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.
Two World Financial Center, New York, New York 10281-1008
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
--------------
Date of fiscal year end: August 31
Date of reporting period: September 1, 2003 - February 29, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS February 29, 2004 / Unaudited
- --------------------------------------------------------------------------------
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMON STOCKS--93.2%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--19.5%
- --------------------------------------------------------------------------------
AUTO COMPONENTS--1.2%
Hyundai Autonet
Co. Ltd. 1 8,085,000 $ 19,215,625
- --------------------------------------------------------------------------------
AUTOMOBILES--1.5%
Bajaj Auto Ltd. 1 528,000 10,582,178
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Hero Honda
Motors Ltd. 500,000 5,450,978
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PT Astra
International Tbk 12,200,000 7,791,839
----------------
23,824,995
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--3.3%
Danubius Hotel &
Spa Rt. 1 210,000 3,354,314
- --------------------------------------------------------------------------------
Greek Organization of
Football Prognostics SA 375,000 6,867,919
- --------------------------------------------------------------------------------
Hongkong & Shanghai
Hotels Ltd. (The) 1 19,156,000 13,043,263
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Intralot SA
Integrated Lottery 964,500 18,814,742
- --------------------------------------------------------------------------------
Jollibee Foods Corp. 27,260,000 9,196,378
----------------
51,276,616
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES--3.4%
Corporacion GEO SA
de CV, Series B 1,2 5,285,000 37,591,351
- --------------------------------------------------------------------------------
Steinhoff International
Holdings Ltd. 12,600,000 16,783,583
----------------
54,374,934
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--1.2%
LG Home
Shopping, Inc. 1,2 480,000 18,326,531
- --------------------------------------------------------------------------------
MEDIA--5.9%
Corporacion
Interamericana
de Entretenimiento
SA de CV 1 2,600,000 5,627,909
- --------------------------------------------------------------------------------
Grupo Televisa SA,
Sponsored GDR 1 675,000 29,814,750
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
MEDIA Continued
Hurriyet Gazetecilik
ve Matbaacilik AS 1 1,269,910,000 $ 4,446,598
- --------------------------------------------------------------------------------
Shaw Brothers Ltd. 4,500,000 4,885,115
- --------------------------------------------------------------------------------
Singapore Press
Holdings Ltd. 1,806,000 19,733,647
Television
Broadcasts Ltd. 2,863,000 13,976,888
Zee Telefilms Ltd. 4,802,000 14,129,462
----------------
92,614,369
- --------------------------------------------------------------------------------
MULTILINE RETAIL--1.2%
Lojas Americanas SA,
Preference 2 2,071,800,000 18,495,039
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--1.2%
Courts
(Singapore) Ltd. 2 10,700,000 3,457,189
- --------------------------------------------------------------------------------
JD Group Ltd. 2,560,000 15,972,337
----------------
19,429,526
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--0.6%
Folli-Follie SA 1 293,750 8,752,325
- --------------------------------------------------------------------------------
Titan Industries Ltd. 442,149 1,176,848
----------------
9,929,173
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CONSUMER STAPLES--11.1%
- --------------------------------------------------------------------------------
BEVERAGES--2.5%
Coca-Cola FEMSA
SA, Sponsored ADR 1 405,150 9,634,467
- --------------------------------------------------------------------------------
Companhia de Bebidas
das Americas, ADR 730,000 19,637,000
- --------------------------------------------------------------------------------
Serm Suk Public
Co. Ltd. 1 7,323,000 5,078,945
- --------------------------------------------------------------------------------
United Breweries
Holdings Ltd. 1,2 1,850,000 1,597,049
- --------------------------------------------------------------------------------
United Breweries Ltd. 1,2 1,462,826 3,033,339
----------------
38,980,800
9 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--4.5%
Companhia Brasileira
de Distribuicao Grupo
Pao de Acucar,
Sponsored ADR 1 900,000 $ 20,700,000
- --------------------------------------------------------------------------------
Dairy Farm International
Holdings Ltd. 6,009,600 11,899,008
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Jeronimo Martins
& Filho SA 1 850,400 10,249,233
- --------------------------------------------------------------------------------
President Chain
Store Corp. 7,123,000 14,307,930
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PT Hero
Supermarket Tbk 1,2 20,000,000 2,365,464
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Tiger Brands Ltd. 865,000 10,754,792
----------------
70,276,427
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FOOD PRODUCTS--1.2%
Sadia SA, Preference 12,990,000 19,267,571
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS--1.0%
Amore Pacific Corp. 1 111,394 16,102,874
- --------------------------------------------------------------------------------
TOBACCO--1.9%
Eastern Tobacco Co. 3 751,192 9,266,259
- --------------------------------------------------------------------------------
ITC Ltd. 1 862,000 20,952,117
----------------
30,218,376
- --------------------------------------------------------------------------------
ENERGY--4.8%
- --------------------------------------------------------------------------------
OIL & GAS--4.8%
Bharat Petroleum
Corp. Ltd. 3,330,000 34,036,156
- --------------------------------------------------------------------------------
SK Corp. 1 1,143,357 42,438,378
----------------
76,474,534
- --------------------------------------------------------------------------------
FINANCIALS--23.7%
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--11.5%
Commercial International
Bank, Sponsored GDR 1,4 1,800,000 6,264,000
- --------------------------------------------------------------------------------
Commercial International
Bank, Sponsored
GDR, S Shares 1 1,100,000 3,828,000
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Grupo Financiero
Banorte SA de CV 2,628,200 9,608,269
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
COMMERCIAL BANKS Continued
Grupo Financiero BBVA
Bancomer SA de
CV, Cl. B 1 28,200,000 $ 30,252,971
- --------------------------------------------------------------------------------
Grupo Financiero
Inbursa SA de CV 1 21,000,000 25,812,283
- --------------------------------------------------------------------------------
HSBC Holdings plc 1,700,000 27,955,318
- --------------------------------------------------------------------------------
HSBC Holdings plc,
Sponsored ADR 86,000 7,030,500
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ICICI Bank Ltd. 780,000 4,686,725
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ICICI Bank Ltd.,
Sponsored ADR 1,875,000 27,937,500
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Turk Dis Ticaret
Bankasi AS 1 1,163,963,000 1,525,072
- --------------------------------------------------------------------------------
Turk Ekonomi
Bankasi AS 1 199,716,000 657,950
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Uniao de Bancos
Brasileiros SA
(Unibanco),
Sponsored ADR 1,075,000 24,456,250
- --------------------------------------------------------------------------------
Yapi ve Kredi
Bankasi AS 1 4,920,000,000 11,021,837
----------------
181,036,675
- --------------------------------------------------------------------------------
CONSUMER FINANCE--0.5%
Tisco Finance
Public Co. Ltd. 1 10,599,980 8,228,541
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--4.6%
Fubon Financial
Holding Co. Ltd., GDR 1,4 42,500 497,250
- --------------------------------------------------------------------------------
Fubon Financial
Holding Co. Ltd., GDR 1 1,650,000 19,305,000
- --------------------------------------------------------------------------------
Guoco Group Ltd. 1,790,000 13,567,836
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Haci Omer Sabanci
Holding AS 1 1,200,000,000 5,647,590
- --------------------------------------------------------------------------------
Haci Omer Sabanci
Holding AS,
Sponsored ADR 1 10,000,000 11,250,000
- --------------------------------------------------------------------------------
Hong Kong Exchanges
& Clearing Ltd. 2,040,000 5,398,871
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Kiatnakin Finance
Public Co. Ltd. 1 5,399,920 6,219,048
- --------------------------------------------------------------------------------
Kotak Mahindra
Bank Ltd. 1 1,300,800 11,199,217
----------------
73,084,812
10 | OPPENHEIMER DEVELOPING MARKETS FUND
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
INSURANCE--2.5%
Aksigorta AS 6,186,325,700 $ 21,428,538
- --------------------------------------------------------------------------------
Sanlam Ltd. 1 12,990,000 17,869,428
----------------
39,297,966
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REAL ESTATE--2.7%
Brazil Realty SA
Empreendimentos e
Participacoes 1,2,3 394,000 507,296
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Brazil Realty SA,
GDR 1,2,4 435,720 5,277,659
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Medinet Nasr for
Housing &
Development Co. 2,3 1,060,000 4,452,702
- --------------------------------------------------------------------------------
SM Prime
Holdings, Inc. 1 193,800,000 20,990,412
- --------------------------------------------------------------------------------
Solidere, GDR 1,3 2,126,453 11,163,879
----------------
42,391,948
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--1.9%
Housing Development
Finance Corp. Ltd. 1 2,220,000 29,932,088
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HEALTH CARE--3.5%
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--0.1%
Pihsiang Machinery
Manufacturing Co. Ltd. 498,750 1,704,617
- --------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--0.3%
Grupo Casa Saba SA
de CV, Sponsored ADR 1 400,000 4,976,000
- --------------------------------------------------------------------------------
PHARMACEUTICALS--3.1%
Divi's Laboratories Ltd. 1 170,391 7,238,463
- --------------------------------------------------------------------------------
Dr. Reddy's
Laboratories Ltd. 250,000 5,993,755
- --------------------------------------------------------------------------------
Dr. Reddy's
Laboratories Ltd., Sponsored ADR 290,100 7,383,045
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Pliva d.d., GDR 4 600,000 9,780,000
- --------------------------------------------------------------------------------
Sun Pharmaceutical
Industries Ltd. 1,260,050 18,046,278
----------------
48,441,541
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
INDUSTRIALS--6.5%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--3.1%
Empresa Brasileira de
Aeronautica SA,
Preference 6,436,000 $ 48,681,573
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--0.9%
Sinotrans Ltd. 31,000,000 13,739,987
- --------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING--1.1%
Larsen & Toubro Ltd. 1,475,000 18,364,541
- --------------------------------------------------------------------------------
MACHINERY--1.4%
Hyundai Heavy
Industries Co. Ltd. 1 728,524 22,301,755
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--6.8%
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--1.4%
Lite-On
Technology Corp. 17,800,246 21,880,081
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--2.4%
AU Optronics Corp. 1 2,970,000 4,941,838
- --------------------------------------------------------------------------------
AU Optronics
Corp., ADR 1 815,000 14,018,000
- --------------------------------------------------------------------------------
Hankuk Electric Glass
Co. Ltd. 1 43,000 2,153,656
- --------------------------------------------------------------------------------
Synnex Technology
International Corp. 1 10,200,000 17,736,471
----------------
38,849,965
- --------------------------------------------------------------------------------
IT SERVICES--2.4%
HCL Technologies Ltd. 2,910,000 18,781,353
- --------------------------------------------------------------------------------
Hughes Software
Systems Ltd. 700,523 10,179,148
- --------------------------------------------------------------------------------
NIIT Ltd. 1,2 2,375,000 9,705,288
----------------
38,665,789
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--0.5%
PKL Corp. 1 1,485,779 7,390,992
- --------------------------------------------------------------------------------
SOFTWARE--0.1%
Patni Computer
Systems Ltd. 1 191,550 1,060,120
- --------------------------------------------------------------------------------
MATERIALS--7.6%
- --------------------------------------------------------------------------------
CHEMICALS--1.0%
Asian Paints Ltd. 2,283,900 15,144,375
- --------------------------------------------------------------------------------
CONSTRUCTION MATERIALS--1.4%
Cemex SA de CV,
Sponsored ADR 1 750,000 21,637,500
11 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
METALS & MINING--5.2%
Anglo American
Platinum Corp. Ltd. 370,800 $ 16,445,313
- --------------------------------------------------------------------------------
Antofagasta plc 500,000 11,338,942
- --------------------------------------------------------------------------------
Companhia Siderurgica
Nacional SA,
Sponsored ADR 1 100,000 6,380,000
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Companhia Vale do Rio
Doce, Sponsored ADR 435,000 21,641,250
- --------------------------------------------------------------------------------
Impala Platinum
Holdings Ltd. 111,274 9,234,496
- --------------------------------------------------------------------------------
PT Aneka
Tambang Tbk 1,2 100,011,000 17,742,933
----------------
82,782,934
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--6.9%
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--4.1%
IMPSAT Fiber
Networks, Inc. 1 167,801 1,174,607
- --------------------------------------------------------------------------------
Portugal Telecom SA 1 960,000 10,830,624
- --------------------------------------------------------------------------------
Portugal Telecom SA,
Sponsored ADR 1 685,000 7,747,350
- --------------------------------------------------------------------------------
PT Telekomunikasi 1 18,019,000 15,557,504
- --------------------------------------------------------------------------------
Tele Norte Leste
Participacoes SA 1 2,340,500,000 26,599,330
- --------------------------------------------------------------------------------
Videsh Sanchar
Nigam Ltd. 87,924 366,390
- --------------------------------------------------------------------------------
Videsh Sanchar Nigam
Ltd., Sponsored ADR 300,100 2,649,883
----------------
64,925,688
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--2.8%
SK Telecom Co. Ltd. 1 114,110 2,855,595
- --------------------------------------------------------------------------------
SK Telecom Co.
Ltd., ADR 1,681,500 42,054,315
----------------
44,909,910
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
UTILITIES--2.8%
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.8%
Companhia Energetica
de Minas Gerais,
Preference 1,577,800,000 $ 27,899,296
- --------------------------------------------------------------------------------
Electricidade de
Portugal SA 1 5,550,000 15,722,590
----------------
43,621,886
----------------
Total Common Stocks
(Cost $1,058,195,293) 1,471,858,674
- --------------------------------------------------------------------------------
PREFERRED STOCKS--0.0%
- --------------------------------------------------------------------------------
Sun Pharmaceutical
Industries Ltd., 6% Cum.
(Cost $41,055) 1,768,000 39,085
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--7.1%
- --------------------------------------------------------------------------------
Undivided interest of 30.13% in joint
repurchase agreement (Principal Amount/
Market Value $371,932,000) with Zion Bank/
Capital Markets Group, 0.98%,
dated 2/27/04, to be repurchased at
$112,064,151 on 3/1/04, collateralized by
U.S. Treasury Bonds, 1.75%--11.25%,
12/15/04--2/15/15, with a value of
$328,930,645 and U.S. Treasury Nts.,
6%, 8/15/04, with a value of
$50,875,180 (Cost $112,055,000) $112,055,000 112,055,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE
(COST $1,170,291,348) 100.3% 1,583,952,759
- --------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF
OTHER ASSETS (0.3) (4,946,367)
------------------------------
NET ASSETS 100.0% $1,579,006,392
==============================
12 | OPPENHEIMER DEVELOPING MARKETS FUND
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 February 29, 2004.
The aggregate fair value of securities of affiliated companies held by the Fund
as of February 29, 2004 amounts to $122,551,840. Transactions during the period
in which the issuer was an affiliate are as follows:
SHARES GROSS GROSS SHARES
AUGUST 31, 2003 ADDITIONS REDUCTIONS FEB. 29, 2004
- ----------------------------------------------------------------------------------------------------------------
STOCKS AND/OR WARRANTS
Brazil Realty SA Empreendimentos e Participacoes 49,000 345,000 -- 394,000
Brazil Realty SA, GDR 435,720 -- -- 435,720
Corporacion GEO SA de CV, Series B 5,273,000 12,000 -- 5,285,000
Courts (Singapore) Ltd. 11,300,000 -- 600,000 10,700,000
LG Home Shopping, Inc. 326,500 153,500 -- 480,000
Lojas Americanas SA, Preference 2,000,000,000 76,009,000 4,209,000 2,071,800,000
Medinet Nasr for Housing & Development Co. 720,000 340,000 -- 1,060,000
NIIT Ltd. 2,500,000 3,400 128,400 2,375,000
PT Aneka Tambang Tbk 94,772,600 5,238,400 -- 100,011,000
PT Hero Supermarket Tbk 17,938,200 2,061,800 -- 20,000,000
United Breweries Holdings Ltd. 1,850,000 -- -- 1,850,000
United Breweries Ltd. 1,450,289 12,537 -- 1,462,826
UNREALIZED
APPRECIATION DIVIDEND REALIZED
(DEPRECIATION) INCOME GAIN (LOSS)
- -----------------------------------------------------------------------------------------------------------------
STOCKS AND/OR WARRANTS
Brazil Realty SA Empreendimentos e Participacoes $ 100,908 $ -- $ --
Brazil Realty SA, GDR (786,060) -- --
Corporacion GEO SA de CV, Series B 27,764,779 -- --
Courts (Singapore) Ltd. (342,055) 26,965 (377,127)
LG Home Shopping, Inc. (9,567,259) 548,856 --
Lojas Americanas SA, Preference 13,410,682 1,008,016 5,581
Medinet Nasr for Housing & Development Co. (1,490,226) 266,884 --
NIIT Ltd. (724,171) -- (4,848,788)
PT Aneka Tambang Tbk 11,590,053 -- --
PT Hero Supermarket Tbk 239,662 -- --
United Breweries Holdings Ltd. (1,193,339) -- --
United Breweries Ltd. (126,320) -- --
----------------------------------------------
$38,876,654 $1,850,721 $(5,220,334)
==============================================
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 $21,818,909 or 1.38% of the Fund's net
assets as of February 29, 2004.
13 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC HOLDINGS, AS A PERCENTAGE OF
TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS:
GEOGRAPHIC HOLDINGS MARKET VALUE PERCENT
- --------------------------------------------------------------------------------
India $ 279,665,381 17.7%
Brazil 239,542,264 15.1
Mexico 174,955,500 11.1
Korea, Republic of South 172,839,721 10.9
United States 113,229,607 7.2
Taiwan 94,391,187 6.0
South Africa 87,059,949 5.5
Turkey 55,977,585 3.5
Hong Kong 50,871,973 3.2
Great Britain 46,324,760 2.9
Portugal 44,549,797 2.8
Indonesia 43,457,740 2.7
Singapore 35,089,844 2.2
Greece 34,434,986 2.2
Philippines 30,186,790 1.9
Egypt 23,810,961 1.5
Thailand 19,526,534 1.2
China 13,739,987 0.9
Lebanon 11,163,879 0.7
Croatia 9,780,000 0.6
Hungary 3,354,314 0.2
----------------------------------
Total $1,583,952,759 100.0%
==================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
14 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES Unaudited
- --------------------------------------------------------------------------------
February 29, 2004
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investments, at value--see accompanying statement:
Unaffiliated companies (cost $1,086,616,162) $1,461,400,919
Affiliated companies (cost $83,675,186) 122,551,840
----------------
1,583,952,759
- --------------------------------------------------------------------------------
Cash 42,042
- --------------------------------------------------------------------------------
Cash--foreign currencies (cost $6,946,900) 6,995,419
- --------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts 441
- --------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 8,202,731
Interest and dividends 3,897,601
Other 114,404
----------------
Total assets 1,603,205,397
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Unrealized depreciation on foreign currency contracts 44,444
- --------------------------------------------------------------------------------
Payables and other liabilities:
Foreign capital gains tax 10,861,476
Investments purchased 8,868,418
Shares of beneficial interest redeemed 3,330,488
Distribution and service plan fees 580,592
Transfer and shareholder servicing agent fees 266,828
Shareholder communications 102,492
Trustees' compensation 59,497
Other 84,770
----------------
Total liabilities 24,199,005
- --------------------------------------------------------------------------------
NET ASSETS $1,579,006,392
================
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------
Paid-in capital $1,230,069,353
- --------------------------------------------------------------------------------
Accumulated net investment loss (30,806,712)
- --------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (23,138,713)
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation
of assets and liabilities denominated in foreign currencies 402,882,464
----------------
NET ASSETS $1,579,006,392
================
15 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES Unaudited / Continued
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- --------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share
(based on net assets of $1,256,885,729 and 58,771,166
shares of beneficial interest outstanding) $21.39
Maximum offering price per share (net asset value
plus sales charge of 5.75% of offering price) $22.69
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $133,200,228 and 6,266,713
shares of beneficial interest outstanding) $21.26
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $167,978,075 and 7,970,994
shares of beneficial interest outstanding) $21.07
- --------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per share
(based on net assets of $20,942,360 and 989,366 shares of
beneficial interest outstanding) $21.17
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS Unaudited
- --------------------------------------------------------------------------------
For the Six Months Ended February 29, 2004
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends:
Unaffiliated companies (net of foreign withholding
taxes of $446,370) $9,565,425
Affiliated companies (net of foreign withholding
taxes of $116,062) 1,850,721
Interest 461,315
------------
Total investment income 11,877,461
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Management fees 5,246,141
- --------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 1,077,202
Class B 543,643
Class C 589,624
Class N 35,683
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 1,101,712
Class B 176,515
Class C 157,063
Class N 24,598
- --------------------------------------------------------------------------------
Shareholder communications:
Class A 63,420
Class B 12,874
Class C 9,628
Class N 1,066
- --------------------------------------------------------------------------------
Custodian fees and expenses 262,982
- --------------------------------------------------------------------------------
Trustees' compensation 18,428
- --------------------------------------------------------------------------------
Other 64,962
------------
Total expenses 9,385,541
Less reduction to custodian expenses (2,245)
Less voluntary waiver of transfer and shareholder servicing
agent fees--Class B (1,059)
------------
Net expenses 9,382,237
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,495,224
17 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments:
Unaffiliated companies $ 15,912,774
Affiliated companies (5,220,334)
Foreign currency transactions (1,715,212)
--------------
Net realized gain 8,977,228
- --------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments (net of foreign capital gains tax of $10,861,476) 254,445,120
Translation of assets and liabilities denominated in
foreign currencies 15,352,436
--------------
Net change in unrealized appreciation 269,797,556
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $281,270,008
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 29, 2004 AUGUST 31,
(UNAUDITED) 2003
- -------------------------------------------------------------------------------------------------------
OPERATIONS
- -------------------------------------------------------------------------------------------------------
Net investment income $ 2,495,224 $ 6,138,146
- -------------------------------------------------------------------------------------------------------
Net realized gain (loss) 8,977,228 (12,608,261)
- -------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 269,797,556 156,873,384
---------------------------------------
Net increase in net assets resulting from operations 281,270,008 150,403,269
- -------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (27,950,754) (5,036,106)
Class B (2,749,640) (444,216)
Class C (3,209,331) (484,074)
Class N (455,621) (56,763)
- -------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- -------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial
interest transactions:
Class A 474,553,077 139,680,513
Class B 23,972,754 5,073,409
Class C 65,452,640 15,689,824
Class N 9,178,298 5,246,193
- -------------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------------
Total increase 820,061,431 310,072,049
- -------------------------------------------------------------------------------------------------------
Beginning of period 758,944,961 448,872,912
---------------------------------------
End of period (including accumulated net investment
income (loss) of $(30,806,712) and $1,063,410, respectively) $1,579,006,392 $758,944,961
=======================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 29, 2004 AUGUST 31,
CLASS A (UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $16.92 $13.43 $12.93 $16.85 $11.40 $ 7.76
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .17 .19 .25 .21 .20 .10
Net realized and unrealized gain (loss) 4.92 3.50 .45 (3.54) 5.37 3.71
------------------------------------------------------------------
Total from investment operations 5.09 3.69 .70 (3.33) 5.57 3.81
- --------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.62) (.20) (.20) (.20) (.12) (.10)
Distributions from net realized gain -- -- -- (.39) -- (.07)
------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.62) (.20) (.20) (.59) (.12) (.17)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $21.39 $16.92 $13.43 $12.93 $16.85 $11.40
==================================================================
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 30.44% 27.93% 5.44% (20.08)% 49.12% 49.92%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,256,886 $588,450 $337,405 $167,178 $114,137 $40,046
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 900,916 $374,841 $257,746 $153,027 $ 77,848 $29,183
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 0.61% 1.42% 1.91% 1.76% 1.56% 1.11%
Total expenses 1.48% 1.81% 1.81% 1.69% 1.96% 2.36%
Expenses after expense reimbursement
or fee waiver and reduction
to custodian expenses N/A 3 1.76% 1.77% N/A 3 N/A 3 N/A 3
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 5% 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
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 29, 2004 AUGUST 31,
CLASS B (UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $16.79 $13.32 $12.82 $16.70 $11.30 $ 7.69
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .04 .09 .15 .12 .11 .04
Net realized and unrealized gain (loss) 4.93 3.47 .44 (3.53) 5.33 3.68
------------------------------------------------------------------
Total from investment operations 4.97 3.56 .59 (3.41) 5.44 3.72
- --------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.50) (.09) (.09) (.08) (.04) (.04)
Distributions from net realized gain -- -- -- (.39) -- (.07)
------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.50) (.09) (.09) (.47) (.04) (.11)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $21.26 $16.79 $13.32 $12.82 $16.70 $11.30
==================================================================
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 29.88% 26.98% 4.61% (20.67)% 48.20% 48.81%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $133,200 $84,705 $63,005 $45,393 $48,146 $21,028
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $109,445 $62,676 $54,744 $48,135 $37,333 $16,430
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income (loss) (0.28)% 0.66% 1.14% 0.92% 0.78% 0.37%
Total expenses 2.32% 2.67% 2.58% 2.46% 2.72% 3.10%
Expenses after expense reimbursement
or fee waiver and reduction to
custodian expenses N/A 3,4 2.52% 2.54% N/A 3 N/A 3 N/A 3
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 5% 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%.
4. Voluntary waiver of transfer agent fees less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 29, 2004 AUGUST 31,
CLASS C (UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $16.67 $13.25 $12.78 $16.68 $11.31 $ 7.68
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .13 .10 .17 .12 .09 .04
Net realized and unrealized gain (loss) 4.80 3.44 .41 (3.52) 5.32 3.69
------------------------------------------------------------------
Total from investment operations 4.93 3.54 .58 (3.40) 5.41 3.73
- --------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.53) (.12) (.11) (.11) (.04) (.03)
Distributions from net realized gain -- -- -- (.39) -- (.07)
------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.53) (.12) (.11) (.50) (.04) (.10)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $21.07 $16.67 $13.25 $12.78 $16.68 $11.31
==================================================================
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 29.88% 27.05% 4.54% (20.68)% 47.93% 48.98%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $167,978 $77,081 $46,722 $20,864 $16,363 $5,064
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $118,906 $52,236 $33,334 $19,646 $10,230 $4,022
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income (loss) (0.17)% 0.66% 1.15% 0.94% 0.82% 0.41%
Total expenses 2.25% 2.57% 2.57% 2.46% 2.71% 3.08%
Expenses after expense reimbursement
or fee waiver and reduction
to custodian expenses N/A 3 2.52% 2.53% N/A 3 N/A 3 N/A 3
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 5% 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.
22 | OPPENHEIMER DEVELOPING MARKETS FUND
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 29, 2004 AUGUST 31,
CLASS N (UNAUDITED) 2003 2002 2001 1
- ----------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ----------------------------------------------------------------------------------------------
Net asset value, beginning of period $16.77 $13.36 $12.91 $ 15.26
- ----------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .17 .22 .32 .05
Net realized and unrealized gain (loss) 4.83 3.41 .34 (2.40)
--------------------------------------------
Total from investment operations 5.00 3.63 .66 (2.35)
- ----------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.60) (.22) (.21) --
Distributions from net realized gain -- -- -- --
- ----------------------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.60) (.22) (.21) --
- ----------------------------------------------------------------------------------------------
Net asset value, end of period $21.17 $16.77 $13.36 $12.91
============================================
- ----------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 30.19% 27.73% 5.13% (15.40)%
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $20,942 $8,709 $1,741 $77
- ----------------------------------------------------------------------------------------------
Average net assets (in thousands) $14,413 $4,196 $ 686 $35
- ----------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.32% 1.27% 1.68% 1.63%
Total expenses 1.83% 2.08% 2.04% 1.96%
Expenses after expense reimbursement or
fee waiver and reduction to custodian expenses N/A 4 1.99% 2.00% N/A 4
- ----------------------------------------------------------------------------------------------
Portfolio turnover rate 5% 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, 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.
23 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 with respect to the Fund in
general and exclusive voting rights on matters that affect that class alone.
Earnings, net assets and net asset value per share may differ 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 may be valued
primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. Securities (including restricted
securities) for which market quotations are not readily available are valued at
their fair value. Securities whose values have been materially affected by what
the Manager identifies as a significant event occurring before the Fund's
assets are valued but after the close of their respective foreign exchanges
will be fair valued. Fair value is determined in good faith using consistently
applied procedures under the supervision of the Board of Trustees. Short-term
"money market type" debt securities with remaining maturities of sixty days or
less are valued at amortized cost (which approximates market value).
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. 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
24 | OPPENHEIMER DEVELOPING MARKETS FUND
securities and investment income are translated at the rates of exchange
prevailing on the respective dates of such transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held 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.
As of February 29, 2004, the Fund had available for federal income tax
purposes an estimated unused capital loss carryforward of $22,912,614 expiring
by 2011. This estimated capital loss carryforward represents carryforward as of
the end of the last fiscal year, increased for losses deferred under tax
accounting rules to the current fiscal year and is increased or decreased by
capital losses or gains realized in the first six months of the current fiscal
year. During the six months ended February 29, 2004 and the year ended August
31, 2003, the Fund used $8,977,228 and $0, respectively, of carryforward to
offset capital gains realized.
As of August 31, 2003, the Fund had available for federal income tax purposes
post-October losses of $12,594,237 and unused capital loss carryforwards as
follows:
EXPIRING
-----------------------
2010 $ 8,068,791
2011 11,226,814
-----------
Total $19,295,605
===========
25 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Unaudited / 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 six months
ended February 29, 2004, the Fund's projected benefit obligations were
increased by $6,190 and payments of $3,812 were made to retired trustees,
resulting in an accumulated liability of $46,743 as of February 29, 2004.
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
Oppenheimer funds selected by the Trustee. 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, if applicable,
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:
SIX MONTHS ENDED FEBRUARY 29, 2004 YEAR ENDED AUGUST 31, 2003
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------
CLASS A
Sold 35,053,916 $ 692,805,921 27,774,840 $ 381,173,305
Dividends and/or
distributions reinvested 1,184,054 23,006,169 345,063 4,409,888
Redeemed (12,243,686) (241,259,013) (18,474,251) (245,902,680)
------------------------------------------------------------------
Net increase 23,994,284 $ 474,553,077 9,645,652 $ 139,680,513
==================================================================
- -----------------------------------------------------------------------------------------------
CLASS B
Sold 1,901,040 $ 37,169,045 2,331,057 $ 31,318,480
Dividends and/or
distributions reinvested 126,695 2,450,282 31,756 404,888
Redeemed (806,568) (15,646,573) (2,048,970) (26,649,959)
------------------------------------------------------------------
Net increase 1,221,167 $ 23,972,754 313,843 $ 5,073,409
==================================================================
- -----------------------------------------------------------------------------------------------
CLASS C
Sold 3,831,990 $ 75,156,926 2,690,076 $ 35,884,161
Dividends and/or
distributions reinvested 143,026 2,741,814 33,761 427,423
Redeemed (628,163) (12,446,100) (1,624,911) (20,621,760)
------------------------------------------------------------------
Net increase 3,346,853 $ 65,452,640 1,098,926 $ 15,689,824
==================================================================
- -----------------------------------------------------------------------------------------------
CLASS N
Sold 591,534 $ 11,489,129 508,343 $ 6,839,560
Dividends and/or
distributions reinvested 23,641 454,865 4,454 56,525
Redeemed (145,149) (2,765,696) (123,773) (1,649,892)
------------------------------------------------------------------
Net increase 470,026 $ 9,178,298 389,024 $ 5,246,193
==================================================================
- --------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the six months ended February 29, 2004, were
$531,638,798 and $57,208,563, 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 Unaudited / 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 six months ended February 29, 2004,
the Fund paid $1,377,363 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 Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class
A shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor currently uses the fees it receives
from the Fund to pay brokers, dealers and other financial institutions for
personal services and account maintenance services they provide for their
customers who hold Class A shares. Any unreimbursed expenses the Distributor
incurs with respect to Class A shares in any fiscal year cannot be recovered in
subsequent years. Fees incurred by the Fund under the plan are detailed in the
Statement of Operations.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The
Fund has adopted Distribution and Service Plans for Class B, Class C and Class
N shares to compensate the Distributor for its services in connection with the
distribution of these shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% per year on
Class B shares and on Class C shares and 0.25% per year on Class N shares. The
Distributor also receives a service fee of up to 0.25% per year under each
plan. If either the Class B, Class C or Class N plan is terminated by the Fund
or by the shareholders of a class, the Board of Trustees and its independent
trustees must determine whether the Distributor shall be entitled to payment
from the Fund of all or a portion of the service fee and/or asset-based sales
charge in respect to shares sold prior to the effective date of such
termination. The Distributor's aggregate uncompensated expenses under the plan
at February 29, 2004 for Class B, Class C and Class N shares was $2,087,815,
$1,944,847 and $213,621, respectively. Fees incurred by the Fund under the
plans are detailed in the Statement of Operations.
28 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption
proceeds prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ---------------------------------------------------------------------------------------------------
February 29, 2004 $413,618 $17,096 $94,078 $29,429 $6,628
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into
foreign currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation
or depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
As of February 29, 2004, the Fund had outstanding foreign currency contracts as
follows:
CONTRACT VALUATION
EXPIRATION AMOUNT AS OF UNREALIZED UNREALIZED
CONTRACT DESCRIPTION DATES (000S) FEB. 29, 2004 APPRECIATION DEPRECIATION
- -----------------------------------------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Euro [EUR] 3/1/04 552EUR $ 686,244 $ -- $ 4,253
Indian Rupee [INR] 3/1/04 50,520INR 1,116,838 -- 123
South African Rand [ZAR] 3/1/04-3/3/04 37,611ZAR 5,654,373 441 40,068
------------------------------
Total unrealized appreciation and depreciation $441 $44,444
==============================
29 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. ILLIQUID SECURITIES
As of February 29, 2004, 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
February 29, 2004 was $25,390,136, which represents 1.61% of the Fund's net
assets.
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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 (the SEC) 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. The
SEC's order requires the Fund's Board of Trustees to adopt operating policies
and procedures to administer interfund borrowing and lending. 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 six
months ended or at February 29, 2004.
30 | OPPENHEIMER DEVELOPING MARKETS FUND
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PORTFOLIO PROXY VOTING
POLICIES AND PROCEDURES Unaudited
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The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and
Procedures is available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.225.5677, (ii) on the Fund's website at
www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In
addition, the Fund will be required to file new Form N-PX, with its complete
proxy voting record for the 12 months ended June 30th, no later than August
31st of each year. The first such filing is due no later than August 31, 2004,
for the twelve months ended June 30, 2004. Once filed, the Fund's Form N-PX
filing will be available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.225.5677, and (ii) on the SEC's website at www.sec.gov.
31 | OPPENHEIMER DEVELOPING MARKETS FUND
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer, principal
accounting officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the registrant has determined that 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 applicable to semiannual reports.
ITEM 5. NOT APPLICABLE
ITEM 6. RESERVED
ITEM 7. NOT APPLICABLE
ITEM 8. NOT APPLICABLE
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a meeting of the Board of Trustees of the registrant held on February 18,
2004, the Board adopted (1) a policy that, should the Board determine that a
vacancy exists or is likely to exist on the Board, the Governance Committee of
the Board, which is comprised entirely of independent trustees, shall consider
any candidates for Board membership recommended by the registrant's security
holders and (2) a policy that security holders wishing to submit a nominee for
election to the Board may do so by mailing their submission to the offices of
OppenheimerFunds, Inc., Two World Financial Center, 225 Liberty Street - 11th
Floor, New York, NY 10281-1008, to the attention of the Chair of the Governance
Committee. Prior to February 18, 2004, the Board did not have a formalized
policy with respect to consideration of security holder nominees or a procedure
by which security holders may make their submissions. In addition to security
holder nominees, the Governance Committee may also consider nominees recommended
by independent Board members or recommended by any other Board members and is
authorized under its Charter, upon Board approval, to retain an executive search
firm to assist in screening potential candidates. Upon Board approval, the
Governance Committee may also obtain legal, financial, or other external counsel
that may be necessary or desirable in the screening process.
ITEM 10. 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 February 29, 2004, registrant's principal
executive officer and principal financial officer found
registrant's disclosure controls and procedures to provide
reasonable assurances 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 over financial reporting that occurred during the
registrant's last fiscal half-year that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 11. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)