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
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(Exact name of registrant as specified in charter)
6803 South Tucson Way, Centennial, Colorado 80112-3924
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(Address of principal executive offices) (Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
Two World Financial Center, New York, New York 10281-1008
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(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
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Date of fiscal year end: August 31
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Date of reporting period: September 1, 2003 - August 31, 2004
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ITEM 1. REPORTS TO STOCKHOLDERS.
TOP HOLDINGS AND ALLOCATIONS
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TOP TEN GEOGRAPHICAL HOLDINGS
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Brazil 19.3%
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India 15.5
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Korea, Republic of South 10.6
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Mexico 9.5
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South Africa 6.2
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Taiwan 5.9
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United Kingdom 4.2
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United States 4.1
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Turkey 3.4
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Indonesia 3.0
Portfolio's holdings and allocations are subject to change. Percentages are as
of August 31, 2004, and are based on total investments.
TOP TEN COMMON STOCK HOLDINGS
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Empresa Brasileira de Aeronautica SA, Preference 3.0%
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Grupo Televisa SA, Sponsored GDR 2.6
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SK Corp. 2.5
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Corporacion GEO SA de CV, Series B 2.0
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Tele Norte Leste Participacoes SA 1.9
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Grupo Financiero Inbursa SA de CV 1.9
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Companhia Energetica de Minas Gerais, Preference 1.8
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Companhia Vale do Rio Doce, Sponsored ADR 1.8
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SM Prime Holdings, Inc. 1.7
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Housing Development Finance Corp. Ltd. 1.6
Portfolio's holdings and allocations are subject to change. Percentages are as
of August 31, 2004, and are based on net assets.
For more current Fund holdings, please visit www.oppenheimerfunds.com.
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9 | OPPENHEIMER DEVELOPING MARKETS FUND
TOP HOLDINGS AND ALLOCATIONS
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REGIONAL ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Asia (excluding Japan) 44.9%
Latin America 29.2
Middle East/Africa 12.0
Europe 9.0
United States/Canada 4.1
Emerging Europe 0.8
Portfolio's holdings and allocations are subject to change. Percentages are as
of August 31, 2004, and are based on total investments.
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10 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND PERFORMANCE DISCUSSION
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HOW HAS THE FUND PERFORMED? BELOW IS A DISCUSSION BY OPPENHEIMERFUNDS, INC., OF
THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR ENDED AUGUST 31, 2004, FOLLOWED BY
A GRAPHICAL COMPARISON OF THE FUND'S PERFORMANCE TO AN APPROPRIATE BROAD-BASED
MARKET INDEX.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. As discussed earlier
in this report, the Fund's performance over the fiscal year that ended August
31, 2004 compared very favorably to that of its peers and its benchmark. Given
our significant positions in Brazil and India--over 30% of the portfolio's value
at the end of the reporting period--our returns certainly reflected the overall
strength of these markets during this reporting period.
It is important to note that the Fund's geographical and industry sector
weightings were the result of individual stock selection rather than an attempt
to replicate an index. Our goal is to invest in businesses with good managements
and exciting prospects, ideally, before they are widely recognized--regardless
of location or industry. Consequently, the Fund's performance doesn't
necessarily track with an index or broad market trends.
In terms of significant individual contributors to performance over the
last twelve months, Grupo Financiero Inbursa SA de CV proved exceptional.
Inbursa is a Mexico-based financial group whose companies include some of the
country's highly profitable and well-run banking, insurance and private equities
businesses. We had owned Inbursa for years and, with the demand for credit in
Mexico growing, we were optimistic about the stock.
Another top holding and our single best performer over this period was SK
Corp. The leading oil refiner and marketer in South Korea, SK Corp. also owns
the largest network of gas stations in the country and is the biggest
shareholder of SK Telecom Co. Ltd, a major wireless communication services
provider. A combination of events last year--including the upsurge in oil prices
which lifted the company's refining margins--turned out to be very favorable for
the stock price.
Brazilian retailer, Lojas Americanas SA, Preference also continued to
shine. A restructuring play when we acquired the stock a few years ago, the
Brazilian company has refocused the business, improved efficiency and increased
sales. They are now generating substantial cash returns and have become Brazil's
leading Internet shopping site.
Among our larger investments that disappointed were Sinotrans, Ltd. and SM
Prime Holdings, Inc. Sinotrans, Ltd., a Chinese freight forwarding company, lost
ground this year as competition intensified which negatively impacted its profit
margins. We think this development is a temporary phenomenon and the longer term
outlook for both the company and its business remains bright. SM Prime Holdings,
which we also believe was undervalued, is a shopping mall owner, developer and
operator in the Philippines. It was the dominant player in a growing industry
and may continue to enjoy
11 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND PERFORMANCE DISCUSSION
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very favorable economic circumstances. We feel the market is misunderstanding
the long-term value of this business, creating even more opportunity for us.
Regarding some of the more strategic decisions made during this reporting
period, the Fund boosted allocations in countries where we believe interest
rates will likely continue to decline, such as Brazil and South Africa. We also
built our position in undervalued commodities, particularly those produced by
major companies located in areas likely to experience a shortage or price
squeeze. For example, we recently purchased two platinum stocks based in South
Africa. Seventy-five percent of the world's platinum supply comes from South
Africa, and these two companies are the leading producers. Based on their
underlying fundamentals, the metal's limited availability, growing world demand
and other factors, we believe these stocks could benefit over the next few
years.
In closing, we remind shareholders that investing in foreign markets,
especially in the securities of emerging countries, 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 each class of shares of the
Fund held until August 31, 2004. In the case of Class A, Class B and Class C
shares, performance is measured from the inception of the Classes on November
18, 1996. In the case of Class N shares, performance is measured from inception
of the Class on March 1, 2001. The Fund's performance reflects the deduction of
the maximum initial sales charge on Class A shares, the applicable contingent
deferred sales charge on Class B, Class C, and Class N shares, and reinvestments
of all dividends and capital gains distributions. Past performance cannot
guarantee future results.
The Fund's performance is compared to the 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 income but does not consider the effect of transaction costs,
and none of the data in the graphs shows the effect of taxes. The Fund's
performance reflects the effects of the Fund's business and operating expenses.
While index comparisons may be useful to provide a benchmark for the Fund's
performance, it must be noted that the Fund's investments are not limited to the
investments in the index.
12 | 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
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer MSCI
Developing Markets Emerging Markets
Fund (Class A) Free Index
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
11/30/2003 21,310 8,707
02/29/2004 24,182 10,064
05/31/2004 22,644 9,145
08/31/2004 23,842 9,264
AVERAGE ANNUAL TOTAL RETURN OF CLASS A SHARES OF THE FUND AT 08/31/04
1 Year 5 Year Since Inception
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21.22% 14.27% 11.81%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. SEE
PAGE 17 FOR FURTHER INFORMATION.
13 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND PERFORMANCE DISCUSSION
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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
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer MSCI
Developing Markets Emerging Markets
Fund (Class B) Free Index
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
11/30/2003 21,616 8,707
02/29/2004 24,529 10,064
05/31/2004 22,969 9,145
08/31/2004 24,185 9,264
AVERAGE ANNUAL TOTAL RETURN OF CLASS B SHARES OF THE FUND AT 08/31/04
1 Year 5 Year Since Inception
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22.50% 14.54% 12.01%
14 | OPPENHEIMER DEVELOPING MARKETS FUND
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
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer MSCI
Developing Markets Emerging Markets
Fund (Class C) Free Index
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
11/30/2003 21,415 8,707
02/29/2004 24,249 10,064
05/31/2004 22,672 9,145
08/31/2004 23,823 9,264
AVERAGE ANNUAL TOTAL RETURN OF CLASS C SHARES OF THE FUND AT 08/31/04
1 Year 5 Year Since Inception
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26.60% 14.74% 11.79%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD.
BECAUSE CLASS B SHARES CONVERT TO CLASS A SHARES 72 MONTHS AFTER PURCHASE,
SINCE-INCEPTION RETURNS FOR CLASS B SHARES USES CLASS A PERFORMANCE FOR THE
PERIOD AFTER CONVERSION. SEE PAGE 17 FOR FURTHER INFORMATION.
15 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND PERFORMANCE DISCUSSION
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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
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
Oppenheimer MSCI
Developing Markets Emerging Markets
Fund (Class N) Free Index
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
11/30/2003 13,047 11,842
02/29/2004 14,790 13,688
05/31/2004 13,833 12,438
08/31/2004 14,560 12,599
AVERAGE ANNUAL TOTAL RETURN OF CLASS N SHARES OF THE FUND AT 08/31/04
1 Year Since Inception
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27.16% 11.33%
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT
GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. FOR PERFORMANCE
DATA CURRENT TO THE MOST RECENT MONTH END, VISIT US AT WWW.OPPENHEIMERFUNDS.COM,
OR CALL US AT 1.800.525.7048. FUND RETURNS INCLUDE CHANGES IN SHARE PRICE,
REINVESTED DISTRIBUTIONS, AND THE APPLICABLE SALES CHARGE: FOR CLASS A SHARES,
THE CURRENT MAXIMUM INITIAL SALES CHARGE OF 5.75%; FOR CLASS B SHARES, THE
CONTINGENT DEFERRED SALES CHARGE OF 5% (1-YEAR) AND 2% (5-YEAR); AND FOR CLASS C
AND N SHARES, THE CONTINGENT 1% DEFERRED SALES CHARGE FOR THE 1-YEAR PERIOD. SEE
PAGE 17 FOR FURTHER INFORMATION.
16 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES
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Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown. The Fund's total returns shown do
not reflect the deduction of income taxes on an individual's investment. Taxes
may reduce your actual investment returns on income or gains paid by the Fund or
any gains you may realize if you sell your shares.
Investors should consider the Fund's investment objectives, risks, and other
charges and expenses carefully before investing. The Fund's prospectus contains
this and other information about the Fund, and may be obtained by asking your
financial advisor, calling us at 1.800.525.7048 or visiting our website at
www.oppenheimerfunds.com. Read the prospectus carefully before investing.
The Fund's investment strategy and focus can change over time. The mention of
specific fund holdings does not constitute a recommendation by OppenheimerFunds,
Inc.
CLASS A shares of the Fund were first publicly offered on 11/18/96. 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 1-year period. Class C shares are subject to a 0.75% annual asset-based
sales charge.
CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares
are offered only through retirement plans. Unless otherwise noted, Class N
returns include the contingent deferred sales charge of 1% for the 1-year
period. Class N shares are subject to an annual 0.25% asset-based sales charge.
An explanation of the calculation of performance is in the Fund's Statement of
Additional Information.
17 | OPPENHEIMER DEVELOPING MARKETS FUND
FUND EXPENSES
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FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, which may include sales charges (loads) on purchase payments;
contingent deferred sales charges on redemptions; and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and service fees;
and other Fund expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning
of the period and held for the entire 6-month period ended August 31, 2004.
ACTUAL EXPENSES. The "actual" lines of the table provide information about
actual account values and actual expenses. You may use the information on this
line for the class of shares you hold, together with the amount you invested, to
estimate the expense that you paid over the period. Simply divide your account
value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00
= 8.60), then multiply the result by the number in the "actual" line under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the
table provide information about hypothetical account values and hypothetical
expenses based on the Fund's actual expense ratio for each class of shares, and
an assumed rate of return of 5% per year before expenses, which is not the
Fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid for the
period. You may use this information to compare the ongoing costs of investing
in the Fund and other funds. To do so, compare this 5% hypothetical example for
the class of shares you hold with the 5% hypothetical examples that appear in
the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front-end
or contingent deferred sales charges (loads), redemption fees, or a $12.00 fee
imposed annually on accounts valued at less than $500.00 (subject to
18 | OPPENHEIMER DEVELOPING MARKETS FUND
exceptions described in the Statement of Additional Information). Therefore, the
"hypothetical" lines of the table are useful in comparing ongoing costs only,
and will not help you determine the relative total costs of owning different
funds. In addition, if these transactional costs were included, your costs would
have been higher.
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BEGINNING ENDING
ACCOUNT ACCOUNT EXPENSES PAID
VALUE VALUE DURING 6 MONTHS
(3/1/04) (8/31/04) ENDED AUGUST 31, 2004
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Class A Actual $1,000.00 $ 986.00 $ 7.77
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Class A Hypothetical 1,000.00 1,017.34 7.89
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Class B Actual 1,000.00 981.70 12.28
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Class B Hypothetical 1,000.00 1,012.82 12.47
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Class C Actual 1,000.00 982.40 11.68
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Class C Hypothetical 1,000.00 1,013.42 11.86
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Class N Actual 1,000.00 984.40 9.52
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Class N Hypothetical 1,000.00 1,015.58 9.67
Hypothetical assumes 5% annual return before expenses.
Expenses are equal to the Fund's annualized expense ratio for that class,
multiplied by the average account value over the period, multiplied by 184/366
(to reflect the one-half year period). Those expense ratios for the 6-month
period ended August 31, 2004 are as follows:
CLASS EXPENSE RATIOS
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Class A 1.55%
- --------------------------------------------------------------------------------
Class B 2.45
- --------------------------------------------------------------------------------
Class C 2.33
- --------------------------------------------------------------------------------
Class N 1.90
The expense ratios reflect voluntary reimbursements of expenses by the Fund's
Transfer Agent that can be terminated at any time, without advance notice. The
"Financial Highlights" tables in the Fund's financial statements, included in
this report, also show the gross expense ratios, without such reimbursements.
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19 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS August 31, 2004
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
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COMMON STOCKS--95.4%
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CONSUMER DISCRETIONARY--20.1%
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AUTO COMPONENTS--1.1%
Hyundai Autonet Co. Ltd. 1 10,200,000 $ 20,745,912
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AUTOMOBILES--1.5%
Bajaj Auto Ltd. 528,000 10,622,072
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Hero Honda Motors Ltd. 500,000 4,772,433
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PT Astra International Tbk 17,900,000 12,130,736
------------
27,525,241
- --------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--3.2%
Danubius Hotel & Spa Rt. 2 210,000 4,486,476
- --------------------------------------------------------------------------------
Greek Organization of Football Prognostics SA 375,000 7,215,490
- --------------------------------------------------------------------------------
Hongkong & Shanghai Hotels Ltd. (The) 19,156,000 12,402,123
- --------------------------------------------------------------------------------
Intralot SA Integrated Lottery 1,339,140 20,352,514
- --------------------------------------------------------------------------------
Jollibee Foods Corp. 34,100,000 15,179,843
------------
59,636,446
- --------------------------------------------------------------------------------
HOUSEHOLD DURABLES--3.0%
Corporacion GEO SA de CV, Series B 1, 2 28,530,000 37,184,718
- --------------------------------------------------------------------------------
Steinhoff International Holdings Ltd. 14,800,000 18,276,840
------------
55,461,558
- --------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--1.5%
LG Home Shopping, Inc. 1 687,900 27,684,253
- --------------------------------------------------------------------------------
MEDIA--6.6%
Corporacion Interamericana de Entretenimiento
SA de CV 2 4,906,300 10,169,390
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Grupo Televisa SA, Sponsored GDR 992,000 47,744,960
- --------------------------------------------------------------------------------
Shaw Brothers Ltd. 5,999,000 5,614,377
- --------------------------------------------------------------------------------
Singapore Press Holdings Ltd. 8,389,500 21,190,809
- --------------------------------------------------------------------------------
Television Broadcasts Ltd. 4,125,000 17,081,512
- --------------------------------------------------------------------------------
Zee Telefilms Ltd. 6,750,656 22,227,947
------------
124,028,995
- --------------------------------------------------------------------------------
MULTILINE RETAIL--1.4%
Lojas Americanas SA, Preference 1 2,226,500,000 26,965,981
- --------------------------------------------------------------------------------
SPECIALTY RETAIL--1.3%
Courts (Singapore) Ltd. 1 10,700,000 3,315,793
- --------------------------------------------------------------------------------
JD Group Ltd. 3,022,000 20,732,961
------------
24,048,754
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--0.5%
Folli-Follie SA 330,000 10,320,161
- --------------------------------------------------------------------------------
CONSUMER STAPLES--12.0%
- --------------------------------------------------------------------------------
BEVERAGES--2.3%
Coca-Cola Femsa SA de CV,
Sponsored ADR 543,450 11,075,511
- --------------------------------------------------------------------------------
Companhia de
Bebidas das Americas, ADR 1,081,000 23,457,700
- --------------------------------------------------------------------------------
Serm Suk Public Co. Ltd. 7,323,000 4,222,270
- --------------------------------------------------------------------------------
United Breweries Holdings Ltd. 1, 2 1,850,000 1,374,730
- --------------------------------------------------------------------------------
United Breweries Ltd. 1, 2 1,462,826 3,469,321
------------
43,599,532
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--4.2%
Companhia Brasileira de Distribuicao Grupo
Pao de Acucar, Sponsored ADR 1,461,600 30,108,960
- --------------------------------------------------------------------------------
Dairy Farm International Holdings Ltd. 5,201,200 12,690,928
20 | OPPENHEIMER DEVELOPING MARKETS FUND
Value
Shares See Note 1
- --------------------------------------------------------------------------------
FOOD & STAPLES RETAILING Continued
Jeronimo Martins SGPS SA 2 1,615,632 $ 17,491,285
- --------------------------------------------------------------------------------
President Chain Store Corp. 10,435,074 15,471,851
- --------------------------------------------------------------------------------
PT Hero Supermarket Tbk 1, 2, 3 20,000,000 3,255,069
------------
79,018,093
- --------------------------------------------------------------------------------
FOOD PRODUCTS--2.0%
Sadia SA, Preference 14,005,000 23,923,813
- --------------------------------------------------------------------------------
Tiger Brands Ltd. 945,000 13,622,135
------------
37,545,948
- --------------------------------------------------------------------------------
PERSONAL PRODUCTS--1.5%
Amore Pacific Corp. 96,424 18,315,500
- --------------------------------------------------------------------------------
Natura Cosmeticos SA 464,300 9,009,990
------------
27,325,490
- --------------------------------------------------------------------------------
TOBACCO--2.0%
Eastern Tobacco Co. 3 797,441 11,195,521
- --------------------------------------------------------------------------------
ITC Ltd. 1,144,700 25,849,578
------------
37,045,099
- --------------------------------------------------------------------------------
ENERGY--3.8%
- --------------------------------------------------------------------------------
OIL & GAS--3.8%
Bharat Petroleum Corp. Ltd. 1,920,055 14,535,015
- --------------------------------------------------------------------------------
Oil & Natural Gas Corp. Ltd. 561,260 8,642,871
- --------------------------------------------------------------------------------
SK Corp. 1,237,347 46,898,880
- --------------------------------------------------------------------------------
YUKOS, ADR 105,600 1,774,080
------------
71,850,846
- --------------------------------------------------------------------------------
FINANCIALS--24.1%
- --------------------------------------------------------------------------------
COMMERCIAL BANKS--11.0%
Banco Bradesco SA, Preference 610,000 29,718,483
- --------------------------------------------------------------------------------
Banco Latinoamericano de Exportaciones
SA, Cl. E 405,000 6,791,850
- --------------------------------------------------------------------------------
Commercial International Bank,
Sponsored GDR 1,100,000 4,323,000
- --------------------------------------------------------------------------------
Commercial International Bank,
Sponsored GDR 4 1,800,000 7,074,000
- --------------------------------------------------------------------------------
Grupo Financiero Banorte SA de CV 2,340,000 9,221,483
- --------------------------------------------------------------------------------
Grupo Financiero Inbursa SA de CV 24,049,000 35,484,209
- --------------------------------------------------------------------------------
HDFC Bank Ltd. 404,348 3,204,432
- --------------------------------------------------------------------------------
HSBC Holdings plc 1,843,011 28,589,932
- --------------------------------------------------------------------------------
HSBC Holdings plc, Sponsored ADR 141,254 11,000,862
- --------------------------------------------------------------------------------
ICICI Bank Ltd. 782,896 4,550,287
- --------------------------------------------------------------------------------
ICICI Bank Ltd., Sponsored ADR 1,925,000 23,485,000
- --------------------------------------------------------------------------------
Uniao de Bancos Brasileiros SA,
Sponsored GDR 1,229,300 28,150,970
- --------------------------------------------------------------------------------
Yapi ve Kredi Bankasi AS 2 5,691,909,000 13,646,935
------------
205,241,443
- --------------------------------------------------------------------------------
CONSUMER FINANCE--0.3%
Tisco Finance Public Co. Ltd. 10,599,980 5,958,908
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--5.1%
Fubon Financial Holding Co. Ltd. 10,925,000 10,007,634
- --------------------------------------------------------------------------------
Fubon Financial Holding Co. Ltd., GDR 1,639,500 15,083,400
- --------------------------------------------------------------------------------
Guoco Group Ltd. 2,050,000 17,345,931
- --------------------------------------------------------------------------------
Haci Omer Sabanci Holding AS 3,783,023,360 12,282,543
- --------------------------------------------------------------------------------
Haci Omer Sabanci Holding AS, Sponsored ADR 12,000,000 9,900,000
- --------------------------------------------------------------------------------
Kiatnakin Finance Public Co. Ltd. 5,399,920 3,956,698
- --------------------------------------------------------------------------------
Old Mutual plc 13,855,890 26,473,041
------------
95,049,247
21 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
INSURANCE--2.9%
Aksigorta AS 1 8,762,905,700 $26,554,260
- --------------------------------------------------------------------------------
Ping An Insurance (Group) Co. of
China Ltd. 2 7,000,500 9,154,383
- --------------------------------------------------------------------------------
Sanlam Ltd. 13,000,000 17,582,931
-----------
53,291,574
- --------------------------------------------------------------------------------
REAL ESTATE--3.2%
Brazil Realty SA Empreendimentos
e Participacoes 1, 3 394,000 488,630
- --------------------------------------------------------------------------------
Brazil Realty SA, GDR 1, 3 435,720 5,075,049
- --------------------------------------------------------------------------------
Medinet Nasr for Housing &
Development Co. 1, 3 1,060,000 7,350,694
- --------------------------------------------------------------------------------
SM Prime Holdings, Inc. 316,570,000 32,130,502
- --------------------------------------------------------------------------------
Solidere, GDR 2 53,075 372,852
- --------------------------------------------------------------------------------
Solidere, GDR 2, 4 2,129,378 14,958,880
-----------
60,376,607
- --------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--1.6%
Housing Development Finance Corp. Ltd. 2,548,500 30,589,146
- --------------------------------------------------------------------------------
HEALTH CARE--2.7%
- --------------------------------------------------------------------------------
PHARMACEUTICALS--2.7%
Divi's Laboratories Ltd. 2 381,652 9,668,902
- --------------------------------------------------------------------------------
Dr. Reddy's Laboratories Ltd. 250,000 3,800,151
- --------------------------------------------------------------------------------
Dr. Reddy's Laboratories Ltd.,
Sponsored ADR 540,000 8,532,000
- --------------------------------------------------------------------------------
Pliva d.d., GDR 4 600,000 8,538,000
- --------------------------------------------------------------------------------
Sun Pharmaceutical Industries Ltd. 2,312,238 19,271,975
-----------
49,811,028
- --------------------------------------------------------------------------------
INDUSTRIALS--6.7%
- --------------------------------------------------------------------------------
AEROSPACE & DEFENSE--2.9%
Empresa Brasileira de Aeronautica SA,
Preference 8,315,800 55,343,964
- --------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--1.3%
Sinotrans Ltd. 76,500,000 24,028,538
- --------------------------------------------------------------------------------
MACHINERY--2.1%
Hyundai Heavy Industries Co. Ltd. 1,110,000 25,031,441
- --------------------------------------------------------------------------------
Larsen & Toubro Ltd. 2 768,050 13,788,784
-----------
38,820,225
- --------------------------------------------------------------------------------
ROAD & RAIL--0.4%
All America Latina Logistica, Preference 2 386,400 8,038,229
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--6.7%
- --------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--2.4%
Benq Corp. 24,510,700 25,043,228
- --------------------------------------------------------------------------------
Lite-On
Technology Corp. 21,406,270 19,985,889
-----------
45,029,117
- --------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--1.3%
AU Optronics Corp., ADR 268,800 3,330,432
- --------------------------------------------------------------------------------
Synnex Technology International Corp. 2 14,099,800 20,905,458
-----------
24,235,890
- --------------------------------------------------------------------------------
IT SERVICES--2.6%
HCL Technologies Ltd. 4,240,200 29,112,503
- --------------------------------------------------------------------------------
Hughes Software Systems Ltd. 975,590 11,427,829
- --------------------------------------------------------------------------------
NIIT Ltd. 850,883 2,854,936
- --------------------------------------------------------------------------------
NIIT Technologies Ltd. 2 1,276,324 5,336,829
-----------
48,732,097
- --------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--0.4%
PKL Corp. 2 1,485,779 7,667,622
- --------------------------------------------------------------------------------
MATERIALS--9.1%
- --------------------------------------------------------------------------------
CHEMICALS--1.0%
Asian Paints Ltd. 2,622,800 17,857,783
22 | OPPENHEIMER DEVELOPING MARKETS FUND
VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
CONSTRUCTION MATERIALS--1.4%
Cemex SA de CV, Sponsored ADR 904,394 $ 25,594,350
- --------------------------------------------------------------------------------
Ultratech Cemco Ltd. 2 240,547 1,379,928
--------------
26,974,278
- --------------------------------------------------------------------------------
METALS & MINING--6.7%
Anglo American Platinum Corp. Ltd. 565,000 25,174,533
- --------------------------------------------------------------------------------
Anglo American Platinum Corp. Ltd. 2 81,364 1,640,775
- --------------------------------------------------------------------------------
Antofagasta plc 693,880 12,481,836
- --------------------------------------------------------------------------------
Companhia Siderurgica Nacional SA,
Sponsored ADR 994,000 15,387,120
- --------------------------------------------------------------------------------
Companhia Vale do Rio Doce, Sponsored ADR 684,000 33,310,800
- --------------------------------------------------------------------------------
Impala Platinum Holdings Ltd. 225,000 18,947,908
- --------------------------------------------------------------------------------
PT Aneka Tambang Tbk 1 135,094,900 18,022,265
--------------
124,965,237
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--6.8%
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--4.1%
IMPSAT Fiber Networks, Inc. 2 50,100 255,510
- --------------------------------------------------------------------------------
Portugal Telecom SA 1,112,100 11,335,660
- --------------------------------------------------------------------------------
Portugal Telecom SA, Sponsored ADR 685,000 6,987,000
- --------------------------------------------------------------------------------
PT Telekomunikasi Indonesia Tbk 2 26,200,000 21,390,608
- --------------------------------------------------------------------------------
Tele Norte Leste Participacoes SA 2,737,718 36,047,712
--------------
76,016,490
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--2.7%
SK Telecom Co. Ltd. 158,750 23,889,262
- --------------------------------------------------------------------------------
SK Telecom Co. Ltd., ADR 1,448,000 27,367,200
--------------
51,256,462
- --------------------------------------------------------------------------------
UTILITIES--3.4%
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.7%
Companhia Energetica de Minas Gerais,
Preference 1,836,000,000 33,809,498
- --------------------------------------------------------------------------------
Electricidade de Portugal SA 5,849,500 16,241,685
--------------
50,051,183
- --------------------------------------------------------------------------------
GAS UTILITIES--0.7%
Gail India Ltd. 3,237,690 12,895,588
--------------
Total Common Stocks
(Cost $1,441,363,346) 1,785,032,965
UNITS
- --------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- --------------------------------------------------------------------------------
Coca-Cola Femsa SA de CV, Sponsored
ADR Rts., Exp. 9/1/04 2 198,393 --
- --------------------------------------------------------------------------------
United Breweries Ltd. Rts., Exp. 2/28/05 2 1,755,391 --
--------------
Total Rights, Warrants and
Certificates (Cost $0) --
PRINCIPAL
AMOUNT
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--4.1%
- --------------------------------------------------------------------------------
Undivided interest of 9.49% in joint
repurchase agreement (Principal Amount/
Value $806,836,000, with a maturity value
of $806,870,963) with UBS Warburg LLC,
1.56%, dated 8/31/04, to be repurchased
at $76,609,320 on 9/1/04, collateralized
by Federal National Mortgage Assn.,
5%, 3/1/34, with a value
of $824,829,716
(Cost $76,606,000) $76,606,000 76,606,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE
(COST $1,517,969,346) 99.5% 1,861,638,965
- --------------------------------------------------------------------------------
OTHER ASSETS
NET OF LIABILITIES 0.5 9,099,774
------------------------------
NET ASSETS 100.0% $1,870,738,739
==============================
23 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. 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, 2004.
The aggregate fair value of securities of affiliated companies held by the Fund
as of August 31, 2004 amounts to $181,486,675. Transactions during the period in
which the issuer was an affiliate are as follows:
SHARES GROSS GROSS SHARES
AUGUST 31, 2003 ADDITIONS REDUCTIONS AUGUST 31, 2004
- ---------------------------------------------------------------------------------------------------------------
STOCKS AND/OR WARRANTS
Aksigorta AS 3,074,518,594 5,688,387,106 -- 8,762,905,700
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 23,257,000 -- 28,530,000
Courts (Singapore) Ltd. 11,300,000 -- 600,000 10,700,000
Hyundai Autonet Co. Ltd. -- 10,200,000 -- 10,200,000
LG Home Shopping, Inc. 326,500 361,400 -- 687,900
Lojas Americanas SA, Preference 2,000,000,000 230,709,000 4,209,000 2,226,500,000
Medinet Nasr for Housing & Development Co. 720,000 340,000 -- 1,060,000
NIIT Ltd.* 2,500,000 3,400 2,503,400 --
PT Aneka Tambang Tbk 94,772,600 40,322,300 -- 135,094,900
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
Aksigorta AS $ 7,357,415 $ 920,648 $ --
Brazil Realty SA Empreendimentos e Participacoes 82,242 13,049 --
Brazil Realty SA, GDR (988,670) 139,463 --
Corporacion GEO SA de CV, Series B 24,793,866 -- --
Courts (Singapore) Ltd. (483,451) 709,386 (377,127)
Hyundai Autonet Co. Ltd. (5,049,046) 262,439 --
LG Home Shopping, Inc. (7,682,905) 557,629 --
Lojas Americanas SA, Preference 20,736,479 1,620,493 5,581
Medinet Nasr for Housing & Development Co. 1,407,765 266,884 --
NIIT Ltd.* -- 183,756 (7,073,143)
PT Aneka Tambang Tbk 7,272,770 471,364 --
PT Hero Supermarket Tbk 1,129,267 -- --
United Breweries Holdings Ltd. (1,415,657) -- --
United Breweries Ltd. 309,662 -- --
-----------------------------------------
$47,469,737 $ 5,145,111 $(7,444,689)
=========================================
*No longer an affiliate as of August 31, 2004.
2. Non-income producing security.
3. Illiquid security. 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 $30,570,880 or 1.63% of the Fund's net
assets as of August 31, 2004
24 | OPPENHEIMER DEVELOPING MARKETS FUND
DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC HOLDINGS, AS A PERCENTAGE OF
TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS:
GEOGRAPHIC HOLDINGS VALUE PERCENT
- --------------------------------------------------------------------------------
Brazil $ 358,836,899 19.3%
India 289,250,040 15.5
Korea, Republic of South 197,600,070 10.6
Mexico 176,474,621 9.5
South Africa 115,978,083 6.2
Taiwan 109,827,892 5.9
United Kingdom 78,545,671 4.2
United States 76,861,510 4.1
Turkey 62,383,738 3.4
Indonesia 54,798,678 3.0
Hong Kong 52,443,943 2.8
Portugal 52,055,630 2.8
Philippines 47,310,345 2.5
Greece 37,888,165 2.0
Singapore 37,197,530 2.0
China 33,182,921 1.8
Egypt 29,943,215 1.6
Lebanon 15,331,732 0.8
Thailand 14,137,876 0.8
Croatia 8,538,000 0.5
Panama 6,791,850 0.4
Hungary 4,486,476 0.2
Russia 1,774,080 0.1
------------------------
Total $1,861,638,965 100.0%
========================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF ASSETS AND LIABILITIES August 31, 2004
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investments, at value--see accompanying statement of
investments:
Unaffiliated companies (cost $1,383,952,408) $1,680,152,290
Affiliated companies (cost $134,016,938) 181,486,675
---------------
1,861,638,965
- --------------------------------------------------------------------------------
Cash 691,004
- --------------------------------------------------------------------------------
Cash--foreign currencies (cost $12,235,061) 12,018,690
- --------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 6,075,200
Interest and dividends 5,547,259
Investments sold 128,839
Other 15,253
---------------
Total assets 1,886,115,210
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Unrealized depreciation on foreign currency contracts 81
- --------------------------------------------------------------------------------
Payables and other liabilities:
Foreign capital gains tax 8,333,913
Shares of beneficial interest redeemed 4,808,292
Distribution and service plan fees 716,059
Custodian fees 559,684
Transfer and shareholder servicing agent fees 413,994
Shareholder communications 255,688
Investments purchased 75,459
Trustees' compensation 73,447
Other 139,854
---------------
Total liabilities 15,376,471
- --------------------------------------------------------------------------------
NET ASSETS $1,870,738,739
===============
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------
Paid-in capital $1,543,557,393
- --------------------------------------------------------------------------------
Accumulated net investment loss (7,081,902)
- --------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign
currency transactions (941,425)
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 335,204,673
---------------
NET ASSETS $1,870,738,739
===============
26 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
- --------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$1,549,854,054 and 73,472,198 shares of beneficial interest
outstanding) $21.09
Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price) $22.38
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $119,749,436 and 5,737,954 shares of beneficial interest
outstanding) $20.87
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $175,024,954 and 8,453,593 shares of beneficial interest
outstanding) $20.70
- --------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets of $26,110,295 and 1,252,819 shares of beneficial interest
outstanding) $20.84
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENT OF OPERATIONS For the Year Ended August 31, 2004
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------------
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $4,165,962) $38,882,543
Affiliated companies (net of foreign withholding taxes of $422,982) 5,145,111
- --------------------------------------------------------------------------------------
Interest 869,968
------------
Total investment income 44,897,622
- --------------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------------
Management fees 12,974,384
- --------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 2,693,152
Class B 1,171,251
Class C 1,451,896
Class N 93,162
- --------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 2,798,004
Class B 379,128
Class C 371,739
Class N 86,444
- --------------------------------------------------------------------------------------
Shareholder communications:
Class A 277,102
Class B 68,488
Class C 43,981
Class N 2,683
- --------------------------------------------------------------------------------------
Custodian fees and expenses 1,412,201
- --------------------------------------------------------------------------------------
Trustees' compensation 51,065
- --------------------------------------------------------------------------------------
Other 143,347
------------
Total expenses 24,018,027
Less reduction to custodian expenses (5,962)
Less payments and waivers of expenses (21,881)
------------
Net expenses 23,990,184
- --------------------------------------------------------------------------------------
NET INVESTMENT INCOME 20,907,438
28 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments:
Unaffiliated companies (net of foreign capital gains tax of $3,168,045) $ 53,018,521
Affiliated companies (7,444,689)
Foreign currency transactions (1,365,139)
-------------
Net realized gain 44,208,693
- ------------------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments (net of foreign capital gains tax of $8,333,913) 200,342,286
Translation of assets and liabilities denominated in foreign currencies 1,777,479
-------------
Net change in unrealized appreciation 202,119,765
- ------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $267,235,896
=============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29 | OPPENHEIMER DEVELOPING MARKETS FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 2004 2003
- ------------------------------------------------------------------------------------------------------------
OPERATIONS
- ------------------------------------------------------------------------------------------------------------
Net investment income $ 20,907,438 $ 6,138,146
- ------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 44,208,693 (12,608,261)
- ------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 202,119,765 156,873,384
------------------------------
Net increase in net assets resulting from operations 267,235,896 150,403,269
- ------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (27,952,368) (5,036,106)
Class B (2,748,497) (444,216)
Class C (3,209,280) (484,074)
Class N (455,621) (56,763)
- ------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- ------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A 774,658,690 139,680,513
Class B 13,494,351 5,073,409
Class C 76,067,428 15,689,824
Class N 14,703,179 5,246,193
- ------------------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------------------
Total increase 1,111,793,778 310,072,049
- ------------------------------------------------------------------------------------------------------------
Beginning of period 758,944,961 448,872,912
------------------------------
End of period (including accumulated net investment income
(loss) of $(7,081,902) and $1,063,410,respectively) $1,870,738,739 $758,944,961
==============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30 | OPPENHEIMER DEVELOPING MARKETS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
CLASS A YEAR ENDED AUGUST 31, 2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 16.92 $ 13.43 $ 12.93 $ 16.85 $ 11.40
- ------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .48 .19 .25 .21 .20
Net realized and unrealized gain (loss) 4.31 3.50 .45 (3.54) 5.37
----------------------------------------------------------
Total from investment operations 4.79 3.69 .70 (3.33) 5.57
- ------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.62) (.20) (.20) (.20) (.12)
Distributions from net realized gain -- -- -- (.39) --
----------------------------------------------------------
Total dividends and/or distributions
to shareholders (.62) (.20) (.20) (.59) (.12)
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 21.09 $ 16.92 $ 13.43 $ 12.93 $ 16.85
==========================================================
- ------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 28.61% 27.93% 5.44% (20.08)% 49.12%
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,549,854 $588,450 $337,405 $167,178 $114,137
- ------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,145,452 $374,841 $257,746 $153,027 $ 77,848
- ------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 1.64% 1.42% 1.91% 1.76% 1.56%
Total expenses 1.52% 1.81% 1.81% 1.69% 1.96%
Expenses after payments and waivers
and reduction to custodian expenses N/A 3 1.76% 1.77% N/A 3 N/A 3
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 15% 6% 10% 16% 22%
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.
31 | OPPENHEIMER DEVELOPING MARKETS FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS B YEAR ENDED AUGUST 31, 2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 16.79 $ 13.32 $ 12.82 $ 16.70 $ 11.30
- --------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .12 .09 .15 .12 .11
Net realized and unrealized gain (loss) 4.46 3.47 .44 (3.53) 5.33
------------------------------------------------------
Total from investment operations 4.58 3.56 .59 (3.41) 5.44
- --------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.50) (.09) (.09) (.08) (.04)
Distributions from net realized gain -- -- -- (.39) --
------------------------------------------------------
Total dividends and/or distributions
to shareholders (.50) (.09) (.09) (.47) (.04)
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 20.87 $ 16.79 $ 13.32 $ 12.82 $ 16.70
======================================================
- --------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 27.50% 26.98% 4.61% (20.67)% 48.20%
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $119,749 $84,705 $63,005 $45,393 $48,146
- --------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $117,271 $62,676 $54,744 $48,135 $37,333
- --------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 0.61% 0.66% 1.14% 0.92% 0.78%
Total expenses 2.41% 2.67% 2.58% 2.46% 2.72%
Expenses after payments and waivers
and reduction to custodian expenses N/A 3,4 2.52% 2.54% N/A 4 N/A 4
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate 15% 6% 10% 16% 22%
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. Voluntary waiver of transfer agent fees less than 0.01%.
4. Reduction to custodian expenses less than 0.01%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32 | OPPENHEIMER DEVELOPING MARKETS FUND
CLASS C YEAR ENDED AUGUST 31, 2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
- ------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 16.67 $ 13.25 $ 12.78 $ 16.68 $ 11.31
- ------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .31 .10 .17 .12 .09
Net realized and unrealized gain (loss) 4.25 3.44 .41 (3.52) 5.32
----------------------------------------------------
Total from investment operations 4.56 3.54 .58 (3.40) 5.41
- ------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.53) (.12) (.11) (.11) (.04)
Distributions from net realized gain -- -- -- (.39) --
----------------------------------------------------
Total dividends and/or distributions
to shareholders (.53) (.12) (.11) (.50) (.04)
- ------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 20.70 $ 16.67 $ 13.25 $ 12.78 $ 16.68
====================================================
- ------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 1 27.60% 27.05% 4.54% (20.68)% 47.93%
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $175,025 $77,081 $46,722 $20,864 $16,363
- ------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $145,460 $52,236 $33,334 $19,646 $10,230
- ------------------------------------------------------------------------------------------------------
Ratios to average net assets: 2
Net investment income 0.83% 0.66% 1.15% 0.94% 0.82%
Total expenses 2.31% 2.57% 2.57% 2.46% 2.71%
Expenses after payments and waivers
and reduction to custodian expenses N/A 3 2.52% 2.53% N/A 3 N/A 3
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate 15% 6% 10% 16% 22%
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.
33 | OPPENHEIMER DEVELOPING MARKETS FUND
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
CLASS N YEAR ENDED AUGUST 31, 2004 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 .45 .22 .32 .05
Net realized and unrealized gain (loss) 4.22 3.41 .34 (2.40)
-------------------------------------
Total from investment operations 4.67 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 $ 20.84 $16.77 $13.36 $ 12.91
=====================================
- ---------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 28.16% 27.73% 5.13% (15.40)%
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $26,110 $8,709 $1,741 $ 77
- ---------------------------------------------------------------------------------------
Average net assets (in thousands) $18,770 $4,196 $ 686 $ 35
- ---------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.31% 1.27% 1.68% 1.63%
Total expenses 1.99% 2.08% 2.04% 1.96%
Expenses after payments and waivers
and reduction to custodian expenses 1.88% 1.99% 2.00% N/A 4
- ---------------------------------------------------------------------------------------
Portfolio turnover rate 15% 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.
34 | 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 with respect to the Fund in
general and exclusive voting rights on matters that affect that class alone.
Earnings, net assets and net asset value per share may differ due to each class
having its own expenses, such as transfer and shareholder servicing agent fees
and shareholder communications, directly attributable to that class. Class A, B,
C and N have separate distribution and/or service plans. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The Fund assesses a 2% fee on the proceeds of fund shares that are redeemed
(either by selling or exchanging to another Oppenheimer fund) within 30 days of
their purchase. The fee, which is retained by the Fund, is accounted for as an
addition to paid-in capital.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities listed
or traded on National Stock Exchanges or other domestic 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.
Corporate, government and municipal debt instruments having a remaining maturity
in excess of 60 days and all mortgage-backed securities will be valued at the
mean between the "bid" and "asked" prices. 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.
Foreign and domestic securities whose values have been materially affected by
what the Manager identifies as a significant event occurring before the Fund's
assets are valued but after the close of their respective exchanges will be fair
valued. Fair value is determined in good faith using consistently applied
procedures under the supervision of the Board of Trustees. Short-term "money
market type" debt securities with
35 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 as of the close of The New York Stock Exchange (the
Exchange), normally 4:00 P.M. Eastern time, on each day the Exchange is open for
business. 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. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. These balances are invested in one or more repurchase
agreements. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
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
36 | OPPENHEIMER DEVELOPING MARKETS FUND
not offset by capital loss carryforwards, if any, to shareholders, therefore, no
federal income or excise tax provision is required.
The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.
NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3,4 TAX PURPOSES
- -----------------------------------------------------------------------------
$27,704,600 $-- $9,286,337 $308,829,234
1. The Fund had $594,538 of post-October foreign currency losses which were
deferred.
2. The Fund had $8,691,799 of post-October passive foreign investment company
losses which were deferred.
3. During the fiscal year ended August 31, 2004, the Fund utilized $19,295,605
of capital loss carryforward to offset capital gains realized in that fiscal
year.
4. During the fiscal year ended August 31, 2003, the Fund did not utilize any
capital loss carryforward.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for August 31, 2004. Net assets of the
Fund were unaffected by the reclassifications.
REDUCTION TO
REDUCTION TO ACCUMULATED NET
INCREASE TO ACCUMULATED NET REALIZED GAIN
PAID-IN CAPITAL INVESTMENT LOSS ON INVESTMENTS 5
-----------------------------------------------------
$7,721,161 $5,313,016 $13,034,177
5. $7,699,737, including $6,565,959 of long-term capital gain, was distributed
in connection with Fund share redemptions.
The tax character of distributions paid during the years ended August 31, 2004
and August 31, 2003 was as follows:
YEAR ENDED YEAR ENDED
AUGUST 31, 2004 AUGUST 31, 2003
------------------------------------------------------------
Distributions paid from:
Ordinary income $34,365,766 $6,021,159
The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of August 31, 2004 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if
37 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES continued
applicable, is attributable to the tax deferral of losses or tax realization of
financial statement unrealized gain or loss.
Federal tax cost of securities $1,544,344,785
Federal tax cost of other investments 12,310,601
---------------
Total federal tax cost $1,556,655,386
===============
Gross unrealized appreciation $ 362,795,416
Gross unrealized depreciation (53,966,182)
---------------
Net unrealized appreciation $ 308,829,234
===============
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, 2004, the Fund's projected benefit obligations were increased by $13,214 and
payments of $3,812 were made to retired trustees, resulting in an accumulated
liability of $53,767 as of August 31, 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.
For purposes of determining the amount owed to the Trustee under the plan,
deferred amounts are treated as though equal dollar amounts had been invested in
shares of the Fund or in other Oppenheimer funds selected by the Trustee. The
Fund purchases shares of the funds selected for deferral by the Trustee in
amounts equal to his or her deemed investment, resulting in a Fund asset equal
to the deferred compensation liability. Such assets are included as a component
of "Other" within the asset section of the Statement of Assets and Liabilities.
Deferral of trustees' fees under the plan will not affect the net assets of the
Fund, and will not materially affect the Fund's assets, liabilities or net
investment income per share. Amounts will be deferred until distributed in
accordance to the Plan.
- --------------------------------------------------------------------------------
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.
38 | OPPENHEIMER DEVELOPING MARKETS FUND
- --------------------------------------------------------------------------------
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 U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
YEAR ENDED AUGUST 31, 2004 YEAR ENDED AUGUST 31, 2003
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------
CLASS A
Sold 63,139,029 $1,266,479,821 27,774,840 $ 381,173,305
Dividends and/or
distributions reinvested 1,184,139 23,007,783 345,063 4,409,888
Redeemed (25,627,852) (514,828,914) (18,474,251) (245,902,680)
-----------------------------------------------------------
Net increase 38,695,316 $ 774,658,690 9,645,652 $ 139,680,513
===========================================================
- --------------------------------------------------------------------------------------
CLASS B
Sold 2,655,996 $ 52,882,450 2,331,057 $ 31,318,480
Dividends and/or
distributions reinvested 126,635 2,449,139 31,756 404,888
Redeemed (2,090,223) (41,837,238) (2,048,970) (26,649,959)
-----------------------------------------------------------
Net increase 692,408 $ 13,494,351 313,843 $ 5,073,409
===========================================================
- --------------------------------------------------------------------------------------
CLASS C
Sold 5,461,597 $ 108,717,047 2,690,076 $ 35,884,161
Dividends and/or
distributions reinvested 143,023 2,741,763 33,761 427,423
Redeemed (1,775,168) (35,391,382) (1,624,911) (20,621,760)
-----------------------------------------------------------
Net increase 3,829,452 $ 76,067,428 1,098,926 $ 15,689,824
===========================================================
- --------------------------------------------------------------------------------------
CLASS N
Sold 1,134,305 $ 22,542,746 508,343 $ 6,839,560
Dividends and/or
distributions reinvested 23,641 454,865 4,454 56,525
Redeemed (424,467) (8,294,432) (123,773) (1,649,892)
-----------------------------------------------------------
Net increase 733,479 $ 14,703,179 389,024 $ 5,246,193
===========================================================
39 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 2004, were
$1,015,247,737 and $196,431,554, 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.
- --------------------------------------------------------------------------------
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, 2004, the Fund paid
$3,384,804 to OFS for services to the Fund.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.
- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor currently uses all of those fees
to pay dealers, brokers, banks and other financial institutions quarterly for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years. Fees incurred by the Fund under the Plan are detailed in the Statement of
Operations.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% per year on
Class B and Class C shares and 0.25% per year on Class N shares. The Distributor
also receives a service fee of 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
Distributors's aggregate uncompensated expenses under the plan at August 31,
2004 for Class B, Class C and Class N shares were
40 | OPPENHEIMER DEVELOPING MARKETS FUND
$2,377,812, $2,453,423 and $293,334, respectively. Fees incurred by the Fund
under the plans are detailed in the Statement of Operations.
- --------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.
CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- -----------------------------------------------------------------------------------------------
August 31, 2004 $673,973 $21,792 $222,817 $87,428 $44,033
- --------------------------------------------------------------------------------
PAYMENTS AND WAIVERS OF EXPENSES. OFS has voluntarily agreed to limit transfer
and shareholder servicing agent fees for all classes to 0.35% of average daily
net assets per fiscal year for all classes. During the year ended August 31,
2004, OFS waived $1,006 and $20,875 for Class B and Class N shares,
respectively. This undertaking may be amended or withdrawn at any time.
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS
A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation or
depreciation.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.
41 | OPPENHEIMER DEVELOPING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS Continued
As of August 31, 2004, the Fund had outstanding foreign currency contracts as
follows:
CONTRACT
EXPIRATION AMOUNT VALUATION AS OF UNREALIZED
CONTRACT DESCRIPTION DATE (000s) AUGUST 31, 2004 DEPRECIATION
- --------------------------------------------------------------------------------
CONTRACTS TO PURCHASE
Philippines Peso [PHP] 9/1/04 4,238PHP $75,459 $81
- --------------------------------------------------------------------------------
6. ILLIQUID SECURITIES
As of August 31, 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 will not invest 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, 2004 was
$27,364,963, which represents 1.46% of the Fund's net assets.
- --------------------------------------------------------------------------------
7. LITIGATION
Six complaints have been filed as putative derivative and class actions against
the Manager, OFS and the Distributor (collectively, "OppenheimerFunds"), as well
as 51 of the Oppenheimer funds (collectively, the "Funds") including this Fund,
and nine directors/trustees of certain of the Funds (collectively, the
"Directors/Trustees"). The complaints allege that the Manager charged excessive
fees for distribution and other costs, improperly used assets of the Funds in
the form of directed brokerage commissions and 12b-1 fees to pay brokers to
promote sales of the Funds, and failed to properly disclose the use of Fund
assets to make those payments in violation of the Investment Company Act of 1940
and the Investment Advisers Act of 1940. The complaints further allege that by
permitting and/or participating in those actions, the Directors/Trustees
breached their fiduciary duties to Fund shareholders under the Investment
Company Act of 1940 and at common law.
OppenheimerFunds believes that it is premature to render any opinion as to
the likelihood of an outcome unfavorable to them, the Funds or the
Directors/Trustees and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss. However,
OppenheimerFunds, the Funds and the Directors/Trustees believe that the
allegations contained in the complaints are without merit and intend to defend
these lawsuits vigorously.
42 | OPPENHEIMER DEVELOPING MARKETS FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 2004, 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 the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of August 31, 2004, 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, 2004, 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 U.S. generally
accepted accounting principles.
KPMG LLP
Denver, Colorado
September 22, 2004
43 | OPPENHEIMER DEVELOPING MARKETS FUND
FEDERAL INCOME TAX INFORMATION Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In early 2005, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Fund during
calendar year 2004. Regulations of the U.S. Treasury Department require the Fund
to report this information to the Internal Revenue Service.
Dividends of $0.6183, $0.4981, $0.5284 and $0.6026 per share were paid to
Class A, Class B, Class C and Class N shareholders, respectively, on December
11, 2003, 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,
2004 are eligible for the corporate dividend-received deduction.
A portion, if any, of the dividends paid by the Fund during the fiscal year
ended August 31, 2004 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.
$28,058,119 of the Fund's fiscal year taxable income may be eligible for the
lower individual income tax rates. In early 2005, shareholders of record will
receive information regarding the percentage of distributions that are eligible
for lower individual income tax rates.
The Fund has elected the application of Section 853 of the Internal Revenue
Code to permit shareholders to take a federal income tax credit or deduction, at
their option, on a per share basis for an aggregate amount of $7,617,623 of
foreign income taxes paid by the Fund during the fiscal year ended August 31,
2004. A separate notice will be mailed to each shareholder, which will reflect
the proportionate share of such foreign taxes which must be treated by
shareholders as gross income for federal income tax purposes.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Fund to the Internal Revenue Service. Because of
the complexity of the federal regulations which may affect your individual tax
return and the many variations in state and local tax regulations, we recommend
that you consult your tax advisor for specific guidance.
44 | OPPENHEIMER DEVELOPING MARKETS FUND
PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES;
UPDATES TO STATEMENTS OF INVESTMENTS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures
is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and
(iii) on the SEC's website at www.sec.gov. In addition, the Fund is required to
file 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 Fund's Form N-PX
filing is available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.525.7048, and (ii) on the SEC's website at www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC for
the first quarter and the third quarter of each fiscal year on Form N-Q. The
Fund's Form N-Q filings are available on the SEC's website at
http://www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
45 | OPPENHEIMER DEVELOPING MARKETS FUND
TRUSTEES AND OFFICERS Unaudited
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS;
FUND, LENGTH OF SERVICE, AGE OTHER TRUSTEESHIPS/DIRECTORSHIPS HELD BY
TRUSTEE; NUMBER OF PORTFOLIOS IN FUND COMPLEX
CURRENTLY OVERSEEN BY TRUSTEE
INDEPENDENT TRUSTEES THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW
IS 6803 S. TUCSON WAY, CENTENNIAL, CO
80112-3924. EACH TRUSTEE SERVES FOR AN
INDEFINITE TERM, UNTIL HIS OR HER RESIGNATION,
RETIREMENT, DEATH OR REMOVAL.
CLAYTON K. YEUTTER, Of Counsel (since June 1993) Hogan & Hartson (a
Chairman of the Board law firm); a director (since 2002) of Danielson
of Trustees (since 2003); Holding Corp. Formerly a director of
Trustee (since 1996) Weyerhaeuser Corp. (1999-April 2004),
Age: 73 Caterpillar, Inc. (1993-December 2002), ConAgra
Foods (1993-2001), Texas Instruments (1993-2001)
and FMC Corporation (1993-2001). Oversees 25
portfolios in the OppenheimerFunds complex.
ROBERT G. GALLI, A trustee or director of other Oppenheimer
Trustee (since 1996) funds. Oversees 35 portfolios in the
Age: 71 OppenheimerFunds complex.
PHILLIP A. GRIFFITHS, A director (since 1991) of the Institute for
Trustee (since 1999) Advanced Study, Princeton, N.J., a director
Age: 65 (since 2001) of GSI Lumonics, a trustee (since
1983) of Woodward 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 25 portfolios in the OppenheimerFunds
complex.
JOEL W. MOTLEY, Director (since January 2002) Columbia Equity
Trustee (since 2002) Financial Corp. (privately-held financial
Age: 52 adviser); Managing Director (since January 2002)
Carmona Motley, Inc. (privately-held financial
adviser). Formerly a Managing Director of
Carmona Motley Hoffman Inc. (privately-held
financial adviser) (January 1998-December 2001).
Oversees 25 portfolios in the OppenheimerFunds
complex.
KENNETH A. RANDALL, A director (since February 1972) of Dominion
Trustee (since 1996) Resources, Inc. (electric utility holding
Age: 77 company); formerly a director of Prime Retail,
Inc. (real estate investment trust) and Dominion
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
25 portfolios in the OppenheimerFunds complex.
EDWARD V. REGAN, President, Baruch College, CUNY; a director of
Trustee (since 1996) RBAsset (real estate manager); a director of
Age: 74 OffitBank; formerly Trustee, Financial
Accounting Foundation (FASB 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 25
investment companies in the OppenheimerFunds
complex.
RUSSELL S. REYNOLDS, JR., Chairman (since 1993) of The Directorship Search
Trustee (since 1996) Group, Inc. (corporate governance consulting and
Age: 72 executive recruiting); a Life Trustee of
International House (non-profit educational
organization); a former trustee of The
Historical Society of the Town of Greenwich.
Oversees 25 portfolios in the OppenheimerFunds
complex.
46 | OPPENHEIMER DEVELOPING MARKETS FUND
DONALD W. SPIRO,* Chairman Emeritus (since January 1991) of the
Vice Chairman of the Manager. Formerly a director (January
Board of Trustees, 1969-August 1999) of the Manager. Oversees 25
Trustee (since 1996) portfolios in the OppenheimerFunds complex.
Age: 78
*Mr. Spiro is expected to retire as Trustee of
the Board I Funds effective October 31, 2004.
- --------------------------------------------------------------------------------
INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IN THE CHART BELOW IS
AND OFFICER TWO WORLD FINANCIAL CENTER, 225 LIBERTY STREET,
11TH FLOOR, NEW YORK, NY 10281-1008. MR. MURPHY
SERVES FOR AN INDEFINITE TERM, UNTIL HIS
RESIGNATION, DEATH OR REMOVAL.
JOHN V. MURPHY, Chairman, Chief Executive Officer and director
President and Trustee (since June 2001) and President (since September
(since 2001) 2000) of the Manager; President and a director
Age: 55 or trustee of other Oppenheimer funds; President
and a director (since July 2001) of 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 following investment
advisory subsidiaries of the Manager: OFI
Institutional Asset Management, Inc., Centennial
Asset Management Corporation, Trinity Investment
Management Corporation and Tremont Capital
Management, Inc. (since November 2001),
HarbourView Asset Management Corporation and OFI
Private Investments, Inc. (since July 2001);
President (since November 1, 2001) and a
director (since July 2001) of Oppenheimer Real
Asset Management, Inc.; 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 Babson Capital Management
LLC); a member of the Investment Company
Institute's Board of Governors (elected to serve
from October 3, 2003 through September 30,
2006). 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 73
portfolios as Trustee/Director and 10
portfolios as Officer in the OppenheimerFunds
complex.
- --------------------------------------------------------------------------------
OFFICERS THE ADDRESS OF THE OFFICERS IN THE CHART BELOW
IS AS FOLLOWS: FOR MR. BAHMAN, MR. MADDEN, AND
MR. ZACK, TWO WORLD FINANCIAL CENTER, 225
LIBERTY STREET, 11TH FLOOR, NEW YORK, NY
10281-1008, AND FOR MR. WIXTED AND MR. VANDEHEY,
6803 S. TUCSON WAY, CENTENNIAL, CO 80112-3924.
EACH OFFICER SERVES FOR AN ANNUAL TERM OR UNTIL
HIS OR HER EARLIER RESIGNATION, DEATH OR
REMOVAL.
RAJEEV BAHMAN, Vice President of the Manager since January
Vice President and 1997; an officer of 3 portfolios in the
Portfolio Manager OppenheimerFunds complex; formerly Assistant
(since 1996) Vice President of the Manager (March 1996 -
Age: 40 January 1997).
47 | OPPENHEIMER DEVELOPING MARKETS FUND
TRUSTEES AND OFFICERS Unaudited / Continued
- --------------------------------------------------------------------------------
MARK MADDEN, Vice President of the Manager (since August
Vice President and 2004); an officer of 1 portfolio in the
Portfolio Manager OppenheimerFunds complex. Formerly he held the
(since 2004) following positions in Global Asset Management
Age: 47 at Pioneer Investment Management, Inc.: Managing
Director, Global Emerging Markets Team (November
2000-July 2004), Senior Vice President and
Portfolio Manager, International Equities
(December 1998-October 2000) and Vice President
and Portfolio Manager, International Equities
(February 1993-November 1998).
BRIAN W. WIXTED, Senior Vice President and Treasurer (since March
Treasurer (since 1999) 1999) of the Manager; Treasurer of
Age: 44 HarbourView Asset Management Corporation,
Shareholder Financial Services, Inc.,
Shareholder Services, Inc., Oppenheimer Real
Asset Management Corporation, and Oppenheimer
Partnership Holdings, Inc. (since March 1999),
of OFI Private Investments, Inc. (since March
2000), of OppenheimerFunds International Ltd.
and OppenheimerFunds plc (since May 2000), of
OFI Institutional Asset Management, Inc. (since
November 2000), and of OppenheimerFunds Legacy
Program (a Colorado non-profit corporation)
(since June 2003); Treasurer and Chief Financial
Officer (since May 2000) of OFI Trust Company (a
trust company subsidiary of the Manager);
Assistant Treasurer (since March 1999) of
Oppenheimer Acquisition Corp. Formerly Assistant
Treasurer of Centennial Asset Management
Corporation (March 1999-October 2003) and
OppenheimerFunds Legacy Program (April 2000-June
2003); Principal and Chief Operating Officer
(March 1995-March 1999) at Bankers Trust
Company-Mutual Fund Services Division. An
officer of 83 portfolios in the OppenheimerFunds
complex.
ROBERT G. ZACK, Executive Vice President (since January 2004)
Secretary (since 2001) and General Counsel (since February 2002) of the
Age: 56 Manager; General Counsel and a director (since
November 2001) of the Distributor; General
Counsel (since November 2001) of Centennial
Asset Management Corporation; Senior Vice
President and General Counsel (since November
2001) of HarbourView Asset Management
Corporation; Secretary and General Counsel
(since November 2001) of Oppenheimer Acquisition
Corp.; Assistant Secretary and a director (since
October 1997) of OppenheimerFunds International
Ltd. and OppenheimerFunds plc; Vice President
and a director (since November 2001) of
Oppenheimer Partnership Holdings, Inc.; a
director (since November 2001) of Oppenheimer
Real Asset Management, Inc.; Senior Vice
President, General Counsel and a director (since
November 2001) of Shareholder Financial
Services, Inc., Shareholder Services, Inc., OFI
Private Investments, Inc. and OFI Trust Company;
Vice President (since November 2001) of
OppenheimerFunds Legacy Program; Senior Vice
President and General Counsel (since November
2001) of OFI Institutional Asset Management,
Inc.; a director (since June 2003) of
OppenheimerFunds (Asia) Limited. Formerly Senior
Vice President (May 1985-December 2003), Acting
General Counsel (November 2001-February 2002)
and Associate General Counsel (May 1981-October
2001) of the Manager; Assistant Secretary of
Shareholder Services, Inc. (May 1985-November
2001), Shareholder Financial Services, Inc.
(November 1989-November 2001); and
OppenheimerFunds International Ltd. (October
1997-November 2001). An officer of 83 portfolios
in the OppenheimerFunds complex.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance
Vice President and Officer (since March 2004) of the Manager; Vice
Chief Compliance Officer President (since June 1983) of OppenheimerFunds
(since 2004) Distributor, Inc., Centennial Asset Management
Age: 53 Corporation and Shareholder Services, Inc.
Formerly (until February 2004) Vice President
and Director of Internal Audit of
OppenheimerFunds, Inc. An officer of 83
portfolios in the Oppenheimer funds complex.
THE FUND'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE FUND'S TRUSTEES AND IS AVAILABLE WITHOUT CHARGE UPON REQUEST BY
CALLING 1.800.525.7048.
48 | 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
(a) Audit Fees
The principal accountant for the audit of the registrant's annual
financial statements billed $15,000 in fiscal 2004 and $15,000 in
fiscal 2003.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed $39,500 in fiscal 2004 and no such
fees in fiscal 2003 to the registrant's investment adviser or any
entity controlling, controlled by, or under common control with
the adviser that provides ongoing services to the registrant.
Such fees would include, among others: due diligence related to
mergers and acquisitions, accounting consultations and audits in
connection with acquisitions, internal control reviews and
consultation concerning financial accounting and reporting
standards.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual
financial statements billed $7,563 in fiscal 2004 and $2,339 in
fiscal 2003 to the registrant.
The principal accountant for the audit of the registrant's annual
financial statements billed $6,000 in fiscal 2004 and $5,000 in
fiscal 2003 to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant.
Such fees would include, among others: tax compliance, tax
planning and tax advice. Tax compliance generally involves
preparation of original and amended tax returns, claims for a
refund and tax payment-planning services. Tax planning and tax
advice
includes assistance with tax audits and appeals, tax advice
related to mergers and acquisitions and requests for rulings or
technical advice from taxing authorities.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees in fiscal 2004 and $110
in fiscal 2003.
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees during the last two
fiscal years to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant.
Such fees would include consultations regarding the registrant's
retirement plan with respect to its directors.
(e) (1) During its regularly scheduled periodic meetings, the
registrant's audit committee will pre-approve all audit,
audit-related, tax and other services to be provided by the
principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its
Chairman for any subsequent new engagements that arise between
regularly scheduled meeting dates provided that any fees such
pre-approved are presented to the audit committee at its next
regularly scheduled meeting.
Pre-approval of non-audit services is waived provided that: 1) the
aggregate amount of all such services provided constitutes no more
than five percent of the total amount of fees paid by the
registrant to it principal accountant during the fiscal year in
which services are provided 2) such services were not recognized
by the registrant at the time of engagement as non-audit services
and 3) such services are promptly brought to the attention of the
audit committee of the registrant and approved prior to the
completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed $53,063 in fiscal 2004 and $7,449 in
fiscal 2003 to the registrant and the registrant's investment
adviser or any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the
registrant related to non-audit fees. Those billings did not
include any prohibited non-audit services as defined by the
Securities Exchange Act of 1934.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser, and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is
compatible with maintaining the principal account's independence.
No such services were rendered.
ITEM 5. NOT APPLICABLE
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable
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-3(c) under the Investment
Company Act of 1940 (17 CFR 270.30a-3(c)) as of August 31, 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)(NOT
APPLICABLE TO SEMIANNUAL REPORTS)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)