Directorships Held
Fund, Length of Service, Age by Trustee; Number of Portfolios in Fund Complex Currently Overseen by Trustee
INDEPENDENT The address of each Trustee in the chart below is 6803 S. Tucson Way, Centennial,
TRUSTEES CO 80112-3924. Each Trustee serves for an indefinite term, until his or
her resignation, retirement, death or removal.
Clayton K. Yeutter, Of Counsel (since 1993), Hogan & Hartson (a law firm). Other directorships:
Chairman of the Board Weyerhaeuser Corp. (since 1999) and Danielson Holding Corp. (since 2002);
of Trustees (since 2003), formerly a director of Caterpillar, Inc. (1993-December 2002). Oversees 29
Trustee (since 1996) portfolios in the OppenheimerFunds complex.
Age: 72
Robert G. Galli, A trustee or director of other Oppenheimer funds. Formerly Trustee (May 2000-
Trustee (since 1996) 2002) of Research Foundation of AIMR (investment research, non-profit) and
Age: 70 Vice Chairman (October 1995-December 1997) of OppenheimerFunds, Inc.
(the Manager). Oversees 39 portfolios in the OppenheimerFunds complex.
Phillip A. Griffiths, A director (since 1991) of the Institute for Advanced Study, Princeton, N.J.,
Trustee (since 1999) a director (since 2001) of GSI Lumonics, a trustee (since 1983) of Woodward
Age: 64 Academy, a Senior Advisor (since 2001) of The Andrew W. Mellon Foundation.
A member of: the National Academy of Sciences (since 1979), American Academy
of Arts and Sciences (since 1995), American Philosophical Society (since
1996) and Council on Foreign Relations (since 2002). Formerly a director of
Bankers Trust New York Corporation (1994-1999). Oversees 29 portfolios in the
OppenheimerFunds complex.
Joel W. Motley, Director (since 2002) Columbia Equity Financial Corp. (privately-held financial
Trustee (since 2002) adviser); Managing Director (since 2002) Carmona Motley, Inc. (privately-held
Age: 51 financial adviser); Formerly he held the following positions: Managing
Director (January 1998-December 2001), Carmona Motley Hoffman Inc.
(privately-held financial adviser); Managing Director (January 1992-December
1997), Carmona Motley & Co. (privately-held financial adviser). Oversees 29
portfolios in the OppenheimerFunds complex.
Kenneth A. Randall, A director of Dominion Resources, Inc. (electric utility holding company) and
Trustee (since 1996) Prime Retail, Inc. (real estate investment trust); formerly a director of Dominion
Age: 76 Energy, Inc. (electric power and oil & gas producer), President and Chief
Executive Officer of The Conference Board, Inc. (international economic and
business research) and a director of Lumbermens Mutual Casualty Company,
American Motorists Insurance Company and American Manufacturers Mutual
Insurance Company. Oversees 29 portfolios in the OppenheimerFunds complex.
Edward V. Regan, President, Baruch College, CUNY; a director of RBAsset (real estate manager); a
Trustee (since 1996) director of OffitBank; formerly Trustee, Financial Accounting Foundation (FASB
Age: 73 and GASB), Senior Fellow of Jerome Levy Economics Institute, Bard College,
Chairman of Municipal Assistance Corporation for the City of New York, New
York State Comptroller and Trustee of New York State and Local Retirement
Fund. Oversees 29 investment companies in the OppenheimerFunds complex.
Russell S. Reynolds, Jr., Chairman (since 1993) of The Directorship Search Group, Inc. (corporate gover-
Trustee (since 1996) nance consulting and executive recruiting); a life trustee of International House
Age: 71 (non-profit educational organization), and a trustee (since 1996) of the
Greenwich Historical Society. Oversees 29 portfolios in the OppenheimerFunds complex.
33 | OPPENHEIMER DEVELOPING MARKETS FUND
TRUSTEES AND OFFICERS Unaudited / Continued
Donald W. Spiro, Chairman Emeritus (since January 1991) of the Manager. Formerly a director
Vice Chairman of the (January 1969-August 1999) of the Manager. Oversees 29 portfolios in the
Board of Trustees, OppenheimerFunds complex.
Trustee (since 1996)
Age: 77
- -----------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE The address of Mr. Murphy in the chart below is 498 Seventh Avenue, New York, NY
AND OFFICER 10018. Mr. Murphy serves for an indefinite term, until his resignation, death or removal.
John V. Murphy, Chairman, Chief Executive Officer and director (since June 2001) and President
President and Trustee, (since September 2000) of the Manager; President and a director or trustee
Trustee (since 2001) of other Oppenheimer funds; President and a director (since July 2001) of
Age: 54 Oppenheimer Acquisition Corp. (the Manager's parent holding company) and
of Oppenheimer Partnership Holdings, Inc. (a holding company subsidiary of the
Manager); a director (since November 2001) of OppenheimerFunds Distributor,
Inc. (a subsidiary of the Manager); Chairman and a director (since July 2001)
of Shareholder Services, Inc. and of Shareholder Financial Services, Inc.
(transfer agent subsidiaries of the Manager); President and a director (since
July 2001) of OppenheimerFunds Legacy Program (a charitable trust program
established by the Manager); a director of the investment advisory
subsidiaries of the Manager: OFI Institutional Asset Management, Inc. and
Centennial Asset Management Corporation (since November 2001), HarbourView
Asset Management Corporation and OFI Private Investments, Inc. (since July
2001); President (since November 1, 2001) and a director (since July 2001) of
Oppenheimer Real Asset Management, Inc.; a director (since November 2001) of
Trinity Investment Management Corp. and Tremont Advisers, Inc. (investment
advisory affiliates of the Manager); Executive Vice President (since February
1997) of Massachusetts Mutual Life Insurance Company (the Manager's parent
company); a director (since June 1995) of DLB Acquisition Corporation (a
holding company that owns the shares of David L. Babson & Company, Inc.);
formerly, Chief Operating Officer (September 2000-June 2001) of the Manager;
President and trustee (November 1999-November 2001) of MML Series Investment
Fund and MassMutual Institutional Funds (open-end investment companies); a
director (September 1999-August 2000) of C.M. Life Insurance Company;
President, Chief Executive Officer and director (September 1999-August 2000)
of MML Bay State Life Insurance Company; a director (June 1989-June 1998) of
Emerald Isle Bancorp and Hibernia Savings Bank (a wholly-owned subsidiary of
Emerald Isle Bancorp). Oversees 75 portfolios in the OppenheimerFunds
complex.
- -----------------------------------------------------------------------------------------------------------------------
OFFICERS The address of the Officers in the chart below is as follows: for Messrs.
Bhaman and Zack, 498 Seventh Avenue, New York, NY 10018, for Mr. Wixted, 6803
S. Tucson Way, Centennial, CO 80112-3924. Each Officer serves for an annual
term or until his or her earlier resignation, death or removal.
Rajeev Bhaman, Vice President of the Manager (since January 1997); an officer of 1 portfolio in
Vice President (since 1996) the OppenheimerFunds complex; formerly Assistant Vice President of the
Age: 39 Manager (March 1996 - January 1997).
34 | OPPENHEIMER DEVELOPING MARKETS FUND
Brian W. Wixted, Senior Vice President and Treasurer (since March 1999) of the Manager;
Treasurer (since 1999) Treasurer (since March 1999) of HarbourView Asset Management Corporation,
Age: 43 Shareholder Services, Inc., Oppenheimer Real Asset Management Corporation,
Shareholder Financial Services, Inc., Oppenheimer Partnership Holdings, Inc., OFI
Private Investments, Inc. (since March 2000), OppenheimerFunds International
Ltd. and OppenheimerFunds plc (since May 2000) and OFI Institutional Asset
Management, Inc. (since November 2000) (offshore fund management sub-
sidiaries of the Manager); Treasurer and Chief Financial Officer (since May 2000)
of Oppenheimer Trust Company (a trust company subsidiary of the Manager);
Assistant Treasurer (since March 1999) of Oppenheimer Acquisition Corp. and
OppenheimerFunds Legacy Program (since April 2000); formerly Principal and
Chief Operating Officer (March 1995-March 1999), Bankers Trust Company-
Mutual Fund Services Division. An officer of 91 portfolios in the
OppenheimerFunds complex.
Robert G. Zack, Senior Vice President (since May 1985) and General Counsel (since February
Secretary (since 2001) 2002) of the Manager; General Counsel and a director (since November 2001) of
Age: 55 OppenheimerFunds Distributor, Inc.; Senior Vice President and General Counsel
(since November 2001) of HarbourView Asset Management Corporation; Vice
President and a director (since November 2000) of Oppenheimer Partnership
Holdings, Inc.; Senior Vice President, General Counsel and a director (since
November 2001) of Shareholder Services, Inc., Shareholder Financial Services, Inc.,
OFI Private Investments, Inc., Oppenheimer Trust Company and OFI Institutional
Asset Management, Inc.; General Counsel (since November 2001) of Centennial
Asset Management Corporation; a director (since November 2001) of
Oppenheimer Real Asset Management, Inc.; Assistant Secretary and a director
(since November 2001) of OppenheimerFunds International Ltd.; Vice President
(since November 2001) of OppenheimerFunds Legacy Program; Secretary
(since November 2001) of Oppenheimer Acquisition Corp.; formerly Acting
General Counsel (November 2001-February 2002) and Associate General
Counsel (May 1981-October 2001) of the Manager; Assistant Secretary of
Shareholder Services, Inc. (May 1985-November 2001), Shareholder Financial
Services, Inc. (November 1989-November 2001); OppenheimerFunds Interna-
tional Ltd. and OppenheimerFunds plc (October 1997-November 2001). An
officer of 91 portfolios in the OppenheimerFunds complex.
The Fund's Statement of Additional Information contains additional information
about the Fund's Trustees and is available without charge upon request.
35 | OPPENHEIMER DEVELOPING MARKETS FUND
ITEM 2. CODE OF ETHICS
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the Fund has determined that Edward
V. Regan, the Chairman of the Board's Audit Committee, possesses the technical
attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as
an "audit committee financial expert," and has designated Mr. Regan as the Audit
Committee's financial expert. Mr. Regan is an "independent" Trustee pursuant to
paragraph (a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES - NOT REQUIRED
ITEM 5. NOT APPLICABLE
ITEM 6. RESERVED
ITEM 7. NOT APPLICABLE
ITEM 8. RESERVED
ITEM 9. CONTROLS AND PROCEDURES
(a) Based on their evaluation of registrant's disclosure controls and
procedures (as defined in rule 30a-2(c) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(c)) as of August 31, 2003, registrant's
principal executive officer and principal financial officer found
registrant's disclosure controls and procedures to be appropriately
designed to ensure that information required to be disclosed by
registrant in the reports that it files under the Securities Exchange
Act of 1934 (a) is accumulated and communicated to registrant's
management, including its principal executive officer and principal
financial officer, to allow timely decisions regarding required
disclosure, and (b) is recorded, processed, summarized and reported,
within the time periods specified in the rules and forms adopted by the
U.S. Securities and Exchange Commission.
(b) There have been no significant changes in registrant's internal
controls or in other factors that could significantly affect
registrant's internal controls subsequent to the date of the most
recent evaluation as indicated, including no significant deficiencies
or material weaknesses that required corrective action.
ITEM 10. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)